Good morning. My name is Juan Pablo, and I will be your conference operator. All lines have been placed on mute to prevent any background noise. This is Liverpool's third quarter 2022 conference call. There will be a question and answer session after the speaker's opening remarks, and instructions will be given at that time. Today, we have with us Mr. Graciano Guichard, Chief Executive Officer, Mr. Enrique Güijosa, Chief Financial Officer, Mr. José Antonio Diego, Treasury and Investor Relations Director, and Mr. Enrique Griñán, Investor Relations Officer. Today, they will be discussing the company's performance as per the earnings release for the third quarter 2022 issued this week. If you did not receive the report, please contact Liverpool's IR department and they will email it to you. Please note that this call is for investors and analysts only, and questions from the media will not be taken, nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. They are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in El Puerto de Liverpool's most recent annual report. Please refer to the disclaimer in the earnings release for guidance on this matter. I will now turn the call over to Mr. Graciano Guichard. Thank you. This is Enrique Güijosa. Good morning to everyone. Thanks for joining us. As usual, I will quickly cover the highlights of our third quarter results, so Graciano and I can devote the rest of the call to answer your questions. I will start by sharing with you a very important milestone in our history. This month, we're celebrating our 175th anniversary. As you can imagine, we're very proud of this achievement, as there are not many companies in the world that have reached this mark. We are one of the first examples of a globalization, as a French immigrant opened a small store in downtown Mexico City in 1847 to sell merchandise that came from Europe through the Port of Liverpool. Throughout our long history, we have always been focused on serving our customers. Needless to say, this has required constant innovation and adaptability, with a long-term vision and built upon hiring the best people and maintaining a fortress balance sheet. Today, we are an omnichannel group with five business units and an ecosystem vision that takes care of its customers by living its mission of serving them everywhere, every day, and anytime, while being the most attractive option in price, service, assortment, and value. Moving on to Q3 2022, I am glad to share with you that once again, we had a strong quarter with a sequential increase in revenue and profitability across all our business units, and improving most of our key performance indicators. Furthermore, we moved forward in all our long-term strategic initiatives. As our total revenues grew 19.6% and our three business segments posted high double-digit top-line growth rates. Retail sales grew 19.7%, interest income increased 18.6%, and revenue from our shopping centers was 17.1% above year ago. For perspective, our total revenue of MXN 38.1 billion is 27% above Q3 2019. Same-store sales for Liverpool posted a 19.3% increase, while Suburbia's grew 16.1%. We continue to see customers returning to our stores as they feel more comfortable spending time away from home. Apparel, particularly formal and occasion wear, footwear, accessories, and cosmetics continue to recover the ground they lost during the pandemic. For perspective, ANTAD department stores reported an 11.9% increase in same-store sales during the quarter, while the apparel and footwear categories grew comps 17.5%. Retail gross margin of 32.3% was 40 basis points below year-ago. Higher logistic expenses and the normalization of our spring/summer sale markdowns were partially offset by a more favorable product mix. For perspective, retail gross margin was 40 basis points above Q3 2019. Our consolidated gross margin decreased also 40 basis points to 39.6%, mainly due to the above mentioned decrease in our retail margin. Operating expenses without bad debt provisions and depreciation grew 18% year-on-year. The main factors behind this increase are, number one, the variable expenses that grow in line with sales, like commissions to our sales associates, credit card fees, and packaging materials. Number two, the 22% increase to the minimum wage at the start of this year. Number three, investment in new talent, particularly in the technology and digital departments. Number four, sales staff increases in selected stores. Number five, general inflation. We have pursued a more aggressive growth in our credit card business in terms of origination, overdrafts, line increases, and cash withdrawals. Despite these strategies, we closed Q3 with a better than expected NPL ratio of 2.8%, 10 basis points below a year ago. It is important to highlight that this is the best NPL ratio for a third quarter that we have seen in at least the past 10 years. The value provision in our P&L during Q3 was MXN 332 million, 31% above a year ago. For the first nine months of the year, the value provision was MXN 590 million, a 16% year-on-year increase. Our bad debt reserve coverage ratio was 10.5% of our gross portfolio, 118 basis points below a year ago. Our nine-day bad debt coverage stands at 3.7 x. Both coverage ratios are above market standards. Finally, our net credit portfolio grew 18.9% and our total cardholder base was 6.4 million accounts, 9.7% above a year ago. Our Q3 EBITDA of MXN 6.2 billion was 18% above a year ago, while our EBITDA margin was a very strong 16.3%. For perspective, this figure reflects a growth of 220 basis points versus Q3 2019. Net profit of MXN 3.1 billion was 36% above a year ago, primarily due to the above-mentioned operating performance. Our quarterly results also reflect a reduction in interest expense due to a lower debt ratio and a higher contribution for, from our non-consolidated subsidiaries, particularly Sfera. Turning to our balance sheet, total inventories grew 26% year-over-year. This increase is mainly due to the normalization of merchandise receipts for the fall-winter season. Inventory position is in line with our expectations as we enter the year-end holiday season, which this year includes the football World Cup. We do not think it represents a profitability risk. For perspective, if we compare our inventory against the same quarter in 2019, it is 21% above, while retail sales are 31% above. Cash flow from operations during the third quarter was negative MXN 329 million. This was MXN 2.1 billion below a year ago, and our largest uses of cash year to date are working capital and the normalization of income tax advanced payments. CapEx during the third quarter was MXN 2 billion, almost 70% above a year ago. This brought the first nine months total to MXN 4.7 billion, and almost half of this amount was allocated to logistics and technology projects. Importantly, we have started to remodel our Liverpool Santa Fe store. Our shareholders agreed to pay a dividend of MXN 1.70 per share on their March 10th, general assembly. The first installment of MXN 1.02 per share was paid back on May 27, and the remainder of MXN 0.68 per share was paid on October 14. At the end of the quarter, cash on hand was MXN 13.2 billion, and our net debt to EBITDA ratio was only 0.48 x. We paid our Liverpool 17-2 local bonds due on August 19 for a total amount of MXN 1.5 billion with our own excess cash. Short-term debt is not a risk as the next maturity is until October 2024. In terms of new stores, on September 20th, we opened Liverpool Tijuana, which was the largest, the last large metropolitan area in the country without a Liverpool store. We will open Liverpool Mítikah in Mexico City on November 10th. Suburbia opened four new stores during the third quarter and another two early this month, which bring the total number of openings to this date to 10. We will open another five new Suburbia stores during the rest of October to complete our plan of 15 stores during 2022. We continue making significant progress in all our key strategic initiatives. Digital GMV was 23% above a year ago, and our digital share was 21%, basically flat versus a year ago. Our 1P and 3P total catalog was almost 40% above a year ago. Marketplace GMV increased 48% year-on-year as the number of 3P sellers and SKUs grew more than 50% and 60% respectively. Monthly active users in the Q3 increased 35%, and the total Liverpool Pocket downloads grew 53% year-on-year. We continue to make strides in the speed with which we deliver our digital orders. Our average lead time on a national basis improved 30% year to date. The percentage of deliveries in the five days or less bracket increased almost 40% versus last year. Furthermore, the share of home deliveries that were shipped directly from one of our stores grew 2.4 x to 16.7% as we continue to leverage our store network, one of our key competitive advantages. Importantly, the normalization of customer traffic to our stores is helping us to gradually bring Click and Collect back to the pre-pandemic levels. Click and Collect in Q3 was 34%, nine percentage points above the same quarter year ago. We completed the transition of our big-ticket logistics operation from Huehuetoca to our Arco Norte right on schedule. PLAN integrates for the very first time the big ticket logistic processes for Liverpool, Suburbia, and all our boutiques under one roof. On July 7, we launched our RUC or Registro Único de Clientes project. This is a key initiative in terms of convenience and security for all our digital customers. One very important functionality is our virtual credit card. We are now able to complete the end-to-end origination process for our cardholders on our digital platform. In just a few minutes, our potential cardholders will know if her line was approved, and if so, will be able to start using her credit card right away, both on our digital channel and also in our stores using her digital wallet. This is without the need to wait for her plastic card. Online origination already accounts for almost 15% of our credit applications. I would like to highlight an important foundational item. On July 7th, the Mexican Stock Exchange announced that we were going to be part of the S&P/BMV IPC Mexico ESG Index for the very first time. This is certainly a milestone for us and reflects the significant progress we have made on the ESG front in the past months. Finally, on the rating agencies front, just a few days ago, S&P announced that our rating for global debt issues was maintained at BBB, with the perspective improved from negative to stable. While Fitch announced that our rating and perspective were kept at BBB+ and stable, respectively. On November 15, we announced a passive investment in Nordstrom, Inc. We invested MXN 5.9 billion to reach 9.9% of Nordstrom's total shares outstanding. The objective of this financial investment is to diversify geographically, taking advantage of our strong cash position at an attractive valuation. Importantly, the mark-to-market valuation of this investment is considered as equity in our financial statements. Well, that's it in terms of our performance during Q3 2022. Let me share with you now the key challenges that we are foreseeing for the fourth quarter. The first one, of course, has to do with Mexico's lackluster GDP growth, which is expected to be close to zero during the last quarter-over-quarter. The second one has to do with inflation, of course. As you know, we will probably close the year around 8.5%. Since wages are not growing in real terms and interest rates have increased sharply, our customers need to dedicate a bigger share of their wallet to basic staples and interest expense. Furthermore, high inflation exerts pressure on our gross margin and our operating expenses. On a positive note, we have seen a significant normalization of supply chains and lower import expenses, particularly in shipping rates. Before we take your questions, let me quickly recap a few important points. Our company delivered strong financial results in the third quarter, and the work we have done over the past months has put Liverpool in a good position for the year-end season. We are confident in our ability to overcome the challenging economic environment and close the year on a strong note. Thank you very much. Now, Graciano and I look forward to taking your questions. Thank you. We will now conduct a Q&A session. If you would like to ask a question, please press the Raise Your Hand button located at the bottom of the screen. If you are connected via telephone, please dial star- nine. We remind you that all lines have been placed on mute. When it is your turn to ask a question, you will be unmuted. If you have placed yourself on mute, you will need to unmute yourself to ask your question. Our first question comes from the line of Sergio Matsumoto. Please state your company name and ask your question. Yes. Hi, good morning. It's Sergio Matsumoto from Citigroup. I wanted to bring up the Nordstrom investment for discussion. Just wanted to hear your views, perhaps the plan for that stake in terms of timeframe, and maybe more color as to the relationship with the Nordstrom family and management, and any synergies in over the long term if there are any that you can share with us. Thanks. That's my first question. Hi, Sergio, how are you? We feel that Nordstrom is probably the best-managed department store in the U.S. We have a certain relationship with the management, but not a big one. We've known each other for quite a while, since we are on the same world, the Department Store Association. They know our stores. We know their stores. It's a passive financial investment where we feel our shareholders were going to gain benefit of truly discounted valuation that Nordstrom was having. We are investing in a country which has significant less risk than Mexico or our other investments, especially, specifically in Unicomer. That's the main reasoning about the investment. It's geographical risk diversification. I see. Okay. Is there a possibility for you to, perhaps, share best practices with each other, or is that not really contemplated at this time? Not at the time, no. Okay, understood. Just if I may, one more on the big ticket merchandise migration to the new facility. Are we already seeing the efficiencies from that migration or are there still some redundant expenses at both facilities? On this quarter, there were some redundant expenses because we ended the move on September. So those are some of the redundand expences. Also, the warehouse, as you probably guess, takes a little bit of time to change the operations, so because we are operating on a more efficient way, but it takes a little time for all the people on the warehouse to learn how to operate that way. I would say on this quarter, there were redundant expenses, plus all the efficiencies were not captured because we were on a learning curve. Thank you very much. Thank you. Our next question comes from the line of Alan Alanis. Please state your company name and ask your question. Hi. Thank you. Alan Alanis from Santander. Well, first of all, congratulations for the first 175 years. That's a big milestone. I have a couple of questions. I'm also going to ask about Nordstrom, but in a slightly different light. I mean, when you did this purchase, Nordstrom was half of your market cap. And if you would have made an offer for with a 20% premium at the time of the price of the Nordstrom, you could have made a hostile takeover of the whole company and leave Liverpool under 3 x net debt to EBITDA. That would have changed, transformed completely Liverpool from an $8 billion company in terms of revenue to a $23 billion and create a the geographic diversification, but also it's the global transformation. Was this ever considered in terms of just doing more than a geographic passive diversification? Because you had the balance sheet to do it at that time before the poison pills that the family established, right after you purchased the 10% of Nordstrom. No. I mean, we frankly didn't consider doing anything hostile. It's not, you know, our style. We have never, you know, like, gone through that route, as you're saying. I mean, you have some opportunities, but, it's not our style. We prefer to do the 9.9% investment. That didn't require the FTC approval in the States. More importantly, I mean, it was definitely not a hostile move. Got it. Now in terms of the geographic diversification, I mean, would this also mean that, for example, if there's a department store in Europe that would be trading very cheap, that you would consider doing similar moves in terms of passive investments in other geographies, right? We are currently not. As always, we're not seeking for this. If the opportunity comes, we always have the ear to the ground. Got it. Last question. Thank you so much for those answers. Last question. You are seeing credit growth in non-performing loans. I mean, you have kept them under control, so congratulations for that. At the same time, on your prepared remarks, you mentioned that, I mean, you are seeing weakness in economic growth in Mexico and the high inflation, which we all know. How do you anticipate non-performing loans and credit evolution going forward, and how are you preparing for that potential deterioration? At what speed would you expect this to be reflected in your non-performing loans? Yes. As you were saying, Alan, I mean, NPLs have frankly surprised us. No, we have been surprised for several months now, both in terms of the top line performance, which we were expecting a slowdown. We haven't seen it. That's certainly very good news for us. Also, the same for NPLs. We have been expecting some, you know, like a deterioration of our delinquency rates. We thought, you know, when we gave a guidance for this year, probably six months ago, that we, at that point in time, thought that NPLs were going to close this year close to 3.1%. We are now seeing them ending the year at only 2.5%. That's a significant improvement. Reflects the excellent performance that we have year to date, and that we already have visibility for in terms of, you know, how things are going to evolve for the very short- term from now till the end of December. That's our expectation. While I am on that, also in terms of the provisions of what that takes in our P&L, I said that, also in terms of guidance, a few months ago that we were expecting an amount of close to MXN 1.2 billion in our P&L for this year. Now we're seeing that at MXN 1.6 billion. You might wonder why, if we're improving, you know, our expectation in terms of the NPL ratio from 3.1% to 2.5%. We are increasing almost 30% our charge in our P&L. This has to do with the fact that we are planning to end the year with a more conservative coverage ratio. We expected to finish that close to 10% coverage ratio. That's like 1.5 percentage points above what we expected previously. This is in anticipation of a challenging 2023 year. On the other hand, because sales have been, you know, performing well above expectations, our portfolio is also bigger than what we thought. This higher budget provision in our P&L has to do with both things, a more conservative coverage ratio and a volume effect. Got it. That's very clear and makes a lot of sense in terms of being conservative. But you haven't seen that kind of weakness this year because of the 2.5% that you're expecting towards the end of the year. Okay. Well, again, congratulations. Very impressive results. Again, congratulations for the 175 years of the company. Thanks. Thanks for taking my question. Thank you, Alan Alanis. Our next question comes from the line of Anabel López. Please state your company name and ask your question. Good morning, everyone. Yeah, here's Anabel López from GBM, congrats on the results. The question is regarding inventories and business dynamics. We have seen the inventory levels that have been growing above sales. Could you tell us how much of this increase is due to the anticipation of the World Cup and year-end promotion season, and how much is due to maybe stock filling or inventory accumulation? Hi, Anabel. I would say almost all of it is due to either the World Cup or certain bets we are making, for example, cell phones. We have accumulation in certain areas, but they are really, really small, like maybe exercise equipment or pajamas. But it's not significant. I would tell you that we are maybe 6%-7% above commercial plan, but sales are also above the commercial plan. We are really comfortable where we are in terms of inventories right now. Okay, thanks. Again, congratulations on the results. Thank you. Our next question comes from the line of Álvaro García. Please state your company name and ask your question. Hey, good morning. Thanks. Álvaro García from BTG. One follow-up on Nordstrom. I appreciate sort of the value case you see there, but I was thinking, Graciano or Enrique, I'm not sure who would want to take this question, if there was any thinking of making this investment outside of Liverpool. Maybe having paid a bigger dividend, having done that investment on a more personal level or at a family office level. That's my first question. Thank you. Yes, that was always an option. We see not Liverpool, but El Puerto de Liverpool as a holding company for retail companies, where we have credit and commerce, shopping malls, Liverpool, Suburbia, and Unicomer. It made sense to do it under the El Puerto de Liverpool umbrella. Okay. Just one quick update. I don't know what your plans for Huehuetoca might be, Enrique. I don't know if there's any plans on that specifically. Originally, it might have been for sale. Any update there? Yes, we have decided. I mean, we considered the two options, of course. I mean, whether we wanted to sell it or to lease it. Considering, you know, the appetite that we see for industrial properties in Mexico, we decide to keep it and lease it. We are, as we speak, in conversations with a group. We are in the final stages. We hope that we will have a signing agreement in the next couple of weeks and probably start collecting rent early, very early in 2023. I mean, the potential revenues to Liverpool are going to be, I mean, for on a full year basis, at like MXN 140 million per year. Great. I mean, actually, I'll circle back. Too many questions on my hands. Thank you very much for the time. Appreciate it. Thank you, Álvaro. Our next question comes from the line of Andrew Ruben. Please state your company name and ask your question. Ruben with Morgan Stanley. Thanks very much for the question. It was really another very strong quarter out of you guys. I recall when we were on this call, three months ago, there was a tone, a bit of caution maybe on some of the macro-related items. I'd be curious on your perspective of what played out in the quarter better than your initial expectations, and if that experience informs how you're thinking about, say, 4Q or next year. Thank you. We see clouds and the storm all around us, but it hasn't yet hit. No, we're still very cautious in terms of provisions, in terms of inventory. We still believe that the next 12 months are going to be tough. Maybe not this quarter, but early next year. We said that last time, so you know, we feel it's still going to be a tough environment, and we need to be prepared for it. We are trying to have costs under control in case when the storm hit, we can reduce them really fast. When the sales grow as they are doing, you can hide a lot of inefficiencies, but we believe they are going to slow down in a little bit. We're trying to kill all those inefficiencies beforehand. To give you some color in terms of expectations for the fourth quarter, I mean, we again are assuming that we will see a sharp slowdown in terms of our sales. Again, as I said, again and again, we have been surprised by how resilient the consumer has been. In this case, both Liverpool and Suburbia performed very well. For the fourth quarter, we're expecting total sales retail sales growth of around 10% for both formats. That's a significant slowdown of the close to 20% that we have seen, we saw in Q3. Again, we have been surprised by how strong has been, you know, the first half of October. We went through our anniversary and special promotions, special sale, and Liverpool grew 35% year-on-year, which again we were frankly very surprised. Hopefully the 10% that we're foreseeing is once again conservative. Eventually I think that we will see a slowdown probably in the first semester of 2023. Get some insight into the thought process there, and the expectations. Thanks very much. Thank you, Andrew Ruben. Our next question comes from the line of Joaquín Ley. Please state your company name and ask your question. Hi, good morning, Graciano and Enrique. Joaquín Ley from Itaú. Congratulations on the results, and thank you for the call. Two questions here. First, store deliveries in the third quarter were 17% of the total. I understand that the other 83% are not done from the distribution centers, but from most of them from other stores that are not necessarily the closest to the customer's address. Where can we get in terms of direct deliveries from the stores? How long it's going to take us to get there? What does it take to get platform once you get there? Hi, Joaquín. Not necessarily. For example, in Mexico City, it is not always the most efficient way to deliver directly from the store. In Mexico City, that you have several stores where you can join the delivery route in a single warehouse, it makes more sense not to deliver directly from the store unless you're like one block away from the store. Because then I would have like two or three trucks on the same address at the same moment. I don't know if. In certain cities, Monterrey, Guadalajara, Mexico City, it makes more sense to have a route from all the stores to a central warehouse and have more efficient routes of delivery. It's not necessarily an inefficient way. If we have it, for example, Mérida or Tampico, then it makes more sense to deliver directly from the store. In certain geographical areas, it is not necessarily better to deliver directly from the store than from a warehouse. Is there an optimal level that you think of for deliveries from the stores? Today, we're not at an optimal level. The problem is not the last mile. The last mile is actually not the most difficult part to resolve. The problem is having the inventory in the correct place beforehand. We are doing a complete change in the way we purchase. We bought with a partner from the U.S. called o9. We bought a software system where we are planning assortment, allocation, and planning. The planning part is done, and the allocation part, which is the most important, is going to be done April next year. Give or take, it will take us, I would say, another year to have all the artificial intelligence getting placed. I would say we will be reaching at the end of 2024 a lot better, a lot better place than what we are now. All right. Understood. Thanks. The second question is on the online business. I mean, pointing out the obvious, I mean, given that burning cash today is not as cheap as it was, 12 months ago. How have you seen competitive dynamics, if at all, changing in Mexico in the e-commerce space? I mean, I understand Shopee is out, for example. I think that, you know, as you know, I mean, most important, you know, competitors on a local level are Amazon and Mercado Libre, and I don't think they're facing, frankly, any squeeze in terms of cash availability. Walmart is basically on the same place. I don't think that they're like being hurt by higher borrowing costs. As you're saying, some of the, probably the aggressiveness that we were seeing from some of the platforms from abroad are going to be less aggressive in the short terms. We continue to see Shein also to be very aggressive. Unfortunately, we don't see any, you know, like, reduction in the competitive pressure on the e-commerce side, frankly. Okay. Thank you and congratulations again. Thank you, Joaquín. Thank you. Our next question comes from the line of Héctor Maya. Please state your company name and ask your question. Hi, thank you very much. This is Héctor Maya from Scotiabank. Thank you for taking my question. Wanted to go back to Nordstrom. We were very surprised with this transaction because we thought that probably there were more pressing capital allocation options. I don't know, like investing in fintech or logistics systems or even start-ups to leverage their technology. I mean, becoming more aggressive to develop or accelerate an in-house merchandise management system or even adapt your footprint as e-commerce hubs or, you know, an extraordinary dividend. Seeing Nordstrom's valuation and that your influence in the company might seem limited left us with the impression that this acquisition follows kind of a more traditional or conservative mindset over a more innovative approach from a business standpoint. I wanted to know how I'm misreading this and how Nordstrom was the best use of that close to $300 million over other options. Thank you. Yes, thank you, Héctor. Well, let me state very clearly that the fact that we, you know, devoted this almost $300 million to the acquisition of the Nordstrom stake by no means we are, you know, like not pursuing our strategic initiatives. I mean, we have the cash on hand in order to continue pursuing our strategic initiatives. We have very strong, you know, CapEx plan for this and the next several years. The projections that we have suggest that we, I mean, we will not be, you know, in a cash squeeze, and that will force us, you know, to reduce the investments in this, again, strategic initiative. That was very clear since the beginning in order to consider whether we wanted to pursue or not just the Nordstrom avenue, let's say. I mean, that it was very clear for us that by no way that we were going to be under-investing in the opportunities that we see strategically. I would like to add that on your question, Héctor, we also have a little office called Liverpool Ventures that Enrique oversees. That office is exactly in charge of what you said. We do a small investments on startup companies, but they are not material. But we do them quite a while in companies that we feel have technologies that can improve our technologies without us having to do them inside. We have seen, I mean, in terms of our strategic planning, we have seen, you know, where there are like any companies that may complement things like, for example, software development. We had a discussion internally where it made sense for us to buy a software development house in order to, you know, increase our capabilities on that front. Frankly, after long, you know, discussions, we decided that it would be very difficult for us to integrate such a company inside a portfolio pool. It was better for us to grow organically, and that's what we're doing as we speak. We have, you know, like, taken a thorough look at some other opportunities that may make sense as fintech, for example. We also thought very hard about the Fintech options, and in the end, we decided to do the partnership that we announced with Actinver. Again, we think that we have, you know, the strategic plan in place and we have the funds in order to invest what we need to achieve our goals. Thank you. Thank you very much. Also on that, I wanted to know, I mean, after the announcement, we saw the reaction by the market on the news. Just wanted to know, I mean, probably it would have been a little bit more constructive to have a conference specifically to address the transaction. Just wanted to know about the rationale on why you didn't come to the market with a conference to clear some things out about the transaction. We thought it was not as relevant as obviously you guys are thinking it was. We didn't feel it was relevant enough to have a conference for it. Yeah, I think, if it was not, you know, like a passive investment and that it was a completely different thing, I'm sure that that we would have, you know, gone for a conference to explain to you guys all the strategic rationale. Being a passive investment and the three lines that we announced was frankly everything we had to communicate. There was no need, we thought, about, you know, putting together like a one-hour conference call to read the three or four lines that we announced, and that are the ones that we are sharing with you once again right now. Got it. Thank you. Thank you very much. Just very quickly, a second question. This one is related to what we saw with ANTAD, particularly a deceleration in September. Wanted to know if you could tell us if the levels seen in that month look like what you have seen. If you are thinking about September as a possible average or even as a possible floor for what you could see in 2023, you know, considering that estimates are seeing inflation as gradually coming down next year. We did. Actually, our top line was really good on September, so no, we did not go the same way as ANTAD did on September. Again, we do see a deceleration for next year, maybe the end of this Q. We still haven't seen it. Obviously, it's very difficult to say how things could get worse in 2023. We are still seeing very strong results this year. Thank you. Thank you very much. Congratulations on the results. Thank you. Thank you, Héctor. Thank you. Our next question comes from the line of Antonio Hernández. Please state your company name and ask your question. Hi. Good morning. This is Antonio Hernández from Barclays. Thanks for the call and congrats on your anniversary and results. Just two quick questions on Click and Collect. You reached about 34% of the retail sales. What is the target there? Because I mean, in the end, it's something of course very good for online results because you don't have to pay for that last mile delivery. So do you have any target there and how is it versus pre-pandemic? A quick follow-up would be on the results for October. You mentioned that the Liverpool format has performed quite well. Is that the same for Suburbia or are you seeing a slowdown in Suburbia? Thanks. We don't have a target for click and collect. We have to have click and collect the best for our customer, but we leave the customer. We don't promote it. We feel that the customer has to have the decision. That's always been our mentality. We're customer-centric. We need to deliver really fast, but we need to have the best click and collect experience and whatever the customer wants. Having said that, pre-pandemic it was around 40%, so we feel it's going to end somewhere around there, between 35%-40%. In terms of October, the sales that Enrique said were of Venta Nocturna, which is only for the Liverpool format. We are having a Noche Morada for Suburbia, but it's still really small. Right now, Liverpool seems a little bit better in terms of the month, but it's mainly because of the Venta Nocturna, not because of day-to-day sales. Okay, perfect. Thanks a lot. Have a great day. Thank you, Antonio. Thank you. Our next question comes from the line of Rodrigo Alcántara. Please state your company name and ask your question. Unmute. I think you're on mute, Rodrigo. Sorry about that. Rodrigo at UBS. On the logistics expenses, just wanted to hear your thoughts about, I mean, was it driven by the higher e-commerce penetration that said, should we expect like a structurally higher levels of logistics expenses o r do you think that it was also another factor that drove the increase on all logistics expenses? That would be my question. Thank you, Enrique and Graciano. Last Q, as I said, we closed Huehuetoca on September, so we had Huehuetoca and PLAN working together simultaneously. I t increased the expense we had on logistics artificially. We should not see that double expense on this Q. Yeah, that's clear. Thanks. Thank you, Rodrigo. Our next question comes from the line of Irma Sgarz. Please state your company name and ask your question. Yes. Hi, it's Irma Sgarz from Goldman Sachs. I just have a few questions. Thank you for allowing me to ask them. One is regarding any relevant mix effects that we should consider for the fourth quarter this year, just given World Cup and obviously different timing than another year's that's normally in the second quarter. Just to understand sort of whether you have anything that we should consider in terms of, you know, greater TV sales are typically dilutive obviously for gross margins, but then there's also apparel associated around that o r maybe it's not relevant enough overall. Then secondly, Financial expenses seem to have come in sort of below our expectation generally, and I was just wondering if there's anything specific that you'd point to. It's a bit more of a technical question, so I'm happy to work through it afterwards if there isn't anything comes to mind. The third question is, you did mention your competitor like platforms like Shein remain quite aggressive. Is there anything that you are sort of adjusting about how you are doing business or what you're sort of taking from what you're seeing in terms of new innovative approaches coming to the market that you're sort of trying to translate to your business or where you're trying to be nimble and adapt a little bit? I'm just curious to hear any thoughts on that. If you want, I'll start with the World Cup. It usually is relevant in terms of TVs and the Mexican shirts, the Mexican soccer team shirts. It is relevant. I don't know how good a team we have this year, so if we lose against Poland, the moment Mexico loses, the sales stop. Usually in the last World Cup, it has been a little while before they stop, but I don't know on this year. I'm going to turn to Enrique for the expenses. The financial expenses, I mean, the reduction that you see has to do with two things. I mean, first, we throughout the year we had two maturities in terms of CEBURES, or the total amount was like MXN 3.4 billion in total. MXN 1.9 billion in March, and then MXN 1.5 billion that we just paid in November. We have a lower debt, gross debt. On the other hand, what you have seen is also that the cash on hand has been higher than what we expected. Also, the interest rate that we get on our investments is way higher than it was a year ago. Today, we are investing our excess cash in the neighborhood of 9%. Our debt is below 8%. Net-net, you know, we are a little bit ahead in terms of the active at the passive rate. That's the reason why you're seeing net interest expense going down. We also have the other one of Shein and all the other platforms. We are always looking at what they are doing, both here in Mexico and outside. There are some markets that are really good in terms of dot-com sales, especially Asia, and we try to innovate on all those things that we see. There are a lot of things going on, but we're trying to see what everybody else is doing. Okay. There's nothing specific that you'd call out? No. Whether it's supply chain or front end. Okay. All right. Thank you. Thank you, Irma. Thank you. Our next question comes from the line of Ulises Argote. Please state your company name and ask your question. Hi, guys. Thanks for the space for questions. This is Ulises Argote from JP Morgan. Just a couple of quick things here. The first one, obviously the first nine months have been very strong, but you're kind of getting a little bit to a more challenging fourth quarter. I just wanted to get your thoughts on how you're seeing the year ending, maybe in terms of EBITDA margin. This obviously has been a big focus point here on the discussions. The second one was just a follow-up around the questions on the Nordstrom stake. I think it was on the first question, and I'm sorry if you already addressed this and I didn't hear it, but do you have any kind of timeframe in mind for keeping the shares or any level where you would be looking to cash in the position? Just any thoughts on this would be very helpful. Thank you, guys. Yes. Thank you, Ulises. A s you're saying, I mean, we're expecting a slowdown in Q4. Again, we haven't seen it yet, but in terms of our financial plans, we've locked in a 10% increase for Q4 in terms of total sales. In terms of EBITDA margin, we expected to close the year, I think at the rate between 16.6% and 16.8%, more or less that's going to be our range. That's going to be almost a full percentage point above year ago. That's the expectation again is that, we're going to end the year on a strong note, and it's going to be a record year in terms of revenues and in terms of profitability for sure. That's, you know, the perspective in terms of profitability for the year. In terms of a timeframe for Nordstrom, no, we think this is going to be a long-term investment. We frankly, it will be a very, you know, surprising if we, you know, like, get rid of the investment, quickly. You should assume that this is for the long term. Okay. Very clear. Thank you very much. Thank you. Thank you. We have time for one more question today, which comes from the line of Nicolas. Please state your full name and company name and ask your question. Thanks very much. It's Nicolas Riva from Bank of America. Thanks for the chance to ask questions. A few questions. The first one, so there was some inventory build-up in the third quarter, increasing inventory. You burned some cash, and I wanted to ask about your thoughts on inventory levels heading into holiday season. It seems that seasonally they are. There tends to be an increase in inventories in the third quarter, but any color on that? That's my first question. My second question, on your guidance for total retail sales, did I hear correctly, did you guide for 10% growth in total retail sales, this year? It seems to be conservative given how much you have grown in the first nine months of the year, if you can confirm that. Third, as you said that the NPL ratio has been quite resilient, much more resilient than you even thought at the beginning of the year. As you said, you are building up some provisions and some coverage of NPLs this year, which tells me you expect some deterioration in NPLs next year. If you can talk a bit about NPLs for next year, your expectation at this point for the NPL ratio for next year. Maybe finally, fourth and last question, given the equity investment in the U.S. department store in Nordstrom, if you can, you know, discuss a bit or give us any color in terms of allocating the cash position towards the buybacks as you did last year's buyback, some of the 26s versus equity investments like the one you did in Nordstrom. Thanks very much. In terms of inventory, as we said, we feel we're in a really good position. We are probably 6%-7% above inventory plans, so it's not really relevant. The sales are better than planned as well. Enrique said 10%, but on the fourth quarter, not on the whole year. Because on the whole year, we'll have to do a really bad fourth quarter. In terms of provision, there are two things. Having a record provision on the downside is good, but it also limits sales because probably we could have more credit delivered. We are planning to grow our NPLs to somewhere around 3% at the end of next year. Enrique said 2.5% this year, so it's 3% next year. That will with the increase in the overall volume of the portfolio. That would mean we would have to have a creation, a big creation of provision next year. We're taking a little bit of that creation this year. Just to give you some color, I mean, in terms of Graciano saying NPLs for next year, we're expecting them to end at 3.0%. That's 50 basis points above this year. That reflects the fact that we expect a more difficult, you know, like a macro environment, which is, I mean, something that makes sense. In terms of bad debt provisions, as Graciano is saying, we are expecting a big increase in bad debt provisions for next year. This year, I said before that we expect to close at MXN 1.6 billion. For next year, with this higher delinquency rate that we're expecting, we expect them to grow almost 50% to MXN 2.5 billion. That for sure will put some pressure on our margins obviously. Again, it comes hand in hand with the more challenging macro environment and what that means in terms of collections. Enrique, just to confirm I heard this correctly. You're the NPL ratio as of September end was 2.8%. You expect that to decrease to 2.5% by the end of this year because of all the growth that you typically have in the loan portfolio in the fourth quarter. Next year, you're expecting the NPL ratio to increase. Did you say 3% or 3.4% by the end of 2023? 3% flat. Okay. For loan loss provisions, you expect MXN 1.6 billion this year and an increase to MXN 2.5 billion next year for provisions? That's correct. Yes. Okay. Perfect. Yes. I'm glad that you understood me. Thank you very much. My last question, just in terms of any thoughts in terms of using the excess cash position towards potentially some debt buybacks like we did last year or more equity investments like the one in Nordstrom? No, no. I think that we are not expecting to do any, I mean, none of what you're saying. Nothing in terms of additional investments in Nordstrom, and also nothing in terms of share buybacks. I mean, we're planning also in terms of guidance for next year. I mean, in terms of CapEx, we're expecting to be in the MXN 10 billion range for next year. That's going to be a significant increase against the MXN 7 billion more or less that we're going to invest this year. Again, we don't have any plans to invest in buybacks or in increasing our Nordstrom stake. Okay. Thanks very much, Enrique and Graciano. Thank you, Nicolas. Thank you. That concludes our question -and -answer session. I would now like to hand the call back over to Enrique Güijosa for some closing remarks. Well, thank you very much. Thanks for your questions. This was a very lively session, and hopefully we are completely wrong in terms of the sales performance for Q4. We can, you know, surprise you once again with our Q4 figures. Thank you very much. Take care. That concludes today's call. You may now disconnect.