Good day, all. Good morning, we're gonna start our video call, 2Q23 from Renner. I have here Fabio Faccio, CEO, and Daniel Santos, CFO. I have some announcements before we start. The video conference is being recorded and simultaneously translated. The presentation will be only in Portuguese. Those who are following in English, it's available in the chat. We also have it in our RI website. Questions can be sent to our press release, phone number 11-3165-9586. Before we continue, I would like to mention that statements made during the call related to business perspectives, projections, operating and financial goals, are beliefs and assumptions based on what we can say today. Forward-looking statements are not guaranteed performance because they depend on circumstances that may and may not happen. Q&A can be sent on our chat or audio. Afterwards, I will tell you how this will work. If you want to raise your hand to ask questions throughout the call, please feel free to do so. I would like to pass the floor to Daniel. Thank you, Carla. Good morning, everyone. We're going to start talking about our performance in the second quarter. Thank you for being here with us. Second quarter was very challenging, be it for the difficult and challenging macroeconomic environment. We still have a large number of consumers that are in debt and are much more selective in holding their expenses, and also our comparison base that we accomplished in the second quarter of 2022. Throughout the call today, in addition to commenting about the performance in the second quarter, I'm going to reiterate the measures and what we've done in the second quarter that helps us, in addition to the results, help us to be more confident about the performance that we expect for the second half of the year. About sales performance. The second quarter of 2023 showed a reduction of 6% year-over-year. Some elements put pressure on the sales performance. First, as I mentioned, a strong comparison base. Last year, we had record sales, repressed demand after the pandemic. It was a very long and cold winter, a challenging macro environment, and consumers were more sensitive to price. Even with a drop in the past quarter, we also had a CAGR that has been increasing quarter-over-quarter compared to the pre-pandemic basis in 2019. We started from a 7% growth in Q4 to more than 10% in Q2. April and May were the months that we felt most pressured. Throughout the quarter, we made some important adjustments in our operations, some of them already shown results in June, and continuing a trend to date. I would like to talk about some of the adjustments that we've done in this quarter so we can keep them in mind. First, about price perception. This factor lost relevance as a NPS detractor, which reflects in a better performance in the collection pricing and also visual merchandising that we conducted in the quarter. We also saw a reduction in the performance gap of stores in popular locations compared to other stores, especially in June, and this trend is continuing in July. In addition to those factors, we are confident in our new collection, that will bring even more offer of products at an entry price point, as well as reviewing prices of important items of the collection. We're gonna have a more competitive price point, especially with the new collection that we are bringing in July and August. Youcom, comparison base was also high. Higher temperatures with the winter that took some time to get colder, had a greater weight. We also saw a better performance in June that has been sustained in July. Camicado, positive same store sales in brick-and-mortar stores. Some stores were closed in the first quarter, but when we compared the bases, we had the 3.8 increase in brick-and-mortar stores. June was the best month, and this tendency continued now for the third quarter. The sales dynamic in June was growth with gain of packages, which is our internal measure to compare with the competition. In July, we continue seeing a positive trend. Our digital channel grew 7.1% year-over-year. Sales achieved 14.9%. Our delivery services continued to advance. Two-day shipping in Brazil achieved 51% of online orders, which is four percentage points year-over-year. In the regions of São Paulo and Rio de Janeiro, same, one-day shipping accounted for 50% of the orders. It's a two percentage point higher than Q22. We are improving our level of service with more efficiency. We had a 4.1 percentage point in expenses on digital sales, highlighting with a gain in the cost of acquiring clients, which is in line with what we explained, gaining continuously profitability in our digital channel. About gross margin, we had a loss year-over-year, especially because of greater need of markdown, a consequence of lower volume sold at the beginning of the quarter. The higher temperatures during this period also resulted in reduction in the demand for winter products, which affected the second quarter. It's worth mentioning that the comparison base to Q22, we operated with a gross margin similar to the pre-pandemic levels, which is very low in markdowns and a good mix of items in the sales of the winter season 22. Camicado recorded for the sixth quarter in a row, improvement in gross margin, 1.6 percentage point, due to continuous improvement of operations and the business side of the store. We increased our own brand Home Style in about five percentage points year-over-year. Markdowns, more concentrated in the second quarter, impacted our gross margin, but they were important to adjust the inventory in stores and favor transitioning for the big first spring with summer collection. We closed the quarter with the inventory position 4% year-over-year, which is a healthy position, so that the new collection plays a leading role in the brick-and-mortar and digital stores in the third quarter. The combination of cost reduction and adjusting inventory levels will bring us greater competitiveness, to healthy levels and gross margin, and a positive impact in the second quarter-- in the second half, which is what we expect. Now, SG&A of expenses. The SG&A grow year-over-year, especially due to reduction of sales volume, but also due to some additional expenses and non-recurring expenses that we had in the second quarter. The expenses were added to the new distribution center in Cabreúva, which impacted around 5%, about BRL 18 million. We're not capturing the operational benefits of our new distribution center, and we have some structures and duplicity during this ramp-up phase. Adjustments in the administrative and operation structures that resulted in specific expenses of BRL 17 million. We closed the quarter with a reduction above 10% in our administrative structure compared to 2022. Excluding these effects, distribution center plus structures, expenses would have stayed stable year-over-year. The digital channel improved its efficiency, especially about advertising costs. This effort in adjusting expenses already had an effect in June. We had an operation leverage. We're confident of this trend continuing in the third and fourth quarter. Our financial services. The results of our financial services continue to suffer pressure. The results of the first quarter were impacted of overdue portfolio with more than 90 days, with greater provisioning to potential losses to ensure the necessary coverage. Origination is limited, and we saw a reduction of the active client base year-over-year in the first quarter of 2022. The total portfolio showed a 13% increase year-over-year, but 6% of the portfolio paid in the due date. If we compare them with the March in 2023, it's stable. This reflects a smaller client base and a shopping behavior that is more careful. We're continuing with collection actions and activate the base to recover our customer base. Despite this more stable portfolio, we achieved an increase of revenues proportionate to the portfolio due to our re-pricification and the revolving interest rate, and also increase of revenue and services. We were able to maintain a level of expenses stable in the portfolio. Now, about the past due behavior. This is a new chart, we can talk about the current NPL. We've seen a delinquency in levels over 90, especially in May. When we look at this behavior and compare with data from Serasa, they show continuous increase of Brazilians that are delinquent in the months of this year, in May, this is in line with what we've been seeing with our portfolio. Even when we look at financial institutions that already reported to the central bank, this behavior is in line with other financial institutions have reported to the central bank in the past months. In the second quarter, those who had a worsening in over 90, were the older, what? Before 2022. Those portfolios before 2020, also had a worsening in their behavior, which shows this general delinquency in the economy as data provided by Serasa. Despite this behavior, we've seen improvements in the first ranges that are due one to 60, which favor future rollouts. June was the first month of the year in which delinquency decreased. We saw this also happen, especially in the NPL formation, which in June showed the lowest indexes in the past 15 months. Believing in a trend of improvement in the second half, due to the actions we took, together with a better potential of the macroeconomic scenario and the level of delinquency. Reiterating, the new batches, they continue showing a positive credit performance compared to the history, due to greater origination. We also saw that a greater balance between the offer of the Renner card in the last two quarters. 60% were of the originations, were at the Renner card, which reduces our exposure to risk. Our strategy is to originate in the Renner card. We look at the customer behavior, we can migrate or not to the co-branded card. We had a positive advance in the economy, our portfolio will also reflect a gradual positive evolution in its level of delinquency. As we said in our last earnings call, in the first quarter, the total adjusted EBITDA in the second quarter was pressured by the factors already discussed, which also reflected in our profit. It's important to mention that we closed the quarter with BRL 200 million of cash position above the first quarter, free cash flow generation, three times higher year-over-year. This result was due to good management of working capital, we're confident that the second quarter will bring a greater recovery. I would like to now pass the floor to Fabio before we go to our Q&A. Thank you, Daniel. Thank you, everyone, for being here. I would just like to summarize and reiterate a few of the messages that Daniel mentioned. We did have a very challenging first half of the year. During this half year, we took several measures that are necessary to adjust our operations. Some of them, we had already announced at our Investor Day and our last res- call, and some others that Daniel mentioned. With this, we feel that all these actions will bring an improvement in price perception in the customer journey. As we can see in NPS, price reduced its relevance as a detractor of NPS, which is a reflex of better execution of our work in price perception. In our new collection, in addition to unique products and quality and fashion content, offers more products in the entry price point, at lower prices in our value proposition. Additionally, other relevant items of the season with reviewed, more affordable prices, also according to our value proposition. Entry margins above what we've seen year-over-year, due to a better negotiation and lower cost of raw material, which allows us to work within our value proposition with greater affordability for our customers and with a more positive entry price point. These factors combined, bring us a balanced inventory position at the end of the cycle, going into the new collections with a very healthy stock position, offering more competitiveness to our new collections, and also in those places with a lower purchasing power stores. This has been favoring both the gross margin dynamics as well as sales in those places as of June. As Henry, our product director, said in our Investor Day, we continue advancing in our reactivity levels and developing our collections during the season. Buying and developing in shorter cycles, which allows us also to have a more assertive product for our customers and running lower risk of markdown. We have to mark down fewer times, which also helps sales and margin. Expenses, we conducted several adjustments in the structures, as Daniel mentioned, which is already reflect in the operational leverage as of June. Our digital channel also showed evolution of efficiency, advancing the level of service, growth not only in sales, but profitability. The work done in reducing expenses, increased margin, and is reflected continuously throughout the months. Our new distribution center in São Paulo, in Cabreúva, continues its ramp up as planned. We're being very careful to preserve operations in important moment like this one, so that's why we increase costs specifically. It's following the plan, both in costs and operations. We already have 6% of the store's volume being transactions through Cabreúva. This project is key for us to start reaching new levels of productivity, accuracy, and service in our operations, be them replenishing the stores or delivering straight to our customers. Improving sales and margins in the future. All these actions together with the strategic investments that are ongoing or already being done, and we discussed them in our Investor Day, can also be seen in the better performance in June and to date. All this together with our culture of enchantment, customer-centered, trying to overcome their expectations, also adjusted to our pro- value proposition, make us confident that we will have a second half of the year with greater competitiveness, growth, and profitability. I will conclude our presentation. Now pass the floor to Carla, who will help us with the Q&A session. Thank you, Fabio. We're gonna start our Q&A. The questions can be done in the Q&A button by writing or raising your hand and send them by audio. We have several questions in audio. I'm gonna start at them. The first question is Luiz Guanais from BTG. Please, Luiz, you can ask your question. Thank you, Carla. Good morning, Carla, Fabio, Daniel. I have two questions. First, if you could comment on this recovery rate that you're expecting for the second half. You mentioned that June was better. I want to understand that expectation in July, what you've been seeing so far. The second question is about price positioning. We've been seeing a strategy of looking at the entry price point, products, so if you could comment a bit, how will be the price position in the second half as well? Thank you, Guanais. Thank you for your questions. As Daniel mentioned, April and May were the months that suffered greater pressure on our results. In June forward, we had expectation, and we talked about this at the Investor Day, and we did see improvement in our earnings, both sales margin and expenses. Our expectation is operational improvement continuously from now on. This happened in June, already June and July. Our expectation is that with all these actions, we will have a second half better than the first half, gaining in operation leverage and productivity. About the prices, we talked about competitiveness and profitability. It's what you said, we're offering products at a better price point in our price pyramid and product following our value proposition, especially in those locations that are more price sensitive at the entry point, more appealing to our customers and with higher entry margins. Not only in P1, we've been working in all the important categories, in which the customer is more sensitive to price due to the landscape. To be more competitive, both through better developments, better negotiations, using also the advantage at the moment of lower costs in raw material, the exchange rate. Everything we have in favor of this price dynamic, and we've been able to transfer this to our customers to be more competitive, more affordable, but also with a healthy margin. Unlike the second quarter, in which we suffered more in margin, but because of a specific markdown, a higher markdown-... with winter products. Now we're talking about regular entry prices that are more affordable, with healthier margins, so that this will allow us to probably have lower levels of markdown. The trend is to have a second half better in all these aspects, so we have a better leverage. Perfect. Thank you, Fabio, for your answers. Thank you, Guanais. Our next question is from Vinicius Strano from UBS. Hi, Vinicius. You can ask your question. Vinicius? Vinicius, if you can come back with audio, I'll call you next, but I'll go to the next person. Ruben Couto from Santander, he's next in line, and then I'll go back to you. Ruben? Good morning, everyone. Thank you for taking my question. Two things: Fabio, if you could quantify the same store in July, if it was closer to breakeven or if the growth is above inflation, so we can understand the pace. Also about competitiveness. This effort that you've done, since the main-- how did the main competitors follow or had similar strategies? Now, not thinking about a markdown risk, but how do you feel about how competitive you are compared to your competitors? Thank you, Ruben. I would say that we're back to growing right now. I would like to show some numbers, but it's still early to do that. We only know what happened until now, but we're resuming our growth with healthier margins and with a more adjusted expense structure. That's why we talk about this operational leverage. About competitiveness, we still see, at the moment, a very aggressive scenario. A lot of people marking down their inventory, which we did beforehand. We did most of that in the second quarter. I think we have a lower volume of markdowns compared to our competitors, but we do have good prices with healthy margins to be competitive. I think in my opinion, we're a little bit better because we have a better adjusted inventory level. We did have that impact in the margin of the second quarter. What allows us to have a good relationship about what we have to mark down yet, but a lot of new products that help us sell in a more healthy manner with good competitiveness. We had some markdowns and also entry prices in all the ranges of the pyramid. Thank you. Very clear. Thank you. Thank you, Ruben. Vinicius isn't here. Maybe he lost his connection. João Soares from Citibank. Hi, João. Please, you can ask your question. Hi, everyone. Can you hear me? Yes. Okay, great. I want to explore two points. First, about cost dynamic, that you already mentioned about inventory at a healthier level. Thinking about gross margin going forward and the cost component, you-- when we look at raw material, freight, exchange rate, how are these components going to affect gross margin in the future? Not the pricing dynamic, but more about positioning of products. How do you think this will affect the gross margin? The second point is about the expenses that you mentioned in the press release. There was an important reduction of expenses. I want to listen to hear about quantifying this amount, about the structure expenses. We have to separate additional expenses from the distribution center. Considering the total amount of SG&A that we are going to look at in the future, how can we quantify that savings and expenses? Thank you, João. I'm gonna answer about the gross margin, and Daniel is gonna talk about expenses. About gross margin, there are some factors that help us. Some macro aspects. Raw material has a lower cost. We had high inflation in our sector, and that helped us with lower cost of product, and also the exchange rate. It's much more positive than in the past. There are other factors that are internal, together with our supply chain, that we've been working together with our suppliers and partners to improve operations and also improve our own developments, gaining agility, flexibility, and digitalizing-... both developing the parts and pieces in our production. This interaction is increasing in our supply chain, with gains to all sides, both in lead time, agility, flexibility, and also cost. Reducing the volume, unfortunately, in the past month, in a certain way, helped us and our partners to speed up and advance in these improvements. I think it's a component, part of raw material cost, part exchange rate, but also gain in efficiency, both ours and that of our partners, that allowed us to have better prices to our consumers with entry margins above the ones we had before. Now I was gonna talk about expenses. João, about the expenses, there are two questions. I'm gonna talk about short term for this year. First, we made several adjustments this year, especially in the first and second quarter, and will continue to offer us a lighter structure in the second half. The volume behavior is a bit different. We have variable expenses. First half, if we compare year-over-year with the growth in volume, you have a behavior volume in the second half, that is different. What's important to consider is that in June, we already had an operational leverage, earnings higher than expenses. What we expect is for this to continue to be an element that will bring us better profitability in the second half. What we're expecting is to continue in this operational leverage, with revenue growing above expenses. When we look forward, you asked about the savings for next year. It's in line to what we said last year. We have two things. First, non-recurring expenses like adjustments of structure that will not exist for next year. Part of these additional expenses of the distribution center that are not recurring and will stop existing, and you start reaping the benefits of the new distribution centers throughout the year. Effectively, we will have, next year, an expense base that is better than the ones we have this year, and this agenda of operational leverage becomes an element that will exist in the year of 2024. Perfect. Can you quantify? You can't quantify exactly how much less. I think it's still early. Let's see how we're gonna what's gonna happen after the distribution center is fully operational, but it's still early to give you numbers, but we will have a reduction in expenses with these elements I mentioned, which make this operational leverage continue to exist throughout 2024. Okay, great. Thank you very much. Thank you, João. Next question is from Dani Eiger, from XP. Hi, Dani, please ask your question. Good morning. Thank you for taking my question. I would just like a follow-up on the margin dynamic in June and July, and understand if you've seen any speed up, and if the increase in volume that you've seen in June continuing in July. My two questions: What is focused in Realize, how do you see the operations outlook? It's been an important driver for results, and if it's a more conservative scenario and what will happen with the results going forward, how much are you expecting? Maybe an inflection or stop to detract on the results. I would like to see that answer. Also, about the competitiveness, especially after launching news that Shein is adding to it, how do you see that? How are you going to address this increase in competition coming from these players? Maybe adjusting product pyramid and price might already counter that, how are you going to address or mitigate that effect in your earnings results? Thank you. I'm gonna talk about the first part. Let's split the answer here. June, July, and August, thank you for your question. About the dynamics, we've been having since June, an improvement. There are different dynamics. In June, we still had a higher volume of markdowns, selling winter items and starting some transition products. July, less markdowns and more transition, and now in August, even less markdowns, less transition, already starting with the products of the new collection. We have several collections throughout a season. Different product dynamics, but with much better results than in the first half, which is what I think is important. About Realize? Realize, I have no doubt that it's been affecting the performance of the year. What we've been seeing is that the level of delinquency that we've been seeing through several indicators isn't going down. The evolution we had in April and May, that we've seen at Serasa, was a surprise for many people, and it impact our portfolio without a doubt. Going forward, do we expect improvement? Yes. We have interest rates, but how fast will that happen? We believe that we will have a sequential improvement, but the speed will depend on how the market and the general delinquency of the market will behave. What we've been seeing is that it's much slower than not only us, but several other players imagine. We do think it will improve, but this year, we won't have a different scenario than we had last year. Let's see how this evolves, so that we can have a more positive evolution or not in our position and the total delinquency and the offer that we have in our portfolio. Your last question was about, on the one hand, the government understood that there's a problem and is addressing the problem. The Remessa Conforme is the beginning of that. If it was without control, and now it's improving with the platform, it's the first-- it's a positive initiative. The government has been saying that this is the beginning, and we'll look for isonomy, and that's what is important. It starts, we're looking for isonomy. The government has a positive trend going forward. We're starting to address the problem, and we expect that it's addressed correctly and quickly, but that's our expectation. On our side, what we've been doing is, as you mentioned, start taking several actions to increase our competitiveness in any way we can. That's our work, is to be more and more competitive and better for our customers. Excellent. Thank you very much. Vinicius Strano from UBS is back. Please continue. Hi, everyone. Can you hear me? Yes. Perfect. Thank you. My question is about suppliers. Could you give me more details about the initiatives to foster the supply chain and how this affects lead time? And about markdown levels, you mentioned healthier inventory levels. I would like to know what you think about the markdown evolution going forward, and how we can see this reflected in the gross margin. There are some levers in the cost of raw material that can help. Thank you. Thank you, Vinicius. In our Investor Day, we showed this, and we've been working more and more with data so that we can offer products that the customer wants to buy, the right products at the right time. The integration with the supply chain, digitalizing and data, what to produce, at what level to produce, also integrating data and a lot of the samples already digitalized, gaining both speed and cost, both for us and for the supply chain. Our inventory using RFID, which also has been bringing us some gain. It all retrofeeds itself. Both data, capturing trends, quantifying the trends and the products, the moment of the purchase, working more and more inside the collection. That's a trend, a positive trend to increase sales and reduce markdown. Margin really depends on several variables, but the trend is to have better sales and a reduction in the markdown. The markdown of the second quarter, as I mentioned, was more specific because we were betting more in winter than what actually happened, and we had to mark down. We decided to do the markdown earlier. That's why we're saying that we have healthier inventories. We could have postponed and diluted that impact in the 2nd and 3rd quarter, but we chose to do it earlier and more intensively in the 2nd quarter, which was assertive in our point of view, to start this 3rd quarter at a better inventory position and better margin projection. The trend we're seeing is to have lower, less markdowns in the 3rd and 4th quarter, but it's a trend. It depends on other variables, but it's a positive outlook to what we're seeing. Vinicius, we also mentioned in the release that perception of reactivity, how much are we going to design and produce within the season, is also helping us to adjust the markdown level, because you have greater reactivity and a closer response to what the consumer wants, which allows us to manage markdown better, and also shows the efficiency of the collection that you're offering. Thank you, Fabio. Thank you, Daniel. Thank you, Vinicius. Our next question is from Pedro Pinto, from BBI, BBI. Thank you, Fabio, Daniel, and Carla. I have a quick question about the ramp-up of the distribution center. I want to know your understanding of the ramp-up, if the curve is as expected, and what are the main milestones, so we can analyze better the evolution in the next quarters? Thank you, Pedro, for your question. The curve is within our expectations. We're not speeding up for safety reasons. It's an important transition. It's an important sales moment. We're gonna have more sales volume going forward. We created a plan and are following it, and it's exactly within our plan, with the main milestones already advanced. We understand that the major gain of the distribution center will start next year. More and more, as of now, it's already bringing some gains. Every month, we have incremental gains. We already have 60% of the volume of the stores being serviced directly from this distribution center, and we have a safety margin of increasing this little by little until the end of the year, so that we have contingencies and security, which will reduce costs. It's totally within plan, 100% according to plan. Thank you. Perfect. Thank you. Next question from Joseph Giordano from JP Morgan. Hi, Joseph. Hi, everyone. Good morning, Daniel, Fabio, and Carla. My question is about Realize. I want to explore three points. The first one is the Desenrola program. How do you see this opportunity, a change going forward in terms of credit risk? We've been hearing a lot about redesigning products and making it more appealing. When we look at interest rate levels and funding in eight and 10-time installments, that Realize is not interesting. I want to hear about those two points and how that evolves in time. Thank you. Well, thank you, Joseph. Let's talk about Desenrola Program. Desenrola has the potential of helping in reducing delinquency. It happened a bit late, and it actually didn't start, in fact. It's going to start in August and September. We're going to start people accessing the platform, and we see the evolution of these negotiations that will take place through the banks that already adhered. Will it reduce credit risk? Yes, but we're still waiting to see how this evolves in the next month. About redesigning products, it's what we mentioned in the Investor Day. We continue working with a digital account that is gaining more and more relevance. We have our loyalty program. You mentioned the eight installments. Of course, a reduction in interest rates and working with products that allow us to extend payment terms and charge interest is something we're looking at. We're testing it in some places, in 10 installments with interest rates, but it's not 7.99%, but lower. This is something that we do believe will help, especially when the consumers start to regain purchasing power, and we see improvement in the delinquency rate. That can help Realize and also retail for Renner. About product design, it's what we said at Investor Day. We're continuing to work with Realize to be closer to retail, working with products that leverage synergies between Realize and Renner, and that you can have in Renner's ecosystem, a greater share of the active base inside Realize. How you generate the advantages so that you can increase the share in the total base. Perfect. Thank you. Thank you, Joseph. Next question is Thiago Macruz from Itaú. Hi, everyone. Good morning. Fabio, I would like to talk about the distribution center. I think it's a very relevant project for you. It has a potential impact in several lines of the business. I want to hear from you, what are these impacts, in your opinion? I don't want quantification. I want to understand in a more qualitative point of view? Are we talking about improvement of gross margin, improvement in working capital, change in assortment at the store? If you were to rank order, what are the most relevant? In your opinion, what would be that order? Thank you. You answered your question already. All of that, when we analyze the operation, you mentioned some relevant important aspects. When I mentioned the timing of the plan, we could have done this quicker to already reap the benefits. We could have, but it's an important operation, and it's a more When we get close to Christmas, it becomes more complex and also close to Black Friday. We have to test the operation first. That's why we slowed down. We're testing to be confident that we can scale this much more. It brings great advantages in the SKU. You can be more assertive in inventory, so you don't need to buy more than you need for that store. You can buy what is actually necessary for the store. So you can work with a lower inventory, selling more, and that leads to less markdown. So we gain in working capital, margin, and assortment. That's very important. We gain assortment. We can expand, especially for the smaller stores and online availability, the number of SKUs we offer to our customers, and we are assertive. We expand assortment. For large store, the impact is lower, but it exists. For mid-size or small store, it has a huge impact, and sell more and mark down less. For online, I not only have 100% of the store inventory available, but until then, this will change as of next year. 100% of the inventory of the stores was available, but part of the inventory at the distribution center is available. Now we're gonna have 100% of the store's inventory, 100% of the distribution center inventory available at a much closer distance from the main markets, which also generates more sales. With the same inventory, with lower cost and with more conversion per lead time. You have margin, working capital, sales because of the assortment and conversion. Perfect. Just to make clear, you already have 60% of the distribution center running. The empirical evidence is going in that direction. You're proving your theory month-over-month. You can answer. We're... With the current evidences proving our theory, the online is only gonna start next year, so we have the ramp-up of the DC. Allows us to start operating 100% this year. Part of it will run as Christmas contingency, but we're testing it. That's our roadmap. For next year, it can operate 100% on and offline. Online, we have this gain next year, not this year. Offline, we're already reaping the benefits this year, and more and more as of next year. Thank you, everyone, for your answers. Our next question comes from Robert Roth, or from Bank of America. You have the floor. Thank you. Good morning, Fabio, Daniel, and Carla. What is the number of active cards of Meu Cartão, and are there benefits in the system and rates? Thank you. It was hard to hear you, Rob, but the number I'm asking, the, the proportion that are Meu Cartão, and if the benefits of the ecosystem are enough to support the cash structure. Today, we have around 60% of our cards that are co-branded, that are not just to buy at Renner. When you talk about, we believe, and we continue to believe, that this integration with the ecosystem will allow us to have either revenue from interest rates or revenue from services that is enough to have profitability of Realize. I don't know if that was exactly the question. I don't know if I addressed your question. Just to add, Daniel, it was a bit choppy. Your, your, audio was a bit choppy. The benefits. We started our loyalty program. It's only being offered at some stores, so we've been testing these benefits that can be greater for not only the card, but for all the programs. We've been seeing that the customers that adhere to our program have been using more frequently and spending more. In the next month, especially next year, we will be able to have more benefits to a larger number of customers, if I understood your question well. This tends to bring a higher number of active users of the cards, together with a reduction in delinquency, that in time will allow us to reactivate some of the clients and also acquire new ones. Reiterating what we've seen with those that already adhered to the loyalty program. When we have a repurchase, an average ticket is positive. On those places where it's already offered, you have loyal customers, it's following the trend of shopping more frequency, so you have something that justifies loyalty program with Realize. I hadn't understood in the beginning that it was the loyalty program. Sorry. To respect the time, we will have our last question. We still have other people waiting for Q&A and audio. We're gonna answer those that we received through Q&A. Those who we can't answer by audio, please send us your question by email, that we will answer, or you can call our investor relations department. Now, it's Goldman Sachs from Irma. Hello, everyone. Thank you for taking my question. I have a follow-up about Macruz's question. Looking at all the benefits of the new DC and looking forward, assuming that we will have a higher competitiveness and focused on value of the consumers, do you think that we could talk about gross margin that structurally could be even higher than historical levels? You need to reinvest in price will not necessarily make this happen. I also would like to confirm if looking beyond the 2Q, looking more towards 2024, 2025, if you could think that we can work with inventory-- lower inventory days. Hi, Irma. Thank you for your question. As I said before, it's very hard for us to state something about gross margin, because it has several variables, like raw material cost, production cost, freight, markdowns. The investment we made in the DCs and the investments we're doing in our production chain and products, and all the work we've been doing with technology, data, and investing in the team, distribution center, again, it's an important change. It tends to allow us to have higher gross margins. It depends on all these variables. We do have an important possibility of working with higher working capital and a better margin, even with a higher assortment that also addresses smaller stores and online stores, and also the opportunity of selling as well. About inventory, we're gonna work with smaller inventories, with better turnover and a possibility of working 100% through SKUs. You can structurally work with lower inventory days than we have today. The possibility exists in both gross margin and working capital. It depends on other variables as well, like competitors, but both, especially the working capital. Thank you. Last question about improvement in digital channel profitability. You mentioned CAC was due to more efficiency in advertising expenses or choosing less in CAC, so growth was below the previous quarter. Both factors. We've been having a higher brand presence, which bring us better traffic, so a higher level of conversion, and we've been more efficient, both in the brand positioning, the products, the collection, and lower investment, but a more effective investment. Our conversion has been increasing because we're more efficient in investing in marketing. Perfect. Thank you very much. Thank you, Irma. With this, we conclude our Q&A session again. I apologize for those we couldn't answer due to time, but they will be answered after the call. Fabio and Daniel, I don't know if you have any closing comments. I would like to thank everyone for being here, and we're here to answer any questions. I apologize for not having time to answer all of them, but we'll address your questions through phone calls, emails, and we're here to clarify anything we can. We're confident that we have a very positive scenario going forward for the second half of the year and forward. We've been working strongly in that direction, and it's what we said in our last Investor Day. It's what has been happening and our expectations going forward, we expect this to continue happening. Thank you, everyone. We'll see you next time. Bye-bye. Thank you. Have a great weekend. Thank you.