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Fabiana Oliver: Good morning, everyone. Let's begin the Lojas Renner S.A. Video Conference. First of all, for those who don't know me, my name is Fabiana Oliver. I joined the Renner team 3 weeks ago as Investor Relations Officer. With me today are Fabio Faccio, our CEO; and Daniel Santos, CFO. Before giving them the floor, I'd like to make some announcements. This video conference call is being recorded and translated simultaneously into English. We will show here the presentation in Portuguese. So for those following the call in English, the English version can be downloaded from the chat and from our IR website. Questions from journalists can be directed to our press office through the number (113) 165-9586. Before proceeding, let me advise you that forward-looking statements relative to the company's business perspectives, projections and operating and financial goals are based on beliefs and assumptions and on information currently available. They are not a guarantee of performance as they depend on circumstances that may or may not occur. During the Q&A, questions may be asked live. With that, I now turn the floor to Fabio.
Fabio Faccio: Good morning. Welcome, Fabi, and thank you all for joining us today. We will share now our results for the third quarter of 2025, the development of our trajectory and our outlook for the future. The initiatives we implemented between 2022 and 2023 to evolve our fashion execution model, fulfillment and omni experience have been contributing to our results since [indiscernible]. The benefits captured also reflected in the higher net income, which increased from approximately BRL 900 million in the last 12 months in September 2023, which increased to BRL 1.4 billion this year, 49% increase while earnings per share grew 59%. In the same period, compound retail sales was 9.6% with a 2.2 percentage point increase in gross margin. Realize went from a negative result of BRL 100 million at the time to a positive BRL 390 million. Our EBITDA margin rose 7.9 percentage points and ROIC rose 4.6 percentage points. The specific performance of Q3 did not alter this trajectory. It mainly reflected the distinct climate dynamics compared to 2024. We had a normal autumn in 2025, which favored the sale of winter items in Q2, but on the other hand, limited their availability at the beginning of Q3. Back then, we decided not to increase the volume of orders for winter items based on our risk return assessment at the time considering possible excess inventory. However, temperatures remained cooler in Q3, which combined with our significant exposure to the South and [ Southeast Asians ] and a cooler start of the spring resulted in a loss of sales opportunities that we estimate between 2 to 3 percentage points. Retail sales in the period grew 4.2% with apparel growing 4.7%. Given the opposite seasonal dynamics between Q2 and Q3 compared to the previous year, on average for these 2 quarters, we grew 11.5% in retail and 12.5% in apparel, maintaining the pace of growth of the year even with this loss of opportunity. In the first 9 months, we grew 11.6% in retail and 12.8% in apparel with a gain in market share. In warm regions, growth in Q3 was well above average. The same happens when we look at the performance of nonseasonal items, which are independent on climate. They also stood out. And this shows how well our collections have been received. Retail gross margin continued its upward trajectory, reaching 55.1%, 56.2% in apparel, up 0.4 and 0.5 percentage points, respectively. This progress also reflects improvements in fashion execution and more accurate fulfillment. In this quarter, Q3 -- given the calendar of some unexpected expenses for the period and given the slower pace of sales, we did not have operational leverage. This does not change the annual dilution trajectory that we began in 2024 and which we are committed to consistently follow in 2025 and in the years to come. It is worth noting that in this cycle where the company finds itself now, our CapEx and OpEx expenses are no longer investments of a structural nature. The prospect of higher sales volumes and efficiency gains is the result of investments made in recent years. Now we start having some opportunities as well to reduce some expenses, and we have already begun work aimed at capturing these opportunities. Realize continued its evolution and contributing to the retail operation acting as a lever for customer loyalty, supported by a healthy portfolio and reduced delinquency, posting a 37% growth in its results. Our consolidated net income was BRL 279 million, an increase of 9% over the previous year and almost up 16% in earnings per share. We generated BRL 473 million in free cash flow. These results provided an ROIC of 14.4% in the last 12 months, an increase of 1.7 percentage points. Our digital channels already account for 17% of sales and their growth can drive the company's profitability. We now have fully integrated online and offline operations at the DC in Sao Paulo. With that, we gained a wider assortment of products and faster availability of items in e-commerce, which provides us with instant feedback on product performance, more agile decision-making, reduced stockouts and improved levels of service. The share of new inventory in the sales that take place over this channel increased by 8 percentage points in the first 9 months, which also contributed to a better gross margin. We have made progress in technology and then creating an increasingly good shopping experience in the stores in addition to continuing with our expansion plan for new cities. So far this year, we have opened 18 new stores, and we will meet our expectation of openings between 30 and 37 units in total for the year, including all of our brands. Our expansion plan is focused on markets that are not yet served. And this store profile is benefiting from SKU fulfillment model. Another point that makes us confident is that our new store models in all business units are proven to be performing above average. And the remodeling of units is also a focus of our investments. The evolution of the omnichannel journey, combined with the expansion of new stores and remodeling of existing ones are important levers for value creation for customers and shareholders. These initiatives have made our company more integrated and flexible to meet new consumer demands and different macroeconomic scenarios. Our net cash position of BRL 1.3 billion, combined with consistent operational generation of free cash flow gives us peace of mind to operate in adverse scenarios and flexibility to continue with strategic investments aimed at driving our growth, while we also create value for our shareholders. Even with a third quarter that was more challenging, the accumulated performance of the last 9 months gives us confidence in the path that we chose. We are not yet halfway through capturing the benefits. Our priority is to accelerate gains to achieve the potential -- the full potential of the model. I would like to thank all of you for your confidence, and I hand the floor over to Daniel.
Daniel dos Santos: Thank you, Fabio. Good morning, everyone. In Q3, retail revenue grew 4.2% and 4.7% in apparel with sales impacted by atypical temperature dynamics, as Fabio already mentioned. However, when we look at Q2 and Q3 combined, apparel grew 12.5% year-on-year. And it is worth remembering that we had a strong basis for comparison in Q3 '24. Despite the negative volume, we saw an improvement in the conversion rate in our stores. Price adjustments to pass on inflation and a greater share of new items in the mix also contributed positively to sales. We will continue to carefully balance prices by monitoring the market and product performance, focusing on the positioning of our brands and customer perception. For the fourth quarter, we expect price adjustments close to inflation. Our digital channel posted 4% growth with a penetration of approximately 17% and achieved SG&A in Q3 similar to that of the physical store operation. We reached a new record number of active customers on our app and our app and website were the most visited among national fashion players, further consolidating our leadership among omni players in the sector. As for Q4, we will have a slight easier basis of comparison in preparing for Black Friday and especially Christmas. As regards to gross margin, we continue to advance even with inflated costs and high interest rates. We ended Q3 with a retail gross margin of 51.1%. Apparel gross margin of 56.2%, also 0.5 percentage point higher. This performance was made possible by efficient inventory management. And here, I highlight the reduction of old items older than 16 weeks, coupled with agility and flexibility in our fulfillment and fashion execution. Price adjustments in line with inflation and an improved mix of assortment and inventory each also contributed to the third quarter. These factors give us confidence that the gross margin for the fourth quarter will be slightly positive compared to 2024. As for expenses, operating expenses grew 7%, above revenue performance. This was a one-off event and selling expenses increased their share by 0.9 percentage points due to lower sales volumes and also to the following factors: increase in personnel expenses resulting from improvements in employee benefits. The transition of the voucher payment model, which led to a one-off increase in expenses. This initiative is important for appreciation and engagement of our teams in line with industry practices. It has brought a positive impact on team retention. And with that the headquarter of sales was higher than expected. But by October, the headcount had already been resized. This combined nonrecurring effect was approximately BRL 7 million in the quarter and impacted sales expenses growth by 1 percentage point. The other factor was higher occupancy expenses. Part of the new contracts and lease renewals were negotiated on a CTO model or total cost of occupancy, which is considered more economically advantageous for the company. With this change, rent, condominium fees and promotion funds are grouped together, forming the CTO, which is accounted for as occupancy expenses, SG&A post-IFRS and not as leasing, amortization and financial charges. This impacted the growth of selling expenses by 0.9 percentage points. However, it had a neutral effect on the company's net income. These one-off effects impacted the leverage for the period by 0.6 percentage points. General and administrative expenses increased by 4.5%, reflecting inflation in the period and higher expenses with personnel benefits, partially offset by lower expenses with restricted stock. Lastly, expenses related to the employee profit sharing program impacted net revenue by 0.2 percentage points. The comparison with the previous year, both for the quarter and the year-to-date was compromised given the nonlinear performance dynamics in 2024. Provisioning for the profit sharing program, or PPR, is based on the accumulated annual results and annual budget rather than based on the achievement of specific targets for a single quarter. In the year-to-date, total EBITDA and net income grew 27%. As mentioned, the PPR over net income for the year should represent around 9% to 13%. We stress our ambition to improve operational leverage in Q4 and in the years to come. We are confident that the investments made will allow us to achieve sales growth that exceeds expenses. And as already mentioned, we have begun working to reduce expenses. Realize delivered another quarter with significant improvements. The result of BRL 79.8 million reflected the continuous improvement in the credit profile of the portfolio. Our robust and accurate credit granting model, combined with a healthy portfolio positions Realize appropriately for the current credit cycle in Brazil. Our over 90 Stage 3 ex regulation closed at 14.7%, 1.3 percentage points lower than the previous year. And our short-term delinquency remains at low levels. As long as the macroeconomic environment remains uncertain, we will continue to offer credit cautiously, focused on less risky profiles, mainly through our private label, ensuring support for retail sales and maintaining the quality of the portfolio. The net effect of Resolution 4.966 was insignificant in the quarter, as we had already indicated in the second quarter earnings call, and this dynamic is likely to continue in Q4. For Q4, we expect Realize to continue its positive performance trajectory, albeit to a lesser extent than in previous periods due to the stronger basis for comparison given the sequential evolution throughout 2024. Total EBITDA grew 3% with EBITDA margin of 19.3%, down by 0.2 percentage points and reflects the challenge in retail operations, partially offset by better results from financial services. Net income increased by 9.4% and also reflects a lower effective tax rate and lower financial results. Earnings per share grew by 15.5%, benefiting from the execution of 85% of the share buyback plan. I'd like to highlight that this year, we have already distributed BRL 1.4 billion in the form of interest on capital and our share buyback program. As for ROIC, the 12-month accumulated ROIC increased by 1.7 percentage points, reaching 14.4%. Thank you very much. I now turn the floor to Fabi.
Fabiana Oliver: [Operator Instructions] First question is from Luiz Guanais with BTG.
Luiz Guanais: I would like to understand the space you see for price increase and ticket increase, and whether we should expect markdowns over the coming quarters. Fabio, you mentioned this Q3 dynamics where markdowns were smaller, also related to the temperature. What should we expect looking forward? And the second question, given the company's cash generation, which continues to be strong and the company's capital structure, how should we think about payout in the future, particularly with this discussion of a possible taxation on dividends in Brazil?
Fabio Faccio: Thank you for the question, Guanais. I would say that when we look at opportunities to increase price in ticket, a part of that is replenishing the price according to inflation. And this has been viable. I think that our prices remain very competitive. And I think that there's still room for that. The competition is working in the same way, and this has been very well accepted and received by consumers because average inflation rate for the sector has been in line or slightly lower than the general inflation rate. When we look at some opportunities to increase ticket by assortment, we've seen that. I think that every now and then, we have explored that. There's an opportunity to explore more opportunities to increase the ticket by product assortment. Also related to that, regarding markdowns, we had a lower level of markdowns over the year with a very effective inventory management. In the third quarter, we even missed some sales opportunities. We could have sold 2 to 3 percentage points more, but on the other hand, we were able to have a higher gross margin. But that led us to a renewed streamlined inventory for the coming cycles. So I would say that both the gain in ticket and margin with a lower -- to a lower level of markdowns continues, and it continues to be an important point. As regards to payout, I think you've seen that the company has had an opportunity to grow with significant investments and with relevant payout, either the distribution of interest on capital, interest on equity or share buyback, which has increased the earnings per share for our shareholders. And I think that we have the right conditions given our robust cash generation to continue to grow, to invest and to continue to have a good level of payout. Daniel, can add to that.
Daniel dos Santos: As regards the taxation on dividends, there are 2 points here. First, we have to wait for the final decision regarding taxation on dividends. This will still be defined. We are evaluating what could possibly change in the dividend distribution this year, considering responsible taxation. But it's something that we haven't come to a conclusion about that. Once we have a definitive response, we'll get back to you. But I stress what Fabio mentioned. This year, we have distributed BRL 1.4 billion either through share buyback or interest on equity. So the company continues to strongly distribute its results to our shareholders. And our commitment is that we will continue to do so in the coming periods.
Fabiana Oliver: Next question from Bob Ford with Bank of America.
Robert Ford: How should we see the benefits of CTO? Rentals are more variable than fixed in the stores and Realize is a pleasant surprise. How should we expect the cost of risk for Realize?
Fabio Faccio: Regarding CTO, well, Bob, this is a more one-off effect in this quarter, perhaps in this year because what we had was some contracts were negotiated in the CTO format. And when we have the CTO model, it's more advantageous in terms of negotiation. However, instead of being considered amortization and interest, it is recorded as an operating expense. So this is something that kind of gets in the way of the comparison. I should tell you that we are actually assessing whether in the future, ideally, we should start bringing you information in the pre-IFRS model, which would allow for a clearer financial assessment. But this is a decision that was made, we will share with you. But this was kind of one-off. And as we feel that this generated an impact, we will explain more on that. And your second question was regarding Realize. What I can tell you is that this evolution we saw in Realize so far is the result of all the adjustments we made in terms of credit granting, the adjustment made regarding our credit granting models which have been shown to be effective. So we are able to offer credit with lower risk. And with that, we had an effective improvement in the positioning of our portfolio. What we believe is that Realize still has a potential and its role to drive the retail operation. And as we have a more appropriate credit moment, I think that we will be able to evolve more positively in our credit granting so that we'll be able to work either to expand the customer base or to foster an even greater ticket increase and greater shopping frequency, which is the big target of Realize to foster retail sales.
Fabiana Oliver: Next question from Vinicius Strano with UBS.
Vinicius Strano: I have 2 questions. First, I'd like to explore expenses a little more this quarter, there was a duplicate expense and also CTO. So I'd like to hear from you where do you see opportunities to have efficiency gains overall. I think that Daniel talked about work to reduce expenses during the presentation. So perhaps you could give us more color on that? And my second question, more regarding sales. You spoke about the impact of 2 to 3 percentage points given the climate. So could you explain how this performance gap happened in colder or warmer stores and how well received were the summer collections? Because that's when we have warm temperatures.
Fabio Faccio: Thank you, Vinicius. Regarding expenses, Daniel mentioned it in our release that we had some one-off duplications and also the CTO, as we explained. But I think that your question is more about opportunities and opportunities happen in 2 aspects. We always say that we have an opportunity to grow sales more than expenses through dilution, and that results from investments made in the past. But these same investments allow for efficiency gains and productivity gains. And we've said this for a while. There's a learning curve involved. And this brings us opportunity to have productivity gains at the stores or at the DC. And in addition to that, we have a lot of investments in technology, AI, more knowledge. And we have seen and we have identified opportunities that go beyond these, both at the operational and administrative levels. And from now, we'll start working to capture those opportunities. And your question also touched on sales. When we spoke about the performance gap, we estimate we could have sold 2 to 3 percentage points more. I would not relate that only to the climate. It was a decision we made because we have this ability to respond to the climate. We have a very flexible model that gives us speed to adapt during the collection. And what happened was we made a decision to avoid overstock, and with the longer duration of cold temperatures, we lost more sales than we imagined in terms of sales opportunities. So if the performance of the year is good, Q3 performance was below our potential and below our expectation. It could have been 2 to 3 percentage points higher. And it was -- and it depended on our decision, we could have done better. And that's why we mentioned that we have adjusted some decision-making windows so that especially in the autumn/winter period, which is a narrower window, we could perform better in other situations. And as performance per location, we normally don't disclose this number. But what I can tell you is that in warmer regions, performance is much superior than the performance in those regions where cold temperatures remain for longer. And this shows that our collection is being well received. And this tends to lose more effect looking forward. As a reminder, when we speak about Q4, 80% of sales in Q4 are concentrated in November and December, mainly Black Friday, Christmas and the holiday season.
Fabiana Oliver: Next question from Danni Eiger with XP.
Danniela Eiger: I have kind of a follow-up question based on your comment, Fabio, of you having the ability to cope with climate adversities and the fact that you made a decision that ended up being the wrong decision because you lost sales. But to understand the future, of course, weather forecast can always change, but we still expect adverse climate conditions until December with more rain. But not just thinking about Q4, but next year, we'll never know whether winter will happen at the right time, at the usual time, if we can say that. I'd like to understand when we are going to start seeing these results of this more agile model because we still see this missing. I think that what you said makes a lot of sense. But the fact that you can react quickly. Well, we had a lot of months with cold weather and perhaps you could have made a different decision or perhaps take more risk regarding inventory. Perhaps you were too conservative. So could you help us understand how the strategy will be to try to have a less -- a story that is less dependent on the climate? It seems that the macroeconomic scenario is not an issue, but in a more challenging macroeconomic scenario, it would be good to know. And speaking about expenses, Daniel spoke about efficiency package. I'd like to understand how much you can reduce expenses. Looking at your expenses as a percentage of sales and comparing with your peers, it is quite robust. So in terms of agility and becoming lighter, what kind of adjustment can you make in addition to avoid the duplications? It would be good to have this kind of visibility given the uncertainty regarding future growth. So perhaps prepare the company for more challenging situations regardless of other factors.
Fabio Faccio: Thank you for the question, Danni. I think that you're correct. But in my answer in the previous question regarding the climate, we don't control the climate, but we control the decisions we make. So we have the tool, we have tools. We have ways to produce quickly and to regulate inventory according to demand and the climate. And every day that goes by, we evolve in that regard. I think that, yes, you're correct, we were conservative. You're right, we were more conservative. That led to some sales opportunities being lost that we estimate at 2 to 3 percentage points. But still, if we look at the collection as a whole, Q2 plus Q3, we posted growth in Q2 plus Q3 of 11.5% in total sales. I haven't seen any other player growing more than that, combining the 2 quarters. So I think that your point is that it could have been better. We missed an opportunity in Q3. But if we were less conservative, we would have been even better. So perhaps the third quarter was slightly below some others. But if you sum the 2, put the 2 together, we were still very positive. There is an opportunity for us to do even better. And it's a decision, not the model. The model can respond to that. The model is ready. We discussed this a lot in-house. We narrowed windows to assess and make decision to be able to use the model even better because we have the model, and we expect to have a better performance regardless of any climate variation or macroeconomic scenario.
Danniela Eiger: When did you change this window, Fabio, just so we can understand when we are going to see this kind of effective result.
Fabio Faccio: In the end of the season, in the end of winter, that's when we improved our processes. And as regards to expenses, and you're also right, we have an expense base that we consider to be high. And that's why in addition to dilution of expenses, we see opportunities to cut down expenses, and Daniel can speak more about that.
Daniel dos Santos: Well, Danni, in the case of expenses, first, let me stress our commitment of diluting expenses over time. So we acknowledge we know that we have a level of expense that regardless of the comparison with other players is higher than the level we operated in the past. It is our goal to sequentially reduce expenses. What we observe is that in addition to the ability to grow sales above expenses, which was not the case in the third quarter for the reasons we mentioned, we have the diagnostics of that. There are some specific areas where we can indeed reduce expenses. We have not sized that. So it's not something we can share with you yet in detail. But what we want to stress is that, yes, there are opportunity for efficiency gains, and we will be pursuing those opportunities. This is not a program that will come in the fourth quarter. It's not a quarter work. It's something that will happen over the fourth quarter and over 2026.
Fabiana Oliver: Next question from Joseph with JPMorgan.
Irma Sgarz: Actually, it's Irma from Goldman Sachs. Well, you've enabled my mic, so I'll ask the question. Going back to Danni's question about the moment, I would like to approach that from a different angle to understand if you're thinking about possible adjustments in building the collections and the assortment to maintain greater flexibility to meet climate requirements. Given all the improvements you've made in logistics and agility of processes, so that you could match the climate that is becoming less and less predictable. My second question is a follow-up to Guanais' question. In terms of capital allocation, whether potential acquisitions are still an opportunity or a possibility? And perhaps you would want to keep greater flexibility in the capital structure looking forward? Or is this water behind the bridge and you're going to focus on organic growth?
Fabio Faccio: Thank you for the question, Irma. I think that as regards to collection adjustments, as you yourself mentioned, that's part of the business. One part of it is having a model that is prepared to make adjustments in quantities and production, and we are prepared for that. we evolved in our decision-making. Another point is assortment. And we mentioned that the performance of more perennial items that are not so seasonal was much superior than the other products. So we have been giving more space for these items. These items are becoming more and more important. They are responding well in different situations. So that was the most difficult part of the model to have the model actually, and we now have it. Now we have to improve decision-making points. And regarding assortment, we have more room for those items that make up the wardrobe. We can have response for winter time with more layers of apparel. We have been doing this in apparel. And more and more, we are prepared to better respond to climate variations. As for potential acquisitions, we have not worked on anything inorganic. We have a lot of organic growth to come from our investments. Our capital structure, as I mentioned, allows us to continue to make these investments in an environment which is still very uncertain and risky. So we prefer to have a more conservative structure at this point to have flexibility in the way in which we invest, in the way in which we operate and at the same time, distributing value to our shareholders. Daniel, do you want to add?
Daniel dos Santos: When you talked about flexibility, it's a key topic, particularly at this moment and in a country, in an economic situation where we know there are always many challenges.
Fabiana Oliver: Now next question from Joseph Giordano with JPMorgan.
Joseph Giordano: Welcome Fabi. I have 2 points. The first, looking at assortment adjustment, I'd like to understand how you see the evolution of lead time decision, the moment that the decision is made to the product be on the shelves. I want to understand the lead time perhaps in winter time, this time is more elastic. And looking at capital allocation, we have dividends. We've talked about that already and accelerating expansions and remodeling. Could you give us more visibility in terms of where do you see the potential to accelerate, particularly at Renner and Youcom and how you see the performance of the refurbishments that you have been carrying out at the stores?
Fabio Faccio: Thank you for the questions, Joseph. Regarding assortment, reactivity and decision points, I think that our lead time has been improving more and more. I would say that in winter time, lead time is always a little longer on average depending on the type of product but compared to spring and summer. And I have to consider that autumn was normal. We had an expectation to have a normal winter time, but winter was more -- was longer. Retrospectively, we should have made the decision to have a greater production. We could have done that even with an average lead time that is slightly longer than summer/spring. So now we are working on the decision points and also to shorten the winter lead times as well to make our responsiveness and flexibility even greater from the standpoint of capital allocation and store openings and store remodeling.
Daniel dos Santos: I'll speak about the opening of stores, and then I will speak about capital allocation and investments. But we are quite pleased both with the new stores and with the new store models. The new stores have been performing well in a cohort that has been performing superiorly compared to the previous cohorts. And Renner that is opening stores in new cities with formats on average slightly smaller than the current average, we have to be accurate in fulfillment by SKU that allows us to have differentiated assortment per store, all of the stores benefit from that. But this store format is the one that is benefiting the most. So in the future, well, looking forward, the performance of these new stores will become even more important. They are performing above average, and we can expect that they will do even better. Regarding remodeling and refurbishment, it is important to say that we have new store models in all of our formats, Renner, Camicado and Youcom. For Renner, for example, if you're in São Paulo, if you want to visit the Morumbi store, which is our most modern one, in Camicado, we have the most updated models in Galleria Mall in Campinas and in Vitória Mall in Espirito Santo. And soon, we'll have more units running on that model. We are refurbishing and remodeling and opening some other stores. And for Youcom, in addition to being a new model, it is a bigger model. We have new stores. The first was in the beginning of the year in Barigui in the city of Curitiba. But recently, we opened or we reopened a refurbished store at Anália Franco Mall in Sao Paulo that doubled the size of the store with a new layout, a new model, bigger selling space with high sales per square meter. I mean that is an investment that makes us very pleased and confident. For Renner, I mentioned the Morumbi store, which is the most up-to-date store, but it is important to highlight that we've been testing this new model for over 2 years. We have a number of new stores with this new model. And we have been improving it actually, and it has been performing better and better. This is proven. We have a large number of stores running with this model, and we have made decisions -- we have decisions to make in each one of them. One important point is that we've been able to renovate the stores at a cost that is 30% lower than last year because we've had these tests and because we understand what really matters more the refurbishments in Renner and Camicado. So we invest less per square meter, and we have a performance of the stores that is better. And both things are very important to us. And Joe, as Fabio mentioned, we have models that have been tested into work. So in terms of capital allocation, investing in expansion and trying to accelerate expansion, both of Renner and Youcom as a priority. And then capital allocation for refurbishment and renovations and remodeling. These are the 2 big pillars of investments for the next 2 to 3 years.
Fabiana Oliver: Next question from Ruben Couto with Santander.
Ruben Couto: I would like to go back to the topic of sales growth. If you could speak about growth of digital GMV, which has seen a good acceleration this quarter. I understand that there is a base effect, but the gap of what online was growing more than brick-and-mortar stores was kind of closed in this quarter. Anything specific about this channel, the marketplace platform being very aggressive. Has this affected you in any way? And what can we expect for Q4, including Black Friday?
Fabio Faccio: Thank you, Ruben. Here's what I can say. We have a share of digital sales, which is quite high, 70%. And what we see is that there has been greater commercial aggressiveness in digital costs. I think that some players are trying to grow more, even the marketplaces are competing more. And we chose to be not that aggressive in inorganic traffic, and that's why growth was not that relevant. It's a balance that we have for growth versus profitability. And I think that we can balance this equation quite well. We can grow the trend we see looking forward, and of course, this will depend on the quarter. But on average, we expect to see greater growth in digital sales than brick-and-mortar sales, but with profitability. This is what we are pursuing. We had slightly more [ timid ] growth in the quarter. This is one-off. And it is a reflection, I should say, of a reality that last year, we had more surplus of inventory and the digital channel has this [indiscernible] of being able to sell these products. And this year, as you mentioned, we missed some sales opportunity, and we didn't have any leftover of inventory, any surplus inventory. So in the digital channel, we didn't have a significant markdown volume this year as we had last year.
Fabiana Oliver: Next question from Rodrigo Gastim with Itaú.
Rodrigo Gastim: I have 2 points. Fabio, please tell us more about this evolution of the quarter. You mentioned a little bit the climate, and we heard a lot of industry feedback of a very hard September. I think it was the worst month of the quarter. Can you tell us about the evolution over the quarter? And now we have the whole of October already closed. Have you seen -- have you perceived any improvement regarding the climate? Or is October following the same pace of the third quarter? And second point, Daniel, about the phasing of retail expenses. My question is, to what extent this was really one-off? And to what extent this depended on an expectation of revenue that fell below expectation? In other words, when you look at Q4 and the setup of expenses you have for Q4 expenses, do you feel comfortable at this level that we will continue to see a dilution? How should we think about this in Q4? These are my 2 points.
Fabio Faccio: Well, we normally don't speak about monthly results or results month by month. But what I have heard in the market in different industries, what I hear is that there was a strong slowdown in September. But to us, we did not have an impact concentrated on just one single month. I think it was kind of distributed for the quarter. Again, we could have sold more. And Daniel will answer the part on expenses, but sales growing more than expenses would help us with that. And we had and we have an opportunity to post even greater growth. So I would say that we had some better months, some worse months, but not the same impact that you heard in other industries and other sectors that I have heard about as well. And as for Q4, we don't envision any dramatic change up or down. What really matters for Q4 is that 80% of it has not happened yet. So it's kind of difficult to affirm, but we have a good expectation for the fourth quarter. We are well prepared with new inventories with a good campaign, excellent products that are being well received with a better performance in those regions where we have a more normalized effect. So I think it is way too early to say, but I think that we have a positive expectation for Q4. Let's see how it is going to play out. Talking about expenses, Daniel, over to you.
Daniel dos Santos: While speaking about expenses, Gastim, since the beginning, we said that Q3 had 2 challenges. One was growth. We knew that we would post a lower growth. And secondly, some expenses that we knew about related to the calendar. Our sales came below our potential, below the expectation, as Fabio mentioned. And as for expenses on the expense side, we had some one-off events that made expenses be slightly above what we had originally designed. So this is kind of the story for the third quarter. Now that was explained. As for the fourth quarter, if we look at the pace of expense growth, Q4 will be the quarter with the lowest expense growth in the year. We believe that with a lower pace of expense increase, we will resume expenses dilution, which is our goal for the year. We've already had an expense dilution year-to-date and Q4 will contribute to that even more. And the idea is that we will continue to dilute the increase of expenses in the subsequent cycles and periods.
Fabiana Oliver: Next question from Pedro Pinto with Bradesco.
Pedro Pinto: And I'm sorry to go back to a point that has been mentioned by Danni and Irma. But I would like to understand what are those initiatives implemented for the coming cycles? You spoke about assortment with Irma. A little bit about the decision-making process in answering Danni's question. I'd like to understand how was the agnostic process related to that? What was wrong in this allocation? I mean, is there any element, any capability that the company still lacks or small adjustments that have been made? I mean, hypothetically, if Q3 were happening again, could you increase sales with a good margin and end the quarter with a balanced inventory? Because as Danni mentioned, temperatures are unpredictable and also winter has a longer lead time. So I just wanted to understand a little better about this diagnostic process and whether you have all the capabilities. And if this were to happen again, whether you could have a different outcome and a better balance if at all this happened again. So that's my first question. The second question is straightforward and easy in terms of people. The company went through a reorganization of the structures and BUs and Fabi was leading the Renner BU. And we didn't know who would lead the other brands. Have you defined these positions? Are there any other gaps related to personnel and people? Anything to share with us? I'd like to have an update on that [indiscernible].
Fabio Faccio: Thank you, Pedro. About the first question, I'll try to shine more light on this topic. We have the capabilities. When we talk about decision points and improving the adjustment of processes. That's the most difficult capability, and we have that capability. We don't need any more investments for that. We have to adjust the decision-making points. When we speak about the estimate that in the third quarter, we could have sold 1 to 3 percentage points more -- 2 to 3 percentage points more. And it's not imagining if we had a better scenario, but it's imagining if we have made the adjustments that we committed to making. But in our hands, I'm not counting on a better scenario or a worse scenario because there are the variations there. But considering the same scenario, operating the capabilities that we have, adjusting processes and everything we've said so far here, we estimate could have an impact of 2 to 3 percentage points, all equal conditions of temperature and pressure. As for people, I spoke about the new structure that we announced here both internally and externally to have everyone on the same page regarding the main changes that we were envisioning. So we had the Renner BU, which was the most important one. We had an important efficiency gain -- we had a productivity gain in the teams with the new organization, not just consolidating the Renner BU, but also removing some corporate issues and distributing them among the corporate divisions. This brought us greater dynamism. We announced the rationale for the other BUs because it is what makes sense to us. But I would say that we're not in a hurry to do that. Some time ago, we started looking for a person to fill that position or haven't chosen yet. There's no urgency in that. And we just mentioned that to explain the strategy, both internally and externally. The position is still open. You asked about other positions. Well, we always make some adjustments here and there, but most of them are well underway. And even in the restructuring as sometimes we get asked, you're bringing somebody from the market, and that gets more visibility, but we're actually filling 80% of our positions with internal succession, even Fabi's case, as you mentioned. Fabi Taccola from the Renner BU, that was an internal movement. And that triggered many other internal movements, and we've been successful in filling most of the positions with internal movements and also bringing new people to add more knowledge.
Fabiana Oliver: Next question from Andrew Ruben with Morgan Stanley.
Andrew Ruben: I think most have been answered, but maybe just to get an update on your Argentina business. Curious how you saw consumption trends throughout the quarter. And now that we start to look forward post the midterm elections, any view on how you expect that business to evolve and what you would need to see to reignite a store growth opportunity in the country?
Fabio Faccio: Andrew, ask in Portuguese since we have interpreting. Andrew was asking about Argentina. And to us, Argentina continues to perform better than in previous years. Just the change in the law to operate in Argentina. We've been able to operate well. Every now and then in Q3, since Argentina is a colder place, it was not the best performance there. We performed better in warmer places, but it is performing better than the average of the cold cities. So Argentina is still posting a good performance. It is a future opportunity for us to expand, and right now, we maintain the 4 units in operation. We are not thinking about expanding in Argentina now because we want to understand the geopolitical stability of Argentina. It seems that the country is on a good path. The country seems to be recovering, and we are responding well as well. So it's a future -- an important future potential for us. We'll just have to wait and see how things will play out there so that we can invest more or just keep what we are investing currently.
Fabiana Oliver: Our last question from João Soares with Citi.
Joao Pedro Soares: Fabi, welcome. I had 2 quick questions, Fabio, to see whether the rationale makes sense, thinking about the gap of the stores in warmer cities. This 3, 4 percentage points, would it make sense to think as the performance gap among the stores? In other words, the average of the stores running at 6%, 7% same-store sales this quarter? And a second quick question. To what extent is the e-commerce margin improving now that you have 17% penetration? What is the EBITDA margin gap now and what it was a year ago so that we can try to understand this efficiency that you're gaining online?
Fabio Faccio: Thank you, João. The gap we have in terms of opportunities missed that we understood we could have sold more in Q3 that accounts for 2 to 3 percentage points, not 3 to 4, okay? All right. But I did understand your rationale. In the warmer cities, we don't break down number per region, but we would say that the performance is significantly higher because we have a higher proportional concentration in cities with a hybrid or colder cities. And that's why we could have sold more regardless of the temperature. With this temperature -- I want to make this clear, with this temperature, we could have sold more. We have the capability to do that. And as for e-commerce margins, we've had gross margin gains, both in brick-and-mortar stores and online stores. We have a decision of where to buy. So what matters to us is the margin of e-commerce and physical stores has increased and total margin has increased as well. So when we look at the operations, we look at sales and cost. And I should say that the online cost today equals the offline cost practically. Of course, it varies month by month, but it's practically the same for online and offline. And we have an expectation that it will be slightly better. So if we understand that digital growth is important, and it is, and it tends to grow slightly more than brick-and-mortar stores because brick-and-mortar stores will grow too. That's why it's only marginally higher. It could be better in terms of the final margin in terms of sales and cost for the full operation. And if that is true, this will be a driver of growth for the company as well.
Joao Pedro Soares: It is super clear, Fabio. And may I ask a follow-up question? Do you think you have corrected those issues in the end of Q3? Should we see October normalize thinking about the gaps? Have the opportunities been captured?
Fabio Faccio: Well, I would say that we've touched on the processes. I think that the biggest opportunity for improvement is for autumn/winter because for spring and summer, the items are less diverse in terms of weight and the production cycle is much faster as well. And these adjustments have been made. And I would say that they are even more important in autumn/winter, but they're already happening, yes.
Fabiana Oliver: With this, we are ending the Q&A session. For the questions we did not have time to answer here, ask the questions to our IR team. I turn the floor to Fabio for the final statements.
Fabio Faccio: Well, again, I'd like to thank all of you for joining us. And I would like to invite you to our Investor Day on December 8. We have sent you a save the date. And in the coming days, we will be sending out the invites with more detail. Thank you very much.
Fabiana Oliver: Thank you. Have a good rest of the day.