Grupo Comercial Ched Ord

Good morning to all participants and welcome to Grupo Comercial Chedraui's fourth quarter 2025 commercial conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Participating in the conference call today will be Mr. Jose Antonio Chedraui, CEO of Grupo Comercial Chedraui, Mr. Carlos Smith, CEO of Chedraui USA, Humberto Tafolla CFO and Arturo Velázquez IRO for the company. We will begin the call with the initial comments on Grupo Comercial Chedraui's fourth quarter financial results by the company's CEO, Mr. Jose Antonio Chedraui and Chedraui USA CEO, Carlos Smith. Thank you. You may begin.

Good morning to all and welcome to our presentation of Grupo Comercial Chedraui's fourth quarter 2025 results. I want to begin by sincerely thanking our valued customers for choosing to shop at our stores, especially during this challenging economic environment, both in Mexico and the U.S. Your continued trust inspires us every day. I also want to proudly recognize our employees on wavering dedication to advancing our three strategic pillars throughout 2025. Their commitment to delivering a unique shopping experience, providing the best assortment at the lowest prices, and consistently exceeding expectations has been crucial to strengthening our customers' loyalty. In Mexico, our same-store sales have once again outperformed Antat's self-service segment by 164 basis points, making an outstanding 22nd consecutive quarter of outperformance. For the full year, our same-store sales growth exceeded Antat's self-service by 140 basis points. Making this the fifth consecutive year of remarkable achievement. At Chedraui USA, although sales were impacted by continued immigration enforcement and the U.S. government shut down in October and November, EBITDA margin improved by 178 basis points to 8.6% and by 6 basis points to 6.9% When including additional non-cash accruals made for general liability and workers' compensation claims in the quarter. This was supported by rigorous expense management and efficiencies from our Rancho Cucamanga Distribution Center. Finally, I'm pleased to note that we completed the most aggressive store opening year in Chedraui's history. and we surpassed our store openings target. In Mexico, we opened 65 stores during the quarter for a total of 142 stores in 2025. As such, we ended 2025 with a total of 1,067 stores in Mexico and the US. Our organic expansion will continue throughout 2026. As we expect to open 147 stores in Mexico, of which 17 of these are larger store formats, and the remaining are supercito. While in the U.S., we expect to open five stores, four el super and one fiesta. Now, to start our presentation, please turn to slide four, where I will highlight the achievements of the quarter. Chedraui Mexico's same-store sales grew 3% in the fourth quarter of 2025 and surpassed Antad's 1.4% growth for the 22nd consecutive quarter. Chedraui Mexico's total sales increased 6.9% due to higher same-store sales and a 4.4% sales floor expansion. Consolidated EBITDA increased 101 basis points to 8.6% and 7 basis points to 7.7%, including extraordinary items in the quarter. Chedraui Mexico's EBITDA margin stood 8.7% and 8.5%, including an extraordinary payment to fiscal authorities Chedraui USA's EBITDA margin increased by 178 basis points to 8.6% and 6 basis points to 6.9% including extraordinary non-cash accruals for claim liabilities. Net cash to EBITDA improved to minus 0.28 times In the fourth quarter of 25 compared to the minus point 18 times in the fourth quarter of 24. We accelerated our organic growth in Mexico by opening 65 stores in the quarter for a total of 142 stores in 2025 above target. In the following slides, I will comment in more detail About our fourth quarter results. Turn to slide five, please. During the fourth quarter, consolidated sales declined 3% compared to the fourth quarter of 2024, primarily reflecting the currency translation effect for Chedraui USA sales from a 10% appreciation of the Mexican peso against the US dollar. Consolidated EBITDA, Increase by 9.7% and EBITDA margin stood at 8.6%, a 101 basis point improvement. If extraordinary items for the quarter are included, EBITDA declined 2.2% to 5,793 million pesos, and EBITDA margin rose by 7 basis points to 7.7%. This performance reflects effective inventory and promotional management, as well as a disciplined expense control across all business units. On slide six, our strategic M&A investments and organic growth strategy have continued to support the positive long-term trend in consolidated net income. Over the past four years, net income has achieved a compounded annual growth rate of 17.4%, highlighting the effectiveness of our growth strategy and disciplined financial management. Our return on equity has recently been affected by RCDC transition costs and non-recurring items for the quarter. However, even after considering these factors, our long term strategic focus In the following slides, we will review the main highlights of our businesses in Mexico and in the U.S. On slide 7, our continued commitment to offer the lowest prices and targeted customer promotions with an assortment of products that our clients prefer and a unique shopping experience enable us to achieve a 3% increase in same-store sales, outperforming and TADS self-service segment by 164 basis points in the quarter. During the last several months, we have focused on enhancing our e-commerce strategy To give customers diverse shopping options. As such, our e-commerce sales penetration increased by 70 basis points to 3.9% in the fourth quarter of 25 in Mexico, compared to the same quarter in 2024. This performance was driven by higher customer satisfaction and stronger reprieve In addition to our strong third-party partnerships with platforms such as Uber, Rappi, Didi, and Rappi Turbo, which have continued to enhance our growth. Please turn to slide 8. Despite a weaker than expected consumption environment in Mexico, total sales in the quarter increased 6.9%, Compared to the fourth quarter of 2024, supported by a 3% increase in same-store sales and a 4.4% expansion in sales floor area. As commented, Chedraui Mexico incurred an extraordinary one-time payment to tax authorities corresponding to the revision of prior fiscal years, which impacted EBITDA margin by 20 basis points. EBITDA in the fourth quarter of 2025 increased 8.2% and EBITDA margin expanded by 11 basis points to 8.7%, driven by strict expense control along with enhanced inventory and strategic promotional management, which was able to offset higher labor costs. If the extraordinary item for the quarter is included, Chedraui Mexico's EBITDA grew 5.8% year over year to 3,271 million pesos, while EBITDA margin declined 9 basis points to 8.5% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA, for his comments on our U.S. operations. Carlos, please go ahead.

Thank you, Antonio. Good morning, everyone. Chedraui USA continues to operate in an environment with stricter immigration enforcement, and this quarter was further impacted by the U.S. government shutdown that occurred in October and November. Although we were able to increase our average sales ticket, these events negatively impacted the number of transactions at our stores, bringing our same store sales negative for the quarter. As we stated on last quarter's call, We implemented strict expense controls to help navigate these headwinds, which were effective in mitigating our loss of operating leverage in the quarter. As Antonio referenced earlier, it's important to note that operating expenses were affected by additional non-cash accruals made during the quarter relating to general liability and workers' compensation claims, which impacted EBITDA margin by 171 basis points. While the number of new claims is trending down, the cost to resolve these claims has increased, not only for us, but across the retail industry. We continue to take actions to reduce the frequency and cost of these claims. I would like to highlight our commitment to delivering solid long-term results despite short-term challenges. Despite current trends, both El Super and Fiesta same-store sales have grown considerably over the last four years. When comparing 2025 data with 2021, the same-store sales compounded annual growth rate for El Super is 6.2% and 6.6% for Fiesta. Also, EBITDA margins over the same period increased by nearly 41 basis points for El Super and 310 basis points for Fiesta, even when considering the headwinds we faced in this fourth quarter.