Grupo Comercial Ched Ord

Good morning to all participants and welcome to Grupo Comercial Chedraui's third 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 third quarter financial results by the company's CEO, Mr. Jose Antonio Chedraui, and Chedraui's USA CEO, Carlos Smith.

Good morning to all, and welcome to our presentation of Grupo Comercial Chedraui's third quarter 2026 financial results. During the quarter, The commitment, dedication, and execution capabilities of our employees were instrumental in navigating a challenging environment. Combined with disciplined cost management and ongoing efficiency initiatives, these efforts enabled us to increase our consolidated EBITDA margin by 14 basis points, reaching 8.7%. Demonstrating the resilience and strength of our business model. In Mexico, our same-store sales performance exceeded untapped self-service segment results in five of the seven regions where we operate. North, Southeast, Southwest, Metropolitan and Center. Consumer demand softened further during the quarter, particularly in the Southeast region. which is our most significant market due to the lower public and private investment and a marked slowdown in tourism activities resulting in a marginal decline in Chedraui Mexico same store sales performance for the quarter. At Chedraui USA EBITDA margin improved by 18 basis points year over year reaching 7.5% This performance was driven by ongoing expense control initiatives and operational efficiencies generated through our Rancho Cucamonga Distribution Center. These benefits helped upset the impact of a slowdown in the consumer spending environment, affecting particularly El Super and Fiesta Mart, influenced by immigration enforcement measures www.comercialchedraui.com Representing 3.4% of consolidated sales and in line with our annual investment plan and strategic priorities. Overall, these results underscore the effectiveness of our operational initiatives, our financial discipline, and our ability to continue generating sustainable and profitable growth While successfully navigating a dynamic market environment. Now, to start our presentation, I will highlight key achievements for the third quarter of 2026. Please turn to slide four. Same-store sales in Mexico, in line with Antal, were affected by a weak performance in the Southeast region. Consolidated gross margin increased by 53 basis points, driven mainly by efficiencies at the Rancho Cucamonga Distribution Center and improved cost of goods sold. Consolidated EBITDA margin increased by 14 basis points to 8.7%. Chedraui Mexico's EBITDA margin stood at 9.8% compared with 9.9% in the third quarter of 25. Chedraui USA's EBITDA margin increased by 18 basis points to 7.5%. Net cash to EBITDA improved to minus .13 times in the third quarter of 2026 compared to the minus Consolidated sales floor expansion in the last 12 months grew by 3.5% while sales floor at Chedraui, Mexico grew 4.7%. 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 2% compared to the same quarter of last year, reflecting the currency translation effect for Chedraui USA sales from a 6.2% appreciation of the Mexican peso against the U.S. dollar. For its part, EBITDA declined by only 0.3% while EBITDA margin reached 8.7%. Thank you very much. Thank you very much. Even considering these factors, our long-term strategic focus drove a 99 basis point increase in ROE in the third quarter of 2026 compared to the same quarter of 2021. This demonstrates our strong commitment to creating long-term value for our shareholders. In the following slides, we will review the main highlights of our business in Mexico. On slide seven, During the quarter, same-store sales declined marginally with a performance similar to Antat's self-service segment. We surpassed Antat's same-store sales results in five of the seven regions, center, metropolitan, southeast, southwest, and north. Nonetheless, our strong presence in the southeast of Mexico, which continues to experience softer consumer trends, and the rest of the country is impacting our results. I want to highlight that Supercito continues to grow its same-store sales above mid-single digit, driven by higher customer traffic as a result of our broad product base and competitive pricing strategy. Our e-commerce penetration continues to strengthen, As such, e-commerce sales, as a percentage of sales in Mexico, increased by 57 basis points to 4.4% in the third quarter of 26, compared to the same quarter in 25, boosted by improved sales in both our own channels and third parties, mainly from Rappi Turbo, Rappi, Uber Eats, and Didi. Please turn to slide 8. Despite a continued weakness in consumption trends in Mexico, total sales in the quarter increased by 4.6% compared to the third quarter of 2025, supported by a 4.7% expansion in sales floor area. EBITDA in the quarter grew 4.1% compared to the same period of the previous year. An EBITDA margin stood at 9.8%, Declining by five basis points due to a loss of operating leverage as higher labor costs were offset by your strict expense control program along the strategic promotional and inventory management. 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, and good morning, everyone. As Antonio mentioned, Chedraui USA grew EBITDA margin to 7.5%, an 18 basis point increase to the prior year quarter. Our team is committed to our plan to make RCDC operations more efficient, being great merchants at store level, while maintaining tight expense control across all areas of the business. The U.S. macro environment remains challenging, with changes to both immigration enforcement policy and SNAP benefit availability. along with high fuel prices impacting customer spend. Although while Super and Fiesta showed a slight improvement in sales trends compared to Q2, the tough environment kept same store sales negative for the quarter. On a positive note, the improvements in sales trends for Smart and Final continue and I'm pleased to report that same store sales turned positive for the quarter. We are seeing our strategic initiatives with our business customers pay off where we saw both larger basket sizes and an increase in traffic in the quarter. Chedraui USA's strong balance sheet and positive cash flow generation allowed us to pay down over $127 million in debt in the last 12 months. Additionally, in the third quarter of 26, we opened one El Super store in Las Vegas and one Fiesta store in Houston. 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, while at the same time implementing different strategies to remain front and center to our customers. Now we will review the results of the quarter. Please turn to slide nine. Chedraui USA's same store sales declined by 2% in 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, softer consumer trends resulting from lower SNAP benefit availability, and higher fuel prices. At Smart and Final, same-store sales increased by 0.1% in dollar terms, with customer count down 0.5%, but average ticket up 0.7%. bringing Chedraui USA's overall average ticket size in line with the third quarter of 2025. Chedraui USA's total sales decreased by 1.8% in dollar terms. In Mexican pesos, the 6.2% translation effect contributed to a sales decline of 7.9%. Please turn to slide 10. EBITDA declined marginally in dollar terms and 5.7% in Mexican pesos. Thank you. Thank you. Smart and Finals EBITDA Margin of 7.1% improved by 55 basis points compared to the same quarter of 2025 explained by the efficiencies gained at RCDC and improved supplier negotiations. This concludes our report on the U.S. operations.