Jeronimo Martins Pe

Good morning, ladies and gentlemen, and thank you for joining this call to present our first quarter results. As a reminder, in our corporate website, you can find the results release, a slide presentation, and a fact sheet for the period. I would also like to highlight that in the appendix of this presentation, we have included the next three years' targets for each of our ESG pillars, promoting good health through food, respecting the environment, sourcing responsibly, being a benchmark employer, and supporting surrounding communities. Our banner started 2024 with strong market positions and prepared to operate against the backdrop of declining food inflation and high-cost inflation. We were aware that this combination would further increase competition in the markets, as all peers would need to fight for sales in a scenario of fading inflation. This was particularly visible in Poland, where competition has intensified with a heightened focus on price communication. Determined to maintain price competitiveness, all our banners grew like-for-like sales volume in the quarter, despite having operated with basket deflation, in the case of Biedronka and Tingo2, or with inflation close to zero, as it happened in Recheio and Ara. The very good sales performance allowed EBTA to grow in value. Nonetheless, as anticipated, EBTA margin was pressured and declined 26 basis points at consolidated levels. We ended March preserving a solid balance sheet, including a net cash position of 1 billion euros when excluding capitalized leases. I would like to remind you that the performance in the quarter was further supported by a positive calendar effect created by the leap year and the earlier Easter season, and by a favorable foreign exchange when translated in euros. Given the continuing decline of food inflation and the uplift of the minimum wages in the three countries, 17.8% in Poland, 7.9% in Portugal, and 12.1% in Colombia, the imbalance between the evolution of food prices and the evolution of costs was a common challenge in our three geographies. In Poland, household spending does not yet reflect the rise in real income, with consumers remaining extremely sensitive to price and promotions driven. As a result, the market has turned more competitive than ever. In Portugal, consumers remain strongly receptive to promotional activities, and in Colombia, the pressure on families is visible. Despite the fast recent fall in food inflation, prices continue to be high and there are no signs of improvements in the volume of food baskets. The results mirror the execution of our strategy and also the market context. Price investments drove pressure on gross margin. The impact of cost increases was mitigated by sales growth with the support of the calendar effect. All in all, Despite EBITDA margin pressure, EBITDA in value grew 13.9% or 5.1% at constant exchange rates. On the items below the EBITDA line, a couple of comments. The growth in financial costs that will persist throughout the year reflects, on top of the lease's capitalization effect, the increase in added debt financing that is denominated in Colombian pesos as established by the Group's Financing Risk Policy. This policy establishes that, as much as possible, businesses are to be financed in the currency in which they invest and generate cash flow. Other losses that were at 49 million euros include an initial endowment of 40 million euros to the Jerónimo Martins Foundation, which was created mid-March this year. This foundation intends to develop its mission among the group's employees and their families, and in addition, the community in general, especially in response to situations of socioeconomic vulnerability. All in all, net earnings, excluding other profits and losses of non-recurrent nature, were broadly in line with the same quarter of the prior year. Cash flow generated in the period was minus 168 million euros, with the negative effects over the working capital, with both the usual post-Christmas seasonal outflow and deflation register. The positive effect of Easter by the end of the quarter allowed for some mitigation. We ended March with a positive cash position of 1 billion euros. To remind you that the dividends in the total amount of 411.6 million euros were approved at our AGM last week, and will be paid on the 15th of May. I will now guide you through our sales performance. All banners contributed to group sales growth, leading to a 5.5% like-for-like in the period, primarily driven by the increasing number of clients attracted by very competitive prices as our main banners operated with basket deflation. As already mentioned, this performance was also supported by a positive calendar effect. Total sales grew by 18.6% or 9.9% at constant exchange rates. Biedronka kept a relentless commercial dynamic to fuel its intense promotional activity and delivered sound like-for-like despite having operated with a relevant negative inflation in its basket over the period. In fact, Sales volume growth was the key driver of the performance. Our main banner continued to register a relevant gap versus the country's food inflation. Sales growth came also from expansion and from remodeled stores. Over the three months, the banner opened 28 stores, 27 net additions, and refurbished 62 locations. All in all, This remarkable performance led Viadronka to once again gain market share, plus 0.7 percentage points year-to-date February, according to GFK. Hebe grew total sales in local currency by 28%, 18.2% like-for-like. The solid sales performance reflected the strength of the banner's value proposition and its investment in growing in the online channel, which represented 20% of total sales in the quarter. Our health and beauty banner opened seven new stores and in March with 350 locations in Poland and two flagship stores in Prague. In Portugal, consumer demand remains subdued with a cautious consumer favoring promotions and saving opportunities. Pingu2 posted an 8.3% sales growth and a 9.5% like for like excluding fuel. despite having operated with deflation over the quarter. The continuous promotional activity and the increased contribution of meal solutions drove this robust performance. Investment was focused on rolling out the all-about food store concept, and 19 stores were remodeled in Q1. The banner opened one store in the period. Recheio delivered a solid performance against a very demanding comparison versus Q1 2023, also considering some pressure felt on the Oreca segment that had been growing significantly since the pandemic period. Our cash and carry business remodeled one of its stores in the south of Portugal, continuing to reinforce its overall value proposition. In Colombia, the recent inflationary period was more accentuated and lasted longer than in Portugal or Poland. As a result, food prices remained quite high, particularly for the vast majority of the Colombian families that lost significant income in the last four years. ARA maintained an intense commercial activity offering the best value for consumers. The underlying strategy, together with a renewed promotional dynamic, delivered well in Q1, with like-for-like reaching 5.8%. The company continued to invest in its infrastructure and opened 27 stores in the first three months of the year and one new distribution center in January. The clear focus on key priorities and effective execution of our strategy led ABTA to grow 13.9%, 5.1% at constant exchange rates driven by sales. As expected, the investments made to keep prices low and the inflation registered on costs put pressure on ABTA margins despite the positive calendar effects. Group ABTA margin fell to 6.3% from 6.6% in Q1 2023. At Piedronca, the margin pressure was driven by increased price investment together with higher labor costs. Hebe margin increased driven by sales performance. In Portugal, execution of the intense promotional dynamics pressured margin. And finally, in Colombia, ADA is working in all fronts to protect margin in year. However, against the difficult comparison with the prior year, price investments pressure the BTA margin for the quarter. Summing up, as anticipated, we faced in this first quarter full deflation, high cost inflation, subdued consumer demand, and more intense competition. In light of this context, we remained firm in our commitment to offer low prices and good promotions. The consistency of this strategy and the quality of the value propositions delivered solid volume growth that helped to limit the pressure on margin, and to reinforce our market positions. We acknowledge that Q1 numbers also benefited from a positive calendar that will somewhat reverse in Q2 and will impact sales growth and put further pressure on margin. Notwithstanding, as we look ahead and against an extremely challenging backdrop, our strategic priorities are kept unchanged. To guarantee consumer preference, pursuing growth by investing in price, in the quality of value propositions, and in our store network expansion, and to work on all fronts to reinforce efficiency and protect profitability. Thank you for your attention. Operator, I am now ready to take questions.

Thank you. To ask a question during the session, you will need to press star 1, 1 on your telephone keypad and wait for your name to be announced. To withdraw a question, you will need to press star 1, 1 again. Please stand by while we compile the Q&A roster.

You will take our first question. Please stand by.

And the first question comes from the line of João Pinto from JB Capital. Please go ahead. Your line is now open.

Hi, good morning, everyone. Thanks for taking my questions. The first one on OPEX inflation in Poland, it was quite low despite the wage pressures in the first quarter. Can you please help us quantify any tailwinds that have helped to offset the pressures on staff costs in the quarter? And my second question, could you quantify the basket deflation in the quarter in Poland and tell us how the gap versus food CPI has been progressing throughout the quarter? I'm just trying to understand if we can expect a lower basket deflation for the second quarter. Thank you very much.

Hi, João. On OPEX inflation, in fact, it was quite significant and our operating expenses have increased on a double-digit figure as we anticipated. The fact is that as sales have grown also quite significantly with the effect of the calendar also helping, of course, this helped to dilute the additional costs at least for the quarter. So, in fact, we are having OPEC's inflation and quite significant as anticipated. Of course, the two main lines where we feel this growth is basically labor-related. So, it's the personal costs and the costs that are driven by salaries. And then also the rents, which are not so visible in the accounts with IFRS 16, of course. But nevertheless, these increased quite significantly. I would say, going beyond the efficiency and all the efforts and the discipline that the company is having at its cost structure, the only time we saw some easing versus last year is on energy costs. As for the basket deflation, it was more than 5%, the negative inflation. But you have to take into consideration that, of course, having Easter in the first quarter, you also have some mixed effects pushing volumes up. And, of course, all the calendar effects coming, as I said, from the leap year and from Easter. It's true that looking just at the numbers in a very straightforward way, it seems that the gap is increasing for the food inflation in the country. But we have some doubts because we think that food inflation in the country is falling quite rapidly, but has some delays considering the technicalities of how it is computed, usually not taking into consideration all the promotions that are done in the prices that are used on a very fixed base to compute the food inflation in the country. Nonetheless, we consider that Bia Dronca is maintaining its very high competitiveness versus the rest of the market.

Thank you very much.

Thank you, Joana.

Thank you.

We will now take our next question. Please stand by. And the next question comes from the line of Nicholas Champ from Barclays. Please go ahead. Your line is now open.

Yes. Good morning, Anne-Louise and Tim, and thanks for taking my question. I have three. First of all, I mean, you talk about calendar impact. Sorry if I miss a number in your press release, but could you provide the calendar impact in planning Q1 precisely? The second question is about the net financial results. I mean, you talk about an increase related to the cost of financing in Colombia. Should we extrapolate Q1 numbers for the next three quarters of the year? And third and last question, could you please update on your trading performance in the start of 2020? of April, especially in Poland. Do you see any change compared with Q1 or still a further continuing trend, I would say, in terms of consumer demand? Thank you.

Thank you, Nicolas. On the calendar impact, I'm not sure if we provided that, but I think that we mentioned it in the prior, on the full year results. Basically, the leap year is 1%, because, of course, you have 90 days for the quarter, and this has some impact. So one day more is around 1%. From Easter, we computed more or less, depending, of course, on the different banners. Easter is usually more important in Poland and in Portugal. But it's around 2%, the impact of Easter. OK. As for the net financial results, yes, I think it's a good proxy because we have to take into consideration, first of all, that it's our choice to finance as much as possible the business in Colombian pesos. The interest rates continue to be very high in Colombia. And, of course, the company, we expect it to improve its performance at the BTA level, but it's also investing quite significantly to open stores as we anticipated and as we designed. So I think it's a good proxy to maintain this. On April updates, as you know, we do not comment on trading after the quarter. This being said, of course, you have to take into consideration that all the effects of calendar will not exist in April. So we do expect a lot of pressure in April. And considering the overall in the quarter, the very good results and the very good comp that we have versus last year, considering all this negative impact, of course, it's going to be very challenging on our different banners, especially in Poland. And with the level of deflation, we think that the life-to-life will depend very significantly if consumer picks up. This is something that we are not still seeing. There was a calendar effect, of course, also in the numbers of the country. But we see an increase in savings. We see an increase in retail sales, particularly in the auto sector. but on the other businesses, we do not see still consumer demand picking up significantly, as it would be somehow expectable, taking into consideration the increase in household income.

Very clear. Thank you very much.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Jose Rito from CaixaBank BPI. Please go ahead. Your line is now open.

Yes, good morning to all. So I have three questions. So the first one on the gross margin evolution. We suspect that the decline at the consolidation level was also extended to Poland. Can you please detail what is behind this? Namely, if you are getting support from suppliers, but still needing to invest on prices. So this will be the first question. The second one related with the Easter effect. If it is possible to isolate what was the contribution to margins in the quarter. I suspect this is difficult to isolate, but if you can provide any reference related to this. And thirdly, there was a change in the EPTA dynamics in Colombia in centralized costs in the quarter. Can you please detail a little bit the dynamics for these two segments going forward, namely in Colombia, what changed to justify the improvements that we had versus the previous quarters? Thank you.

Thank you, José. So on the gross margin, in fact, the evolution that you see at consolidated level came from all banners, with no exception, in fact. So all banners invested in promotions and in creating saving opportunities to consumers to really maintain the competitiveness and to, as we expected, to make sure that the consumer continued to prefer our store. every banner invested in prices quite significantly. The same happened, of course, in Poland. The market is very competitive with all players, with also no exceptions, fighting for sales. And this, of course, has an impact on margins. On the support from suppliers, This is something that we mentioned that it could happen. I think that as I previously have been stating, we think that at a certain point, suppliers and particularly the A brands will have an interest to invest because they are losing also volumes quite significantly. And I think that ultimately they want to protect margin, but ultimately they will have to push also for volumes as it is happening in the food retail business already. As for the Easter effect, it's of course difficult to isolate, but as we have so many promotions going on also in Easter, it's true that it can contribute with some effect on the mix, but not really on the part of the deflation. We are investing in prices and doing a lot of promotion. So I would say that you do not see any improvement really coming from the Easter because you want to also push sales during this period. So we cannot assume that margin tends to be higher during this period. I think it's versus the remaining items that contribute to margin. I don't see ISER contributing significantly to that or making an improvement. On the ABTA dynamics in ARA, as we mentioned, of course, it's been very tough in the markets. Consumer demand and product consumption is decreasing since the beginning of 2023 and has continued throughout this first quarter of the year. But the company also, as we mentioned, worked very significantly in its cost structure, even did some cost restructuring at the end of 2023. And this, of course, is helping with the cost dilution, which is quite significant considering the sales growth.

Okay, understood. Thank you. So on the support from suppliers, I guess that suppliers are still not helping, let's say that way. Do you have expectations when this could change?

We have different situations, José, but of course I think that this is my wishful thinking. I think that it would be on the interest of some of the suppliers, particularly on the multinationals, to drive their volumes. particularly when private label is at a so high market share considering the current dynamics. But this is something, of course, that has to do with negotiation. So you have different situations. We cannot say that some are not investing and some are, but this will depend really on the dynamic of the market overall. Okay, thank you. Thank you.

Thank you. We will now take our next question.

Please stand by.

And the next question comes from the line of Andrew Gwynne from BNP Paribas X saying, please go ahead. Your line is now open.

Hi, good morning, Ellen and Luis. Yes, I'm going to ask you to get your crystal ball out again. I mean, how do you think it plays out? Second half of the year, would you anticipate industry volumes coming back? Market becomes a bit more rational. There is that supplier support. Or do you think it lasts a bit longer? And then secondly, would you describe your actions at the moment? Have you moved from sort of being on the back foot, perhaps, or reactive, and now you're becoming much more active, and I suppose putting the industry sort of back in its place? Just sort of helping us understand to what extent you have the appetite for margin investment, or is actually just you're kind of going with the flow and protecting the position. Thank you very much.

Hi, Andrew. so as for the we have we have been stating and and of course uh the the full impact we will only see on the first half uh considering these swings and this uh um quite significant uh calendar effect because the first quarter as i usually say is the one that uh in total sales is the the one contributing less so any um any change in the numbers usually is amplified. The percentages in terms of growth or decrease is really amplified from a lower base. The fact of having Easter is quite significant. The leap year also, even, you know, having one more Saturday or not has its impact. And so we will see, as I mentioned, the first half will definitely be very challenging because we will have the reverse in terms of calendar. we consider that we will continue to operate in deflation. I would say we will operate in deflation throughout the whole year, also for the second quarter, for the second half, sorry. But, of course, in the second half, as inflation or food inflation was already accelerating in terms of decrease, it will be a different comparison. But nevertheless, I think really that this pressure will maintain throughout the year, because as we mentioned, and this also relates with your second question, the markets and all the peers, and it's not going to be just in Poland, it's going to be everywhere, looking at the PPIs and looking at the price of the food and of commodities that, with the exception of sugar, all went down in the first quarter. So all this dynamic really contributes to keep deflation. And this really, with the level of inflation on costs, will make all peers fight for sales. And this puts extra pressure on the margins and on the market. If we are being more reactive and active, I think it would be a mix. I have to say that it's a mix of both. As we want to keep price leadership in Poland, as we want to keep our competitiveness in all markets, this means that we will continue to invest in price. This is our expectation. As I previously mentioned, we don't know how much part of the suppliers will want to help to support and also improve their volumes. I would say that the whole dynamic in the market really will depend heavily on the reaction of consumers. So if consumer demand picks up, particularly in Poland.

That's very clear. And then, I mean, a very difficult thing to estimate, but how much do you think the advantage or the benefit in Q1 for margin was for Easter?

As I mentioned, Andrew, I don't think that Easter really contributed very significantly for margin. because you also intensify your promotional activity during Easter. So it's true that you may have a slight better mix, but with quite an investment also in margin during that period.

Okay, that's clear. And Q2 margin down a percentage point or less?

Of course, I will not comment on that, but I would expect more pressure on the second quarter, definitely.

It was worth a try. Thank you very much. Have a good weekend.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Isabel Dobreva from Morgan Stanley. Please go ahead.

Hello, Mark. I had one follow-up on your comment that the basket deflation was about 5%. So from this comment, should we understand that your gap versus the CPI at market level has increased? And I guess linked to that, could you comment on how your spread in terms of volume outperformance versus the market has evolved? Putting it together, it looks like maybe your outperformance really accelerated over the quarter. If you could confirm or deny that, that would be helpful. That's the first question. And then the second question is just, again, going back to the competitive dynamics. How should we think about the timing of these price investments? Is your expectation that a lot of the competition is maybe front-loading price investments before the potential recovery in volumes, and therefore we're at peak price war during Q1 and potentially Q2, and this should abate as we go through the year? Or are you expecting a pretty persistent level of pressure as we go through the year?

Hi, Isabel. So on the basket inflation, as I mentioned, was more than 5%, the negative basket inflation in Poland. The underlying volume, in fact, because we have here several effects. So you have the calendar effect, and assuming that would be the three percentage point growth that I mentioned, so the two from Easter and the one from the leap year. If we take that out and also the mix effect from Easter, I would say that volumes were in line more or less, the underlying volume would be more or less the same as last year. As for the pickup and when we expect the price war to go up, I think it's I don't like to speak about price war. I like to speak about really a very or a more intense competition in the market because this is really the dynamic that we were expecting. And if it's going to go down or not, I think it's difficult to say. I see it as difficult as I answered to Andrew because, in fact, people will want to strive for sales to be able to dilute their costs. And this is also going to be difficult not only in the second quarter, but throughout the rest of the period. So it's very difficult to say if we are coming back or not. The main KPI that we think is really key here will be consumer demand. So we continue to see that people are quite cautious, particularly in Poland, in driving consumption. And this is in all sectors. In fact, as I mentioned, these are the numbers that flow from the official numbers. And so I think it's going to be really key to see how consumer demand will evolve. One just clarification on the gap. So looking just at the numbers that are published by the official statistic office in Baizhou, by goods in Poland. The gap seems to have increased. I have to say that I have some doubts because the markets, all the players are really investing in price. And this is all the main players. So it's us, it's all these little Carrefour or Sean. So it's difficult to say or to see still that we are having inflation when everybody is in deflation. I think really that we maintain the gap to the country. I don't know if the gap is so high. I think it's a technical issue and a delay on the way the authorities and the official statistic office in Poland calculates inflation.

Thank you. We will now take our next question.

Please stand by. And the next question comes from the line of Michal Potira from UBS. Please go ahead. Your line is now open.

Good morning. Thanks very much for taking my questions. I have three questions, please. So one question about the VIT increase and the pass-through. There was a lot of kind of noise and PR, many of our banners were saying that they will not be passing on the tax increase. Let's say the evidence is quite mixed, so if you could comment on what you are seeing in the markets with VAT pass-through. That's the first question, please. The second question, a very technical one, if you could just remind me, please, what is the number of SKUs you are currently holding in Piedronka stores? The first question about it, but I wanted to ask about Hebe, a really stellar, like-for-like performance. So I wanted to ask, is this kind of shows consumer strength in this particular segment, or is it solely due to very strong execution on your side? Thank you.

Thank you, Michal. So on the VAT increase, it's of course another source of pressure that adds to a negative calendar in April. As you know, probably not only Biedronka, but other players said that they would not pass the VAT at their regular prices through to the consumers. I would say that considering the current dynamic with us operating in deflation, I believe that the consumer, in fact, will not see the price increases. I think that they will maintain or see a maintenance in the prices all over the market, considering this dynamic and this further increasing competition in the Polish market. So this is something that... I would say that comes not only from this guarantee of not passing through the VT, but really from the underlying prices are being decreased due to deflation. As to the number of SQs, I would say that currently there are more than 3,000 SQs. Of course, this will depend also because you have a lot of dynamics. Going out going on in terms of promotions and in-and-outs that have increased quite significantly in the quarter and this of course leads to having more SKUs going through the stores on the only have the performance and We are not really seeing a pickup in the cosmetics market But but we see an increase in in the in the last flight performance and we think that this is because hebe at least from the numbers that we get is gaining market share so it's really a good execution from the banner uh and um and and for us this is quite uh important and then of course even after or considering that you do not you are not longer in the pandemic etc we see not only a pickup, or particularly we see a pickup in the number of clients in the stores. And this was something that we mentioned in our performance. This was something that for us is quite vital, is that this happened in all banners. So really the main driver when you look at the Life for Life is the number of tickets increasing and not so much the average ticket that in some banners even decreased. Not the case of Hebe. Hebe managed to also increase slightly, but the main driver is the number of clients.

Thank you very much. And just to be clear on Hebe, likes for likes, the online part is not included, right?

Michael, the online part is included. So we consider that we were operating, fully operating with online last year, and we are fully operating this year. So it's included also.

Okay, thank you for clarification. And just one clarification on the number of SKUs, please, because I think your advertisements were saying that you are guaranteeing price for 4,000 products unchanged, right? So that kind of includes some extraordinary assortment, right? Because you told you have 3.5 thousand SKUs.

And also includes the fact that you have, one thing is, of course, the logistics SKUs, as we say. In some boxes, you have different SKUs. So, in fact, and of course, it includes, as you mentioned, also the extra assortment that we have that is not so regular, but that we use in the in-and-outs and in the promotions. Thank you. No, thank you.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Antonio Celadas from AS Independent Research. Please go ahead. Your line is now open.

Hi. Good morning. Thank you for taking my questions. I have two questions. One is related with working capital. It improved slightly when you compare first quarter with the first quarter last year, but maybe it was just easier effect. So I don't know if you can provide some color, what should we expect in the coming quarters about working capital performance? And second question is related to Portugal. Tungudos outperformed, or at least performed very strongly. So I guess that you gain market share. I don't know if you can provide some, well, some insight about your margin performance and how you did so well in Portugal. Thank you very much.

Thank you, António. So on the working capital, as we mentioned, it really has, of course, a positive impact when we compare Q1 23 with Q1 24. Because, of course, we have the seasonality and we have to pay for the purchases that drove sales in Christmas. But then you have, of course, also the trade payables that increase with the purchases for Easter. And, of course, Easter ended 31st of March, so you have all this contribution. It's difficult to say, but I would probably quantify that improvement around 150 to 200 million euros that would be done due to Easter, which would mean a negative, a more negative impact on working capital, but that has to do with the dynamics that we also mentioned that have to do with deflation also on the part of the suppliers invoices. And, of course, the deceleration of growth. So you are growing, but growing less. And that, of course, the dynamic of the working capital has to take that into consideration. And as I said, also the terms of payments that we revised in some cases on the smaller suppliers, mainly in Portugal. As for the performance of Portugal, I would say that, yes, according to the numbers that came out, the official numbers for the retail markets, it seems that we outperformed the markets. We don't have currently market shares. They were not reliable and currently we are not getting market shares even from Nielsen. But I would say from the numbers of the markets that we really outperformed. And if we outperformed, I would say that we increased market share. To this, I would highlight that the effort that we are doing to refurbish our stores to the new concepts is probably premature to say, but we think it's adding results. So you have 60 stores last year that are now entering for the like-for-like and also for total sales, of course, that really improved their sales versus the prior periods. And this justifies also the sales. As to the margins, they were quite flat, I would say, because, of course, you have more costs also. We linked our salary increases to the minimum wages in most of the cases to maintain the gap and to also be competitive because the market maintains quite tight here and also in Poland. And so it's difficult to mention that, of course, this increase will drive an increase in margin, at least in the current context. where we also see an increased competition in Portugal.

Just a follow-up question on working capital. You mentioned some, well, some changing conditions regarding suppliers. So when, on an early basis, when do you think this effect will disappear? By the second half of the year?

It will depend, because we also mentioned that if interest rates, and particularly if there continues to be a constraint in funding for some of our smaller suppliers, because it's currently what is happening. It's true that you mentioned a decrease in interest rates, but that didn't happen. And you don't see a lot of liquidity in the market going for the smaller companies. At least here in Portugal. And of course, this means that if we want to have alternatives in our supply chain for different products, sometimes we have to provide better paying conditions to our suppliers. So I do not exclude that. You may, it's true, turn comparable with the decrease in terms of payments from last year. But then you also have to add also some other payment terms, as I said, particularly in Portugal and for the smaller suppliers.

Thank you very much.

Thank you, António. Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Nicolas Champ from Barclays. Please go ahead. Your line is now open.

Hi again. I have three quick follow-up questions, please. The first one is regarding Poland. You said you gained 70 bps market share during the period. Could you say if you are the largest winner in terms of market share in Poland since the start of the year? So just trying to estimate if you are the main beneficiary of the price investment. Second question is, could you elaborate on the percentage of your sales under promotion in Poland as well? How did it evolve in Q1 versus the previous quarter? And the third last question is about some clarification regarding your gross margin evolution in Q1. So it contracted by 30 BIPs. in Q1, which is less than the previous quarter. I think, of course, margin at the group level contracted by 40 bps in Q4, 70 bps in Q3. So could you come back on the drivers explaining this lower gross margin contraction in Q1 sequentially, given that you mentioned a higher price competitiveness, especially in Poland, I think. Thank you.

Thank you, Nicola. Once again, so for Poland, the market share, of course, Biedronka is the leader in the market, and I would say that its growth also became more difficult for Biedronka than probably for others. Nonetheless, these numbers that we showed at least according to the reference that we use, so the proxy with JFK numbers, I would say that Bia Dronka continues to gain more market share. Of course, there are some that are losing market share, and I would say the Traditionals and some of the other players continue to be the ones that are facing a more challenging time now with deflation in the markets and with the intensity of of the promotional activity and of the competition in the markets. As for promotions, they increased significantly, I would say, and particularly the promotions, more than probably the in-and-outs. The total, it increased two percentage points, but promotions versus in-and-outs have increased more, in fact. So it was the main driver during this quarter. As for the gross margins, I would say that you have several effects in this case, Nicola. As I mentioned, all businesses have decreased their gross margins and contributed to the consolidated number. Then you have some mixed effects. We know that, for instance, in Pingdou's meal solutions and some of the concepts have higher margins, so they contribute positively. So you have Also some mix, and you have, as I mentioned, the part, of course, of some of the suppliers already also investing with us. So it's really a question of, yes, we are investing and we are fighting to maintain price competitiveness, but then you have several different drivers contributing to gross margin. Even on shrinkage, for instance, all the businesses are trying to reduce it, of course, knowing that they have to offer the best price and shrinkage is a part also of the gross margin.

And do you expect these positive factors will continue to help your gross margin going forward? So should we expect gross margin contraction maybe to continue to reduce over the coming quarters?

It will depend really on, as I said, it will depend mainly on consumers and consumer demands, and then, of course, on all the rest of the mechanics. We hope that, at least we think that we will have to maintain our competitiveness, but I hope that this tends to stabilize somewhat because, of course, at the level of cost, they will, in their ways, versus the sale growth that we will be presenting, for instance, in the second quarter.

Okay. Thank you very much. Thank you, Nicola.

Thank you. As there are no further questions, I would now like to hand back to Ms. Ana Luisa Virginia for any closing remarks.

Thank you, Sonia. This quarter required renewed energy from our teams to successfully compete for growth in a deflationary context. With quality assortments, appealing stores, and efficient logistics, our business models underpin these efforts. The uncertainty persists on how food inflation and consumer behavior will evolve. However, we consider the performance of our banners in Q1 as a validation of the effectiveness and rightness of our strategic focus. Thank you all for your questions and for attending this conference call. I wish you all a nice day.