Wal-Mart de México, S.A.B. de C.V. (WALMEX) Earnings Call Transcript & Summary

Good morning, everyone. I'm Salvador Villaseñor, responsible for Investor Relations at Walmex, and I want to thank you for joining us in our live Q&A session following our fourth quarter and full year results, which were published yesterday evening. Joining me today is Ignacio Caride, President and CEO of Wal-Mart de México, Centroamérica; Raúl Quintana, our Chief; Omnichannel Operating Officer; and Paulo Garcia, our CFO. We will make every effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. We kindly ask you to limit yourself to one question as courtesy to others. Now I will pass over to Ignacio for his initial remarks before moving on to the first question. Please, Ignacio?

Thank you, Salvador, and good morning, and good afternoon, everyone, depending where you are. As always, I'd like to start by thanking our associates, the dedication to our customers keeps and remains unmatched. And together, we successfully navigated the Q4 with intense activity and gaining the trust of our customers and members. So thank you for joining us today. Let's go to your questions.

[Operator Instructions] The first question is from Mr. Alejandro Fuchs from Itau BBA.

[Foreign Language] My question would be on competitive landscape in Mexico. Wanted to understand if maybe, Ignacio you can give us some additional color on the quarter, how you saw competition? You mentioned on the release more promotional activity, investing in price. Maybe we can touch on maybe differences between the formats, Sam's and Bodega’. How should we think also on competitive dynamics going into this year online versus brick-and-mortar. So anything that you can give us additionally on competition, I think it will be very interesting to hear from you.

Yes, sure. Thanks, Alejandro. I'll start, and then I'll let Raúl complement here. But as always, when you have a year like the one we had last year with, let's say, a little bit of headwind at the end of the year, every single competitors and everyone starts reacting -- reacting to the softness of consumption, and this was exactly the case. What we try to focus on our end is bringing our purpose to life more than ever. This is where we feel with our portfolio of brands and formats, it's where we feel our purpose comes to life better than everything. And what we did is invest a lot in pricing in order to help our customers navigate this softness at the end of the year. And we saw the reaction. So let's say, that this is what's been happening at the end of the year or after half of the year, Q3 and Q4. So our focus was to help our customers invest in pricing and gaining market share, that is the idea of this. 2025 has started pretty similar, but we expect the year to improve along the way. In terms of the format, Raúl?

Yes. In terms of the format, I think we see consistency in market share gains from Bodega and Sam's. And we're seeing a better improvement in Walmart Supercenters and at Walmart Express, which now plays to our portfolio strength that we have as a company. So I think the price investments that we took in Bodega helped increase traffic quarter-over-quarter. So if you recall, quarter 3, we had a little bit of a slowdown in Bodega, quarter 4 had an improvement in Bodega in traffic. And Bodega as well gained market shares in quarter 4 as well as the full year measured by Nielsen and ANTAD and then Sam's as well continues to be consistent in market share gains. So I would tell you that our portfolio strength is well positioned, and we have good consistency between Bodega and Sam's, and we have good improvements in Walmart Supercenters and then Walmart Express.

Thank you, Ignacio, and Raúl. It was very clear. Can I do one more follow-up very quickly, if that's okay?

Go ahead.

On the new businesses, just very quickly. They were contributing around 30 to 40 bps of margin in the last quarters. This quarter was 20 bps to the gross margin. The Bait continues to grow very successfully, right, in Walmart Connect as well. So I was just wanted to see if there was something extraordinary this quarter on the profitability of the new businesses that maybe could be something like a one-off because of the contribution was a little bit less than the last quarter. That was my second question.

Alejandro, no, I don't think you should read much into that debt. You probably have seen it at Connect, which is a business that is doing extremely well, grew a bit less in this quarter than the normal. So as the higher Bait, so it grew 22% versus a year average of around 27%, because last year, the Q4 was particularly strong. But Q4 is -- also says because of seasonality, is the highest. In absolute terms, Connect, this quarter was by far the highest. So I don't read too much into that. I think we feel comfortable in terms of what was delivered and what will be delivered going forward in terms of contribution of new businesses to our overall business and overall gross margins.

Our next question is from Mr. Ben Theurer from Barclays.

Just wanted to actually follow up on Alejandro's last question. And if you could maybe share a few early assessments as to what the benefits are going to be that you're seeing from the different things within the Walmex ecosystem? You've highlighted, I think, yesterday and the prepared remarks that you're going to provide a little more detail in coming quarters. So maybe a little bit of a teaser or something that you can share with us, maybe Raúl or Ignacio something that we can kind of like maybe track over the course of the coming quarters as to how you're actually going to leverage the Walmex One ecosystem as to growing than the top line once the macroeconomic environment improves a little bit?

Thank you, Ben. So first of all, one-off -- this is one of the areas we're extremely proud of what we are achieving since we launched it at half of last year, the reception we have -- coming from our customer is -- it really -- is really amazing and has been surprising us. The number of subscription was very positive. The great importance of the -- good importance about “Beneficios is, first of all, it helps us to know and understand and have information on the customers that used to pay in cash. And that's about half of our business, especially in Bodega. And once you start gathering data on the customers and the customer is getting a benefit for giving us that access, it help us understand much more their shopping patterns, how they interact between our ecosystem, if there are one -- if they just buy one banner or they purchase in different banners. If they're Bait customer, if they use the health membership, it helps us understand how they are interacting across our ecosystem. Once you have that information, it's -- we consider it like gold because you know exactly who to target and with what proposal you can target and convince to jump into the ecosystem. Also all this information is what has helped us reinforce the value and the information we give to our suppliers through Scintilla that is the new name for our previous Luminate product. But Scintilla gathers all of this information and make it available to suppliers. So, all of these help everyone in the business, suppliers and us understanding much better our customers and help us deliver better offering for our customers. Let me give you a graphical experience. When you start understanding customer, you can see that they restock, for example, toothpaste every 1.5 months. So -- and you start seeing that because it's a pattern. So you will know and understand -- you know exactly when that customer will go into the shopping mission of getting toothpaste inside your store. And it will go back to your store because you also know that customer is a Bait user. So for every purchase they do at the store, they get a benefit in Bait with 3 megas. So for a supplier like Colgate, that information is super important, especially because they can know if they're purchasing their brand or another -- our competitor's brand. So again, it help us understand much better the customer. And by using all this information together with suppliers, we will improve much better our offering. At the end, it will help us, let's say, remove the guessing or the projection of the sales going forward. It will give you much more certainty on what to expect going forward from your own customers? So if you ask me the one thing that really, really encourage me of what we're doing and give me a lot of passion of what we're seeing is this because the potential of this program is incredible.

Can I just make...

Very quick builds. One is, Ben, ultimately, at the end of the day, it translates into market share and capturing a higher share of wallet. And if you see our performance versus in fact this year, versus last 2 years where the ecosystem is picking up, you see the big difference in the numbers in the performance of ANTAD. The second one is the point of -- these things are not unfortunately very quick. We need a long period of time to be able to get significant ascertain from a statistical standpoint -- statistical point in terms of the cost and effect relationship. We are working on that. What gives us a pride is if you look at in terms of market share, accelerated share gains, almost 200 basis points versus ANTAD in 2024. A year ago or 2023 was 50 and the year before was 10 basis points. So I think it's working.

Yes. And let me complement just one more thing is, one of the great benefits about this, that this is a win-win situation. So our customers, what we're hearing from our customers joining Beneficios is that in the past for them, it was quite expensive maybe to go to the cinema or to get a coffee in a premium coffee shop or to go to certain restaurants. And now just because they purchase with us, they start having access to these benefits. So we've been doing a lot of hearing with customers and the value they get from this is they really appreciate it. So it's good. It's very good. We'll see a lot of value going forward.

Our next question is from Mr. Andrew Ruben from Morgan Stanley.

It was helpful you provided some perspectives for the year ahead. Maybe one item I wanted to dig in on a bit is operating expense, the message around single-digit growth and less operating deleverage. So I'm curious if you could break some of that down how you're thinking about the impacts of wages the pace of some of your digital investments and then the efficiency gains, how you see each of those versus this past year when we're looking at 2025 ahead?

Yes. Andrew, for you. Yes, in terms of regarding SG&A, a big component about the difference what you saw last year and what you'll see going forward, and we've talked about that is -- will be around labor. As you know, Andrew, in the last 4 years, the CAGR of labor has been around 20%, the minimal wage salary, which, of course, tends to pull all the other levels of the organization that we have, particularly, of course, in the stores. And U.S., as you probably have heard it for 2025, that minimum wage increase will be 12%. And there's an expectation that to be around 10% in the next 5 years. Still well above inflation, but of course, something that together with the things that we keep constantly doing from an efficient standpoint, and in the company is something that, of course, allows us to be able to leverage better than we have done in the past. We will do, of course, in terms of macroeconomic standpoint where we are today, we will review a few of some investments in terms of prioritization, but I won't reiterate here that at the end of the day, when we think we still very much abide to the long-term view that we have in doubling this business. We're still behind all the growth and strategic investments that we have, be it on the distribution centers, the automatization. We want to continue to expand stores, if not even more remodelings and maintenance of stores for us will be an important investment that we'll continue to do going forward. And eCommerce is a great priority in this company. But of course, we have the ability to navigate the environment here and there, re-prioritizing some investments where needed. And that's why we talked about that we feel that this year, we will see an increase in SG&A more around single digit.

Our next question is from Mr. Antonio Hernandez from Actinver.

Just a quick follow-up regarding the contribution of new businesses. They have been helping profitability. But I just wanted to understand out of the 3 different businesses that you mentioned, maybe if you could provide more info on which one was the most impactful or which one has the most potential to contribute to margins going forward?

I think if we look on stand-alone, Antonio, as you will imagine, on a stand-alone basis, we've talked about that our advertising business and Walmart Connect because of the size of the business that we talked about to you in 2023 that is growing now with rate of almost [indiscernible] year-on-year and the very high industry margins that, of course, itself is the one that has the highest contribution. But Bait is expanding very fast. We've talked about a couple of times in the past that actually it's accretive also on the gross margin, Bait. And actually, it's already a profitable business also on the Financial Solutions -- while we're progressing that in particular money also we're making also with the income and the factoring income helping suppliers. But I will argue the biggest one on a stand-alone basis, advertising and Walmart Connect, but don't forget when it comes to the point of Ben alluded before, at the end of the day, all that we are creating these businesses, the role that also they play ultimately is our ability to capture a bigger share of wallet, i.e., driving increased frequency and the higher ticket, which translates to higher sales and therefore accelerated market share gains. And that's how we tend to look. Not always it's easy to capture all the numbers. How we tend to look at the contribution of the Genius business and verticals. Of course, when you look stand-alone, it's what I was just mentioned to you.

Yes. And let me add on this is, please don't look the ecosystem on a stand-alone basis and separated silo businesses, because it's not what we're doing. It's not in our interest, and it's not what we want to do. The whole idea of the ecosystem is this mutually reinforces benefits and services that will help drive different things. So Connect will help us -- will help us with profitability. But Bait helps on traffic, or our health helps on traffic particular to pharmacy. So each one has their own idea goal on doing this. And maybe we will invest on some of these won't be profitable at all, never ever, and we will subsidize that with other parts of the business, especially in the ecosystem. But the ultimate goal is to share gain of wallet. But it's important to understand that our P&L is changing. The shape of our P&L is changing. And what we want to do with this is generates more space in order to reinvest back into pricing, and start spinning the wheel once again with better prices, everyday low prices. We will have families save money and live better with that, they will come back to our ecosystem. So it's important to reinforce this because we can take -- we can get the wrong idea or things that we're doing if we will look it at a stand-alone basis.

Our next question is from Ms. Irma Sgarz from Goldman Sachs.

I just wanted to go to gross margin for a moment and maybe picking up on the point that you just mentioned that you -- that you're hoping to have the contributions from new businesses enable further price investments. Yet in the release, you made comments about the new business contribution to gross margin now in following quarters being expected to drop through to the margin again. So I was trying to square those 2 things up. Was it just specific in the fourth quarter that you just needed a bit more price investment because of the change in economic environment and maybe the combination of the comp being really hard for the new business contributions? And it evens out a little bit more in the coming quarters? Or is there something else behind it? And I'm also asking about gross margin in light of the higher inventories that you had at year-end, how we should be thinking about you addressing those potentially a few days of excess inventories that you finish 2024 with and whether that could result in some pressures on the gross margin in first quarter?

Thank you very much. Good question and connecting all the dots there. So actually, just now on the Q4 and as Ignacio was saying, we really saw an opportunity to help our customers in this macroeconomic environment and importantly, an opportunity to accelerate market share gains. So that comes to our DNA to our purpose of the company. Does it mean that every single quarter we have to invest and actually put to your words actually derisking the gross margin. It's not the case. I think we need to be prepared that the gross margin can vary by quarter. I actually was looking back. So a couple of quarters, we were talking about and people challenge us whether our gross margins were too high in terms of contributions. Now it's, of course, there's a challenge what I met particular quarter. I think we just have to accept that the business and environment where we operate is very volatile. And then you see volatility on the quarters. I think when you look forward, and that's what we tried to pass in the message that we put in our webcast, looking forward ahead, we still expect in 2025 that our margins, gross margins will see benefit from contribution from new businesses. And of course, we will navigate the quarters and the economic environment, which is expected to be stronger in the second half of the year than it will be in the first half of the year by actually taking the decisions around taking the best price investments or not to us to help our customers navigating deal the year or the turmoil, if you will. I think the inventories just to do the last comment, yes, we are right. We acknowledge this first. We actually have to improve that. We have -- and really is an opportunity. We all look to that as an opportunity to improve our -- also our cash flow. And so I think there is much that we can do there. In terms of what the impact of the markdowns, it's something that we do on a regular basis that we'll have to be able to manage as part of the delivery of our gross margins and investments we make to our customers.

Our next question is from Mr. Bob Ford from Bank of America.

How should we think about the performance in apparel and general merchandise in the quarter? And how are you thinking about strategies and tactics in discretionary categories for this year? And then I was hoping you could also comment a little bit on new store openings in terms of returns versus historical and the concepts in regions that you're most excited of?

Sorry, Rob, can you -- at least I didn't pick up the second question, the new...

New stores.

New stores. Okay.

New stores returns versus historical in the concepts and regions that you're most excited for?

Yes. So I can start with the -- now I already forgot the first one. I was trying to understand the second one, I forgot the first one. So let me start from the second one. I'll come to the first one and you're happy to any of you to build them. In terms of the returns of new stores, Bob, as you can imagine, of course, the returns of new stores in the immediate and short term are not as the same as the one that we already have existing. But the way we really see opportunity, that's where we tend to look at here is there's an opportunity and lots of white spaces to continue in expanding. Often, we get the question and ask guys, if you're actually expanding more in your stores, it doesn't drive cannibalization versus stores that you already have on the ground. The answer is yes, and we have a very sophisticated model. And depending on whatever stores we open and depending the regions and there are some guys, as you know, that we have a lot of white spaces, probably more North and the Southeast. The cannibalization is lower. But many times, the cannibalization will be higher if we actually let a competitor open. So that's when we look at the returns of the new stores. We need to look at the full picture. Of course, looking at stand-alone them versus also what if is actually we are not going there. And therefore, then we play with the diversification of our portfolio that Raúl alluded to, the news that we are going to open versus the other ones that we already have there, and we keep on playing those investments and making decisions what are the best returns on investment. And we do it very often in terms of opening more stores versus remodeling or maintaining the existing stores is an ongoing discussion on this business. At the end of the day, we have to do more of the 2. And the second, which was your first question, Bob, look, apparel for us is very low. I often get that question. Bob, it's very low single digit in the sense of our business. Quite frankly, Apparel is a major opportunity for us and is a major opportunity, particularly online, where we're hardly playing today with that particular business. And with all the things that we're doing on the -- from a tech stack front, on the eCommerce, that's something that we'll be able to be playing better going forward. In terms of GM, it's interesting, the dynamics that you see there. If you actually look at Q4 in particular, November, there was a huge -- so November was very strong with El Fin Irresistible season for everyone, with record years for everyone in the GM with the TVs and toys and so on. And then there has been a bit of a slowdown. I think the people are very smart in terms and savvy understanding when there are best prices to buy these categories. I think what we have to do, Bob, is continue to diversify our portfolio in terms of including GM because we continue to be very strong in a couple of categories, which is TVs, toys, video games, white appliances. I think we have to do more and more of penetrating a few further-- few other categories.

And the opportunity to penetrate those categories comes from our strategy with the marketplace going forward. That is one of our top priorities moving online. So bringing and creating this global marketplace together with the U.S. assortment is something we're building and we're much closer to have in place. And that will help us position ourselves differently to the customers with a much broader offering other than what we have at the stores or in our 1P offering at the moment. So this is how we're seeing GM going forward.

The timing for that greater integration, just out of curiosity?

Well, this is going to be a very important and pivotal year in our technology. We're doing one of the biggest migrations in terms of back end that will allow us at the beginning to join the hallways if you're tracking and following U.S. You can see that U.S. a couple of years ago, they joined the hallway where the customer didn't have to choose between buying groceries and buying extended assortment. It's going to be just one up. The experience is completely transformative. And as you can see, after U.S., this change results start growing much, much faster. This is happening this year for us. It's a big, big back-end technology change and operational change. So we expect that to start adding a lot of value in an e-commerce business and for the whole business going forward.

Yes. And I think just to add a couple of things. On new store growth, I think we believe we're a growth company. We need to double the business faster than we did in the past decade, and we're going to accelerate store openings. No, and that's going to accelerate in all our portfolio. It's not going to -- Bodega will continue to be the greatest number of stores. But Sam's Club, Supercenters and Supermarkets will also have their fair share of that growth portfolio. And I think to your question, discretionary spending for this year, I think we'll wait to see. What I can tell you is we have a meeting every day at 7:30 with Walmart U.S. and Walmart Canada on tariffs. And we're keeping a close eye on that. We're understanding from the U.S., what that impact is; from Canada, what that impact is. Some of the learnings that may apply to the Mexico market in those circumstances. And I think to your point on discretionary spending, I think we'll wait to see, but we're well prepared and we are being proactive to understand our imports and our price points so that it still becomes attractive to the market here in Mexico, no matter the circumstance of the economic environment or the political environment.

Our next question is from Mr. Álvaro García from BTG Pactual.

We can't hear you, Álvaro. I am sorry. You need to speak louder.

Can you hear me, there?

Better.

Little better, all right. A question on expenses. I was wondering if you could maybe provide a bit more detail on the DC build-out you have planned over the next couple of years to maybe give a bit more context on the grow side of things. I think that would be helpful context. And then 2, just to double check on the buyback. I'd love to see it just to double check if you plan on canceling those shares. I'm not sure if you mentioned that earlier in the call or not, but I wasn't -- I wasn't online, but I just want to confirm if the idea is to cancel those shares once they've been bought back?

Yes. Álvaro, let me start quickly from the second one. The answer will be, yes, will not make sense that us being on the market, tapping the market and not canceling the shares. So we will not bring value to the shareholders and not giving the right signal as well. On the first one on DC, basically, as we've talked about that in the past, so these 2 big investments we are doing in El Bajíon and Tlaxcala. They will be opening in 2027. We are opening -- we are already working on them. The is basically just going to transform where we look at our DCs because the level of automation is enormous. In DCs, the idea is, of course, in the country where the cost of doing business, you still can argue versus others still low, but it's increasing and has been increasing a lot significant in the last years. We need to drive a lot of automation in our organization, be it on our distribution centers, be it also in stores and the way we run them efficiently. And that's we are planning to do with the DC, which the cost to serve and will be a lot lower than what we have in the current DCs. But for that, of course, we have to make big investments. But we are here to stay not just for the next 5 years or the 10 years, we are here to stay for the long term. We have this ambition of doubling the business faster than before, which means you need to create gross capacity and the need to be able to operate in a country that will be increasing the cost of doing business.

Yes. And building on that, Álvaro is when you know where the future is going, start investing now, right, to be prepared because once the reality change is going to be too late, investments are big. It takes time to build an automated DC, but I would love to invite everyone when we open it, it's an incredible, incredible experience in seeing them operating and the improvement in efficiency at the store level, not only in supply chain, but at the store level is incredible. So you can get your pallets organized by IL, so you can just download the pallet from the truck and go directly into the shelf without the need of using the backroom and with an efficiency that will help us lower our operational cost by a lot. So you will -- you can expect us doing much more of this type of investments for the long term and with technology, automation and digital mindset going forward.

More than happy to organize with our U.S. colleagues to visit to the one in the U.S. If you guys want, more than happy to organize.

Our next question is from Mr. Froy Mendez from JPMorgan.

Going back to the cash conversion cycle, we did see some lengthening especially in the second half of this year. Just wanted to know your thoughts as on what is driving this lengthening of the cash cycle. And if it's somewhat related to the COFECE’ restrictions that you are -- made to implement?

Yes. Thanks for the question. And the answer is absolutely no, 100% no, the COFECE has zero impact on the discussion on the payment terms on the cash cycle. I think the opportunity is the one I alluded to before, and we mentioned in the webcast is primarily in the days on hand, it's on inventory where we've mentioned before that we have an opportunity to do. And it's a clear priority in the organization and it's something that we can use better our cash and put it to work. And it's something that we are putting a focus in 2025 and to be more disciplined in this area.

And if I may just follow up on Walmart Connect. You have been speaking about the tremendous growth that this business has. Can you give us a sense of the size in dollar terms or peso terms? And if there is a goal on - I don't know what penetration of sales? And how dependent is that on the development of eCommerce?

Yes. So we published -- so in effect, we could give you -- but I will give it at our Walmex Day, I think you can get to the number of Froy. Last year, we said it that was [ MXN 3 billion, $150 million ] you know the growth rate, 27%. I think you can do the math. Last year, what we said it is to the base that we mentioned last year, our ambition is to, indeed, next 5 years to fourfold this business, i.e. 4x bigger than the number that we gave at the end of 2023, so which was roughly $150 million in the next 5 years. And you know the margins of these industry margins. So I think as you can actually make your own calculation around that. I think to your point on eCommerce, we didn't connect, we've always alluded to the fact that today, the part that we do from Walmart Connect in the stores, in the brick-and-mortar is still a little bit more or 2/3 of our business. So 1/3 is actually more digital and eCommerce. And that's also why we are confident in our ability to unleash the potential that I was talking to you because we have a lot of space to grow in the digital area, as our eCommerce business continue to grow and accelerated growth, which is what happens in the -- our mother company in U.S., actually, our mother company in the U.S. when you look at the advertising business pretty much, and I don't like to give a lot of stats, but it's a public number. It's almost 90% comes from the digital space. So that's why we believe that we can unleash that opportunity.

Yes. And let me build on that and to clarify something on how to think about this business going forward. We are not turning our stores or our sites into an advertising business. The advertising business or Connect is something that needs to add value to our customers and need to have a relationship with the customer experience. So you should not expect and we are not going to turn, for example, our stores into a place full of advertising. It doesn't make sense to our customers. So this is why we are building a business that is sustainable, but it adds value to the ecosystem and adds value to our customers, and it needs to add value also to our advertisers or suppliers in this case. And the opportunity for us is how we move this more into digital space rather than the physical that we are stronger today given the opportunity we're seeing that is happening in the U.S. So together with the changes we are doing in our technology and eCommerce business, this should be -- the opportunity is very big, but doing it the right way.

Our next question is from Ms. Renata Cabral from Citi.

My question is regarding Bodega. We saw that the format is performing above the ANTAD, but it's lagging versus other formats in the Walmex. So I would appreciate if you could give some color of the main drivers of ticket traffic or both. And naturally, you know that this is a reflection of the economy, but -- do you have -- do you see a clear opportunity of any change in this format in order to boost same-store sales? And if you see that the current economic environment should take this format this year to continue to be the format with -- amongst the others that will lag? Or if you see opportunities to catch up along 2025?

Sure. Thank you for your question. Like I mentioned before, we saw a better traffic performance in the quarter for Bodega versus quarter 3. So traffic was up. We took some additional measures on price investments that Ignacio and Paulo mentioned, some of these price investments were tailored to the Bodega customer to help know that customer and the environment for the quarter. But we believe, Renata, that the portfolio is well positioned for any economic situation. So Bodega is going to continue. Like I mentioned before, it's winning market share, and it's consistently winning market share and won market share in the quarter and had won market share in the full year. And we believe for this year, whether the economic environment gets tougher or not, that our portfolio will be able to succeed and Bodega is a big part of that. Now our strength in the Bodega formats where Bodega Aurrera Express, we see a good market share gains from an external -- from an amplitude of the market from a proximity standpoint, we see Mi Bodega as well continue in the rural areas to be able to provide good value propositions for our customers and the large format on shopping locations for the missions, Bodega continues to be a good performer in a large format to our customer base. As well, we saw good performance as well in eCommerce. eCommerce is performing strongly in Bodega on demand, as you saw in the transcript for more than 70% growth in El Fin Irresistible for the quarter. So we continue to see good penetration on both Bodega and Mi Bodega on an eCommerce base. And then as a reminder, the ecosystem is a competitive advantage for Bodega as well. Bodega stores represent a large portion of Bait customers and a large portion of Cashi as well of Health. And that continues to complement like Ignacio said, that way we'll complement my core business to add traffic so that my Bodega customer can have more added value services, and continue to see Bodega as not only products, but services and solutions. But we see Bodega with good consistency. We see Bodega with a good value proposition on price, on price leadership, and we expect Bodega to continue to deliver in 2025.

Our next question is from Mr. Andrés Ortiz from BTG Pactual.

[Foreign Language] First of all, I would like to start with a follow-up to Froy's question on inventory. How long would it take for you guys to reach the levels that you are comfortable with? And if you could share some color on which categories are the ones that actually did not sell as well as expected, as you mentioned in your remarks. And second question from my side is, you mentioned this effect on the tax rate. I don't know if you could share some color because it was large enough to offset the pressures that you have below the EBIT line, right? So anything would be helpful here.

Yes. So I think when we talked about your first question, Andrés, I think it's about throughout the year. We have the opportunity to actually reduce inventory levels. We have our internal ambition that we want to be there. We will not necessarily disclose it here, but I think it's throughout or actually, the opportunity to do better on base on inventory -- it's actually in all the categories. Of course, in some of the categories on the general merchandise, we have a bit more inventory. Normally, you have the longer inventory in these categories as you can imagine, there are particular ones on some of this area. But also actually in food, where it's a rotation, which is much more frequently and lots of top items that I think we have the opportunity to be more efficiently and not hold so much of the inventory in terms of foods and consumables. And that's also another area where we want to reduce. At the end of the day, if you want that to be meaningful. And because [indiscernible] customer is still such a big part of our sales in our business, we need to reduce it across. So Andrés, is not exactly in a particular category. In terms of your question was around [ ETR ]. So the ETR as you know, normally around the mid-20s. If the discussion was why in this particular quarter, ETR was lower than the normal mid-20s that we tend to offer. I think we alluded to that in the webcast transcript, so as we review the Andrés, the useful lives and the tax values of our fixed assets, we actually -- we had to recognize it or make an adjustment in terms of our values of our current and deferred taxes. At consolidated level, on the Q4 that has led to -- as we actually put in the transcript a [ 15 million ] impact on net income, which actually meant was and recognition of interest -- significant interest associated to the tax. We also SG&A, a small adjustment one-off related to that, which was partly compensated by a benefit in our effective tax rate. So that benefit on our tax rate, that one-off is actually what pretty much explains our ETR that typically, it's around the mid-20s and this time around, there's a one-off. It was lower as you have seen it, Andrés.

That was the last question. I will now hand over to Mr. Salvador Villaseñor for final comments.

Well, thank you very much for joining us once again, and hope to see you at our Investor Day on March 27. Thank you for your interest in the company as always. And have a good day.

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