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 periods. The group delivered a good performance in the first quarter of 2026, with a 6.3% sales growth incorporating the effect of an earlier Easter season and a BTA rising by 8.4% year on year also benefiting from the operational leverage. These results were achieved despite persistent global geopolitical tensions and heightened economic uncertainty for both businesses and consumers. Against this backdrop, and with fuel costs on the rise, consumers stayed cautious about food spending, favoring low prices and promotions. In Poland, Biedronka started the year operating with basket deflation. In face of these constraints, all companies remain firmly committed to their strategic priorities, maintaining price competitiveness and executing effective promotions to guarantee consumer preference and trust. We close the period with a solid balance sheet that includes a positive cash position of 385 million euros when excluding lease capitalization. Looking now to our first quarter P&L, I share with you a couple of comments. The first relates to operational performance, noting that the increase in EBITDA was primarily driven by strong sales and strict cost management. Furthermore, the improvement in gross margin reflects the group's commitment to optimizing product mix across banners as well as leveraging scale advantages resulting from consistent expansion as seen in ARA. The second comment concerns the evolution of financial cost that significantly impacted net earnings growth in the quarter. A major driver of this was the year-on-year increase in interest expenses and the exchange rate differences arising from the capitalization of leases in accordance with IFRS 16. The later concerns the Euro-denominated rents in Poland, which translated into a charge of 5.5 million euros in Q1 26, compared to a positive contribution of 8 million euros in Q1 2025. Cash flow for the period, which excluded any dividend payment, was negative at 428 million euros, in line with the typical post-Christmas working capital cycle. The group ended the quarter with a solid financial position, comprising net cash of 385 million euros. The General Shareholders' Meeting, held on 23 April, approved the proposal to distribute a dividend of 65 cents per share, the gross amount, totaling 408.5 million euros, which will be paid on 12 May. Also approved was the distribution from the 2025 results of 40 million euros to Geronimo Martins Foundation. Looking now into the detail of the performance, I start with sales. All companies delivered well, contributing to the group's top line growth. Consolidated sales increased by 6.3%, 6.7% at constant exchange rates to reach 8.9 billion euros, driven by a like-for-like of 3.1% that was also partly supported in Poland and Portugal by the timing benefit of an earlier Easter season. Inevitably, This will act as a headwind to comparatives in Q2. Expansion of the store networks was also a relevant feature of the sales performance. Food inflation in Poland has decreased since September 2025, averaging 2.3% in the first quarter of this year and dropping to 2.1% in March. Food retail demand remains subdued, with heightened competition intensifying toward the end of March in anticipation of Easter. Biedronka led in price and promotions, while also fine-tuning the assortment and improving its store network through the refurbishment plan implemented. All in all, sales grew 3.6% to 6.2 billion euros. In local currency, sales increased 4.5%, with like-for-like at 2.3%, including close to 1.5 percentage points of positive calendar effects, mainly driven from the early Easter. I flag here that the banner operated with significant basket deflation over the period, and therefore, this performance was supported by strong volume growth. In the first three months, 12 stores were opened, three net additions, and 36 were renovated. Hebe continued to face an extremely fierce competitive environment with no signs of easing. Sales increased by 1.6%, 2.5% at constant currency, to 148 million euros with like for like at 0.4%. Online sales grew 8.4% and represented slightly more than 20% of total top line. In Portugal, Food inflation was 3.5% in Q1-26, matching the rate in Q4-25, and consumers continued to prioritize promotions. Operating a distinctive food store model with consistent commercial strategy, Pink Dose reinforced its well-known and highly valued promotional campaigns, delivering strong growth. Sales increased by 7.5% to 1.3 billion euros, with a like-for-like, without fuel, of 5.7%, which also included around 1 percentage point of benefit from the early Easter season. In the first three months of the year, Pink Dose refurbished 11 stores. In this period, the Eureka sector revealed some demand constraints. Recheio faced a somewhat volatile market due to several storms that impacted particularly the centre of Portugal, affecting the Eureka Channel. Despite the challenges, our wholesale banner posted solid growth with sales reaching 312 million euros, 3.3% ahead of Q1 2025, and Like for Like standing at 2.7%. This top line performance benefited also from the contribution of a new flagship store open in Lisbon in February, and from a larger number of clients on the Like for Like base. In Colombia, Food inflation persisted at an elevated level, reaching 5.7% in Q1-26. The consumer environment continued to be difficult, despite some improvement in private consumption and increased household confidence. ARA reinforced brand awareness through a disciplined and consistent expansion strategy. This notoriety, together with competitive pricing and a high-quality and assertive offer, is driving good sales growth. In Euro, sales reached 959 million at 23.6% increase over Q1-25. In local currency, sales rose 21.2% with 6% like-for-like. I highlight that the banner operated with very low basket inflation and therefore this was primarily a volume-driven performance. Expansion was also an important growth driver. In Q1-26, Ara added 51 new stores, 45 net additions, to its network and operated a new distribution center. EBTA performance performed strongly, increasing by 8.4%, plus 9% at constant exchange rates, to reach 572 million euros. Group EBTA margin stood at 6.4%, 13 basis points up on Q1 2025. At Pedronca, EBITDA grew 4.6%, 5.5% up in local currency, with the respective margins standing at 7.8% versus 7.7% in Q1 2025. The company maintained its sales-focused strategy, leveraging on price leadership and improved assortment mix that, combined with rigorous cost management, shielded the margin in a very pressured market. At Hebei, EBITDA increased from €3 million in Q1 2025 to €10 million. The EBITDA margin increase to 6.7% reflects the work carried out since Q2 2025 to enhance sales mix and control costs. In Portugal, the combined EBITDA of our distribution banners stood at €83 million, 7.2% above the same quarter last year with the respective margin standing at 5.2%, in line with Q1 2025. Arezebite reached 44 million euros, an increase of 17 million euros compared to the first quarter of 2025, or plus 58.4% in local currency, with the respective margin improving to 4.6%, versus 3.5% in Q125 as a result of the consistent increase in scale of operations and the remarkable work on cost management. In summary, despite the impact of the deteriorating geopolitical environment on consumer sentiment, all our banners were able to deliver good underlying performance during the quarter, both in sales and EVTA. This reflects the resilience of our business models and the daily focus of our performance-driven teams on operational discipline. We will continue to place the consumer at the center of our strategy with price competitiveness remaining a fundamental pillar across all banners alongside ongoing improvements to our assortment and shopping experience. During these first months of the year, we maintained a very rigorous approach to capital expenditure, continued to execute the CAPEX program in line with our strategic priorities and without compromising financial flexibility. Looking forward, we acknowledge that geopolitical developments continue to require close monitoring. The war in the Middle East has already resulted in higher fuel and fertilizer prices, which are adding cost pressures as we approach the next food production cycle. This reinforces the need for vigilance and agility to respond to potential challenges. I conclude by confirming that the outlook we shared on 18 March 2026 remains unchanged. Thank you for your attention. Operator, I am now ready to take questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Will Woods from Bernstein. Please go ahead, your line is open.

Hi, good morning. The first question is obviously you flag rising fertilizer prices feeding into the upcoming food cycle. How long do you think that will take to feed through into Poland? And do you think that Q2 might be the trough of food inflation in the markets? And then the second question is, obviously, your margin performance has been impressive expanding year over year. Could you give a little bit more detail of what you've been doing to drive those improved margins? And do you think that Q2 and Q3 margins can show the same level of resilience or expansion? Thanks.

Good morning, Will. So as we mentioned, at this point, we are not seeing stills. and inflation from the supply part. But what we see and what we expect somehow is that the increasing prices in fuel and fertilizer will put pressure on the costs, particularly on the production side in the agriculture sector, starting with the agriculture sector. So this is probably, there will be a delay of the cycle in itself. So we think that most of these increasing prices will come through starting in the second half of the year. So at least I think that this will happen not only, of course, in Poland, but everywhere, because every operator will, of course, look for availability. And as the cost productions will be higher, this will probably... what we think is the most reasonable scenario, this will probably drive inflation in food. But we have to take into consideration that we are not alone in the market. So there is supply, and there is the demand, and then there is competition. And so the question now will depend also on the demand from the part of the consumer. and the intensity in competition, which we expect will not ease considering the current context. Because again, it's very important to have sales, to have the operational leverage kicking in and protect margins. So coming to your second question, I think that, as I said, the underlying performance of all businesses, and particularly of Biedronka, considering the deflation that we had on sales, really shows a very big resilience from the companies in the margins. Of course, we have to acknowledge that there is an operational leverage coming from the fact that we have a positive calendar in the first quarter. So we think that, of course, it will be a little bit more challenging for Q2. But I'm sure that the company will do its best, of course, to continue to protect profitability and work as it has been doing on several averages. So, as I mentioned, the first and most important one is to guarantee sales, to dilute our fixed costs. The other one, of course, is the resilience of the margin. And this has been acted particularly on the mix. But it has been difficult, of course, with the deflation. And the other one, of course, is try to look for all the cost savings that we can have. So basically, the company is working in all its drivers to protect profitability.

Understood. Thank you very much.

Thank you, Will.

Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We'll now move on to our next question. And our next question comes from the line of Luis Colaso from JB Capital. Please go ahead. Your line is open.

Thank you very much. Good morning, everyone, and thanks for taking my questions. I have a couple from my side. The first one is probably related with the gross margin. It was up to 25 basis points year on year. Could you give us a sense about the underlying underlying drivers for this gross margin evolution. And we're still seeing some effects of the inventory statement that we saw in the fourth quarter. The second question would be regarding the competitive environment and promotional intensity in Poland. You mentioned that the competitive environment remains very challenged. Did you see an increase of the promotional intensity in the first quarter or it was something normal and in line with the previous quarters? The third question would be on Colombia. I was particularly impressed by your performance in terms of margin, especially in the context of wage inflation. Could you elaborate a bit on the drivers behind this margin evolution in terms of gross margin and OPEX, and if it's reasonable to assume a similar improvement of margins for the full year? That's it from my side. Thank you very much.

Thank you, Luis. So on the gross margin for the group, it has increased. And as I said, the main driver really was a question of mix. I think I mentioned that in my previous introduction or in my introduction. One, of course, is sales mix. And it was across all banners. In fact, we are... betting on on categories that bring a little bit more of margins also and of course that was important to to protect the gross margin another thing was and I also flag that is that in in Colombia and this will relate to your third question, but also in Colombia is The fact that we increased sales density and so with the increase in scale, we also tended and were able to improve gross margin slightly. So all this contributed to a better gross margin. It had nothing to do with being less competitive or trying to protect gross margin. Just was really the work that was done by the companies to really manage proactively and as much as possible, the mix and the taking advantage of the scale. So on the inventory restatements, it may have a slight, because of course we will have to use the new standards, but the main driver had nothing to do with the inventory adjustments on the accounting. As for the competitive environment in Poland, we saw a more intense, or let's say, the competitiveness going to a slightly next step, particularly towards the end of March as Easter approached. I think that, of course, this has to do with the whole context and environment in terms of consumption. all players, of course, trying to fight for sales and having to dwell with deflation. This means that you have to drive also volumes and this puts a new level of pressure. So we saw a slightly more intense competitive environment towards the end of the quarter and growing, in fact, throughout the Easter period. As for Colombia, As I mentioned, the drivers were basically the main drivers of our profitability as a food retailer. One, of course, is the growth in sales. And so more sales density, and we have been flagging that, we need the market to recover to really take advantage of the operational leverage. And that really happened this quarter. And that reflected, of course, in higher scale in our negotiations. And on the other hand, there was also a very tight management of the costs, considering that we were anticipating two things. One, of course, was the impact that we had prepared in terms of adjusting the time, the the plenograms and schedules for labor in the stores to deal with labor reform. And the other one was, of course, the minimum wage. We don't have anyone in our company earning the minimum wage. And of course, that means that we can accommodate a little bit more. But of course, there was pressure on the labor But the company tried to manage and anticipate the most possible the effect and really adjusted the most that it could, even the timetables to match and to try to have or to somehow mitigate and limit the impact of this increase in salaries that happen in the country.

Thank you very much.

Thank you. We'll now move on to our next question. And our next question comes from the line of Antonio Celadas from AS Independent Research. Please go ahead. Your line is open.

Hi, good morning. Thank you for the presentation. So I have three questions. First one is regarding your gross margin and ABTDA margin. So it seems that So gross margin is improving, has improved, but nevertheless, the operating margin has also improved, but not at some place. So it seems that there are some lack of operating leverage. So you can comment on this. Second question is working capital has been quite volatile. I guess that it's something that you should be used to. Nevertheless, if you want to comment on this. And last question is related to your expansion plan. program in Poland take consideration that like for like cells are are growing well are growing slowly are growing modestly modestly does it doesn't make sense to continue to to open new stores in Poland or is something that you have to consider it thank you very much thank you Antonio

So on the gross margin, it's true that gross margin increased slightly more than ABTA margin, but that has to do with some pressure that we continue to have on costs. So we try to mitigate them as much as possible, but we still need to have things going to have the sales. And in fact, we saw the cost with labor still growing, and we are already seeing also an increase in costs in terms of transports. So for the logistics, following the fuel rises, particularly since February. So this is already impacting somehow, and that's why the operational leverage was not fully – or it was not just the – didn't follow the increase in the gross margin. Our companies really manage, and it's not just the P&L, they also manage the rest of the drivers of our profitability the best way possible. So we know that, and we try to balance as much as possible the gross margin and the costs to try to drive then a return in line with what we perceive it's a good return. On the working capital, The volatility, I would say, versus 2025 has only to do with the seasonality of the business. So in fact, we had a very good Christmas last year, as you know, in terms of sales. So it's in the first quarter that we pay for the invoices of our purchases for Christmas. And this means that, of course, the working capital change was quite significant. as we pay for the Christmas purchases. And of course, the level of sales and the level of purchases does not totally compensate that for this period. So in line with our expectations, no big change there, neither in terms of payment terms and neither really in terms of lack of management of our inventories. On the... On the expansion plan in Poland, what we see is still some white spaces in Poland. So we think that instead of having just our competitors opening in the locations, we feel that not only it makes sense to have a Biedronka store as we will grab part of the market, we will continue to open. So we think that expansion for now, as we flag, will continue to be a driver for growth. Of course, expansion doesn't enter in the like-for-like only and directly if there is some stores affected by the new openings. But we take into account any cannibalization that may happen even when we decide to open the store. So for now, we will continue. It's true that there was some slowdown. In this quarter, we refurbished more stores than last year and we opened less stores, but it was just a calendar effect. So if nothing changes, no disruption happens in the market, we will continue with our investment plan as said in the outlook for the full year.

Thank you very much.

Thank you, Antonio. Thank you. Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We'll now move on to our next question. And our next question comes from the line of Matt Clements from Barclays. Please go ahead. Your line is open.

Yeah, morning. Thank you for your time. Two questions I count. First on inflation again. Just wondering if we can build on some comments you made earlier. Firstly, can you quantify basket deflation of beer drunker in one queue? I know you said it's substantial, but a number there would be helpful. And then secondly, on inflation, before the war, you already expected to return to inflation in 2026. I think the deflation in the first quarter seems to have been largely driven by input pricing and commodities. Do you expect lower deflation in 2Q or perhaps even a return to basket inflation in the second quarter? And then I'll come back for a question on Slovakia, if that's okay.

No worries. Okay. Thank you, Matt. So on basket inflation in Biedronka, in the quarter, it was slightly ahead of 3%, so the deflation, which for us is significant, as you may imagine. And of course, which means that the underlying volume growth was more than 5%, also including the effect of Easter. But so it was a quite challenging period situation for Biedronka. To let you know, so the deflation has several drivers. One, you are totally right, so one is of course driven by the supply and the commodities and also the suppliers wanting to increase volumes, but you have to take into consideration that again, the other drivers in fact are the demands, so we continue to see a cautious a consumer and a consumer that is quite sensitive to price. And of course, with the novelties and the fact that fuel prices are on the rise, all the headlines point to that the prices of food are going to go up. So you tend to be quite conservative in the approach of your, let's say, not fixed expenses or family budgets. And the third one is, of course, the competitiveness of the markets. because, of course, if the consumer remains cautious, you tend to have a more intense competition, again, to be able to dilute your costs and take advantage of the sales growth also on the balance sheet. And so I think that these three components circumstances have been driving what we think is very significant because it's really impacting so we were as I mentioned in the full year our base case was to operate with a very low single digit inflation but with inflation for the moment this hasn't been inflecting so we are still operating in deflation but I think that considering what is happening with fuel costs and the production factors, at a certain point, I think that even from the supply parts, there will be a different situation. So if there isn't, or let's assume that everything stays more or less challenging in competition and in consumer, but then the prices go up, particularly on the supply, that there will be some slight inflation in the markets. I don't know if it started in Q2. I would say that it's more certain probably in the second half, as I said, because of the production cycle.

That's very helpful. Thank you. The follow-up question on Slovakia. I know it's a small part of business at the moment, but you've been there for a year now. Any color you can give on learnings, competitive response, consumer response, and your thoughts as far as expansion going forward for the next couple of years? Thank you.

Thank you. So on Slovakia, of course, it's one year of operations. And I think that there are a lot of learnings. I think that the only thing is, of course, we know that it's a little bit more bureaucratic country. So it's more difficult or it's more time length, the opening of stores. But we already flagged that. In terms of the consumer, of course, we are still monitoring and fine-tuning even the assortments. For instance, one curiosity is that we thought that they would prefer or they would not be so keen in having most of the products from Poland. But in fact, I think that some of them already knew the Adronka from Poland. So they expect even a reinforcement of the products that are Polish. So we are fine-tuning the assortment. But of course, we will need to densify the country, of course, to even dilute the logistics and the head office costs. And this will come with our expansion and with the maturity of the stores. In terms of competition, the first reaction that we saw is that competition started also to either refurbish or starting to expand slightly. something that didn't happen for a while in Slovakia. So I think it's already a sign that somehow it's a way to respond to our entry in the country. But it's too early and for now we don't disclose much, of course, because we want to make sure that things are in the right place and we don't want to provide information that in fact will help more the competition than to understand the performance at this stage.

Thank you. Thank you very much.

No, thank you, Emma. Thank you. We'll now move on to our next question. Our next question comes from the line of Janice Pieta from MBank. Please go ahead. Your line is open.

Hi. I've got two questions. The first one on Easter impact in Q2. So should we expect negative impact close to the positive one we saw in Q1 or should the number be slightly different? And the second one on your plans on your basket evolution in Q2. So should we expect the spread between the food inflation in the country and basket deflation at your Biedronka store to remain at the same level as we saw in Q1 or should we expect some difference, maybe higher spread or lower spread? I mean, is this spread we saw in Q1 something extraordinary or something you expect to continue going forward?

Thank you, Janusz. So, the Easter impact, as I mentioned, the total calendar was around 1.5 in Q1. So, on the positive, I'm talking about just Viadronca. In Tengdos, it was slightly less. So, of course, we have to take into consideration that in Q2, we'll have to consider that the impact, or you have to consider different underlying growth, of course. So, it's going to be more challenging in terms of like-for-like, no doubt about that, because we won't have this week that influenced the growth in the first quarter. As for plans on our basket evolution and the gap versus the country, so as I mentioned, we are still, in April, we'll still operate with basket deflation. The gap, I can tell you that slightly decreased because at least the flash inflation that we have for food now was 1.9% versus 2.1% in March. But this is a technical, I have to say, I think that there is a technical issue probably here from the way the statistic office measures inflation. It's true that the shelf prices also decreased following the commodity prices decrease and the competition. But apparently, what we notice is not all promotions go through and are considered when computing inflation, particularly those that go or you need to have a loyalty card to get advantage of it. I don't have total visibility on the gap that it may happen. One thing is for sure, Biedronka will remain and will defend its price leadership position. So depending on how things evolved, but I cannot say the gap will increase or not, because for me it's a little bit odd, as most of our competitors also stated that they are operating in deflation. the fact that if the major players in food rates are operating with inflation, the country is still posting inflation. It's a little bit strange for me, but I think it's a technical issue. So we don't manage for the gap to the country. We manage to be the most competitive for the consumer.

Thank you.

Thank you. We'll now move on to our next question. Our next question comes from the line of Rob Joyce from BNP Paribas. Please go ahead. Your line is open.

Hey, good morning. Thanks for taking the questions. And apologies if any of these are repeats. I had to join a little late. The first one, I guess, could you just give us, in terms of Be A Drunker, an update on market share? In the quarter, 4.5% growth looks close to, if not maybe below the market. So just wondering if you could comment on on share there and also let us know if you think sort of the capacity to gain share it's getting more expensive or getting harder to gain share in the polish market second one i guess following on from the last question um are you seeing any signs of inflation starting to come through in the basket relating to various kind of commodity increases and if not when would you expect to see them start to filter into the system, particularly at Bia Dronca. I think that's it for me. Thank you.

Thank you, Rob. So according to, of course, the way that we measure, we still gain market share. So it's true that the market is operating in deflation, and Bia Dronca, as I mentioned, had a deflation of more than 3% in its baskets in Q1. but it still gains share. So if you ask me, of course, in a market that doesn't grow, because if we consider in terms of volumes, the market's not growing, if gaining share is as easy as it was, let's say, 10 years ago, after consistently having delivered the market share increase, of course, in terms of percentage points, the increase is going to be probably lower, as we can expect. But in terms of value, I think that you continue to see that we add a lot of Zloty to our top line. So for us, it's something that we continue to drive for. Of course, probably in some time, there will be a constraint from the market, but for now, Biedronka is gaining share. In terms of inflation going through, What I mentioned previously, Rob, is that for now we are not seeing that. But what we think is that the production costs, and particularly going not only from fuel and from the fertilizers, et cetera, on foods, there will be a delayed effect. And so we are expecting somehow inflation to go into the markets from the supply side. I'm not saying because it will depend on the competitive environment. But from the supply side, we will probably see that coming through the market on the second half. So in Q2, we still see that it's probably not happening because there is this delayed effect of increasing the production factors.

Okay, thank you. So we should probably even be thinking potentially negative like-for-like into Q following and then coming back with positive in the second half.

Well, we will definitely fight not to have a negative, but it's true that the calendar doesn't help.

Understood. Thank you.

Thank you. Thank you. We'll now move to our next question. Our next question comes from the line of Elena Juranova from JP Morgan. Please go ahead. Your line is open.

Yes, thank you. Good day, everyone. I have a few questions, if you don't mind just asking them one by one. So on the topic of inflation, how do you think consumers in Poland in particular could take higher inflation that suppliers are going to be passing through in the second half, assumingly? Do you think there is a risk that you may have to increase promotions to support consumer?

Okay, so Elena, Well, it's true that it depends on, as I said, we'll have to count, as you mentioned, on the consumer behavior, and we have to count also on the competition to see if we will, as we have been, increasing the level of promotion. But the question is, from, let's say, from the consumer purchasing power. In fact, what we know is that the consumer has more available income, that it has been increasing its savings. So I would say that if we just consider that, they would be able to cope with a slight positive inflation. I wouldn't see that, but of course we are not alone in the market. So it will depend on several moving parts that for now, are difficult to, or it's difficult to have full visibility on that.

Yes, fair enough. And then on the labor market in Poland, how are you finding it currently? Is it tight or not? And does it trigger you to have still elevated personnel cost inflation? Or have you been able to see like, you know, softer dynamics there because of lower minimal wage hikes?

Okay, so on the labor market, it remains tight. So it's true that we are no longer talking about a proxy, so a reference for our salary increases of double digits, and that helps. But nonetheless, so not only we have to take into consideration that we are also competing for labor because the lack of offer in the labor markets, as you mentioned, it is quite tight. So it's true that our increases, particularly for the stores and the operations, are slightly above the 4%. That was the minimum wage increase.

So personnel cost inflation runs ahead of like for like?

The cost inflation ahead of like for like? Or the personal cost? Yeah, personnel cost inflation.

Probably slightly. Yes. Okay. Then a very small clarification question. When you mentioned that transport costs are going up, do you record this in your OPEX or as part of your COGS as supply chain costs?

We record it at our OPEX. We are talking about the transport from the DCs to the stores, Helena. Of course, if we buy directly from the suppliers in the price, usually there is the transport already incorporated in invoices, and it's part of the cost of goods sold. But if we are talking about the transport from the DC to the store and vice versa, of course, it's on the cost expenses.

All right. Then a few more questions, please. You mentioned the store refurbishment program. You've been doing it for a while. Can you comment on how the likes and likes of refurbished stores differ from the blended average or from the unrefurbished stores?

So usually when we refurbish the store is because, of course, either the shopping experience is not that good or it's been an old store and has to be put up to standard in terms of the layout. So it's not unusual and it's even more usual to have to see an uplift in the like-for-like that can be even double digits.

And it runs for like a year after refurbishment, or how long?

Sorry, you're saying how long we see the like-for-like? Yes, how long we can see the double digits. Yes, so usually the big impact is on the first 12 months But then you continue to have, but of course, the base is completely different. You're already growing on top of growth.

And then, like a more big picture question. So, sale densities of the stores in Poland for the drone car are pretty high. Do you think there is still potential to grow them in the medium term? And if yes, then what would this require in terms of? any category changes, any new incremental categories?

Okay, so as we mentioned, one thing is, of course, the fine-tuning of the offer that has to match the consumer needs and trends, in fact. So we are seeing some improvement in some categories that are even a little bit more margin-driven. So, of course, if we manage the sales and margin mix That is one opportunity. And the other will depend also, of course, on the environment. If for some reason the economic cycle also kicks in, in principle, the consumer being more optimistic is also more prone to consume it. It will depend. So our expectation is to continue to grow.

Thank you. And the final one for me is economics of your stores in the smaller cities, because you're opening quite a lot and potentially these are less competitive areas. So wondering how is your profitability profile in the smaller cities in Poland?

So usually the sales density is a little bit lower, but also the cost structure and the rents, etc., are also low. So, in fact, you don't see, you know, a big, big difference in terms of return on invested capital on these smaller stores.

And you would say that gross margins are similar as well across the different geographies, or maybe gross margins are a bit higher?

I would say that probably it may be a little bit lower depending on the categories, but again, the costs are also different. So I would say that the way that we look at it is that from a profitability point of view, it doesn't dilute or differ much from the rest, from the urban ones.

Okay.

Thank you so much.

Thank you, Helena.

There are no further questions at this time, so I'll hand the call back to Ana Luisa for closing remarks.

To close, Q1 results reflect a strong start to the year. We grew sales, expanded the VTA, and maintained a solid balance sheet against the context defined by geopolitical tension and uncertainty, cost volatility, and intense competition. Those challenges are real, and we stay vigilant, remaining focused on discipline execution and firm in our strategic priority of offering our consumers in each market a good quality assortment at the best possible value for money. Thank you for your questions. And for attending this conference call, I wish you a nice day.