Good morning. My name is Joe. I'll be your conference operator. All lines have been placed on mute to prevent any background noise. This is Liverpool's first quarter 2023 earnings call. There will be a question and answer session after the speaker's opening remarks. Instructions will be given at that time. Today, we have with us Mr. Enrique Güijosa, Chief Financial Officer, Mr. Jose Antonio Diego, Treasury and Investor Relations Director, and Mr. Enrique Griñán, Investor Relations Officer. They'll be discussing the company's performance as per the earnings release for the first quarter of 2023 that was issued yesterday. If you did not receive the report, please contact Liverpool's IR department and they will email it to you, or you can download it from the company's IR website. 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 earnings call are based on information that is currently available, which is subject to risk and uncertainty 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. Enrique Güijosa. Thank you, Joe. Good morning to everyone, thanks for joining us. I hope you all are doing well. As usual, I will start the call covering the highlights for our first quarter results. After this, I will share with you a couple of exciting news, I will devote the rest of the call to answer your questions. We started 2023 on a strong note as we saw sequential improvements in most of our key performance metrics, while we continued to make strides in our strategic initiatives. Our consolidated top line during the first quarter increased 16.5%, our three business segments posted double-digit growth rates. Retail sales grew 15.4%, interest income from our credit portfolio increased 27.3%, revenue from our shopping centers was 17.3% above year ago. Same-store sales for Liverpool grew 15%. Almost 90% of this increase was explained by higher traffic. We continue to see our soft line categories growing above the average. In the case of Suburbia, same-store sales were 3.1% over a year ago. The key driver was also traffic, as we observed a slight reduction in our average ticket. For perspective, ANTAD department stores reported a 5.6% increase in same-store sales during the first quarter. While total ANTAD apparel and footwear categories grew comps 10.0% and general merchandise 4.2%. In terms of new stores, on January 24th, we opened Liverpool Parque Tepeyac in Mexico City. This is our sole Liverpool new store for 2023. Suburbia opened two new stores during the quarter, one in Tijuana, which is our fourth store in this metro area, and another one in Oaxaca. These two new stores openings strengthened Suburbia's presence in the northern part of the country. Retail gross margin of 32.2% was 45 basis points below a year-ago. This reduction was due to the normalization of our promotional activity as we were able to carry out the clearance of our full winter merchandise with enough inventory for the first time since the pandemic. This was partially offset by a more favorable product mix. The top line of our financial services business unit increased 27.3% year-on-year. This reflects a 23.2% increase in our net credit portfolio as we continue to pursue a more aggressive growth in our credit card business in terms of origination, overdrafts, line increases, and cash withdrawals. For perspective, we achieved a 10.9% increase in the number of cardholders to reach 6.8 million. Suburbia, in particular, grew its cardholder base in 25%. Furthermore, the share of sales with our own credit cards was 46.3% in Liverpool, 180 basis points above a year ago, while in Suburbia it was 27.3%, 221 basis points above. We closed Q1 with an NPL ratio of 2.8%, 38 basis points above a year ago, and basically in line with our expectations. As I mentioned in our Liverpool Day, we decided to make an important change to the way we account for our bad debt provision in our quarterly P&L during 2023. We are now looking at the full year picture instead of just the figures for the current quarter. We believe this change provides greater transparency and minimizes volatility in our quarterly profits. Accordingly, in Q1 2023, we provisioned MXN 403 million. This represents a swing of almost MXN 700 million versus what we did in Q1 2022, when we posted a reserve reversal of MXN 269 million. Our plan is to close the first semester of 2023 with a cumulative provision that represents about 50% of the total year. For perspective, in 2022, the first semester provision was only 14.4% of the total year. Our coverage ratio at the end of the quarter was 10.6%, 70 basis points below a year ago. Revenues from our shopping centers grew 17.3% year-over-year as we were able to increase occupancy rates by almost 3 percentage points to reach 91.4%. We continue to see healthy growth rates in terms of visitors. Our consolidated gross margin of 40.5% was 16 basis points over a year ago as the business segment mix effect allow us to more than offset the aforementioned retail gross margin reduction. Operating expenses without bad debt provisions and depreciation grew 15.3% year-over-year. The main factors behind this increase were, number 1, the variable expenses that grow in line with sales, like commissions to our sales associates, credit card fees, and packaging materials. Number two, the 20% increase to the minimum wage at the start of this year. Number three, the new laws on vacations and patient plans, which became effective this year. Number four, above average salary increases and investment in new talent in logistics, technology, and digital. Finally, number five, general inflation rate. Our Q1 EBITDA of MXN 5.2 billion was 5.3% over a year ago, while our EBITDA margin was 13.8%, 1.5 percentage points lower when compared to the 15.3% in the same period of 2022. It is very important to highlight that the aforementioned change in the way we account for bad debts in our P&L plays a significant role in these comparisons. If we exclude the bad debt provision from both this year and the base, our EBITDA grew 20%, while our EBITDA margin improved 43 basis points. As I said in the beginning, we continue to move forward in all our key strategic initiatives to strengthen our omnichannel ecosystem. Digital GMV in the first quarter was 33% over a year ago. Our digital share was 24.5%, 280 basis points above the same period last year. Monthly active users of Liverpool Pocket in Q1 increased 27%. Downloads of our app grew 16%. Our Marketplace GMV grew 62% year-on-year, and we closed the quarter with 22% more sellers and 44% more SKUs. For perspective, more than 40% of our digital catalog now comes from our Marketplace. During the first quarter, the digital orders that were delivered in 48 hours or less grew 79.1% year-on-year, and they accounted for 39% of total orders, which was basically flat versus a year ago. The share of Click & Collect was 36%, and it was 4 percentage points over the same period last year. Our in-store deliveries were 20% of total home deliveries, almost 4 percentage points over a year ago. Turning to our balance sheet, total inventories grew 20.7% year-on-year. Considering that in 2021, we were still facing merchandise shortages as a result of the pandemic, we do not think this ever represents a risk to our 2023 profitability. On the other hand, accounts payable to suppliers increased 21.8%. Importantly, the balance for this account includes our supplier finance program. Cash flow from operations during the quarter was negative MXN 4.2 billion. This was MXN 2.1 billion better than in 2022. Our largest uses of cash flow in the quarter were working capital, mainly inventories and trade payables. CapEx during the quarter was MXN 1.1 billion, 2.1% over a year ago. Almost 60% of this amount was invested in new stores, remodeling, and expansion projects. Importantly, the remodeling of our Liverpool Santa Fe, one of our flagship stores, continues as planned. The Arconorte project accounted for almost 30% of the total investment spent during this quarter. We have just reviewed our CapEx for the full year, and we now believe that our 2023 investment will be in the MXN 9 billion-MXN 10 billion range, around 10% below the previous guidance. We still expect logistics and technology to account for close to 50% of the total investment. At the end of the quarter, cash on hand was MXN 18.5 billion, and our net debt to EBITDA ratio was only 0.28 times. Our shareholders agreed to pay a dividend of MXN 2.61 per share on their March 16, 2023 general assembly. This results in a payout ratio of close to 20%, which is significantly above the 13% that we were distributing to our shareholders as dividends before the pandemic. The first installment of MXN 1.57 per share will be paid on May 26, and the remainder of MXN 1.04 per share will be paid on October 13. Well, that's in terms of reviewing our performance during the first quarter of 2023. In other news, on April 12th, we opened our first showroom for the BYD electric vehicles branch in Galerías Insurgentes. We expect to open our first full-service BYD dealership, including a workshop, in the second half of June in our Perisur Shopping Center. Finally, in another exciting news, earlier today in New York City, we announced our partnership with WHP Global, which is the parent company of Toys"R"Us. The partnership will bring this iconic brand to Mexican customers for the very first time through an omnichannel offering of standalone flagship stores and e-commerce. This represents a significant milestone for the brand's global expansion and will strengthen Liverpool's positioning in this strategic segment. The stores will offer a wide range of toys and games from top brands, including exclusive private brands from Toys"R"Us. The digital launch on the first flagship store is planned for holiday 2023. Let's move into our Q&A. 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'll be unmuted. If you have placed yourself on mute, you'll need to unmute yourself to ask your question. We will now pause for questions. Our first question comes from Antonio Hernandez. Please state your company name and ask your question. Hi. Good morning. This is Antonio Hernandez from Actinver. Congrats on your results and the new announcements. My question is regarding your non-retail business. In terms of leasing, you mentioned the occupancy recovering and basically posting very good results. What are your expectations ahead in terms of profitability and in terms of growth in this format in this division? Basically, have you seen any specific trend during the year? Thanks. Yes. Thank you, Antonio. Yes, as I said, we once again saw very strong growth rates in the revenue from our shopping centers. The Q1 growth rate was 17.3%. We see, as you mentioned, and I said in my opening remarks, we're seeing higher occupancy rates. We have had a positive commercial activity. That means that we have more like people, like leasing, instead of people like abandoning their stays in the shopping centers for several months now. We see also a healthy growth rates in terms of the number of cars, number of visitors to our shopping centers, which in turn also help us in terms of the revenue that comes from the small shops that we have in the isles of the shopping centers, and also all the activity regarding the marketing and promotional activity that goes on inside our shopping centers with the islands and so on, and all the advertisement that we have inside our shopping centers. We believe that, you know, the GMV growth rate will continue for the rest of the year. That's we're expecting it that the growth rate for the full year will be close also to 17% showing this recovery of this important segment for the company. This, in terms, obviously will help a lot in terms of profitability. As you know, the real estate division has a very high EBITDA margin rating. This of course helps us a lot in terms of the overall profitability of the company. Okay. Basically contributing because of course, because of this higher proportion in terms of sales mix, but also better profitability within the real estate division? Yes. Yes. Also better profitability. Okay. Yeah. Because of this. Real estate division. Of these different initiatives. Just a quick follow-up and maybe a little bit more technical, but these promotional activity that you've mentioned within the shopping centers aisles and so on, is this being managed as well by, you know, Liverpool and Suburbia's marketing teams and so on, or is it a different part of, you know, the advertising that you offer to third parties? No, it's managed by the different team. I mean, we have a different marketing team in our real estate business, which is separate from the Liverpool, and it's also separate from the Suburbia brand. In fact, we have four, let's say, advertising teams. One for Liverpool, one for Suburbia. We also have a marketing team in the credit card business. Finally, the one that manages the advertisement for shopping centers, both in terms of, you know, advertising our shopping centers and also marketing the commercial space for people that wanna have promotional activities inside the shopping centers. Okay, perfect. Thanks a lot. Have a great day. Thank you too, Antonio. Our next question comes from Camilla Azevedo. Please state your company name and ask your question. Hi, this is Camilla Azevedo from UBS. Thank you for taking my question. My question is about operating expenses in Mexico. There are discussions to lower the working hours from 48 to 40 per week. Considering what we have seen in your OpEx line, do you think this regulatory change could have some material implications for your headcount or labor expenses? Thank you. Thank you, Camilla. Well, I think that we're still, you know, analyzing what's gonna be the effect in our, in our payroll expenses from this change. I mean, it still has to go, I understand, through the Senate. I mean, it has to be still, you know, like, has to go through the, I think 17 of the local congress chambers of deputies in the States. As my understanding, it still has some way to travel. Yes, it will continue to put pressure in our, in our payroll expenses. El Puerto de Liverpool** Good morning, everyone, and thank you for joining us for El Puerto de Liverpool's first quarter 2024 earnings conference call. My name is Anna, and I will be your operator for today's call. **Participants on the Call** On the call today, we have Mr. Enrique Güijosa, our Chief Financial Officer; Mr. Jose Antonio Diego, our Treasury and Investor Relations Director; and Mr. Enrique Griñán, our Investor Relations Officer. **Q&A Session Instructions** Following the company's prepared remarks, we will open the floor for a question-and-answer session. If you would like to ask a question, please press star, then one on your telephone keypad. To withdraw your question, please press star, then two. **Disclaimer Regarding Forward-Looking Statements** Before we begin, I would like to remind everyone that this call may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. El Puerto de Liverpool assumes no obligation to update any forward-looking statements. **Handover to Management** Now, I would like to turn the call over to Mr. Enrique Güijosa. Please go ahead. **Enrique Güijosa's Opening Remarks** Thank you, Anna. Good morning, everyone, and thank you for joining us today. We appreciate your interest in El Puerto de Liverpool. **Overview of Q I mean, which I still don't have, you know, the exact figures. We're still analyzing what's gonna be the implication. Very clear. Thank you. Thank you, Camilla. Our next question comes from Ulises Argote from JP Morgan. Please go ahead. Hi, guys. Ulises Argote from JP Morgan. My question is related there to the same-store sales performance. Is there any room to update that guidance that you provided for the 7%-8% growth there for both Liverpool and Suburbia banners, given the results that we saw for the first quarter? And also to what do you attribute that big gap between the Liverpool performance and the broader and that figure there for department stores? Any color that you could provide there would be really helpful. Thank you. Yes. Thank you, Ulises. The answer to your first question is no, we are still not ready, you know, to update the guidance that we provide for the same-store sales of increase for the full year, which is, as you pointed out, 7%-8% range. I mean, although we saw a very, you know, like a successful first quarter, it's important to highlight that this was basically due to the fact that January and also February were very, you know... We observe a double-digit growth rates in the case of Liverpool and also for Suburbia in January because we finally had a clearance, a normal, let's say, clearance of the fall/winter merchandise, which was not the case in 2021 because of merchandise shortages. In the margin, we are seeing a slowdown. I'm sure you have seen, you know, the figures from the ANTAD for March, which were very soft, particularly for department stores. Our numbers were a little bit better, but not a lot. We're still, you know, like, cautious on the balance of the year, as we are still expecting a, you know, like a slowdown in terms of the consumption due to inflation and due to, you know, several factors going on in the Mexican macroeconomic environment. We're still, you know, keeping our guidance. Going to your question on the difference between Liverpool and Suburbia, I think that Suburbia is still, you know, like a challenge for us, obviously. I think a part of the gap has to do with the socioeconomic segment. I think that the challenges for the lower socioeconomic levels in Mexico are higher because they devote a significant, a larger portion of their income to basic staples, which as you know, inflation in, you know, food and basic staples in Mexico has been well above general inflation, has been more on the double-digit side. That's for sure, you know, like the impact on that, on the lower socioeconomic levels is much higher. Because of the share they devote to this kind of merchandise and the middle class, which is the target of a Liverpool banner. We also, you know that we have, you know, like, a still way to go in the product we're buying, in how we are allocating the merchandise to each of the one of the Suburbia stores. We still have, you know, like, important opportunities there. In fact, we have been doing some technical changes in the leadership of the buying department in Suburbia. We have changed basically 3 of our directors, for women's, for men's and also for children's. We have replaced people that came with the acquisition from Walmart with people that have a, you know, very successful career buying clothes in Liverpool. That I'm sure will be an important reinforcement for the balance of the year and also for next year. As we said in the Liverpool Day, we're expecting that Suburbia will have a better second semester than the first semester, but certainly we're still facing some challenges there. That's perfect, Enrique. Super clear. Just to kind of fine-tune a little bit there. The second question was also related to Liverpool performance versus the broader ANTAD figure. I don't know if that answer that you gave on Suburbia and maybe, like, the different socioeconomic segments that they target, do you think that that also explains kind of the gap versus ANTAD or is there anything else there? Could be. I mean, could be. I mean, I'm sure that, you know, the way that Coppel has in the ANTAD numbers, basically the softness that we have seen on the overall ANTAD numbers indicate, and I'm not familiar, you know, with the with their numbers, but we can infer probably that they have had low growth rates. I think that also that can point out what I say in terms of Suburbia, that maybe, you know, the lower socioeconomic levels are seeing, you know, like more challenges than the middle classes in terms of their purchasing power for sure. Another interesting dynamic there is that, in terms of, you know, payment methods, we have seen, you know, cash and debit card usage going down and credit card usage, or share, both our own credit cards, the bank credit cards gaining share. I don't know if that's another indication that, you know, that the consumer is feeling pressure. They don't have necessarily, you know, the cash on hand to pay cash or to pay with debit card, and they're relying more and more on the credit card side. All right. Perfect. Thank you, Enrique. That's super clear. Thanks for the color there and congrats on the results. Thank you, Ulises. Our next question comes from Irma Sgarz from Goldman Sachs. Please go ahead. Yes, thanks for taking my question. Just to follow up on the CapEx guidance that you provided, that as you pointed out in your opening remarks, is slightly below what you'd initially indicated. Apologies if I missed it, but is there a specific segment or part of the CapEx envelope that you'd call out that justifies this slight reduction? That's my first question. In terms of second question, just, as you think about delinquency and credit provisions and sort of credit approval for this year, given the dynamics on the both on the rates and inflation side for somewhat lower income cohorts, that obviously I know you're tilting more towards the higher end, but, for those part of your credit, those part cohorts in your customer base, that tilt more towards lower income, are you already restricting credit or how do you think about sort of risk taking there for 2023? Thank you. Yes. Thank you, Irma. Well, in terms of CapEx reduction, I mean, as you know, I'm sure you're all aware that we generally understand, you know, the number we provide as a guidance, we understand, you know, by a significant percentage. We're trying, you know, to be more assertive on really, you know, like, making sure that the number that we're providing is the one that we're gonna spend. That's what we review very carefully our CapEx in the past couple of months for our projects. We don't have any, frankly, any, you know, like, particular project that is being delayed. It's just a revision of really the actual, you know, like, disbursements that we are expecting for each of the projects. That's why we revised down our CapEx by basically, like, MXN 1 million versus the view that we had provided beforehand. Again, it has nothing to do with a major project being delayed. It's just a matter of fine-tuning the cash disbursements that we are expecting and hopefully being more accurate in terms of the CapEx for the full year than what we have done in the past years. That's it for CapEx. We're still expecting, you know, more than 50% of the overall CapEx to reinvest that in technology and also in terms of Logistics, particularly, you know, the Arconorte, the second phase for the Arconorte project, which is for soft lines, as you know. Finalizing just some minor things that we still have to finish on the phase one for big ticket. Also, it's not a big investment, but also some minor equipment for the free fulfillment center we're expecting to open this year. That's it in terms of CapEx. In terms of our risk management for the lower income level, no, we're not doing anything, you know, especially, or being more, you know, like, careful in the origination of new credit lines for the lower socioeconomic levels. We continue to be, you know, to have the same approach that we have had for, you know, the last several quarters. In fact, if you, if you know, the number of new cardholders for Suburbia, they increased 25%. That gives you like clear signal of what's our risk appetite in that segment. We've see, you know, NPLs for Suburbia, particularly around the low five, in fact, 5.2%, for the Q1. It certainly evolved previous year, but still nothing to worry about. Frankly, in the business model for the credit card for Suburbia, we can certainly accommodate a higher number of NPLs, way higher than what we have right now. We again, are feeling okay with the way we are managing our risk right now. We don't intend to do any short-term adjustments with what we're seeing to date. That's very clear. Thank you. Thank you, Anna. Our next question comes from Alejandro Fucs from Itaú BBA. Please go ahead. Hi. Good morning, Antonio. Thank you for the call. My question is around the recent announcement of the agreement with Toys Us. If you could shed some more light on that, please. I mean, what's the potential of that business in terms of number of stores and contribution to sales? What will be the CapEx involved? What kind of agreement is that? It's a JV. It's a license contract based on fees or royalties. Then, from an operating perspective, I mean, you know, we've seen that brand closing in a number of countries recently in the last few years, I believe the U.S. included. What do you see the opportunity is in Mexico opposite to what just happened in some other markets? Yes. Thank you, Joaquin. In terms of the, you know, the agreement, it's basically a royalty agreement. We're gonna pay a royalty to the parent company of the pictorial Toys Us brand, WHP. We're gonna have, you know, the full management of the operation in Mexico. We decide the merchandise that we buy, and we also decide the pricing, we decide the promotional activity. It's basically more or less the same agreement that we have for the Williams Sonoma brands. Again, it's a royalty. In terms of the, we're still fine-tuning. I mean, it's gonna be frankly a non-material investment. You see, I mean, these are like small, the flagship stores we're talking of, you know, like a maximum 1,500 square meters. That's the, you know, the largest one. More often than not, it's gonna be below 1,000 square meters. They're a small investment in terms of CapEx. We're seeing this as a defensive move. We wanna make sure. I mean, we have a very big presence in the toys segment in Mexico, and we wanna make sure that we continue to be the leader. When the owners of the Toys R Us brand approached us, we thought that there was also a way to protect our, you know, like, our presence in the toy segment in Mexico. I mean, we didn't commit. I mean, I cannot, you know, like, share with you the number of stores that we're planning to open, but there are like, just a handful of stores. We didn't make the the mistakes that we did in prior agreements for these kind of brands, where we commit to open, you know, dozens or of stores throughout Mexico, which frankly didn't have the profitability that we expected. We closed down the majority of them and just kept a handful which are profitable. In this case, we were very careful in the, in the number of locations that we promised to make sure that we have all of them contributing on the profit side of the company. For frankly, it's gonna be a small operation. We have seen, what I've seen in the US is that now, you know, the Toys Us has a presence inside the Macy's stores, and it's going well. In fact, that was the first approach that the owner of the Toys Us brand made to us, was to have Toys Us inside the Liverpool stores, and we said no. We were not willing to, you know, to share the profitability of what goes inside the store, which again, is very, very successful for us, to share it with a, with another one, pay a royalty for the business that we already, you know, like, are making inside Liverpool stores. We decided to go instead with standalone stores and the e-commerce business. Okay. This is gonna be reported within your boutiques division? Yes, absolutely. It's already managed by the same people that manage the Gap and the, Banana Republic and the, Williams Sonoma brands. Okay, fantastic. Thank you, Enrique. Thank you, Joaquin. We will pause once more for any further questions. As a reminder, to ask a question from a phone line, dial star nine, or if you've joined over the internet, please press the Raise Your Hand button at the bottom of the screen. Our next question comes from the line of Felipe Cassimiro. Please state your company name and ask your question. Hi, I'm from Bradesco BBI. Thank you very much for taking my question. It's actually a very quick one on the, on the contribution from online sales to the growth, you know, same-store sales of Liverpool has been very strong, right? Also online. I just wondered if you could share with us the contribution of the online to the same-store sales of the quarter. Going forward, what is your expectations for online contribution in the next quarters? Thank you. Yes. Well, as we say, I mean, online increased its GMV 33% quarter on quarter. If you see the same-store sales for Liverpool grew 15%. I would say that probably, you know, part, like, Online represents like basically 25% of the total business. I would say that probably 3 percentage points over the overall increase over the Liverpool same-store sales came from online. We, you know, continue to expect online to keep growing at very healthy rates for the balance of the year as we share with you in our Investor Day. Great. Thank you very much. Thank you, Felipe. 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, thanks a lot. I think that, it was a very quick call, I think, just to share with you the Q1 figures. We don't have a lot in terms of sharing additional news because the Liverpool Day was just a few weeks ago. Thanks a lot for your presence, and we'll see you in Q2. Thank you very much. Have a nice day. That concludes today's call. You may now disconnect.