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results for the fourth quarter 2022 for gpa for those who require simultaneous translation we have this tool available on the platform for this please click on the interpretation icon globe at the bottom of your screen and choose your preferred language portuguese or english

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For those who are listening to the video conference in English, you can mute the original audio in Portuguese. For this, press Mute Original Audio. This video conference is being recorded and will be available at the RI side of the company, where you will also find the material for this release. It is also possible to download the presentation from the chat icon. During the company presentation, all participants will be in listen-only mode. Ensuing this, we will go on to the question and answer session. Should you wish to pose a question, click on the Q&A icon at the bottom of your screen and write your question to become part of the queue. When you are announced, there will be a request for you to turn on your microphone to ask your question. Please ask all of your questions at the same time. The information contained in this presentation and the forward-looking statements made during this video conference referring to the business outlook, projections, and operational and financial goals for GPA are based on the beliefs and assumptions of the company management as well as on information currently available. These forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore depend on circumstances which may or may not occur. Investors should understand the general economic conditions market conditions and other operational factors could impact the future performance of gpa and lead to results that differ materially from those expressed in the forward-looking statements with us today we have marcelo pimentel ceo and the cfo I will now give the floor to Marcelo Pimentel, who will begin the presentation. Well, thank you, and good morning to all of you. I would like to thank you for your interest in attending our fourth quarter 2022 results call. Since the beginning of the transition year and changes in the GPA strategy, we have recorded imported changes, growth in same-store sales, and an accelerated expansion, two fundamental factors for our growth. In the international perimeter, the business of the Exito Group has had an evolution in the three countries we are present in because of the increase in store traffic and the very good performance of innovative formats besides the multi-channel sales that have a very high share. We have also evolved with the process of segregation of the exito group during the quarter and the beginning of 2023. We have obtained approvals from shareholders and others. We will be attaining another milestone of unharnessing value for the shareholders of GPH. In slide number four, I begin to speak about the main evolution indicators in each of the pillars that are part of our growth strategy. Regarding the top line, we had a growth of 16.8% in total sales and 17.3% in same-store sales vis-à-vis the fourth quarter of 21. In different work fronts that are underway, we have already observed improvements in some of the important indicators of the fourth quarter. Among them, the evolution of the refurbishment of the Pão de Açúcar stores based on the Generation 7. Seventy percent of the stores have been refurbished. a reduction of our breakage in 1.3 percentage points vis-a-vis the fourth quarter of last year, and an increase of 2.79 percentage points in the share of perishables in the total sales. reaching 4.2 percentage points for the Pão de Açúcar banner compared to the fourth quarter of 2021. Perishables records 48% of the sales share, which is fundamental as part of our strategy and the renovation of our business strategy. We continue working with a refresh project that looks upon the value proposal of perishables since the flow of merchandise, their exposure, assortment, and the availability and quality of the product. we have ended up with improvements in profitability and a reduction in breakage. Our goal is to increase the share of the category, reaching a share of 53% at the beginning of next year. In the first quarter of 23, We're going to move forward in the rollout and revision in the clustering of stores, pricing, management of stock and categories. We began in mid-2022. This will unharness more benefits for the operation, and it allows us to think we will have an acceleration of same-store sales, reduction of losses, and, of course, an improvement in customer experience. our second pillar is what guide us regarding the expansion of the level of satisfaction of our customers the nps we have worked in a focused way to mitigate the detractors of nps with a very robust action plan that has led to significant strides and enhancements of 20 points in the global nps in all of our banners vis-a-vis the first semester of 2022 in the digital parameter we have a strategy to speed up our e-commerce and we recorded a growth of 15 year on year compared to 2021 with significant improvements in the service levels that are being presented. We are retail food leaders with 1.7 billion reais for the year, 50% of which is carried out based on our own e-commerce IP. the integration of brick and mortar stores and online stores it continues to move forward we're operating with 600 stores digitally to service more than 30 million customers recorded in our base now this result has been given thrust to based on a strategy based on three points, an increase in assortments, especially perishables, the expansion of availability of delivery schedules, and the expansion of speedy delivery. Nowadays, 70% of our sales are delivered on the same day, and the 60-minute delivery called Praja is already available in 200 stores. We have accelerated the express delivery in 30 minutes in the proximity stores, expanding our partnership with Magalu iFood Shopping, and we have increased by more than 270,000 active users our app, reaching a total of 1.2 million active users per month. In the next slide, I would like to state that we're maintaining our expansion plan, opening 29 new stores between Ponte Azucar and proximity stores. During the year, we have reached the opening of 72 new stores. Regarding the refurbishment, we are at 60% of our store parks that have been revitalized based on the Generation 7 model. And we have an increase in sales in those units. For 2023, we're going to inaugurate 103 new units aligned with our new expansion plan. And until 2024, we will have 309 new stores. 250 will be proximity stores with a focus on Minuto Pão de Azúcar because of its maturity and the greater potential it has for capilarity. This year, we will close down 100% of the – we will refurbish all of the Pão de Azúcar stores. Now, we're going to increase the number of stores in the city of Sao Paulo in verticalized regions. In Pão de Açúcar, our focus are the cities with a high premium potential. where we have a strong presence of the brand, the large centers in the hinterlands of Sao Paulo and some of the cities in the Northeast. Regarding profitability, Guillaume will explain the details to you, therefore I will not refer to this, but I would like to reinforce that we continue on with our work to recover profitability, working along three main lines, an improvement of our commercial lines, a reduction of breakage, and a decrease of expenses. We are gradually evolving in this sense, and it enables us to believe that we will reach an adjusted EBITDA of 8% to 9% until the end of the coming year. I would like to end my presentation on slide six, highlighting the pillars of ESG and culture regarding our goals of consumption of energy we have reached 97 percent medium tension energy that comes from renewable sources we would like to attain 100 in 2024 the scope one and two emissions have more than 40% reduction compared to the base year of 2015. When it comes to fostering diversity and inclusion, I have to highlight the work that has been done to focus on female leadership in the company. We have reached 38.3% of women in leadership positions. and our goal is all point A, and this has been set forth for the year 2024. This allows me to believe that we will comply with our goal of reaching 40% until the end of 2025. When it comes to social impact, we work soundly in terms of donating food, led by the GPA Institute, working along with all of our stores. We have offered more than 4.2 million supplementary meals, working with partner social entities benefiting thousands of companies. This is a work of incentive, and I'm very proud to be part of this. With this, I would like to end my presentation and give the floor to Guillaume, who will speak about our financial highlights.

Thank you, Marcelo. Good morning to everyone. I thank you all for participating in our earnings results of the Group GP. I would like to highlight that as of Q4 2022, the exit operations were considered discontinued operations respecting the IFRS 701. Now, in the accounting statement, we can no longer see the breakout between the P&L lines of Grupo EXITO, but in management, we've reproduced in the release and within this material the vision of EXITO to facilitate the comparison. Starting by slide 8, here you can see the total sales of GPA Brazil, new GPA Brazil, that is $5.3 billion on Q4. This is a growth of 12.3%. Excluding taxes, the sales was $4.9 billion, resulting in an increase of 16.8%, drive-driven growth. by the hypermarket converted stores and by the consistency of customers in our stores in the past quarters. Now, the same store sales indicators grew 6.3%. This is an improvement in all the banners when this is compared to the increase of 6.6% that we observed during Q3 of 2022. I highlight once again the proximity format with a double-digit growth of 17.3% explained by the increase of the passage stores and more number of stores servicing the last mile partners. Now, Pão de Açúcar, our same store, sales total 6.7%. This is a sequential improvement since Q1 2022. This result is a consequence of the increase of perishable penetration and by strong growth of basic groceries. Now, Main Street Banners Mercado X and CompriBank, the growth of same-store sales was 4.1%, an improvement vis-à-vis the growth of 2% of Q3 2022. Now, finally, in e-commerce, we had 448 million. This is a growth of 7%. These have you keep for 2023, excluding sales from hypermarkets during this period and totaling an online penetration of 10.5% of total sales. On slide 9, you can see the EBITDA and the adjusted EBITDA margin and new GPA Brazil. Here we have certain expenses that cannot be classified for the discontinued operations. and partially discontinued of hypermarket operations. Now the adjusted EBITDA total 297 million with an adjusted EBITDA margin of 6.1% during Q4 of 2022. This is a reduction vis-a-vis Q4 of 2021, explained mainly by the pressure of gross margin and profit caused by the strong food inflation of two digits. with the impact on merchandise costs, labor, and also transportation to supplier stores. This effect was partially mitigated by the good performance of the SG&A, which dropped 1.8% when compared to Q4 of 2021. generating a delusion of 2.2 percentage points vis-a-vis the net income. Now, this delusion is consecrated in SG&A with the restructure carried out in the headquarters after the transformation of the hypermarkets and efficiencies that were captured with operation expenses. i would like to highlight that we are focused on gradually recovering our margin according to the projections to the market between eight and nine percent of adjusted margin habitat in 2024 this evolution is based on three main lines commercial margin sdna and in 2022 we observed the first signals of improvement in our sdna something observed on q4 of 2022 and breakage which reduced one percentage point when it was compared to the beginning of the year Now, throughout 2023, we will have important rollouts of projects that will increase these gains, mainly in the commercial margin. Now, the year to date, the adjusted EBITDA was 1.2 billion BRLs with a margin of 7%. We go to slide 10 now. With the total sales of Group Brexit, which presented a solid sale performance on Q4 of 2022, totaling throughout the six consecutive semester double digits in same store sales the gross sales was 7.8 billion this is the same store sales growth of 16 point Vis-a-vis Q4 of 2021, and because of the depreciation of the peso, the total growth demonstrated a drop of 6.8%. In 2020, the XC2 group had a gross revenue of $28.3 billion. In e-commerce, the GMV was $709 billion. million on q4 with an online penetration of 9.5 percent now in same store sales of 16.3 percent was driven by a growth of the three countries In Colombia, the growth of same-store sales growth was 12.1% because of the sound performance of cash and carry during the quarter. In Uruguay, the significant growth of fresh market stores with high share in sales, which was 52.9%, this totaled a same-store sale of 13.7% throughout the quarter. And finally, in Argentina, the growth above inflation was a result of the increase of traffic in the stores, good performance of commercial galleries, and the consolidation of real estate business resulting on the same store sales of 95%. Thank you. Now on slide 11, here you can see the evolution of the EBITDA and adjusted EBITDA of Grupo Exita. That was 8.6% on Q4 with an EBITDA of 599 million BRLs. This is a drop of two points, mainly impacted by a one-off effect during the quarter. with the adjustment of the balance of the stock that affected the gross margin and higher inflation level in these three countries. Now, near today, the EBITDA totaled 1.9 billion reais with an EBITDA adjusted EBITDA of 7.8%. Now, slide 12. This is our net income consolidated resulted where we analyze the exceptional elements that impacted the result of our quarter by approximately 1 billion Reais. These exceptional elements are broken out in three major parts, 900 million Reais regarding tax matters, 300 million reais regarding labor contingencies and 200 regarding restructuring costs. Now, when we see the details of each one of these points now regarding tax matters, there are three points. One, $285 million regarding a decision of the Supreme Court that invalidated our ISM as contingents on energy and limited discredit for essential and productive areas. The other one would be $288 million regarding CSLL provisions after the decision of the STF annulling the exception of payment of this tax that the company enjoyed benefits since the past. And the third point is tax matter that represents $288 million is regarding the tax reform in Colombia with an increase of the deferred income tax in Colombia that would be 10% for 15%. And as a consequence, this impact in the deferred income of the Grupo Éxito. In addition to these taxations, we also had labor contingencies of 309 million reais, reflecting the highest value during the second semester. So our total level provision, total $660 million, which is twice as much as last year. And in 2023, we have a more comfortable provision level. We would like to signalize that we reached the peak of labor contingencies in May of 2022, and there has been a constant drop of these labor contingencies since that year. In skill three, regarding these points, we also had costs with restructurings, which represent 227 million riyals and matters regarding the closing of the hypermarkets, restructuring of stores, and the resizing of our headquarters, and also exito segregation projects. At last, we had positive points that mitigated these effects. Number one, an ICMS credit of 313 million reais. This is the monetary update on fiscal credits and the tax deduction on the exceptional negative adjustments. Now, after all of this, when we analyze these exceptional elements or consolidated net profit goes from minus 102 billion Reais to 146 million Reais, minus 146 million Reais. Now on slide 13, you can see our financial leverage. And here we can see that the company continues with a sound cash position of 3.8 billion, read to 3.7. The short-term net debt, that is 1 billion and 0.5 billion were refinanced by the new CRI issuance last week. Now, on the left-hand chart, we can see that we totaled a net debt of $2 million on Q4 of 2022 with a leverage level of 2.3 times the EBITDA. now when we compare it to q4 of 2021 proforma which excludes the position of group or exit here we can see a drop of approximately 900 million of the net debt and 0.2 percentage points of leverage

the transaction with the supermarkets has been fully concluded and received with an anticipation of the installments of 2023 and 2024 generating a net cash in of 2.2 billion reais which have been allocated towards a reduction of our net debt. However, part of these gains were consumed by the higher interests and the higher costs of the tax and labor contingencies that we were faced with. We continue on to slide number 14, where I would like to remind you the schedule for the separation process of the exito group that we announced last year. Up to present, we have concluded the negotiation with creditors. This has been filed at the CVM. And we're under the process of filing this at the SEC. In February of 2022, we approved in an extraordinary General Assembly a capital reduction for the issuance of new shares for EXITO. The approval was carried out with a record vote of 68% of the shareholders, and the approval of this item was done by 92% of those that were present. Beginning now, we will be waiting for the term of the legal position of creditors that ends on April 15th, and we will wait for the conclusion of the filing at SEC and CVM. We believe that the conclusion should take place in the second semester of 2023. Now, with this, we would like to end the presentation of financial results, and we will now go on to the question and answer session. We would like to remind you that with us, we have Carlos Magro, the CEO from Exito, and Yvonne, the CFO from Exito. We will now go on to the question and answer session. Should you wish to pose a question, please click on the Q&A icon at the bottom of the screen and include your question in the queue. When you are announced, there will be a request for you to turn on your microphone. Please turn on the microphone to pose your question. We request that you ask all of your questions when your microphone is on. Let's go on to the first question from Felipe Casemiro, a sales side analyst from Bradesco BBI. The question, well, we will open up your microphone so that you can pose your question. Felipe, you may proceed, please. We cannot hear Felipe. Felipe if you could please turn on your microphone. It has been opened. I believe that Felipe might be having a technical problem. We'll go back to Felipe. We're going to go on to our next question from Marcela Recha from Credit Suisse. Marcela, we will be turning on your microphone so that you can pose your question. Marcela, you may proceed, please. Good morning, everybody. Thank you for taking my questions. I do have some questions here. First of all, if you could explain and give us more color on your gross margin dynamic. The margin compression has been quite high this quarter. When we compare this with other players, of course, you're different, but there's a great deal of resiliency in your gross margin. If you could explain the dynamic and what we can expect for the year 2023. The second question, when we look at your reinforced base, your EBITDA is negative because of the... growth of other operational lines. If you could give us greater visibility of what is happening in that line item, part of the provisions that you have posted and what we can expect recurrently throughout the year finally you have also spoken about your labor provisions what do they refer to exactly and although you have mentioned that this brings you a more comfortable base for 2023 what is it that we can expect in that front for the year thank you very much Well, good morning, Marcela. Thank you for the question. I'm going to begin speaking about gross margin and then we'll give the floor to Guillaume to speak about EBITDA and labor provisions. Thanks to the work that is being carried out to adjust categories, we do have a very important element that we are carrying out, which is the discontinuance of some categories of suppliers. And this increased the impact of our markdown level in the fourth quarter. And we had a process that expected that. Secondly, and the consequence of this was the higher level of breakage that we expected with an impact on our commercial margins while we were reducing the volume of inventory and the cleaning out of these inventories these breakout indices should decrease finally of course the issue of logistic cost because of the pressure of inflation we had a significant readjustment in this area What we can say is that what you can expect for the year 2023 is a gradual resumption of improvements vis-à-vis the fourth quarter. We do have the expectation of seeing improvements in the first quarter already when compared to the gross margin of the fourth quarter 22. We're working on this at this moment through commercial renegotiations. The commercial team between February and March will be working on the revision of commercial contracts. we're heading towards the third level of adjustments of logistics which should further decrease our logistic cost making it more uh in accordance to our present day moment and we have made adjustments in terms of stock reduction we ended the year 2022 with a reduction of four days and the expectation that is becoming materialized is to further reduce the inventory in the first quarter throughout the year 2023 this will also happen and as a result this will reduce the amounts we have invested in markdown and breakages which of course have an impact on our commercial area. The margin was strongly impacted in the fourth quarter, and it is our understanding that this is part of the trough. Our expectation is for a gradual resumption during the year 2023. Guillaume, well, when it comes to your question on the other revenues and expenses, the operating expenses, we have three different elements, and I imagine that your question refers to Brazil, the continuous perimeter, We have had three significant developments, the restructuring, refurbishing of stores and the headquarters. Secondly, the effect of the contingencies on ICMS and electrical power that we have acknowledged in the continued segment. And the third element, the labor provisions, which once again relate to the continued perimeter these are the three points that had an impact on this line item in revenues and expenses thank you thank you very much Our next question is from Felipe Casemiro, a cell site analyst from Bradesco BBI. Felipe, we will be turning on your audio so that you can pose your question. Felipe, you may proceed, please. Good morning. Good morning, and I hope that everything is working now. I do apologize. The question on the gross margin has been explained very clearly, Pimentel. I would like to explore the dynamic of the online growth, which was 7%, somewhat below our estimates. And what draws attention is the drop of share in total sales compared with the second and third quarters of 2022. I would like to gain a better understanding of the dynamic because you're accelerating your service levels quarter on quarter. You have a higher number of partnerships. I simply would like to understand the dynamic of the growth in the fourth quarter and if something will change in terms of your online penetration for 2023. Thank you, Casemiro. No, nothing will change, and the growth and the penetration fell short of what we expected for the fourth quarter, although we did have some highlights. For example, better and... Black Friday, a historical improvement compared to what we had historically in the digital part in Pão de Açúcar. There were some adjustments that had an impact, the close down of chains and the migration process to GPA. That had an impact because of the transition. But we do observe an upside now when it comes to enhancement. We hope to have a resumption of penetration share and growth. for the year 2023. Now, when it comes to that topic, we have a very positive expectation, which is not based on wishful thinking, but instead on the work that we have carried out. And we hope that we will harvest results and have a greater expansion as well as a greater penetration. we concluded the james migration and as you were able to observe through their figures because of that we went from 40 percent in the first quarter 22 to 70 percent same day deliveries this could not have happened were it not for the migration We have increased in 200 stores. The Prasha delivery carried out in two hours. We have had a significant increase In the mid-year, in the third quarter, we had 890,000 customers per month. We have now reached 1.2 million, and this figure remains constant. And we have made strides. when it comes to click and withdraw deliveries especially in those stores where we have the g7 model we have an aquarium at the entrance of the store enhancing the customer experience a move forward in the partnerships and the expression of digital in proximity stores, especially from express delivery in up to 30 minutes. And we have also expanded our leadership position among our partners. Presently, we are the largest food retail company. leader with i food we're moving forward quickly enhancing our partnerships and we have begun working recently with magazini luisa we observed significant returns we have done this with choppy as well our expectation is that we will resume growth levels that will be much higher beginning in the first quarter and, of course, during the rest of the year, leading us to 15% of penetration and up to 20% of penetration at the end of next year. Very clear. Thank you very much.

Our next question, Daniela Ager, sales side analyst of XP in Portuguese. Daniela, we will open your microphone so you can pose your question. Daniela, you may go on. good morning thank you for taking my question i have a number of questions one would be an update of the leveraging this quarter you were slightly above two times and i believe that you wanted to reach one time by the end of the and to remain in the break-even point after 2024. I would like to understand if this is your target, if you're on track, and if it makes sense to maintain this goal. Two, I want to understand how you see the discount side, because it continues driving your bottom line. Therefore, I would like to understand if you are discussing with Casino to review this business as you did with James, but I would like to understand what you think regarding this operation because it has consistently... pressured your result. And last question would be an update regarding labor contingencies. You mentioned this, and I believe that this was connected to the hyperlayoffs. I don't know where these labor contingencies come from and what can we expect in the future? Well, thank you, Daniela. I am going to respond sales discount, and Guilhom will answer the other point. Well, sales discount, this is a constant matter of discussion amongst us and Casino. We do understand that we are, on the right path to unlock value to our shareholders this started that was the spin-off of acai the exit of hyper markets and now with Grupo Exito, we believe that we're on the right path and that we will find a solution to unlock the value, including here sales discount. We have nothing solid that I can disclose right now. but there is no doubt this is something that we're constantly talking about and we do see an opportunity to unlock this value and when we do it we will improve the gpa results you know Now regarding our deleveraging point, we continue with the same prospects. Regarding drops, I shared this during the last call, and I would like to remind you which are our initiatives in order to reduce our leverage level this year. Number one, it would be the dividend proposal that was carried out by Exito that will generate a cash-in of approximately 230 million reais number two well these are operating initiatives to improve the generation of our operating cash flow that come from the improvement of the editor margin the reduction of inventory from two three five days also monetization of fiscal credits we have nine billion of fiscal credits in our balance 2.2 billion of fiscal themes and 0.8 billion of icms we also There are also initiatives to sell assets, mainly real estate assets, and a non-strategic business like gas stations. And at last, our share... our remaining share in groupo exito after a spin-off of 13 percent so yes we do continue with the prospect of lowering our leverage level for q1 we are affected by a seasonal effect that would be payment to our suppliers regarding Q4. And this creates a slight deterioration on Q4, but by the end of 2023, our perspective is to lower our debt. Now, regarding the labor contingencies, it's important to remember that on 2022, we faced many labor contingencies because of two factors. One was the closing of the hypermarkets, and two, the law changes and made the labor law was changed. Therefore, the plaintiff doesn't have to pay for the cost. Now what we can say is that this peak of entry was in May and June, and now we can see a strong drop of these lawsuits. And now we are also observing the amount of labor lawsuits that have dropped significantly thanks to the agreement policies that we have.

So this would be it. Thank you very much.

Our next question from Andrew Rubin, sales side analyst from Morgan Stanley in English. Andrew, you have the floor.

Andrew, you may go on with your question.

Andrew, I've opened your microphone.

Well, so we'll go to the next question until he fixes his microphone problem. Our next question from Joseph Giordano, Southside Analyst from J.P. Morgan. The question will be posed in Portuguese. Joseph, we are opening your microphone so you can pose your question. Good morning to everyone. Good morning. These are two simple questions. Number one would be to better understand the ICMS liability regarding the electricity bill. I wanted to know if 100% has already been provisioned, and I would like to understand the liabilities regarding the ICMS liability. you're talking about 5.5 million what is the magnitude of this and we see the occupation cost of the company when we eliminate the extra store it seems high when we see the payment of leasing is four or five percent of your revenue i would like to know if there is some legacy payments regarding the the extra operations and at last now Thinking about innovation, you spoke about e-commerce. I would like to understand if you're thinking about exclusivity contracts with platforms like we see with Exito Colombia. now regarding the icms yes 100 of the contingency was provisioned this is these are these are past lawsuits before 2010 because after these are processes before 2010 so this has already been provisioned Now, regarding the cost of occupation and 4.5%, There is no extra effect. It is highly connected of inflation and the valuation of leasings. Therefore, this is a revenue that grows below inflation, and this is why you can see this increase. Now regarding the e-commerce, Joseph, good morning. The answer regarding innovations during the next two years, our focus will be on two three points regarding digitization one would be to increase sales in a profitable way this is to increase the penetration bringing providing a better experience to our customer and also improving the experience of the store, like pickers and delivery process, because we don't want to see friction in these processes. Point number two, regarding customization, everything regarding CRM. We are making progress with CBP, Customer Data Platform, so because we want to pull out of a CRM model that that is a generalized context that is all the same for every. And we want an intelligent bespoke model focused on the existing customer base. And we have over 30 million customers. within this context we can harness and we can be more optimized in terms of the investment and the return over investment therefore we will diminish this CAC 0.3 and And when you talk about exclusiveness, well, this is not our model. We are not going to work toward exclusiveness. We believe that customers have to be able to access spa when, where, whenever they want and how they want. Therefore, we have to strengthen exclusiveness. And here, yes, this is part of our strategy. We want to strengthen our app. Now, the good news is that 70% of... of our purchases come from app and this is a great contact hub for all the multi-channel contacts that we have with our customers now regarding last mouse partners we do see opportunities and and this has materialized And if you can offer and if you can be a positive reference of food retail in these platforms, well, yes, we do see an opportunity of sales growth in them. So within this context, we don't need any exclusiveness with any of them.

Thank you very much. Our next question.

from João Pedro Soares, city cell site analyst. João Pedro, we will open your microphone so you can pose your question. João Pedro, you may pose your question. Thank you, good morning. i have two questions one would be the follow-up regarding your gross margin i would like to understand the competitive context even though it's clear the initiatives that you are pursuing are based in assortment service improvement nonetheless it's important to understand the timing of the improvement of gross margin when you can offer a more premium price and have this resiliency so this doesn't affect your gross margin I don't know if my question is clear and point number two would be I know that it's difficult Guillaume I know that there are many initiatives of asset monetization and naturally there are effects that perhaps And then there's not a clear timing, but it's important to understand that company's capacity to generate cash and the cost of occupation is high, as Joseph just mentioned. So although there's an improvement in the EBITDA margin, I want to see the cash generation. So what can you share with us regarding organic cash generation? Thank you very much. Well, thank you, João.

Well, when you speak about gross margin, I will answer that question. Well, it's important to look upon gross margin based on three 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 Joaquin 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 plans, 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 pound de azúcar and pound de azúcar although we are rebuilding the store 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 and 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 and tireless work in the reduction of inventory. 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 three points that we will attain the improvement expected. Once again, I think that we attained a 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. Good morning, João. regarding your question about an organic cash generation. I'm going to speak about the operating cash generation. We're working with a cash break even for 2023 to have three different impacts going forward and improvement in our EBITDA, a reduction of inventory, as mentioned by Marcelo. We are between three to five 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 break-even for the Brazilian perimeter this year. Thank you. That was very clear. Thank you. The next question is from Thales Piaça, a sell-side analyst in Portuguese. Thales, we're going to turn on your microphone for you to pose your question. You may proceed, Thales.

Good morning, Marcel.

Good morning, Marcelo. Good morning, Guillaume. Thank you for taking my question. I have two, which has been the same story, sales performance per banner in this first quarter vis-a-vis the dynamic of competition of Bande Azucar in areas where you have the super position of Natural Bateja. Have you seen more favorable sales? Thank you. Thales, good morning. 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 Pão de Açúcar. And we could, of course, benefit from a reality in which the hortifruti may be undergoing some problems.

Natural da terra. Well, thank you.

Our next question is from Iman Sanz, a sell-side analyst from Goldman Sachs. Irma, we will be turning on your microphone so that you can pose your question. Irma, you may proceed, please. Good morning and thank you for taking my question. 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 margins. 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 the more premium formats, you're not able to pass over price. If I could better understand that same store sale dynamic below the inflation and what we should expect in the coming months, if you would have to 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 stairs that have been refurbished. And by looking at my notes, we have been speaking about the G7 format for the last five years. normally the retail market renews its formats every five to seven 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. Thank you. Thank you, Irma. When it comes to same-store sales, We still have some impacts, and it is important to understand the value proposition that we're working on very strongly to once again regain our premium customers, something that we have to go back to doing, that we have begun to do, and the NPS is proof of that, is a value proposition, especially for Pão de Açúcar, of becoming a premium food retail for Brazil. Now, in that context, there is a transition, of course. We're reinforcing this. This year, we began investing in the top 30 stores, as we call them. This model has been very positive. They represent 7% above the average sales on average, one EBITDA point above the average. and we're now moving on towards the top 50 stores. We have that expansion until the end of March. We're working on a model that we call the premium circuit, representing the 50 most premium stores in the organization, further expanding our value proposition, not only for the brick and mortar store, reinforcing the brick and mortar store working on the food hall concepts where we offer a ready to eat ready to go concept with greater volumes that we use to have and strengthening the presence of perishables coffee pizzas hamburgers, pasta, we're moving towards new services for our customers. Despite all of this, an important point, and here we have to be convinced of the work we're doing without shortening anything, We truly have to bring back our customers and the vision of our premium customers so they return to the Pão de Açúcar stores and, of course, enjoy the premium value proposition that had suffered a deterioration. Very shortly, we will have news for you regarding an upgrade in the MICE program with a segmentation of customers, a segmentation in our customer standards to further engage these customers. a value proposition of the Pão de Açúcar card, strengthening and awarding consumption in store, not only awarding those that consume outside of the Pão de Açúcar. This is something we changed in the last quarter and beginning of this quarter to make sure that it will be worthwhile buying with a Pão de Açúcar card especially buying on the side and in Pão de Açúcar we have seen an increase of the card share within our stores which is very important and strengthening our proximity strategy We have observed a growth, a timid growth perhaps, but a constant growth quarter on quarter in supermarkets. And we see a double digit growth in the proximity stores. and what we observe is a more aggressive growth in the extra banner supermarket they're more sensitive to prices and this is where we have worked with a commercial and operational partnership with a very strong return we still have to work with a comprehensive banner We carried out a test at the end of last year, beginning of this year, of changing for compre being supermarkets in the coast of Sao Paulo to extra stores. We need more time to prove our thesis here. Perhaps we can bring together that banner and strengthen that. the banner extra, but for the pound de azúcar value proposition, we have to stick to our strategy, although growth has not appeared at the speed that we wished it would.

Regarding G7, I do understand your point, but here... I do not want to create distractions in the organization to stop what they're doing to create a new model. The G7 model Well, it has proved to be a winning model. They are carrying out a number of adjustments together with the commercial team, the store concept team, but they are broadening the presence of perishable goods in the store. They're more notorious, but this is not a moment to launch a new store model. While we still have 40% to do, we're going to conclude what we have. We will strengthen our current model. And, well, we can think about a new model as soon as this is necessary. But we believe that this will not be necessary for the time being. But can you tell me how much of your sales Your G7 is accountable for up to 60, almost 70%. Yes. And we expect 100% until the end of the year. 60% of sales. The next question from Yago Souza Southside, an analyst from Genial e Investimento in Portuguese. Yago, we are opening your microphone so you can pose your question.

Yago, so you may begin. Good morning.

how are you and thank you for taking my question i would like to explore your perspective for easter with the events of americanas on q1 do you see that there is an opportunity to capture more share during this year and what are your prospects for this year if you could give us some flavor regarding this number and thinking about margin How do you intend to work on Easter? Thank you very much. Thank you, Iago. Good morning. Well, Easter, I would say that you have a point. We've discussed this strongly since the World Cup. We have discussed a lot the theme of seasonality. how the consumer's behavior has adapted to the seasonality. What we observed during the World Cup wasn't the update that we expected, be it because of the proximity to Black Friday seasonality because of Christmas and what we see more. is a leveling field in terms of seasonality, 30 days, before the event. Now obviously you always have the last 10 days that represent a greater impact. Now in this sense, well, we are preparing ourselves for an Easter that will start on the month of March. All our preparation is being carried out together with the chocolate industry, Everything regarding fish products that is a great strength of Pão de Açúcar and obviously fresh fish and also codfish. Well, we already have everything planned for the entire month. And this will provide us the opportunity not only to capture the seasonality, not only exclusively depending on the last 10 days that come before the event, but also to better level our margin because as you're able to sell more products, During the preseason, obviously, you pull out of the seasonality with lower volume with a less need of marking down prices. Now, speaking specifically about Easter this year, What we are doing together with the industry, yes, we have been able to acquire an additional volume than what traditionally we have. We have closely followed the industry. Now everything. regarding chocolates chocolate bars everything connected to that category as a whole has surprised us positively yesterday we were seeing these numbers for example candies have grown by double digits something surprising and this is because of the adjustments that we carried out on the g7 stores we put all the sweets in the front This is, of course, close to the PDV, the last point of contact where the customer, where the impulse purchase takes place. And we've seen a positive response in sales and in margins for this category. So, yes, stores are being prepared now during the first week. of March, and for the first time, we are going to carry it out, encompassing tests in the proximity stores. Traditionally, we don't explore the proximity store because of physical space. easter and we do believe that here we can offer a more reduced assortment but more relevant in these stores and we're going to carry out this testing here and we want to be positively surprised due to the work and the engagement of the entire team thank you very much Our Q&A session has come to an end. And now I would like to hand it over back to Marcelo Pimentel for his final remarks. Thank you very much. I thank you once again for participating. I would like to strengthen that I'm reassured with all the progress carried out last year. We are aligned with the turnaround process that we started in April. We've recorded important progress. like the recovery of growth. Our EBITDA has also improved the expansion plan and the commitment of opening over 100 stores this year, in addition to the digital growth that will surpass double digits. There is a lot to do still, there is no doubt. Nonetheless, we are committed to continue developing our strategy to recover the GPA that we want to be a supermarket company, a reference in the premium segment with a sustainable model. We've worked with discipline to overcome and I am sure that we're on the right path. I would also like to thank the dedication of all the team that has been extremely important for our evolution process within GPA. Thank you very much and have an excellent day. Our video conference call has come to an end. The Investor Relations Department is at your disposal to answer any further questions. Thank you very much to all participants and have a very good day.