Marcelo Pimentel: Well, when you speak about gross margin, I will answer that question. Well, it’s important to look upon gross margin based on 3 pillars: your relationship with vendors; secondly, your pricing strategy; and thirdly, the issue of markdown. When we’re looking at suppliers, as I mentioned formerly, we are undergoing a process after the discontinuance of Extra to come closer to the supplier based on a new business model. And this will be based on proximity markets and multichannel sales. The work is being done under the leadership of Joaquim and the commercial team. And when it comes to category strategy, it is extremely important to offer the customer an ideal assortment, taking into account the size of the store.
We’re working on clustering of stores, and through this store clustering, thinking of the size of stores, of space, creating plants, and then offering a proposal differently from what was being done. We’re focusing on the reference products, those products that we call never be better, although our value proposition is focused on premium banners, Minuto Pao de Acucar and Pao de Acucar, although we are rebuilding the stores so that they can be a benchmark in food retail in Brazil. We know that we can’t be far away from some products that the customer wants, regardless of their social bracket and price benchmark. We’re referring to 250, 300 products that we monitor very closely. Now how are we working differently? You don’t work on the entire category.
You work on the reference prices and recompose the margin for the rest of the category. This is very important. Secondly, the increase in penetration of perishables, which also aid and abet us in improving the recurrence of visits, loyalty of customers, and enhancing gross margin because perishables naturally offer a better gross margin. And finally, the work that we have mentioned frequently today, a very relevant tireless work in the reduction of inventory. We’re doing this. We have made significant strides, and it’s important to reduce our capital costs, increase turnover, and as a result, of course, also reduce investments that are being made presently in markdowns and breakages because we still are faced with a surplus stock. We’re working towards adapting to this new business model with great speed.
It is through these 3 points that we will attain the improvement expected. Once again, I think that we attained the trough in the fourth quarter. What we see in the first quarter is an improvement upon the fourth quarter, and this should continue in the coming quarters.
Guillaume Gras: Joao, regarding your question about an organic cash generation. I’m going to speak about the operating cash generation. We’re working with a cash breakeven for 2023. To have 3 different impacts going forward: an improvement in our EBITDA; a reduction of inventory, as mentioned by Marcelo, we are between 3 to 5 days of reduction in inventory; and third, the monetization of our main tax credits, especially PIS, COFINS, and ICMS. These are the levers that will enable us to reach a cash breakeven for the Brazilian perimeter this year.
Operator: The next question is from , a sell-side analyst in Portuguese.
Unidentified Analyst: Marcelo, Guillaume, I have 2. Which has been the same-store sales performance per banner in this first quarter vis-a-vis the dynamic of competition of Pao de Acucar in areas where you have the super position of Natural da Terra? Have you seen more favorable sales?
Marcelo Pimentel: , of course, we cannot break down too many details regarding the first quarter. What I can say is that we continue to observe growth in sales and evolution in the month of February, especially in the second fortnight because of Carnival. We had a good month in some areas, in some regions, but somewhat harsher in the region of Sao Paulo and the coastal areas we had a problem with rainfall, and we had heavy rainfall in Sao Paulo during Carnival as well. It could have been better in our opinion. But as a counterpart to this, we have observed highlights, especially in the Rio de Janeiro market because of the operational enhancements and the work that has been carried out. We’re extremely interested in the Rio de Janeiro market. This is a strong brand for both banners for the Extra market, for Pao de Acucar, and we could, of course, benefit from a reality in which the Hortifruti may be undergoing some problems €“ Natural da Terra.
Operator: Our next question is from Irma Sgarz, a sell side analyst from Goldman Sachs.
Irma Sgarz: I have two questions. One on same-store sales. Of course, although it has improved after the third quarter, it is still below the inflation for food. And of course, you mentioned this when speaking about gross margin. What is it that you foresee in terms of price and volume? I understand you made a remark on the clusterization and enhancement in assortment and partnership with suppliers. And of course, this should have an impact on the level of promotions. What still draws attention is that in a more premium format, you’re not able to pass over price. If I could better understand that same-store sales dynamic below the inflation and what we should expect in the coming months, if you would have to break down the effects that are leading to this growth below inflation, which would be the main drivers?
My second question is on the G7 format, which is the percentage of sales in actuality, the percentage of stores that have been refurbished? And by looking at my notes, we have been speaking about the G7 format for the last 5 years. Normally, the retail market renews its formats every 5 to 7 years. I would like to understand if you’re already thinking about a new format or if in some markets, you require an innovation besides the G7 format, perhaps opting for the G9 format, which you have already mentioned. If this will become necessary to take that additional step?
