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For those who are listening the conference call in English, you also have the option of muting the original audio, which is Portuguese. We would like to inform you that this conference call is being recorded and will be made available at the company's IR site, where you will also see the earnings release. You can download the presentation through 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. To pose a question, please click on the Q&A icon at the bottom of the screen. When you are announced... There will be a request for you to turn on your microphone so that you can pose your question. All questions should be made at a single time. The information contained in this presentation and the forward-looking statements made during this video conference Referring to business outlooks, operational projections and goals of GPA are based on the beliefs and assumptions of the company management and on information currently available. These are no guarantee of performance as they involve risks and they depend on circumstances which may or may not occur. Investors should understand that overall, economic conditions and other operating factors could impact the future performance of GPA and lead to results that differ materially from those expressed in these forward-looking statements. With us today, we have the GPA CEO, Marcelo Pimentel, and the CFO, Guillaume Gra. I will give the floor to Marcelo Pimentel to begin the presentation. A good morning to all of you and thank you for joining us in this earnings call for the second quarter of 23. This is a very important quarter as we have concluded five periods of our turnaround work where we are based on six pillars and 12 strategic projects to recover our business. especially because we have recorded significant strides showing the assertiveness of the changes we have made during this period. These are actions that reflect long-lasting results for the company. In this opening slide, I would like to speak about our gross revenue with a double-digit growth of 14.7%. especially the strong growth of same-store sales that was 6.4 in the consolidated figures. The highlight is Pão de Açúcar with an evolution of 8.6% in the quarter, totaling five sequential periods of growth acceleration showing the consistency of the recovery work and the improvements carried out in the banner with a strategy focus on an increase of penetration of assortment and competitiveness. It is important to highlight the evolution of the EBITDA margin in 0.3 percentage points vis-a-vis the first quarter of 23 and our gross margin that reaches 24.8 0.4 percentage points higher vis-a-vis the first quarter. Regarding the financial indicators, Guillaume will explain them in greater detail. In this next slide, I would like to speak about our strides in each front. the top line has an increase in market share that follows a positive trends in september of last year according to the nielsen figures we have made strides in self-service and in the total market which includes the wholesale formats that shows our adherence of clients to this value proposition of our banner. The premium format was responsible for the greatest evolution of market share with 0.5 percentage points of growth, followed by the mainstream formats with an evolution of 0.3 percentage points. If we consider the evolution only of Pão de Açúcar We grew 1.9 percentage points in the period In the proximity stores, we have had significant market share gains. In the smaller supermarkets in this quarter, we had an advance of 2.6 percentage points. Once again, attesting to how assertive our expansion project is, where we are better positioned with this future vision of a resumption of consumption and an enhanced macro scenario. Other points of highlight are the revision project of the assortment. This has resulted in a reduction of 10% of the total number of SKUs exhibited in the store. We will now focus on the mainstream and proximity formats. This clusterization project has been concluded in 60% of the stores and is accountable for an increase of six percentage points compared to the stores that have not undergone review. Now, this project of availability of products on the shelves has reduced our rupture levels, and these are important to sustain the growth of our sales. We have had an increase in the penetration of perishable products in all of our businesses, which is a fundamental leverage to increase loyalty. Regarding NPS, all of our banners had a significant improvement, which shows that we are looking very judiciously towards the demands of our customers and ensuring that the purchase experience will be the best possible in all channels. This quarter, we had an evolution of 15 points in NPS vis-a-vis the same period in 2022. I would like to speak about the strides in the premium customer base. This is essential in our resumption strategy for Pound de Azúcar. This quarter, this base increased 10% when compared to the same period last year, leveraged by the relaunch of the Pão de Azúcar Mais loyalty program. To end my comments on NPS, we were very satisfied with the award of a GPA in the e-commerce retail and loyalty programs. showing the recognition of customers on the work that is being carried out. In the digital pillar, we have had a growth of almost 10% in our GMV during the period, with a continuous enhancement of profitability. driven by the work of reducing expenses, the close of the James operations, and the sales through the distribution center. We have also reduced the number of non-profitable players in the marketplace. I would like to underscore the double-digit growth in our 3P partnerships, where we are leaders in the supermarket vertical and the main platforms. The result of enhancement of the customer journey in the app that we have worked on in the last quarters now is reflected in an increase of visitors by 65%. I would like to update the expansion project that continues to be underway. We inaugurated 23 stores this quarter, all in the proximity format, And we have 101 stores that we inaugurated last year that have brought in 1.7 billion reais of incremental sales. We also have 81 stores in the inauguration pipeline. To conclude this slide in the profitability pillar, we have had a continuous enhancement of profitability reaching 8.9%. This is the result of the recovery of formats and the new steps we are taking in our formats. In this slide, I would like to speak about ESG and culture, highlighting that gpa reached the goal of having 40 of women in leadership positions this was something we were supposed to reach in 2025 an important stride that shows the commitment of the entire company leadership with gender equality actions and our classification for the second year in the Bloomberg Gender Equality Index as the only national retail sector among 480 companies in the world. When it comes to fighting against climate change, we continue to work with a reduction of scope one and scope two emissions with a 5.8 increase compared to last year. Our goal is to reduce the CO2 emissions 10% compared to 2022. As part of this responsible work to enhance the value chain, we have launched a new line of special products with our brand Qualita that is 100% traceable in the chain. And to conclude, an update on our social impact activities. This quarter, we had 701,000 meals with the addition of fruit, vegetables, and others, and we also carried out a campaign along with the Salvation Army. To conclude this initial moment, I would like to remark on the decision that we have made of repositioning the Comproben stint. 100% of these brands will be transformed. And they will undergo not only a layout change in the facade, but also in terms of their commercial positioning. With this change, we are adapting and enhancing assortment that will now be the same as the extra banner with a focus on our own brand qualita that is responsible for more than 30% of the market share in other markets. and we end the dynamic of sticks and several others, something we had not done before. These conversions will allow for the possibility of making this banner ever more profitable recalling the importance of the extra brand the relationship it have with customers and enhancing the performance of the stores in the eight stores that have undergone this transformation we could already observe a significant improvement not only in NPS but also in sales, which motivates us in terms of the results of this process that should be concluded until the end of the month of August. I would like to conclude my presentation and I will give the floor to Guillaume Gras to speak about the financial indicators for the quarter.

Thank you, Marcelo. Good morning, everyone. Thank you for participating in our earnings call today. First of all, I'd like to highlight that as it happened in the fourth quarter of 2022 and the first quarter of 2023, the results from the exitos groups are accounted for as a discontinued operation. This way, the figures presented below will not show impact from the discontinued operations, except where otherwise stated. Exito will release its results on July the 31st, and the information relative to that can be accessed on Exito's IR website and through the CVM portal as well. Starting on the slide number 10, where we have our total sales for the new GPA Brazil that reached 5.1 billion in Q2 2023, maintaining a strong growth of 14.7%. Considering only the supermarket formats and excluding, therefore, gas stations, revenues were 4.7 billion, resulting in an increase of 16.7%, driven by a robust same-store increase and also by the expansion plan, with the opening of 101 new stores since the beginning of 2022. The same store sales indicator grew by 6.4%, with an emphasis for the Pão de Açúcar brand, which grew by 8.6%, showing steady growth for the fifth consecutive quarter. The effectiveness of the strategy has been proven with a gain in market share since September 2022, and more recently, with the acceleration of these gains in relation to the market. If we include the new stores and also the conversions, the sales increase for Pão de Açúcar reached the strong level of 19.6%. The proximity format, as we call it, showed an increase of 15.5%, maintaining its strong total double-digit growth. driven by the good performance of the new stores. The increase in same-store sales when compared to the strong comparison basis for Q2 2022 reached 5.8%. It is also worth mentioning the significant gain of 2.3% in market share for the format when compared to small-sized supermarkets. showing the relevant competitive edge of our business model. In the mainstream, Mercado Oeste and CompriBank, total sales growth was 15.7%, driven mainly by the conversions performed in 2022. The same store sales increase reached 3.5% with different performances across the different brands that make up our format. The extra brand remained consistent and posted solid same-store growth of 7.1%. This progress with a gaining market share occurs despite this environment of greater direct competition in this mainstream format, stressed by the cooling and the deflation of the price of basic products. which also shows the excellent acceptance by customers of our brand's value proposition. CompreBain showed a decline of 11.5% in same-store sales, impacted by the reduction in volumes after the start of its commercial repositioning, which aims at improving its profitability. As already presented by Marcelo, we started the conversion of the Comprebank stores into Extra Mercado, which should bring a larger and more profitable flow of customers. We will also benefit from a better assortment, from an introduction of the exclusive Qualita brand and a participation in the Club Extra and Stix loyalty programs. As for gas stations, we saw a recovery in volume, with a 25% same-store growth. Due to the reopening of hypermarket stores, which were closed after the transaction with Asahi, in the same-store revenue comparison, we had a decrease of 3.5%, which can be explained by the 24% decrease in the average fuel price when compared to Q2 2022. Finally, in e-commerce, our GMV was 453 million BRLs, a growth of 9.8%, reaching an online penetration of 11.1% of total sales. I would also like to highlight that this growth happens along with a series of initiatives as we search for improved profitability, which includes the closure, of the James platform operation, the reduction of unprofitable sellers in our marketplace, and also the closure of operations that came from our distribution center in Q2 2023. The combination of all these initiatives resulted in a dilution of 5.8 percentage points in our SG&A for this operation when compared to the previous period. On slide number 11 now, we present the financial performance of the Novo GPA Brazil, which excludes the effects of the international scenario. Gross profit reached 1.2 billion with a margin of 24.8%. As can be seen in the upper part of the chart, we presented a margin improvement when compared to the last three quarters. Starting the expected capture of gradual margin gain, with implementation of our strategic plan. These figures reflect store growth, same store growth, mainly in the premium formats, a progress of commercial negotiations as well, also an increase in perishables penetration, as well as a reduction in shrinkage. GPA Brazil's adjusted EBITDA totaled 299 million with an adjusted margin of 6.3%, leading to an increase of 0.3 percentage points when compared to the first quarter of 2023. When we compare with Q2 2022, we presented a dilution of 0.6 percentage points in SG&A, partially offsetting the effects that pressured our gross margin in the year-on-year comparison. following on the presentation on moving on to slide number 12 we come to the consolidated financial numbers ongoing at income saw a decrease of 117 million to a net loss of 322 million although profit before financial results and taxes having remained in line with q2 of 2022 The financial results had a greater negative impact, mainly due to a decrease in financial revenues related to the monetary restatement of receivables from the sale of the hypermarket operation. On the right-hand side of the slide, we present the consolidated net debt that reached 2.9 billion at the end of the period, with a drop of 1.5 billion in the past 12 months and 100 million vis-a-vis the previous quarter. We remain focused on the company's financial deleveraging plan. And in the second quarter, we concluded the sale of 11 units through a sale and leaseback operation, which led to a receipt receipt of 330 million of which 140 million already part of our cash in the second quarter and another 190 million will be part of the cash in the early part of the third quarter. The company continues to have a high cash position at 3.2 billion equivalent to twice the short-term gross debt. On slide 13, we have more details on the evolution of our timeline to segregate the operation of Exitu Group, which is an important step in our deleveraging plan. As can be seen on the slide, since September 2022, we have been moving forward in the process of segregation. And in this week, with the completion of the registration process with the SEC, we made Exitu a publicly traded company in the US. With this, Exitu now becomes a listed company in the three countries where we will list its shares, Colombia, Brazil, and the US. From now on, for the conclusion of the operation with the distribution of shares to GPA shareholders, we only need the approval from Colombian regulators. We expect to complete, remains the same, for the middle of the third quarter. And I close my presentation of the financial numbers. And we can start our Q&A session. We'll now start the Q&A session. Once again, to ask a question, you should click on the Q&A icon in the bottom part of your Zoom screen and then write your question to get in line. As you are announced, a prompt will appear on your screen, and then you can unmute your mic to ask your question. Please, we kindly ask that you ask all the questions at once. Let's have our first question then from Daniela Agne, a sales site analyst from Maxpeak. Daniela, we now unmute your mic for you to ask your question. Go ahead, please. Good morning, everyone. Thank you for taking my question. I have a couple of questions, actually. The first one is about the profitability dynamics. We see a margin under pressure when compared with your track record, especially for gross margin. But you say that this evolution has been happening gradually. And with that, some efficiencies have been captured on the expense front. which help mitigate the effect on the EBITDA margin. So I'd like to understand a little more, how can we think about those margins looking forward? Do you have any initiatives in place? You talk about a zero budget or zero base budget, but I'd like to know what other adjustments are you doing? I know that the company bank will be working with the conversions, so I expect to see some pressures on short-term expenses. You're also revisiting assortment for the Minuto network. What kind of pressure will that bring? So overall, I'd like to understand how can we reconcile all those one-off pressures coming from your strategic adjustments and what can we see in terms of gains going forward in the short term? And a second question has to do with divestment. Can you give us some color on the sales and leaseback operation or a potential sale of gas stations. And also the Exito Group, it caught our attention, their interest in the asset, but then the board rejected that approach. Maybe that's a strategy as you wait for the spinoff to be concluded. So any update on that front will be very, very helpful. Thank you. Well, thank you for your question, Daniela, or questions. I'll do my best here. As for our expectation in terms of gradual improvement in margins, both gross and EBITDA margin, our expectation as we have been announcing every quarter is to continue to improve sequentially. It's important to say and to highlight to all of you that our focus remains on having a turnaround based on a long-lasting approach. We do not want to have peaks and valleys in performance where we have no consolidation or lasting consolidation of all of our strategic plans. So, capture gains should remain with us. With that, we have three important aspects. We continue to focus on those three main aspects since early on. Number one, the first, improving our commercial negotiations, which have been improving quarter on quarter with a stronger partnership with our suppliers, our commercial teams. Also, the conclusion of the assortment work also brings about an expectation that those relationships, those negotiations will improve Even further, because once you have an assortment well-established for Pondia Sucre specifically, we are concluding the sale of those quote-unquote deleted programs. And at the same time, you have products which are more permanent, taking on a leading role on the shelves and becoming consistent sales leaders. And that has to do with the work we did with the supply side. The historic reduction and inventory we've conducted is directly linked to an increase in sales. As we move forward along those lines, we are able to improve that equation. Number two, in terms of margin improvement, comes from an improvement in our rupture performance in our shrinkage performance in 2022, that number was very high. We have gradually improved that shrinkage number as well. And with that, in the last quarter, we launched a new tool, which has already been rolled out across all stores to automate that shrinkage problem. That has brought us a significant improvement of 0.6%. and we expect to be able to reach our target of 1%, which will have a strong and direct impact on our margins. So we continue to wait and expect, and we've seen that happen in the past few months, and we expect, as I say, to continue moving forward in the coming quarters. As for the base zero budget, It's all in line with our plans. We have concluded the personnel restructuring process. That number has actually improved better than we expected. We had talked about a decrease of 100 million in personnel. That number has already exceeded that. We are expecting to reach 130 million, which of course translates into a an improvement in productivity, and of course, also preserving customers' experience at the store level. We do not want to compromise that journey of the customer at the store with the brand. But also at the same time, we have moved forward across all the other expense items within the company. So we continue to be in line with expectations on that front as well. We have no expectation, no of seeing expenses deteriorate. Quite the contrary, we expect to continue to show improvement in performance in terms of expenses.

Regarding investments, as was mentioned, we have concluded a very successful sales back procedure. For this year, we still have two additional processes that we should conclude. The sale of the headquarters and we're thinking about a mix, of course, of selling part of the headquarter and a sales back that may materialize, but this is an asset that we would like to monetize and another very important asset that we have discussed with you of a plot, a very important plot that we have in Rio de Janeiro. All of this is very much aligned with what we had planned and we don't foresee any change or warning regarding our plans now speaking about this we have communicated to the market everything that has been taking place there is nothing that we want to add here regarding the proposals made and the reaction of the board to these proposals presently were significantly committed and engaged with this spinoff process. As Guillaume mentioned, it should materialize during the month of August, and ensuing that we will go on to a second part, a second charter, regarding the monetization of the assets. We have 3.3% of GPA and our expectation is to monetize that stake partially this year and partially in the second quarter next year. Thank you very much. Our next question is from Angel Rubin, a cell side analyst from Morgan Stanley. Once again, you can pose your question. Andrew, you may proceed.

Thanks for the question. I was hoping you could talk more about the impact of food inflation. Wasn't much of a call out at Pao de Açúcar. Wondering maybe if it's even a tailwind for margins based on that product mix and then within your mainstream formats, how you see the inflation backdrop would be very helpful. Thank you.

Thank you, Andrew, for the question. I think that we have spoken about this to the market and GPA does not have any specific privileges when it comes to the retail market as a whole. in the food sector we have been impacted with a bit of deflation especially in the basic grocery part we had an impact on the price of milk vis-a-vis the past and all the part of commodities when we compare this with the previous year Now, obviously, we are faced with a deflation, an important point that I would like to underscore that is a very significant indicator for the future for us. In all of these categories, despite the deflation, we did have a growth in volume. and an increase in market share in these categories and this guarantees the following as this behavior trends to phase out and when we observe this trend when we see a stabilization happening we will be very well positioned to be able to capture a resumption because our volume market share has proven to be highly positive for us thank you very helpful thank you our next question is from Felipe Casimiro, a self-site analyst from Bradesco BBI. Once again, you can pose your question. Felipe, you may proceed. Good morning, Pimentel, Guillaume, and thank you for taking my questions. I would like to have a better understanding of the operational part, the context of slowdown of proximity formats and same store sales. i understand that you have continued to gain market share that there is a deflation in terms of food but the growth is lower than gpa and it seems that the trend is opposite in these two formats is there new is there a new competitive factor that has appeared something that goes beyond your simple base of comparison something that would be helpful for us and in the second question i would like to insist on the proposals for the exito group If you could convey more detail regarding the board discussions, it hasn't been very clear to us which would be an acceptable value in the mindset of Casino. I understand that there is that spinoff purchase, but if we could better understand the metrics that were assessed and which constituted the main problem and of course we can understand your mindset but if we can go more in depth of this perhaps we could understand the company mindset as a whole thank you philippe and thank you for the questions first of all when it comes to the proximity format Now in proximity format, although we have had a reduction in the figures, it is important to underscore that we're doing very well in the expansion, especially in the city of Sao Paulo and in the prime neighborhoods for AB brackets that are highly verticalized. Now in this context, we have had an increase of stores that we want to continue to work on. And we have to see the results as a whole. When you look at the total growth of the proximity format, it is above and beyond 20%. Therefore, and once again, when you mentioned the competition, the Nielsen figures point to the fact that yes, of course, there is competition, but the competition that we see growing does not have a value proposition that will directly impact our value proposition in the Minuto stores. The impact will not be as direct as if we had the same business models. What Nielsen has shown us is that besides our success in figures, we continue to gain market share. As we said in the call, proximity this quarter had an increase of 2.8 percentage points in market share. something very expressive that we had not observed for some time, and we continue to make progress in this area. Of course, as we carry out the enhancements, assortment, the store value proposition, The calculation is not as simple as it was originally where we did not have this business focus. But on the other hand, we are convinced that the expansion will continue to show us the path to increase share. Another point that I would like to highlight is the gross margin of this banner. And it's very important as we did with the online part to adjust growth with profitability. Otherwise, we will be focusing only on growth without an appropriate profitability. What we are attempting to do is to bring the proximity banners closer to what we see in GPA. And we're quite satisfied with the results and growth of the proximity sector. Now regarding the EXITO proposal, allow me to expand a bit on what has already been presented. The decision-making process for the board, and of course you are correct and we did this on purpose in the release of the second proposal is to clarify the parameters based on which we will consider an offer or not. Now, why are we doing this? The spin-off process was a process approved in assembly authorized by shareholders, something that we do have to put in place. Unless something completely different happens, we should not have any changes with what was decided at the General Assembly for this company. Now, given this, we also had a context of the imminence of the spinoff process with an offer that continued to be somewhat vague, nothing that could lead us to taking a decision to protect their shareholders. And I'm not speaking on behalf of the board, but the idea was to change a process that was about to be accepted with a proposal that came at the very last time without concrete elements that could convince the board to analyze it with more clarity. Therefore, this we believe is a responsible response and the shareholders did not accept the proposal. This was the conversation that took place within the board of management. Thank you. Would you like to add anything? Now to reinforce this the offer that we received was insufficient, not only in terms of price, but also in terms of the execution warranties, we did not receive the. acquisition conditions, anything regarding antitrust, a visibility of the timeline for the transaction, nor any financial warranty. Once again, this was an insufficient warranty that made the decision to accept the offer not viable. Thank you. Thank you very much. The next question is from João Sardes, sell-side analyst from Citigroup. Once again, we will turn on your mic. João, you may proceed with the question. Good morning, everybody, and thank you for taking the question. Good morning, Pimentel and Guillaume. We have two questions here. First, a follow-up on your gross margin. When we think about the review of assortment, you are focusing more on perishables, and I understand that you're going to expand FLV, this should lead to an enhancement improvement in gross margin. Please correct me if I am wrong. And what is happening this quarter and if going forward, this will be your focus on assortment. The second question refers to the compre-bem conversion, which is your expectation of purchases per square meter. And in terms of expansion, which will be the marginal return of these new stores, especially focusing on Minuto, which is the main pillar for expansion?

Thank you. Thank you, João. Let's talk about gross margin first. As we mentioned, it's going to be a sequential path of improvement. That's how we expect to move forward. You are correct. The increase in the penetration of perishables within the business as a whole, it is a key driver for that. When we analyze gross margin in detail and look at Pão de Açúcar specifically, where the whole project started and it's now coming to an end, we already have a penetration of 49% for the Pão de Açúcar banner and with a margin improvement for those stores when compared to previous performance levels. Having said that, when you look at the global gross margin level, the assortment process, as we also mentioned before, brings new pressure on the margin because 10% of all SKUs that we had were taken off the list. So they needed to be sold. And in this process, they are sold at a discount, of course, to clean the inventory. That process is gradually coming to an end. And this was part of our plan, right? we should see a continued improvement in our gross margin. But that has not been the case yet. When you look at the final numbers of the plan, as I mentioned, we have as a target, reach a gross margin a few points above what we have now. That's what we expect to achieve. But it's important to have in mind that this is an ongoing process. We need to transition that inventory level. And that also goes for all the other banners. As I mentioned, we closed the assortment management process for Pão de Açúcar and now have started that very same process for the extra banner and for the other proximity banners. As for company Bain, in terms of performance, in the previous quarter, we had worked with eight stores as a pilot program. They perform well. both in sales, but mainly in profitability. We changed our business model. We changed the way we operate, for example, the meat department. We operate the meat department in a partnership with our supplier. Now we operate our meat section just as we do with Extra. We have an internal meat processing plant. All the assortments that Extra operates, which was not available in full for CompreBank, now is an integral part of the assortment for CompreBank, which allows us to increase our own brand assortment for CompreBank. And as a consequence, this will help improve the total margin for that banner. And still on CompreBank, that also simplifies and helps us maintain our focus on the banners that are well-established in the group. Compreband had 30 stores among 700 stores where you had a bit of distraction because you needed to have separate marketing materials, different strategies. But now, under the extra banner, we have one single hub for all of those activities. And without a doubt, the extra banner is much stronger. And we have already proved that as we convert those stores. Customers are accepting well a brand which was already known to them. It's an immediate process. Also, in addition to that, you have a card, the Mercado Extra credit card that already translates into better customer experience, better NPS, something we did not have before, a way of measuring that. And we also have now this banner being seen as a Mercado Extra banner. As for expansion, especially in Sao Paulo and why, we have already mentioned our target public for Minuto is the same target public for the Pão de Açúcar supermarket, the same target public. I buy what I need at Pão de Açúcar and I replenish my home inventory, if I may, at a minuto, where people can walk to replenish their stocks. So we are now finishing our assortment review and this will also help us improve the contribution of that banner to the overall margin of the business. As is, we have no interest in expanding that brand to other states. We see large opportunities still in Sao Paulo where the brand, the banner is strong. Implementation costs are lower because our DCs are here. So the service cost is way cheaper and we want to preserve that and As we understand the local market in Sao Paulo has become saturated, we can still take into consideration going to other states where ponjo suco is already present, but with no proximity format. Thank you for your question. I hope I have addressed your questions. One more thing. So the expectation that you have is that the proximity format will have a positive marginal return, correct? Is that what you're saying? That's what you expect from this new unit, those new units. Now, just to be sure, they already contribute positively. We have no expectations of having that banner only based on sales. That's why we are focused on expansion for the Minuto, not for the Mini Extra, because that proximity banner also services that premium target public, which is a focus of this turnaround process. What we already can see is an increase in contribution margins relative to what we had back in the pilot program back in 2021. In 2022, we already saw significant improvements. In 2023, we see even better improvement There is no expectation on our side. It's actually the opposite. What we expect to see and what we have been working on in terms of expansion is that those stores, those units will contribute significantly to our gross margins in the overall bottom line of the company. OK, thank you. Next question comes from Nicholas. Cell site analyst from JP Morgan. We'll unmute your mic now. You may carry on, Nicolas. Hello, good morning, everyone. Good morning, Marcelo, Guilhom. Thank you for taking my question. Occupation costs is our question. like to understand how do you expect that cost to unfold in the second quarter second half of the year and what you have in mind to try and reduce that number and the second half even for 2024 thank you thank you for your question nicola well our occupation occupation studies well 90 percent of our stores over 90 percent of our stores are have a lease contract. We have an annual renegotiation process to try and mitigate inflation effects. All those contracts are all indexed to the IDC. We expect that burden coming from the lease contracts will maintain and maybe be diluted as we speed up the expansion of our stores. Thank you, Guillaume. Next question comes from Irma, sell side analyst from Goldman Sachs. We'll now unmute your mic. Irma, you can go ahead. Good afternoon or good morning. Most of my questions have been addressed, but I still have to ask about the initiatives that you mentioned about assortment, the breakage, and all the initiatives relative with gross margins. Can you also comment on how we should be thinking about impact on the working capital? What kind of opportunities do you see on that front? And a second question, if you see any sign for a trade up that might happen now given a scenario of deflation. Maybe part of the customers would be returning to a market with more services, more assortment, and leaving behind the cash and carry option. Do you see a trend there or only going forward? Thank you, Irma. As for... initiatives to improve our gross margins. And I'm speaking especially about assortment. It's important to reinforce and remind you all that we had on average 10% of our assortment, which was considered inactive, not productive. Products that would stay a whole year on the shelves, not being sold. And of course, that of course created pressure on working capital, but also created pressure on gross margins because those items at the end of the day will only be sold with a very deep or steep markdown. As we cleaned up that inventory and as we aligned a more long-lasting assortment, we started to see that improvement. What is the beauty of what we're doing in that respect? And I have to give a shout out to the supply team. They have been working really well. We need to have that reduction and you have two challenges coming your way, which is to reduce breakage. In other words, you have a permanent long lasting stock availability. That's a response we're giving to feedback coming from customers as early as last year. There were inconsistencies in that availability level and combining that with a reduction in inventory days. This quarter, we have reduced by 5.5 inventory days when compared to last year. So now we have ideal assortment, assortment at the shelves, combined with an inventory reduction, freeing up more working capital for the company. Also, to free up that working capital, we have also closed the operation at the digital DC, digital sale DC that we have. We moved that to 100% happening through stores. All the supply happened through the stores. With that, we have also reduced dramatically the inventory levels at the DCs to take advantage of the inventories already present at the stores and also make last mile products cheaper. That has helped us not only that, but also has improved customers' experience. Our on-time and full order level has exceeded 100%, which is a significant improvement from what we had. And that's also a result from all that work we are doing on inventory management. So we expect to have that going on and becoming permanent. Another consequence of those efforts have been a reduction in our breakage indicators, which also impact our gross margins. We are now at 0.6 better than we were in the past. So we want to get to at least one percentage point of breakage reduction when compared to the previous year. Those efforts, when you have an ideal assortment, when you respond to clients' needs, when you have a store supply, which is much more assertive with our suppliers and from the DC to the store, you do not need to have the level of markdown we had in the past. All of that is a consequence of those efforts. And as I mentioned, we have a reduction of 5.5 days of inventory days in this quarter.

Regarding the trade-up, what I can say to you is that it's still very difficult to state that we do observe trade up. We have seen the return of the customers to the premium market. And this has been proven through the figures of the growth of our market share, not only with self-service, but as a total component carry over, we have gained market share. And as I mentioned at the beginning, we have grown almost 2.2% in terms of market share. And with the relaunch of the Mize program, what is interesting is that we observe a 10% growth year on year for valuable premium customers. They are the customers that purchase Larger baskets more frequently and with a better profitability it's too early on to speak about the future, but everything points to a resumption of these customers to our premium stores. The next question is from Igor Silva, a cell site analyst from UBSBB. Once again, we will turn on your mic. You may proceed, Igor. Good morning, Marcelo. Good morning, Guillaume. Thank you for taking the question. Most of the questions have been answered, but we still have one more. I would like to hear about the performance of discontinued operations. You referred to losses of 3 million in terms of this, and if you could give us more information regarding this. For the future, the result had three impacts of the discontinued activities. We had a net profit from Exito, but we also had negative impacts from Globex, which works with some of the contingencies of our Via Varejo subsidiary due to labor contingencies and labor contingencies relating to the hypermarket transactions. that continue to impact our results. As we go forward, we should observe a reduction of that impact On the part of the hyper markets, we have more than two thirds of the employees that filed a suit and we're reaching the end of this process. And when it comes to the other activities, for the time being, we cannot foresee any potential impacts. therefore this trend for losses in these activities should have a much lower contribution in the coming quarters thank you thank you very much With this, we would like to close our question and answer session. We return the floor to Marcelo Pimentel for the company's closing remarks. Well, thank you. Once again, I would like to thank all of you for your attendance, for your interest in our second quarter results. I need to underscore that we're in the process of a three year turnaround process. This is not a simple process. It requires dedication, focus and coherency. We still have a great deal to do, but we're convinced that we're on the right path. We're quite enthusiastic with the results attained so far. We have increased revenues, the number of tickets, we have captured new market share, and of course have obtained new customers. We continue to improve the NPS and all of our businesses are operating indicators. continue to perform consistently, which is, of course, crucial for our resumption. We continue to work with commitment to improve our profitability, improving the trade margins, reducing breakage indicators, and seeking an operational cash This quarter we have a significant seasonality with the Women's World Cup, the return to school, Father's Day, the anniversary of Pão de Açúcar now in August. And because of this, I would like to remark with you the Pão de Açúcar anniversary in a partnership with industry stressing the resumption of this banner and giving great visibility to all of our brands, I would like to close by thanking our entire team for their very committed work, for their focus, and nothing would be happening were it not for this highly committed team. I would also like to conclude by taking this moment to thank Guillaume Gra, ho today. concludes his last call. As we have already announced, he will return to France. Thank you so much for the partnership, for your very competent work during these last few years and for your dedication to GPA. Guillaume will be with us until the 31st and we will have Mr. Soft taking over this position as CFO and Once again, congratulations for your success and your future success. Once again, I would like to thank all of you and wish you a very good day. The video conference ends here. The IR department is at your entire disposal should you have any additional doubts. Thank you.