Grupo Comercial Ched Ord

Good morning to all participants and welcome to Grupo Comercial Chedraui's second quarter 2026 conference call. 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 initial comments on Grupo Comercial Chedraui's second quarter financial results by the company's CEO, Mr. Jose Antonio Chedraui, and Chedraui's USA CEO, Carlos Smith. Please begin.

Good morning to all and welcome to our presentation of Grupo Comercial Chedraui's second quarter 2026 financial results. I want to start by commenting that although we can't control the weaker consumer environment we're facing both in Mexico and in the U.S., we can respond by being more focused than ever on having the best operational execution and customer engagement, which are key elements to successfully navigating this environment. I also want to recognize the commitment and dedication of our employees. Thank you for your hard work as it was an essential factor in the 15 basis points increase in our consolidated EBITDA margin in the quarter compared to the same quarter of 2025. In Mexico, consumer spending remains weak, particularly in the Southeast region. were it affected not only by a lack of investment, but also by slowdown in tourism. Our same-store sales growth felt this impact during the quarter, growing by 1.3% compared to the second quarter of 25. Despite soft consumer spending, we continue to outperform on TAD's self-service segment Thank you very much. and Immigration Enforcement, as well as pressure in our customers' budgets due to higher gas prices. Despite the loss of operating leverage at El Super and Fiesta, EBITDA margin improved by 20 basis points compared to the prior year to 8.5%, reflecting expense management and cost efficiencies from our Rancho Cucamanga Distribution Center. We remain confident in our long-term outlook, supported by healthy margin levels, low debt levels, and a strong cash position. These elements continue to support the organic growth strategy as we open one store in the U.S. and 28 in Mexico. Also, CapEx for the first six months of 2026 represented Now, to start our presentation, I will highlight key achievements for the second quarter of 2026. Please turn to slide four. Chedraui Mexico's same-store sales grew 1.3% in the second quarter of 2026, surpassing Antat's decline of minus 0.1% for the 24th consecutive quarter. Chedraui Mexico's total sales increased 5.1% due to higher same-store sales and a 4.4% Consolidated EBITDA margin increased 15 basis points to 9%. Chedraui Mexico's EBITDA margin stood at 9.5%, in line with the second quarter of 25. Chedraui USA's EBITDA margin increased by 20 basis points to 8.5%. Net cash to EBITDA improved to minus 0.09 times in the second quarter of 26 compared to the minus 0.05 times in the second quarter of 25. Our organic growth for the quarter consisted of opening one Tienda Chedraui, 27 Supercitos in Mexico, and one El Super in In the following slides, I will comment in more detail about our consolidated results for the quarter. Please turn to slide 5. Consolidated sales declined 3.9% compared to the same quarter of last year, primarily reflecting the currency translation effect for Chedraui USA sales From a 9.7% appreciation of the Mexican peso against the U.S. dollar. Consolidated EBITDA declined by 2.2%. An EBITDA margin reached 9%, a 15 basis point improvement compared to the second quarter of 25. Despite the loss of operating leverage, we were able to compensate with cost efficiencies From the RCDC Improved supplier conditions in the U.S. Better promotion management in Mexico And strict expense control programs at both Chedraui Mexico and Chedraui USA Turn to slide 6 For our strategic M&A investment and organic growth strategy Continue to support the positive long-term trend Thank you for joining us. Even considering these factors, our long-term strategic focus drove a 179 basis points increase in ROV in the second quarter of 26 compared to the same quarter of 2021. This demonstrates our strong commitment to creating long-term value for our shareholders. In the following slides, Thank you very much. Thank you very much. is that we continue to strengthen our e-commerce penetration to give our customers diverse shopping options. As such, e-commerce sales as a percentage of sales in Mexico increased by 68 basis points to 4.6% in the second quarter of 26 compared to the same quarter of 2025. This performance was driven by Stronger repeat purchase rates across our digital channels and strong third-party performance, mainly from Rapi Turbo, Rapi, Uber Eats, and Didi. Please turn to slide 8. Despite a continued weakness in the consumption environment in Mexico, total sales in the second quarter increased by 5.1%, Thank you for joining us. Carlos, please go ahead. Thank you, Antonio. Good morning, everyone. As Antonio mentioned, Chedraui USA delivered strong results this quarter as we grew EBITDA margin to 8.5%.

A 20 basis point increase from the prior year quarter. This is due in large part to our continued focus on making RCDC operations more efficient while maintaining tight control over expenses across all areas of the business. The customer environment has been challenging with changes to both immigration enforcement policy and SNAP benefit availability, as well as rising fuel prices in the second quarter. Together, these factors negatively impacted same-store sales in the quarter, particularly at El Super and Fiesta, where we experienced a dip in in-store traffic due to those headwinds. At Smart & Final, we are seeing improvements in sales trends, particularly with our business customers, whose larger basket size allowed us to increase our average ticket in the quarter. We believe we are uniquely positioned in the market to serve our business customers and we are actively executing strategic initiatives to expand market share in that channel. Finally, I would like to reiterate that our U.S. business continues operating with healthy margins, a strong balance sheet, and positive cash flow generation, which has allowed us to pay down over $75 million in debt in the last three months. We remain confident that in the medium and long term, Our operations and profitability will continue to improve as we optimize our CDC operations and maintain our disciplined approach to expense control. Now we will review the results of the second quarter. Please turn to slide nine. Chedraui USA's same store sales declined by 2.3% in US dollar terms compared to the same quarter of last year. This is explained mainly by a lower number of transactions at El Super and Fiesta Due to stricter immigration enforcement, which began in Q2 of 2025, and the softer consumer trends resulting from lower SNAP benefit availability and higher fuel prices. At smart and final, same store sales decreased by 0.4% in dollar terms, with customer count down 1.2%, but average ticket up 0.8%, bringing Chedraui USA's overall average ticket size positive for the quarter. Chedraui USA's total sales decreased by 2.1% in dollar terms. In Mexican pesos, the 9.7% translation effect contributed to a sales decline of 11.6%. Please turn to slide 10. EBITDA was slightly up in U.S. dollar terms, but declined 9.5% in Mexican pesos. while EBITDA margin rose 20 basis points to 8.5% as a result of continued expense control across the organization and efficiencies from our CDC and our distribution network. The combined El Super and Fiesta EBITDA margin remains at very healthy levels, even in this complex environment, reaching 8.8% in the second quarter of 2026. Finally, Smart Finals EBITDA margin of 8.3% Thank you, Carlos. We now turn to the consolidated financial results on slide 11. Consolidated sales of 71,035 million pesos