Good morning, everyone. Now we'll begin the call for Q3 of Lojas Renner. We have Fabio Faccio, our CEO, and Daniel Santos, our director. I'd like to say that this conference call is being recorded and presented simultaneously. We will present in Portuguese, so if you're attending in English, you can see the link on the chat or on our website. Any questions that come from journalists can be sent to press relations. The phone is 11 3165 9536. Before we continue, the initial disclaimer, so everything that we inform here, our business perspectives and forecasts, are beliefs based on the information that we currently have available, and are not guarantee of future performance, so they may or may not occur. About the Q&A session, questions can be made by chat, or you can use the Q&A icon, or even audio. Now, I'd like to hand over to Daniel. Thank you, Carla. Good morning, everyone. Thank you for your presence here in our earnings call for Q3 of 2023. well, Q3 was a challenge. On one hand, we have a strong basis for comparison, Q3 2022, plus a macroeconomic environment that's even tougher, BRL 70 million that are still delinquent. About sales performance. In Q3 2023 had a slight increase of 0.8% year-over-year, b ut considering Renner operation only in Brazil, the growth was 2% in the quarter, and same-store sales of 1.5%. That difference is mainly a result of the operations in Argentina, who is suffering in product import restrictions and the strong exchange rate devaluation that we've seen in Argentina in Q3. The consumption environment continues to be hard, especially in August, and the places that have a higher purchasing power with more pressure in the credit situation. As we mentioned before, it's worth noting the strong basis for comparison of Q3 last year, when the company grew 10.6% on average, double the market, according to the PMC. During Q3, we see a positive evolution of many changes that we made in the company in previous months and during the quarter. In price, we've evolved positively in the perception as the new spring and summer collection gained more presence in stores. The spring and summer collection was well accepted, and we had a higher offer of price, products with higher prices that are in some even more competitive. With all of that, the collection has been showing good sell-through during the quarter. At the end of the quarter, we began many campaigns for brand presence, 360 communication, integrated with the entire communication funnel, encouraging customers to visit the on and off stores. In addition to a more competitive value proposition, has increased the number of pieces purchased and then been growing since September to the current moment now, October, and even this first week of November. I'd also like to highlight the Camicado performance, evolved 6% in sales per square meter, presenting strong same-store sales of 9% in brick-and-mortar stores. We are still confident with the recovery of Camicado, and in the beginning of Q4, has already shown positive growth of total volume of sales. Our digital channel has grown. Now, about digital, about e-commerce, presented growth of 6.7% year-over-year, with a share of 15.3%. We continue to advance our service level, so the deliveries in up to two days have achieved 72% of online sales, 1% growth compared to last year, and in São Paulo and Rio de Janeiro, already account for 79% of orders, a growth of 1.5 percentage points year-over-year. We continue to gain efficiency in line with our ambition to equal out the SG&A of online stores with brick-and-mortar stores. We had a reduction of 6 percentage points in expenses over online revenues for Renner year-over-year. About gross margin in retail has remained stable year-over-year, but it's worth noting that it would have been 0.3% higher if we consider the negative effect of default that affected the margin in Q3 of 0.5 percentage points. Markdowns are at healthy levels in line with historical averages, and we have average inventory for the high summer collection. It's also worth noting the price adjustments and entry prices have not impacted the margin, so the new items have the entry prices in line with our historical prices for our collection. Once again, I'd like to highlight Camicado. In evolution in the seventh consecutive quarter because of operating aspects, better management of inventory and a higher share of owned stores and renters stores, where the margin is also higher in that case. About SG&A, the share on that over ROL has grown, given lower volume sales and the ramp-up of our distribution center in Cabreúva, in São Paulo. In Q3, where we had positive volume, we already see operating leverage, even with the additional expenses in the distribution center. The additional expenses of the new distribution center in São Paulo impacted our G&A by 8%, and we are still not capturing the operating benefits from the distribution center. We still have doublet effects, and ruling out that effect, the SG&A would have grown 4% year-over-year, showing the changes to the framework that we've done this year. We're also optimizing marketing investments, focusing on campaigns to strengthen brand presence and also streamlining our digital marketing. In that sense, the digital channel, as mentioned, continues to improve efficiency, with a reduction of 6.6 percentage points in the expenses over ROL of the digital channel, especially in advertising on the total revenues of the channel. About the results of our financial services division, have been pressured in Q3, but with a sequential positive evolution year-over-year. In September, we've already presented positive results and a trend that we've already seen in October. The growth of revenues was higher than the credit portfolio, showing better portfolio management and adjusting the risks, risk management. There was an impact of BRL 14 million in revenues, and that shows a mismatch of revenues. There was a change in the cutoff date for the bills, and that effect negatively impacts Q3, but it will be replenished across for Q4 2023. The losses were affected by the past due portfolio, considering the coverage that's necessary. In Q3 2022, we had a credit provision past due of BRL 24 million, and that benefit did not repeat itself in Q3 2023. Origination continues to be limited. We see a decrease in active customers year-over-year and also quarter-over-quarter. Total portfolio presented a growth of 3% year-over-year, but stable when we consider the portfolio that is on time, and also compared to July 2023. Lower customer base, more cautious purchasing behavior of the active base. So we continue working on collection and to try to recover as well, the customer base. About NPL formation, t he total past due have increased year-over-year, showing the scenario of delinquency in the market that is still challenging. As I mentioned in the beginning, the Serasa Experian data show an increase in delinquency rates when we consider September compared to June. We have BRL 72 million that are delinquent. In the quarter, there was an improvement in the formation of balance greater than 40 days. That dropped 21% quarter-over-quarter and 6% year-over-year. There was a drop in the number of individual taxpayer numbers that were delinquent of 7% quarter-over-quarter and 12% year-over-year. However, as a proportion of the portfolio, there was an increase of one percentage point and sequentially compared to Q1 2023 and the voluntary forming these, the new credit, as mentioned before, and a combination of less origination of a customer base that continues to be active, but they are containing their expenses. We also see improvement in the first bracket, the smaller past due from 1-60 days, and that will favor the future portfolio. About the vintage, if we look at the chart on the left, you see that new vintages have a positive credit performance compared to historical average. That's a more result of a more restrictive credit and aversion to higher risk profiles and balancing out private and co-branded. As you can see on the chart on the bottom, on the right, the Renner origination accounted for 60% of total origination. The volume of credit approvals was 39% lower than Q3 2022. On the top chart on the right, we approve customers that are minimal or low risk, accounting for 24% origination, compared to 69% in Q2 2022. The total adjusted EBITDA in Q3 had a drop of 21% year-over-year, pressured by the factors that we've already seen before. It's worth noting the non-comparability of other operating results. We had 24 million in credits that were recovered in Q3 2022 that did not happen again in Q3 2023, as well as other one-off items. In comparing the, a bit of Q3 2023 compared to Q3 2022 of BRL 88 million. As I mentioned before, sewing portfolio cut off for the bill, cut off date for bill payment and distribution center expenses. R emove these non-recurring, we're in line with last year. On the right, we have free cash flow. About generation and cash position, we have a net position of BRL 370 million, greater than Q3, BRL 3.3 billion in cash, and record flow in this quarter of BRL 600 million. That strong cash generation is a result of good working capital management and adequate inventory levels that we are operating at. We've also seen that in the financial cycle, that presented a reduction year-over-year, 134 days to 130 days. Now, I'd like to hand over to Fabio for his closing remarks. Thank you, Daniel. Good morning to everyone. I would just like to reiterate some of the messages. Daniel explained well many of the aspects here, but we did have a very challenging quarter. We already knew that, that was the expectation that we had, which is a result of not just the macro environment that is tougher, but also a strong base of comparison that we had, given Q3 last year. When we look at that, we've been taking the necessary actions to adjust our operations, as we mentioned during the Investor Day, in the beginning of the year, in the Q2. And what we've been mentioning in some of the meetings, we've been advancing also in our strategic projects. We have some specific adjustments to our price pyramid that strengthened our positioning and value proposition, and improved our competitiveness. At the same time, we've done that by preserving our entry margins, and that has enabled more sell-through of the new collection, improvement of NPS for customers, especially in terms of price, and in a consistent manner. I n September, we've already seen the beginning of that improvement, and in September as well, we've started many campaigns to reinforce our positioning. W e've built better positioning, we've built these actions better and started to communicate better the brand positioning, brand awareness in an integrated way, 360 degrees in all different media. W e continue to invest in that during this quarter and during 2024. We have aired a campaign, if you joined since the beginning, you've seen that, and there was a teaser as well. We'll see the new campaign on Sunday. Y ou can see these new campaigns that reinforce the closeness with our customers in an integrated manner. We're also more agile in our reactivity that's already higher than the pre-pandemic. 40% of the collection is being developed and purchased during the season, as well as our supplier chain is increasingly more connected and integrated with us. Those factors contribute so that we have more flexibility in servicing our customers and reflect in balanced out inventory and healthy gross margin. Thinking that we have sales that were not that high, but even so, we had inventory management and cash management that was extremely efficient, enabling us to be very well balanced, to go into this new cycle that has already started in September, continues in October, and will continue in November, of a moment of growth with sustainability, healthy margins and adjusted inventory with good quality as well. In terms of credit, we've already seen some signs of evolution that are a result of the restrictive measures that we've taken. We've also informed the market in August of the arrival of Paula Mazanék, and she's the leader now of Realize. With all the experience that she has, not only in credit, but also in developing and improving products and innovation, other important aspects to help us to expedite the evolution of Realize and offering our financial products to our customers, focused on our core business. Realize has also been showing since September and October good signs of improvement a nd we will still see more evolution moving forward. Our new distribution center in Cabreúva, in the final phase of the ramp up, and for apparel, it's in line with the plan. We have over 90% of our entire volume being purchased, stored, processed, and distributed per SKU. It's also important to note that during that phase, we have additional costs, such as what Daniel has just reminded us, and efficiency and execution. When we transition, we have cost redundancies, and we also lose speed because of the transition. T hat, without a doubt, was already expected. It's within what we expect, and there's a one-off impact in our Q3 in terms of sales efficiency. It's a step back to take five forward, and that's why we're so happy, because we're going through that moment and we will definitely, mo ving forward now, during the next year, we'll have a lot of fruits to reap. When we look at an operation that's completely omni-channel, from collection, development, storage, and distribution, we have a lot of benefits to reap from now on. Camicado, who was the first one to start the transition to the distribution center, we started off with Camicado and then go on to the fashion brands. Camicado's operation is very much stabilized and is reaping the benefits, not only in lead time to replenish stores, but also in cost reduction. In addition, we've intensified the actions to gain efficiency in the store portfolio, and in that case, those are different types of actions, not only closing stores with deficits and also absorbing sales in closer stores, and investing in store remodeling that contribute b ecause at first, when they're done, they do affect sales because we're renovating, b ut right after that, after we finish the renovations and remodeling, we have two big ones. They highly contribute to gain productivity. In addition to that, in terms of portfolio, we continue to inaugurate stores. We've inaugurated 21 new stores in that September year to date. For Renner, it was 10, and 90% of them in new cities. T hat's in line with our expansion program that we had planned for the year. These stores have shown an EBITDA margin higher when we compare to the vintage. N ot only reduction or the shutdown of some stores, remodeling others and opening others, has really helped us and will continue to help us increasingly more to bring on higher productivity to our store portfolio. We have robust liquidity with strong free cash generation, and those are key in the challenging context that we are going through right now. That really places us in a very unique position in retail, and as a result of all the investments and operating improvements that we've made across or during these past years, we do believe, and we envision that from now on, and it's not in the future, I mean, from now on, we have a gradual growth evolution cycle with profitability, sustainability, and consistency. That's what we expect moving forward, and we've been feeling that, and gradually, that's the expectation that we have. I think I've said too much. I'd like to hand over to Carla, and she'll tell us about the next steps for Q&A. Thank you, Fabio. Now we'll begin the Q&A session. I f you'd like to ask a question, you can do that by asking them out loud. Please raise your hand in that case, or click on the Q&A icon and send the questions. We already have some raised hands. I'll start off with the audio questions. The first question is from Luiz Guanais, from BTG. Hi, Luis. You can ask your question. One moment. O kay, there you go. Thank you, Carla. Good morning, Fabio, Daniel, Carla. Two questions on our side. Fabio, the first one, about what you mentioned, brand positioning. Could you tell us about how we should expect the average price evolution for Renner in the upcoming quarters? You've made some movements to increase competitiveness of your products in the past quarters, so I'd like to know what we can expect moving forward. The second question related to the first, could you comment on the volume breakdown for Q3, and what can we expect for the upcoming quarters vis-à-vis the price positioning? Thank you. Thank you, Guanais. Thank you for your question. I would say that we've been working in the past months in having more efficiency in the price pyramid, more competitiveness, preserving the margin. We've talked a lot about that. We've had in significant opportunities of bringing in more competitive prices for our customers in the many different price levels of the pyramid with healthy margins. So that hasn't been pressuring, putting pressure on our margin, margins. When we look at Q3, I'll start with that. When we look at Q3, I think it was more relevant during the quarter, especially closer to the end of the quarter. In Q3, we've still seen slight price growth, slight drop in volume, slight price growth, but differently than in the whole quarter. At the end of the quarter, we already saw the growth of volume, and that's been maintaining itself since then. We've seen more stable average prices. I would say that the price increase in Q3 was more about the mix than the price itself. S ince then, since September, October, and November, we've seen very stable average prices and growth coming from volume at healthy margins. T hat's the important fact. Is having to increase prices for margin. We can need good prices, be competitive, increase volumes, and having healthy margins. That's the positioning. We've improved competitiveness, and we've seen improvement in the current month. Moving forward, what we also expect. Obviously, we're talking about what we see today. This industry is always very dynamic. There's a lot of volatility, there are many issues in the equation, so our expectation is that our work continues as such. That's why we did the work. We believe we will go back to have good growth, mainly driven by volume and healthy margins. Thank you, Fabio, for your answers. Thank you, Guanais. Next question is from Thiago Macruz from Itaú BBA. Go ahead. Hi, I'm doing fine. Thank you for taking my question. My question is about the stepping on the brakes at Realize in retail. Macruz, just a second, please. Can you speak a little louder, please? How about now? That's better. Thank you. Sorry about that. Well, my question is about eventual contagion that could happen because of you stepped on the brakes with Realize, and how that, how that affect retail. Y ou see private label, the product that's mainly used to expedite retail sales. So we're trying to collect evidence. A re the two things connected? I'd like to know from you, do you have any internal assessment about that? What are you thinking about in terms of this topic? I'm asking this because there's a significant discrepancy in growth in this quarter compared to some other companies that we've been monitoring. That's my question. Thank you. Thank you, Macruz. What we've been mentioning is, as we've been saying, not only Realize, when we look at high delinquency in the country, that restricts the consumption power, especially in lower income classes that have lower purchasing power. Y es, we felt that. But even in such a scenario, we can see that things are at a more stable, at more stable levels, and we're already seeing signs of gradual improvement. It's not going to be that fast if we consider the entire context and scenario, but it will be increasingly better in that sense. W ithout a doubt, if we had more credit grants, that, that would positively affect sales, b ut in this type of scenario, with so many people that are delinquent, we would be doing that, the conservative restriction and credit, not only to preserve Realize, but also to sell and receive. If you do that, it's not, i f you don't get paid for it, it's a donation, right? W e have good opportunities to gradually have balanced out concessions. W hat we've been doing with new vintages and reviewing the credit limits, so that we can have Realize as it always played a part in our ecosystem, but in a healthy way, with a controlled risk and controlled delinquency. For us, that's a trend as well, a future trend of improvement, not only for Realize, but for also the other retail companies. We generate healthier gains and earnings in Realize, and we help retail increasingly more. We're at a turning point where we can gradually take this in a consistent and responsible manner b ecause we don't want to sell more by burning margin or granting credit at any cost. So it would be easy, but that's not the ideal for middle and long term. So we're still doing our work, and month after month, it should show better results. Thank you, everyone. Thank you, Fabio, for your answers. Thank you, Macruz. Next question is from Ruben Couto from Santander. How are you doing, Ruben? Good. Hi, everyone. Good morning. Two quick questions. First of all, still price. You mentioned that price is no longer a detractor of the journey. Can you explain a little more about the other offenders that you found in those, in that research? A lso, based on, about price, we've heard from other industry players a difference in performance in the stores in shopping malls that have higher income than the ones that's lower income. C ould you talk about Renner's context in that case, how same-store sales in Brazil has behaved in these different income clusters? If you're acting differently in those clusters that have lower performance now for the end of the year, or is it just the, pretty much the same kind of action that you'll have in all the different clusters? Thank you. Thank you for your question. Thank you for your questions, actually. I n our NPS, in terms of price, we were seeing a little more friction, so we did some work on that, as mentioned, and that quickly reflected on consumers' perception. I t improved our NPS a lot in terms of that. We have other detractors. We're also always looking at the others, so one's lower, the other one gains more relevance. O ur job is to consistently attack those detractors to reduce that. T here is a part related to delivering orders, be it speed, but also the makeup of that order. I think we've been improving a lot, lowering lead time, lowering the friction, but it's still a detractor that we're focusing on and improving more b ecause for every problem that we have, that leads to friction with our customers, and we want to enchant, we don't want to create friction. S ervicing online orders is a focus that we have, to not only improve the quality, but also lower lead time and cost b ut it's always a point of attention for all of us. W hen the price, per se, is not such a big detractor, other things come up, like type of service that we can improve in a store. I t's been different in some stores. And now moving on to the second part of your question. We have NPS for each store, for each channel. We can see that well, so that we can act. In the second part of the question, you're asking about the different clusters, right? A s we have different reasons according to store, what we still see, we see less of a difference, but in fact, there are stores that have a target audience that have lower income. Those stores have lower performance than the others. T he higher the income of the target audience in that place, the better the performance. The difference used to be higher, I would say. It's been decreasing, but that still does exist. Great, thank you. Next question is from Dani Eiger, from XP. Dani, go ahead. Hi, good morning, everyone. Sorry, I barely have a voice. M y first question is about the gross margin dynamic. You mentioned that you are protecting that, and based on the dynamic versus the past, we see that, but historically, you've always outperformed your peers in terms of profitability, given all the advances that you have in your homework a nd what Fabio mentioned, taking one step back and then taking many forward. I'd like to understand that balance between profitability and competitive dynamics, because we have seen the two main competitors, in terms of positioning, growing more, one giving up on margin and the other not, even with margin higher that you, than you'd have when we look at apparel. J ust to look at the positioning and the competitive market, starting off with the gross margin dynamics a nd my second question, about the trend. Based on your release, and I think most people believe that there, there's an improvement, not only in volume dynamics in retail, but also in Realize. You mentioned the positive results in September, but we had felt a more conservative tone on your side since September. I'd like to understand that better, if that trend has been better in margin, and if the perspective has remained for Q4. Thank you. Thank you, Dani. Hope you feel better, but we could understand your question. No worries there. A bout gross margin, I would say, like you mentioned and repeated that, we have investments that we make, and at the time of investment, sometimes it just doesn't generate return, only pressure, not only from the operation, but also the cost b ut after that, we get a lot of returns. T he distance that we created in the past for the, the investments that we made in the past, maybe some of them are coming up now, and now we're in a different phase of investments that we've just finished. A t first, when we invest, it is a step back, and then you open up steps for the future. W e have very positive expectations of going back to our best margin levels soon. The trend for Realize as of September in volumes. Actually, we can mention what's happening now, but why are we so careful in not mentioning too many things or promising things for the future? Because the scenario is still very volatile, uncertain, even when we talk about the short-t erm and Q4. Even though we're already in the beginning of November, most of Q4 happens end of November and December. Yes, September, October, and November, beginning of November, at least, the volumes have grown, and Realize has improved. September was positive, October was positive, b ut actually, to strongly state that will continue or not is very complicated. We still have a lot of volatility and uncertainty moving forward, and the most important part of the quarter of the year will happen still in the future, so we can't really affirm that, b ut the current trend is positive. It's a gradual improvement. It's not a strong turnaround, but it is a very important improvement, and we do have expectations that it will continue, b ut it's complicated to actually affirm that, and not just this quarter, but also during the upcoming years. We've invested a lot. We took that step back, and we've concluded. N ow we're moving forward. We're taking five steps ahead. There is a moment that we don't really need to make high investments in CapEx and OpEx, so now we're reaping the results of everything that we've invested. W e invested a lot, and now we'll start to see the results of that, be it for Realize or for Renner volume or for all the investments that we've made. We go into the phase of lowering our investments and starting to get the sales, reaping the revenues. Just to add to that, about Realize, once again, we have positive results in October, and we see NPL formation on a positive trend. Obviously, the market is still like we've observed. It's not that delinquency has had a strong increase, but we've seen all the work that we've done in containing that and restrictions. We are seeing the results of that, and October is an example of that continuity. Excellent. Thank you, everyone. Thank you, Dani. Feel better. I'm going to ask a question from the Q&A from Andrew Ruben, from Morgan Stanley. Andrew has two topics. First of all, the performance in the different store clusters. Andy, I'm going to consider that was already answered. T he second question is new stores. W hat our ideas are for 2024 and how street stores are performing versus small stores. Thank you, Andrew, for your questions. J ust to add, and how that fits within the store opening plans. Thank you for your questions. We're still budgeting to determine the right number for the store openings for 2024, b ut we will continue to act in the three ways in managing the store portfolio as I mentioned. We will probably and specifically have one or another store that we may close, Renner, Camicado, or Youcom, maybe. It's constant portfolio management, always looking at streamlining performance and when something makes sense or not, and surrounding units could take that in, which streamlines our total result. T hat will always be present. We'll always be doing that. The second thing that we always do in portfolio management is renovations and remodeling, that we constantly maintain that, and we continue to maintain that. We've completed some big remodelings this year. Some of our biggest stores in the past one and a half years, not all of them, of course, but in the south, one that we did a while back, Iguatemi Porto Alegre, that's a very important store for us here. We did that this year. We're concluding BH Shopping Mall. That's another important store. Finishing Center North in São Paulo, that's a big one. We did downtown Curitiba store, and during the renovation period, it does affect us, but after that, it's very positive a nd not just big remodelings and renovations, we've also made some small actions to improve sales and layout, how the store looks, without necessarily having to make major investments, and we've been doing that increasingly more as well. T hat continues, and store openings continue. You mentioned street store versus mall store performance. Thank you for that question, actually, because then we can really clarify that. T here's a difference between street stores in big cities, like metropolis, for instance. They've been losing performance. We've been closing some of those stores, actually, and prioritizing others in surrounding them or close by. What we've been gaining performance are stores in cities where we are not present. Some of them in shopping malls, some in small galleries, and others in downtown places, in small cities. They act kind of like the mall stores. Those perform well, and that's our expansion program. Close where it doesn't make sense, remodel where we have to, and open where we still don't have stores, and we need them. Those are performing well, above average in the stores compared to them, and we continue our expansion plan, b ut I have to apologize right now. I don't have a net figure for that because we're still studying and validating the portfolio for the upcoming year. W e'll continue with the expansion plan in those small towns, and that's been very positive. Next question, now going on to the audio calls, Vinicius Strano from UBS. Vinicius, how are you doing? Hi, everyone. Good morning, everyone. Fabio, Daniel, Carla. Question about Realize. You mentioned the new customer vintages with better asset quality, but still not very representative. A bout the portfolio duration, could you mention when we can expect that these vintages will represent more overall? A lso, if you could mention the strategy of private label vis-à-vis co-branded in the long term. S econd question about the distribution center. C ould you mention the capacity level that's currently being used, and how do you expect that evolving moving forward, and expectation of gaining operational levels leverage with that? Thank you. I'll take that one. Thank you, Vini, for that question about the vintages. Well, the new ones, obviously, they're new. They're vintages that went through a different sieve, so to speak. We expect that these vintages will have an evolution of their share in the portfolio, and during the year, they'll have a positive evolution. Obviously, that's also related to the entire strategy of being able to offer more product differentiation b ecause when the product is more unique, and if you have more benefits in that card within the ecosystem, the consumer would be more likely to spend with that card. T he evolution of that vintage will begin with the evolution that is Paula's objective, who just joined us. H ow can we have more differentiation s o you can have more expenses in that card? About private label and co-branded, the logic for origination that's higher in private label isn't a strategy change. It's related to a moment of higher risk, where you give a product that's private label, that has lower risk exposure. W e still believe in co-branded as a product that offers you more profitability with a good balance and online, but that will show how we will evolve the delinquency rates during 2024. About the distribution center and capacity, today, occupancy is 75%-80%. M aybe an indication that would make more sense right now is that right now, 90% of our operation is already going through the Cabreúva distribution center, meaning that we' ll pretty much close the year at 100% of the operation running in that distribution center, and we'll go into 2024 with the challenge of taking away the additional costs that we added in 2023. We believe that we'll be taking out approximately 50%-60% and speed up the benefits in operation. Many of you visited our distribution center with us in October, and everything that we mentioned in terms of precision and agility and omni-channel, as we're going to transition digital in 2024, and we can explore many different benefits that Fabio already mentioned before. I'd like to add to that. Y ou asked about private versus co-branded. Daniel, you explained that well, but it also enables us to talk about the strategy, that regardless of being private or co-branded, it's mainly focused on the Onus and the different actions that Daniel mentioned, the work that we've been doing, so that we have more stimuli for Onus, with good credit management and risk management, as well as benefits for customers, benefits that would make sense for them, and that the products, be them co-branded or private, with a strategy to focus on our core business increasingly more, and being able to do important work for Realize and the retail brands at Renner S.A. Great, thank you. Thank you, Vini. Next question is from João Soares from Citi. Good morning, everyone. Thank you for taking my questions. I have two. The first one is about credit. We already see some significant variables, and you're mentioning that NPL formation is dropping. You mentioned that the results are better, at least in September and October. What are the variables that would change your risk app, your appetite for risk and why you're concentrating on low-risk customers? We see that the big banks are even doing that as well. I know there's the issue about credit b ut we can understand the variables a nd about the store clusters. Is there still room for closing stores in areas of more difficult income? Understand that strategy to see if there's space for that o r if you're already comfortable with what was already done this year. I'll talk about NPL formation. What I see is that you clearly mentioned that the big banks, and in all the calls that I've seen so far, everybody's being very careful. H ow do we go back to origination faster? T he market is still careful, and we're going to continue like that. H ow can we optimize the base that we already have? How can we look at t he card base that we already have? B efore expanding, if we're increasing the number of cards, maybe we could use our base better because we already have it. T hat calibration between private and co-branded is a mechanism that we have, so we can work on origination. Looking at that, the risk and the exposure to risk, we know that we're gaining more traction, and we need to see how the total delinquency rates in Brazil will behave. How can we calibrate origination looking at the risk? That's the art and science that we're going to have to do, especially during 2024. That's opportunities for closing stores. Opening and closing stores is already part of retail. Portfolio management is continuous. To answer you directly, yes, we have an opportunity for closing some stores, and I believe that it's a continuous work that we do. W e do have an opportunity of growing number of stores. We will continue to open more stores than close more stores. Especially not just the stores that are bringing down our results. We can also use the stores that are close by, and that positively affects the company, because on one hand, you're taking away a store that's bringing down the earnings, but on the other hand, you're sending the sales to a neighboring store. T here are opportunities. T hen having opportunity to expand and then having a positive number, always comparing closures and openings. We also have to bear in mind the context. T here was an increase in shopping mall openings in the past seven years, eight years, a nd the best moment to get into the shopping mall is when it opens, because you get the best place and negotiation, but then you have to see how the shopping mall will evolve. A fter the pandemic, and after that huge number of shopping mall openings, there's the work that the team does to see, is that shopping mall working or not for us? W e can work then an equation to absorb it, like Fabio mentioned, and that's an exercise that we did in 2023, and we're doing that again, a nd without a doubt, it will result in some stores that you're going to have to close or decrease store area and always focusing on absorbing that as well. It's a continuous exercise, and after this boom in shopping mall openings, you can definitely do that with a higher number of stores within the store base that we manage. In addition to the shopping malls, there's a change in footfall and consumption habits, especially after the pandemic in street stores from big cities. That's why I wanted to separate it in Andrew's question, in smaller cities like towns, where actually downtown is the shopping mall for the, the city doing well, b ut the street stores from large cities we've seen, we've closed some because footfall has changed. W e had two in downtown Porto Alegre, and we closed one, and the other is doing far well. We had one in downtown Curitiba. We remodeled it, so now it's better. It's doing pretty good. T here's that, and stores in other cities that we've absorbed the traffic in some other stores. T he pandemic brought us more work in terms of portfolio management, b ut it has to be continuous. We know we're always have to do that, even under normal scenarios. Y es, there's always an opportunity. Thank you. Thank you, everyone. Thank you, John. Next question is from Joseph Giordano, JP Morgan. How are you doing, Joey? Hi. Good morning, everyone, Carla, Daniel, and Fabio. I'd like to look at the work that was done in the first half of the year and expenses in the P&L. P retty flat expenses, even when we adjust that with the distribution center, that's pretty flat year-over-year. I'd like to understand is it something that we should consider recurring moving forward? T hat's the first question. Second question is about inventory a nd robust cash flow of the company, controlled year-over-year. I'd like to understand of the new distribution centers. A lot of the volume goes to the distribution center. You've moved most of the suppliers to SKUs, and that would give you more agility in the Q4 for purchases. Then decreasing markdown, and then inventory turnover. Thank you. I'll start off, and then Daniel can add. Thank you for your question, Joseph. For expenses, at least in the Q1, when we look at the fourth, we have some positive aspects to happen still, because that was happening during the year. Even with higher expenses for some movements, and then reviewing the framework and teams and t hen we can collect a more positive effect, so we can get that positive effect as well. When we look at the Q4 moving forward in relation to expenses, we still believe there are some opportunities, and there's the non-recurring base that Daniel mentioned that we deactivate little by little. Would you mention anything else about expenses? No. When we ramp up, talk about ramping up, taking one step back and then five forward, not just the distribution center. We also made new other investments for developing production, distribution, supply, and replenishment. A t first, not only the cost increases because we're investing in doing and we're still not operating everything, but the operation gets worse as well because you have redundancies. You're still training people, you're increasing time, you're making the way you work worse, actually, b ut then we're very happy with the results, especially with the new distribution center. It's very much what we were planning. I s it already helping? No, it's not. It even gets in the way a little, so to speak. I n the performance of Q3, if we hadn't transitioned, it would have been better. It's really hard to quantify how much better, not just in expenses and sales as well. Q4 already has some gains. I'd say it already is becoming stable and not getting in the way, so to speak. It's similar levels that we had. The gains will be strong as of next year, gradually. A t this time, it's not only within the plan, but it's no longer a detractor in the operating side, still pressure on costs and next year b ut then it would be dropping our costs next year and gradually improving operations. For inventory, what I would mention is recovering reactivity would help us in inventory management. We weren't reactive in the previous levels, and we were going to evolve. A ll the work about reactivity that Fabio mentioned, that we're going to go into the season and already happened in Q3 with 40% of the collection that would still be closed, i t makes it better for you because you can see what consumers like more or less, and you can adjust things and change things. T hat has helped us in inventory management and gains in that w hen the distribution center is ready and it's fully operational be cause then we'll have SKUs and precision and agility, and then you close that complete model, and Daniel mentioned that well. W e could be developing that and of developing faster, producing faster with our partners, but at the end, it gets better as of now. M oving forward, that has enabled us already to not only have efficient management, but also more flexibility, more assertiveness. T he brand that we started working that way is the brand that's we're performing better. T hat gives that difference. We 're accelerating that model now, and makes us more flexible, more anti-fragile for any volatility. Perfect. Thank you. Next question is from Irma from Goldman Sachs. Hi, Irma. Good morning. Thank you for taking my question. I have two more questions, though, about Realize and operating expenses. I know that in Q3, there was a bit of noise of a tax credit that had next year and didn't replicate this year, b ut the fixed expenses. I'd like to think in that line, how should we think about that? There should be a balance in reinvesting in product innovation and bringing benefits, maybe strengthening the team. Obviously improve profitability and have more sustainable levels moving forward. The second question. You've had major evolutions in today's shipping, but I see that outside Rio and São Paulo, it's a bit not as much as, like 50%-52% now. How about that final delivery and the final transition to Cabreúva distribution center, should we expect that level to increase o r should we think that for the rest of Brazil two days shipping isn't really the sweet spot? Could it be more than that, even? I always think that it should be the sweet spot, but maybe I should look at it differently. Thank you. Thank you, Irma, for your question. Well, about Realize. That's true. When you look at that, and earlier, we were looking at Realize expenses versus the portfolio. In last year, we had a non-recurring, approximately BRL 12-13 million, that are credits from the relationship with the branded a nd then you see that these expenses are relatively stable, b ut about the future, Paula is here now, and one of the things that she's doing is looking at the entire expenses framework so we can understand what we can optimize. We have clear the objectives for the future, and Paula is going to do an exercise, and we're always going to try to optimize the framework, but also consider the new dynamic that we have in portfolio. W hat we can create to differentiate our product. T hen things she's going to look at, so to see what we can believe that we can change. About shipping in Brazil, an important aspect to improve that. You're correct about Brazil, Irma. It's about moving online into the new distribution center. That will happen during the next year, and then we can conclude all of Omni. W hen we bring in online to the new distribution center, then we can really streamline the lead time of the more distant locations. Piggybacking, actually, the tunnel that we have for daily replenishment for all of Brazil, coming and going to the main regions. To streamline that well. That comes in through the next year. Thank you. Thank you, Irma. Next question is from Pedro Pinto, from BBI. Hi, everyone. How are you doing? Good morning. Thank you for taking my question. Too quick on my side. Realize, you mentioned that, and that Paula is onboarded, and we know that the macro would obviously help the business in the future, b ut I'd like to know the micro aspect and mid and long- term, what kind of initiatives to strengthen the importance of the Realize product, contribute more with the ecosystem, and at the same time, decreasing risk? And by Paula onboarding that you mentioned, what's her mandate so far? What should be her main KPIs? T he capital structure and payout from 2024 moving forward. We see that the company's increased payout since Q3 last year, even to organize the capital structure after the follow-on and interest on old capital has also been important for tax shield, and it's important to have profits. I'd like to know what you think. I f you have a target for the net values, and if you have anything for 2024? Thank you for your questions, Pedro. Well, Paula's mandate is very much focused on the strategy that we've already, always had for Realize, and she's going to add to how to implement that better. Strengthen Realize according to our core business, and that to make it increasingly more important for our customers and focused on our retail operations in a healthy way, with benefits for our customers and benefits for retail, and financial health for Realize. F ocused on that, we've changed teams, tools. It's not a coincidence, it's not just macro. Of course, it's still early, and we've already seen improvement in results in September and October, and we expect that to improve moving forward. W e're much more in effort of focusing our efforts and resources to streamline our core even more, as we do with the entire company, without major needs to invest or expenditures. It's more about focusing, concentrating, and the improvements that we have, so we can also improve the customer journey and the Realize NPS, and also grant credit in a healthy way, and balance out the use of our credits even more. Streamlining that in our core business, in a way that it not only helps retail more again, but also in a healthy way for retail and Realize. H er mandate is in many aspects that. She started well, we're very happy a nd that will already start showing results gradually, obviously. Not only for internal aspects that we have to have, but also we gradually expect some improvements in the macro environment as well. Let's talk about capital structure. W e have been working with a higher payout, predominantly payments of interest on non-capital, and we did a share buyback in the beginning of the year. We had already done that in the previous period, and the challenge that we have is the limit of reserves. O bviously, with a cash of BRL 3.3 billion that we have today, and we paid in the first and Q2, interest on own capital, and now we should have the third and the fourth soon. O ur challenge is maintain payout at normal levels, but seek alternatives so we can use that cash and as return for shareholders. W e're going to do an exercise at the end of the year to see the best mechanism to use that cash and better return for shareholders. That's the conversation that we're going to have in the next 30-45 days. Perfect. Thank you, everyone. Thank you, Pedro. Well, now moving on to our last question. I'll pick one of the questions that are in line here in Q&A. Melissa from Bank of America. I apologize for not answering the other questions here today, as we've run over time, but they will be answered by IR afterwards. Melissa's question is very much connected to Pedro's about Realize. I f you like to give some more flavor about how we think of improving the relevance of Realize for our customers, we can give you some examples. H er second question is about cross-border. W hat are the expectations regarding import taxes, and what's the probable size of the increase, and when could that happen? Thank you, Melissa, for your question. When we want to improve the relevance of Realize for customers, I think we're very much focused on Realize and using our retail brands. It's not about competing with open waters or a bank, making Realize increasingly more important for our customers or each brand that we have a nd we do that, bringing in products with benefits for these customers in using them in our stores, and that they're increasingly more relevant when they use Realize. W e already have some very heavy users and highly concentrated at Realize. W e've done some very positive tests in having differentiated benefits for these customers, so it's positive for them and for us. T hat's been showing good results, and we should advance with that in the rollout and some of those initiatives. Anything else? No, perfect. About cross-border and taxes, something that's been talking about in the government, we monitor that through the associations. The scenario, it has been improving, because a little while back, even though taxes existed, they weren't paid. 60% of import taxes and ICMS varying from 17%-25%, but in practice, it was zero. W hat the associations are looking at is isonomy. We have a tax burden in retail overall, on average of approximately 100%. It goes from 80%-109%. E ven in our case, it's not the most critical one, but approximately eighty some percent. It's very high. When we talk about 80%, 100% or zero, right? It's not isonomic. It's better now. It went from 0% to 17%, so now the minimum tax for ICMS is being charged, and states are saying it should be the minimum, should be more, b ut from 0% to 17%, you already see a change in the share of that segment. And based on the information that everyone has, and also through the press and all government manifestations, the zero rate for imports, federal taxes, just for the beginning, it's not forever. A pproximately 60 days, the program started a while, but most platforms adhered in the middle of October. W hat we imagine and have the information about with you is that the second one, not the main one, of the federal tax, should be defined in the upcoming months, maximum end of year. In addition to ICMS, it will probably bring in a situation of isonomy, and that's what the associations are looking for and advocated by the actual government. Having that isonomy, that would make it a lot different. The way it is today, it's already better than the past, right? It should just improve moving forward, in our opinion. What we're working on, and for us, and the team is highly concentrated and focused on this, is becoming increasingly more competitive within our value proposition, even in non-isonomic conditions. W e're always encouraging ourselves and driving ourselves that even if this scenario doesn't change, we have to be more competitive, even though there's no, it's unfair, the isonomy is unfair. W e hope it gets better. If it's a little less, we're ready to compete even in the previous situation, and we have to compete for that. Any situation of being, this being more fair would favor us a lot. Thank you. With that, our earnings call for Q3 2023 is now over. I'd like to any final comments? Sorry for running over time. I'd just like to thank you all and say that we're coming from a strong cycle of investments that has pressured us somehow. We're going in through more into more stability now, and we have expectations of a longer cycle, positive cycle. We've been working strongly on that a nd we have growth, profitability, efficiency gains in a sustainable and efficient manner. That's what we expect and are working for. W e're going into that cycle now. T he expectation is that it is going to be gradual and working so that it's the best possible, more intense as possible, as fast as possible. It 's a cycle that we believe is positive moving forward. Thank you, everyone, and we're available if you have any questions. Thank you. Bye-bye.