Good morning. My name is Andrea, 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 2024 earnings 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. Gonzalo Gallegos, Chief Financial Officer, Mr. José Antonio Diego, Treasury and Investor Relations Director, and Mr. Enrique Griñán, Investor Relations Officer. They will be discussing the company's performance as per the earnings release for the third quarter 2024 issued yesterday. If you did not receive the report, please contact Liverpool's IR department and they will email it to you or download it at IR's website. Please note that this call is for investor and analyst only. Any questions from the media will not be taken, nor should the call be reported on. Any forward-looking statements made during this 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. Gonzalo Gallegos. Thank you, and welcome everyone to our third quarter 2024 earnings conference call. As you have seen from our third quarter results, we continue to experience strong revenue trends while making strides in expense control. NPLs rose to 4.1%, a topic I will discuss further later in the call. Additionally, a favorable exchange rate contributed to an increase in net profit of over 11% year on year. As usual, I will review our most important metrics by business unit, and afterwards, I will provide an update on our interest in Nordstrom. Let's start with revenue. During the third quarter, consolidated revenue reached MXN 46 billion, an increase of 10.4% versus last year. Retail revenue was 9.7% compared to last year, and we continued to achieve double-digit growth rates in financial services and real estate, with a 16.3% and 11.9% increase, respectively. Same-store sales for Liverpool grew 7.6%, the highest since Q2 2023. It was encouraging to witness the resilience in our customers, as usually, the second semester of an electoral year tends to reflect lower economic activity. It is worth mentioning the solid performance of categories such as hard lines and cosmetics. Quarterly results were further benefited by a strong performance in Liverpool's value-added services and income generated from our marketplace. On the other hand, Suburbia same-store sales of 7.6% is lower than previous quarters due to a more normalized growth in its digital channel and the temporary closing of one of our Monterrey stores. Excluding these effects, we're encouraged by these results, especially considering that total apparel and footwear categories reported 0% growth during the quarter. We will keep enhancing our stores while inviting customers to rediscover the Suburbia experience. Inventory position at the end of the quarter reflects an increase of 20% versus last year due to early deliveries of winter merchandise to take full advantage of the fall weather and to ensure inventory coverage for the upcoming quarter. We are expecting a normalization of inventory levels during October and November, and therefore, we are not anticipating risks on the overall health of our inventory by year-end. It's important to note that the sales slowdown we saw in the third quarter appeared to be fairly widespread. For perspective, ANTAD department stores reported a 4.2% increase in same-store sales during the third quarter. As mentioned, total apparel and footwear categories in ANTAD saw no change in same-store sales, while general merchandise increased 4.4%. The top line of our financial services business unit increased 16.3% year on year, mainly due to an increase in our net credit portfolio of 16.7%. The overall value of the portfolio is increasing at a rate higher than sales growth due to increased cardholders, purchases from us, and higher share of internal sales. For perspective, we increased the total number of cardholders 8.7% to reach almost 7.7 million. Out of this, Suburbia cardholder base continues to achieve double-digit growth, reaching 1.8 million, 16.3% above a year ago. The share of sales with our own credit cards during the quarter was 49% in Liverpool, 90 basis points above the year before, while in Suburbia reached 33%, 140 basis points above last year. Revenue from our shopping centers increased 11.9%, mainly driven by the acquisition of the Tampico Altama shopping mall, improved lease spread, and the occupancy growth of 2.7 percentage points to reach 94.2%. Our consolidated gross margin of 41.8% was slightly above last year, mainly due to a more favorable business segment mix. Operating expenses without bad debt provisions and depreciation grew 10.2%, returning to a more favorable level when compared to our revenue growth. This increase is primarily driven by higher minimum wages, new pensions provisions, new stores, and manpower-intensive services. We continue to take actions to mitigate negative impacts, both inside the stores and particularly in our corporate staff areas. As a result, consolidated operating income reached MXN 6 billion, representing a 7% increase year-over-year. Moving to NPLs, we ended Q3 with an NPL ratio of 4.1%, 63 basis points above year ago. Despite the rapid growth of this indicator, it remains within normal parameters and is still below the pre-pandemic levels of approximately 6% for this quarter. We have continued to closely monitor medium and high-risk customers, and we have proactively refinanced the debt of cardholders to prevent loan defaults. These actions have reduced entry rates and improved the overall health of the portfolio. Moreover, in Q4, we anticipate further improvements in NPLs, driven by portfolio growth during the peak season. Accordingly, we expect a material improvement in this indicator, and we now anticipate NPLs at year-end between 3.1% and 3.2%, slightly above our guidance. In Q3, we recorded a bad debt provision of MXN 1 billion, a 57% increase from last year, driven by the rise of NPLs and overall portfolio growth. It is worth noting that we expect our full-year provision to be in line with our guidance of MXN 4 billion. Our coverage ratio at the end of the quarter was 10.1% of the gross trade portfolio, while the ending balance of the bad debt reserve represented 2.7 x the NPL balance. Q3 net profit of MXN 4.4 billion is 11.3% above last year, reflecting a robust operating performance and a favorable exchange rate. On the other hand, Q3 EBITDA of MXN 7.5 billion was 7.3% above last year. EBITDA margin was 16.3%, 50 basis points below the prior year. Turning to our digital channel, total GMV in the third quarter was 15% above year ago. Liverpool's digital share has grown to nearly 25%, 138 basis points above last year, while monthly active users of the Liverpool Pocket app increased by 7.6%. In the case of Suburbia, digital share reached 5.3% of sales, an increase of 1.6 x, and monthly active users of the Suburbia app increased by 2%. Our marketplace continues to deliver strong growth. Total marketplace GMV during the third quarter grew 33% year-on-year, and we closed the quarter with 50.2% more SKUs and 33.6% more sellers. During the third quarter, digital orders that were delivered in 48 hours or less accounted for almost 49% of total, more than four full points above last year. The share of click and collect was 39%, two and a half percentage points above the same period last year, and direct store deliveries were 34%, six point four percentage points above year ago. Moving to other items, Q3 CapEx, including real estate trusts, was MXN 2.8 billion, reflecting a cumulative investment of MXN 8.5 billion, 42% higher than a year ago. This investment is mainly divided among logistics, store renovations, new stores, and the acquisition of the Altama shopping Mall. I am pleased to share that our expansion project for Galerías Metepec is nearly complete, with an estimated opening date in mid-November. Operating cash flow for the quarter was a negative MXN 1.1 billion, bringing cumulative cash flow from operations to MXN 650 million. The cumulative result is fueled by strong EBITDA performance and the seasonal trends in our credit portfolio, partially offset by inventory buildup, income tax advances, and the normalization of accounts payable. At the end of the quarter, cash on hand was MXN 18.2 billion, and our net debt to EBITDA ratio is 0.2x. Regarding dividends, the first installment of MXN 1.77 per share was paid on May the 24th, and the remainder of MXN 1.18 per share was paid on October eleventh. We would also like to inform you that on October the second, the company fully settled the Liverpool 2024 bond of MXN 3.9 billion using its own cash reserves. This decision reflects our strong liquidity position and prudent cash management. In terms of new stores, we opened a new Suburbia store at Apodaca, Nuevo León, and another one in Reynosa, Tamaulipas. Also, we opened 6 new Liverpool Express units to reach a total of 35. Our boutiques continue to grow as we open the third Toys "R" Us and the first Babies "R" Us, both located in the Santa Fe district of Mexico City. These openings mark a significant step in both brands' mission to enrich the experiences of childhood and parenthood for Mexican families. BYD continues growing. Car sales during the quarter were 1,300 units, exceeding now our full-year target. In August, we opened our first full-service car dealership in Guadalajara, located at Galerías Santa Anita. Since operations started last year, Liverpool has sold over 3,200 u nits, making Liverpool one of the largest BYD distributors in Mexico. I would like to pause now, because I know several of you are eager to hear about what is going on with our interest in Nordstrom. As we disclosed in our Schedule 13D, filed on September the 4th with the SEC, we formed an investor group with the Nordstrom family to take Nordstrom, Inc. private. Under the proposal sent to the Nordstrom board, Liverpool would own 49.9%, and the Nordstrom family would own 50.1% of the equity of the private company. We are currently in discussions with the Nordstrom board about our offer, and as a company policy, we do not comment on the status of ongoing negotiations. We look forward to updating you on our progress in the upcoming quarters. In other exciting news, Liverpool ranked eighth in Merco Empresas Mexico 2024 and eleventh in Merco Talento 2024. Compared to last year's ranking, Liverpool improved one position on the former and fifteen positions on the latter. Merco is a corporate monitor reference in Latin America that has been evaluating the reputation of companies since the year 2000. In July, Newsweek and Statista published the world's most trustworthy companies for 2024, in which Liverpool was ranked the 22nd most trustworthy retailer in the world and the second in Mexico. These rankings follow three distinctive pillars when evaluating companies' trust: customer trust, investor trust, and employee trust. In September, S&P released their most recent corporate sustainability assessment results, in which Liverpool improved twelve points compared to last year due to progress in our overall ESG strategies. Finally, I am pleased to share that Liverpool made an alliance with CONFE, the Mexican Confederation of Organizations in favor of people with intellectual disabilities, to offer employment opportunities for their community members. As of today, we have recruited five positions in both our stores and our corporate staff areas. Thank you all for joining us today. We appreciate your continued interest in our company. Looking ahead, we'll remain focused on executing our initiatives and capitalizing on the increased consumer demand in the upcoming quarter. Now, 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 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 Andrew Ruben. Please state your full name and company name and ask your question. Hi, Andrew Ruben from Morgan Stanley. Thanks very much for the question. I'd be interested to hear how you're thinking about the holiday season. You mentioned some of the ANTAD numbers were sales decelerated. On the other hand, we saw the inventory position had increased. So just trying to understand what kind of holiday season you're planning for, both from the inventory side and in terms of your expectations for consumer demand. Thank you. Hi, Andrew. Thanks for the question. We're preparing to have a very strong season. For perspective, we are expecting sales in the low- to lower two-digit range, and what we did is to make some advances on the winter merchandise to be fully prepared to cover that. As you saw in our report, we had an increase of 20% on our inventory, and that was the same level of inventory that we had back in October of last year. So what we expect from an inventory point of view is to stabilize more or less at that level, and that by November, we have an increase in inventory in line with our sales growth. So we're not anticipating a risk on the inventory side, and we certainly hope to capitalize on the increased demand for the holiday season. It's very helpful. Thank you. Our next question comes from Nicolas Riva. Please state your full name and company name, and ask your question. Thanks very much for the chance to ask questions. I know, Gonzalo, you said you don't wanna provide a lot of updates regarding the Nordstrom potential acquisition, given that you are in discussions with the board. But perhaps I can ask it this way: with the information you have provided here, which is your intention to own 49.9% of the company and therefore don't consolidate the investment, I believe, would be around $1.5 billion for Liverpool. In that scenario, what's your expectation in terms of increase in net leverage? I calculate an increase in net leverage from the 0.6 x you reported at the end of September to 1.3 x. I want to ask if that number, 1.3 x net leverage, that makes sense to you. Also, in that scenario of an investment required of about $1.5 billion, what are you contemplating in terms of financing for the $1.5 billion, and if you would contemplate coming to the dollar bond market for that? Thanks. Thank you, Nicolas. We're anticipating an investment, a little bit lower than that, maybe in the range of MXN 1.2-1.4 billion. So we expect our net leverage to increase to between 1.0 and 1.2 x. And from a financing strategy, we haven't decided yet. We're keeping our options open, and certainly with access on the international markets, that's one of the options that we're contemplating. Once we were clear on the size of investment and the timing of a potential closing, we will review our whole plan to determine whether we would issue probably a bond in Mexico or in the U.S., but at the moment, we're contemplating both options. Thanks very much, Gonzalo. Our next question comes from the line of Daniela Muscat. Please state your company name and ask your question. Hello, everyone. Congratulations on the strong beat for Q3 results. The question is on the foreign exchange gains that you recorded. Can you just explain the different instruments that you're using? I see in the release that 63% of your cash is invested in U.S. dollars. But in the financial results, you had both a line for exchange rate fluctuation as well as mark to market on derivatives. So perhaps you could just share with us if that's related to your cash position in dollars, or at what level are you swapped? Because I see that, you know, your U.S. dollar debt is also fully hedged. So just explain so we can better calculate this FX gains or losses going forward. Thank you. Thank you, Daniela. Those two lines refer exactly to the two items you mentioned. On the one hand, our cash position is heavily shifted towards a dollarized position, so around 60% of our cash is held in dollars. So as the peso depreciates, we generate FX gains on that position. So that's one item, and the second item refers to the cross-currency swap of our long-term debt. All our dollarized debt is fully covered with a derivative, so we did a cross-currency swap to turn that into, in essence, a Mexican peso debt, and it covers both the principal and the coupons. So as the peso depreciates, we also generate an FX gain to cover the principal and the coupons. Would you share with us the level that you swapped, like the actual exchange rate and the date of the maturity of the swap? The maturity is linked to the bond's maturity. So, our next maturity date is in 2026, and we also have maturities in... Hold on. I can just get that information- Yeah. Later. It's not a problem. I just- Oh, yeah. So it's 2026, and I believe it's 2030. So it's fully covered under a cross-currency swap. Thank you so much. Yeah, I just wanted to know if there is short-term volatility, but it seems that you're locked for the next, you know, two, three years, so that's fine. Thank you. Yes, absolutely. For instance, in early October, we paid a bond that we issued in 2014. It was a 10-year bond. It matured in early October, so we paid that, and the conversion to pesos was MXN 3.9 billion, and it was fully hedged with a cross-currency swap. So for the fourth quarter, we'll reflect again on the derivative, on the settlement of the bond. And from a volatility standpoint, we most of the volatility that we have now is related to our cash position rather than the long-term debt. That's very helpful. Thank you. ... Our next questions come from the line of Ben Theurer. Please state your company name and ask your- Hi, good morning. This is Ben Theurer from Barclays. Just two quick follow-ups. First, as we look into your performance compared to peer performance and such in both Liverpool and Suburbia, there was a nice outperformance in the quarter, and I wanted to dig a little bit deeper as to what's been driving, particularly, the strong transaction volume still in the quarter, because we know it was a pretty challenging quarter, so if you could kind of dig into what's been driving those transactions in Liverpool. That's like one part of the question, and the other part is really what's been driving the average ticket so much higher in Suburbia. Was that a mix effect? How should we think about this performance as we go into the fourth quarter? So that would be, like, kind of my first set of questions. I have a quick follow-up. Thank you, Ben. Let me start with Liverpool. In Liverpool, we saw significant increases mostly in the hard lines divisions. I'm talking home, electronics, sports. So the overall hard lines, all of the hard lines divisions have double-digit growth. For instance, more electronics have an 11% growth, and the other categories also in the two-digit range. So, and it's a combination of strong demand, our promotions activity, and good inventory management. On the soft lines side, particularly in cosmetics, we did really well because of the same reasons. In the case of Suburbia, as you know, we have invested very heavily on maintenance, store renovations, inventory, and to offer more price points to the customers. So that has been driving traffic to Suburbia, and we have been doing some progress in the inventory, so we have had less discounts, particularly for the spring/summer season. So we didn't have to discount as much inventory as we did in previous years, so that helped the overall average ticket. Okay, that, that makes sense. Very clear. And then, as we think about, just the kind of a slowdown on the digital side, it feels like it's trickling down. It's still elevated, obviously, but, like, quarter after quarter, it feels like it's a little bit less in terms of just GMV, particularly at the Liverpool banner. Have you any explanation for that? If we look at it, how it was coming down over the year to date, and it kind of, like, came down even further in 3Q. Just to understand, like, if there's anything you particularly could do to address it and maybe get it back into the 20-plus% growth, where it used to be and not so much in the mid-teens%. Thank you. Yes. Thank you. Let me start with the marketplace. The marketplace, during the first semester, had very strong growth in the 40%-50% range. And that was above our expectation that we-- When we started the year, we expected the marketplace to grow in the low thirties. Actually, when we showed our guidance at the beginning of the year, we said 31%. So I think that throughout the first semester, the growth in the marketplace outpaced our expectations. Now that we're reflecting growth in the 33% range, I think is more aligned with our expectation. So we expect the full year growth on the marketplace of around 40%. What we have seen is a slowdown in some items in some categories like travel, but overall, we feel very confident with the overall growth on the digital channel. For the last quarter, we expect a high performance, probably in the 15%-20% range. We don't feel particularly concerned about a specific item. We believe that the marketplace is a good complement of the merchandise that we have in the store and to give the customers an omni-channel experience. Okay. Thank you very much. Our next question comes from the line of Irma Sgarz. Please state your company name. Yes, hi, it's Goldman's Irma Sgarz from Goldman Sachs. So, just a couple of quick questions on the gross margin. I'm sorry if I missed any earlier comments on it, but I was just wondering the margin pressures that you had on a year-over-year basis. Was that just because... I mean, I know you came off a very strong comp, but was there a little bit maybe on the big side? You mentioned that electronics and hard lines grew quite strongly, so I would imagine that drags down margins maybe a little bit. So just wanted to confirm it was that or whether anything else was going on. And then I also was curious if you could make any comments, and sorry if I'm sort of abusing of my turn here, but lob in two more questions and ask about whether Suburbia or maybe less so Liverpool whether you felt that they benefited at all in this past quarter from some of the disruptions that one of your more middle to lower-income competitors faced. I know it might be a different target public, but I know there was a cyberattack that may have impacted one of your competitors, and I was just interested if you feel that Suburbia maybe have benefited from that. And then the third question is cross-border regulations that are coming in place next year? Again, I know it's less of a topic for the Liverpool banner, but maybe a little bit more for Suburbia. Any comment, commentary that you have on the competition from the cross-border channel would be very welcome. Thank you. Thank you, Irma. So let me start with a consolidated gross margin. Our gross margin was slightly above last year, and during the first semester, we had some benefits from a stronger exchange rate. And what we saw during the third quarter is a more normalized level of the gross margin, and that's why it is pretty much aligned with last year. On a cumulative basis, though, it's almost one percentage point above last year. So from a margin perspective, we feel very good about the result. Now, turning to your second question, I think the short answer is no, we did not see a significant change on the Suburbia banner due to potential issues, the competition. I think we're more focused on our store execution and managing the inventory and the promotions and the managing the business on a day-to-day basis. But we did not see a significant topic related to the competition. And regarding the cross-border regulation, I think we all benefit from having a more the same, having to play under the same set of rules. So we have a lot of imports that don't pay taxes, and when we bring the same merchandise through our own logistics channel, in a way, it's a bit unfair. So I guess these cross-border regulations will benefit all of us because it will provide the same set of rules for everyone. It's very helpful. And just to clarify, when I was referring to the gross margin earlier, I meant the retail gross margin specifically, but I think you mostly addressed it. Yeah. Well, thank you. I guess from the retail gross margin, the biggest effect is that hard lines is growing faster than soft lines. Exactly. that have a low, lower margin. So Yeah, perfect. There's also a mixed effect. Yeah. That is not only Liverpool, but also in Suburbia. As we grow hard lines in Suburbia at a faster pace than soft lines, it has an increase in average ticket. It provides an increase in overall sales. However, it puts pressure on the average margin. That's super helpful. Thank you so much. Our next question comes from the line of Saulo Riachi. Please state your company name and ask your question. So much for, hi, Michael. Saulo Riachi here from Afore Sura. Just one question. Can you remind us, what is the size of the buyback program? Thank you. I think we have José Antonio on the line. José Antonio, do you think you can address us that question? Oh, yes, yes, by all means. Thank you, Saulo. The size, the current size that we have in the share buyback program is an approved amount all the way up to MXN 6 billion. That's the one that the recent shareholders meeting pretty much approved last March. Okay, perfect. And just adding to my question, you have not been very active this year in the buyback program, right? From time to time, we do buy and sell some shares, but not active in any particular way. Or let me put it this way: we're not necessarily inclined or on buying or selling. We just participate relatively frequent on the markets, but with any type of defined position as a buy or sell. I don't know if I made myself clear. Yeah, perfect. Thank you. Good. Great. Thank you, Saulo. Our next question comes from Jorge Izquierdo, from BTG Pactual. Please ask your question. Jorge, you are still on mute. Please unmute yourself to ask your question. Sorry, can you hear me? Yeah, we can. Hi, Gonzalo. Hi, Gonzalo, José Antonio, Enrique, hope you are well, and thank you for the space for questions. Two questions from my side. The first one is, if you could please share any comments on same-store sales growth outlook for Suburbia and Liverpool for 2025, this would be very helpful. My second question is on CapEx. When should we expect a normalization of CapEx levels? Thank you very much, and congrats on the results. Thank you, Jorge. At At the moment, we're not issuing a guidance for 2025. We're still working on our budget for next year and going through the approvals and so forth. We do intend to issue our guidance, but no, not at this moment. What I can say regarding the fourth quarter is that we expect to capitalize on our high inventory position on a very strong promotional activity, so we are expecting sales growth in the lower two-digit range. Regarding CapEx, as you know, during the last two years, we have invested very heavily on our logistics projects, particularly our Arco Norte facility, so we're expecting a reduction of about MXN 2 billion on that particular project for next year. Even though it will not be fully normalized for 2025, we do expect a reduction on our end of our overall CapEx, and we will include our projections for 2025 when we issue our 2025 guidance. Perfect. Thank you. We remind you that we still have time for more, one more question. If you have any question, please raise your hand. Our next question comes from Gustavo Frattini. Please state your company name and ask your question. Hey, guys, it's Gustavo Frattini here from Bank of America. I was just wondering if you could share your view on the department store channel in the US, like, your initial thoughts, any comments on what we should expect on Nordstrom? And how are you thinking about the potential investment on what are the key problems that you would address? And what learnings from Liverpool you can bring to Nordstrom? Thank you. Thank you, Gustavo. As you can imagine, we're excited about a potential deal with the company. Our perspective on the department store markets is that even though we will not see growth similar to what we usually see in Mexico, we certainly expect the U.S. market to continue growing rates in the low single-digit. So, in that sense, we are excited about potential diversification on geography and currency, which will, I think, give us exposure to the largest retail market in the world, and represents an opportunity for us to learn about Nordstrom's operations, like, things like e-commerce, Nordstrom Rack. Maybe we can get some synergies, but at the moment, this is all very preliminary, so I cannot comment on that type of things. Thank you. That already helped. Thank you. That concludes our question and answer session. I would now like to hand the call back over to Gonzalo Gallegos for some closing remarks. Thank you for your time, and we'll be in touch. See you next quarter. Thank you for attending. That concludes today's call. You may now disconnect.