Good afternoon, everyone. Welcome to Organización Soriana's second quarter 2024 earnings conference call. With us today are Mr. Rodrigo Benet Córdoba, CFO of Organización Soriana, and Ms. Claudia González Romero, Head of Investor Relations for Organización Soriana. Together, they will be discussing the financial performance for the second quarter of 2024, and providing a summary of the latest news on the company. At the end of the presentation, there will be a Q&A session to answer any questions you might have. We would like to mention that all lines have been placed on mute as to prevent any background noise. At the beginning of the Q&A session, we will provide instructions as to how you may participate in today's conference call. Please note that the conference call may be recorded. I will now turn the conference over to Mr. Rodrigo Benet Córdoba, CFO of Organización Soriana. Please, go ahead. Thank you very much. Good afternoon, everyone, and thank you for joining us in this conference call regarding the financial results of the second quarter. Starting with the top line of our income statement, the company total revenues increased 1.5% versus the same period from last year, reaching MXN 45 billion, basically derived from a same-store sales of 0.8%, 1.6% increase in total, sales, as well as the net effect of 10 store openings and three closures. Those closures were stores in the end of the leasing period, but it's worth to mention that there are other Soriana stores in the surrounding area that can cover the sales perfectly. Also, by two store conversions that were executed in the states of Campeche and Veracruz, all of this in the last 12 months. As you already know, during the last week of May, we started our emblematic summer campaign of Julio Regalado. This year, particularly, we offer new innovative promotion, where I can highlight the promotion of four by two in several categories, such as wine, personal care, pharmacy, cosmetic, cereals, among others. This aggressive promotion was a response over the aggressive reaction that the market has had to our promotions in the last couple of years. Also, as a part of the main strategy of the company, and moving along of our private label renovation process, I'm glad to share with you that we are moving forward in this strategy, where at this day, we have fully renovated hundreds of SKUs and display, display it in our shelves with a new image, design, and quality for all the divisions. Regarding the performance of the private label of our membership club, City Club, also it's continued showing double digit increase in sales. Talking about the performance by region, we cannot stand the performance in the states of Mexico, Oaxaca, Veracruz, and Yucatán for the hypermarket store. For the supermarket format, we can highlight the results that we observe in the states of Nayarit, Baja California, and Colima. On the other hand, we have very important opportunities in the states of Durango and Chihuahua that are part of the states that are showing the less attractive performance. Also, as a part of the main strategies of the company, I'm talking about the future, I want to share with you a couple of things about the digital business. About what I'm very glad to share with you that we continue serving positive performance and client gaining through the Soriana app, since important investment has been made to this channel. As a consequence of these improvements and preference of the clients this quarter, we can highlight the increase of the channel in 21% in sales and 34% growth in number of orders. Also, I'm trying to cover in all the business of the company, talking about the real estate business, we can say that this quarter, this business show a gain of 4.9 percentage points in the occupancy rate, that basically take the company to occupancy rate of 90%. Continue with the gross profit. This quarter, we reached MXN 10.4 billion, which represent a gross margin of 23.3%, as an increase of 7.9% against last year, as a result of better negotiation with the supplying regarding the Julio Regalado campaign. Going in the P&L, the operating expense line show an increase of 9.7% versus last year, reaching MXN 7.3 billion, which represent a 16.3% over the sales. Basically, this increase in the operational expense is attributable mostly to the cost of personnel derived from an improving the coverage of vacancies and salary increments, and on the net effect of the new stores and the closures, as well as a higher expenditure in the net cost of advertising campaign. As a consequence of the variation just mentioned, the company's EBITDA for the quarter reaches MXN 3.1 billion, which represent a 7% margin and an increase of 1.5% compared to the second quarter of last year. Going down in the P&L and regarding the financial items, the net financial cost reached MXN 785 million, showing a 12% growth due to a net effect, basically obtained by the increase of the financial product, and also by increasing the financial expenses. Basically, the debt increase is caused principally to finance the CapEx and the growth for the whole year. Finally, the net income for the quarter, which is MXN 725 million, which equals to 1.6% over the sales. Moving on, talk about the progress made with our partner, Falabella. This quarter, Sodimac, our home improvement format, opened 1 store here in Monterrey, reaching 14 stores in operation in eight states of the country. On the other hand, the financial business with Falabella keeps growing. At the close of this quarter, more than 750,000 active cardholders are part of our portfolio that operates in more than 100 modules in our stores, and reaching a portfolio, great portfolio, higher than MXN 4.4 billion. That basically represent an increase of 25% compared to the same quarter of last year. Finally, as an update of our expansion plan and investment in the CapEx, we have made an investment of MXN 3.6 billion in this first semester of the year, mainly in store remodeling, maintenance, and the opening of five stores in the states of Baja California Norte, Coahuila, Chihuahua, and Nuevo León, which contribute expanding the store base of the company in more than 23,000 square meters. Furthermore, we hope that this information has been of your interest, and now we can continue to the Q&A session. Thank you very much. We will now start the Q&A session. If you have a question, please enter star eight on your telephone keypad. In case your question has been answered, you may cancel it by pressing star eight again. The first question is from Mr. Alejandro Fusz from Itaú BBA. Please, go ahead. Hello, Rodrigo, Claudia. Thank you for the space for question. Very quick one from my side. I was wanting to talk about same-store sales. Wanted to see if you saw maybe a more competitive environment this quarter, and what your expectations are for the second half of the year. Any color that you can give us is appreciated. Thank you. Hi, Alejandro. Nice to hear you. Well, yes, as I mentioned in this introduction of the call, basically, as a matter of fact, we have to make important changes in Julio Regalado campaign, like the new Re-Locos products, P recios Re-Locos, and also the four by two promotion, mainly because the aggressiveness of the competitors is really high. And actually, I mean, you as a client, for sure, you see in other competitors that basically copy exactly the same promotion of four by two. So it's a matter of fact that we have to be more creative and more innovative, and we have to have a new value proposition for Julio Regalado. It's part of the things that we try with these new Re-Locos prices and the four by two promotion. That is the first time that we launched that promotion. Not only Soriana, but basically in the country, the four by two was something completely new that give good results. But yeah, we are having troubles facing the competitors really, really aggressive, and that is the reason why we are also changing the typical strategies of Julio Regalado. And for the following months, we believe that it will continue. For sure, the sensitiveness of the client for the price is really high, so we have to maintain the competitiveness at the top of the priorities of the company. Still, we have important seasons to... In the coming months. Right now, we are really preparing a strong back to school campaign, and then we will have the Buen Fin and the December campaign, the Christmas season. So there are still very important seasons to face up in the following months, and we have to increase our competitiveness. Thank you, Rodrigo. Maybe if I could just follow up very quickly with another one. Wanted to see if you can walk us through how the partnership with Nubank is going this quarter, if there's any relevant, you know, news that you can share or any color will also be very helpful. Thank you. Sure. Well, basically, obviously, Nubank is a very important name, mainly because the growth that is having in Mexico, and we are really, really happy to have this partnership with them. In general, not only with Nubank, Soriana, as part of the strategy, wants to be a store and a point of solution for the client. So, if you go to our stores, you will find that the portfolio of services that right now we can offer to the client is probably the biggest in the self-service format, in the servicio. We perfectly know that right now, for the client, it's important to save time, and we want to make very efficient every time that they go to the stores. That is why we are making this kind of partnership, that we can say that right now we have more than 500 different services or banking services that you can do in our cashier line. Particularly with Nubank, obviously, because the amount of credit holders and debit holders that have Nubank is really, really important. We are really happy with them. Right now, we believe that we are giving an very important service to all the clients of Soriana and Nubank clients, with the two services that we are offering right now. And the idea is that in the following months, we will continue increasing the portfolio service with Nubank, but also with other strategic partners. Very clear. Thank you very much. For sure, Alejandro. Thank you very much for your question. Our next question is from Miss Irma Sgarz, from Goldman Sachs. Please go ahead. Yeah, hi, Rodrigo and team. Thanks for taking my question. One question I had, just as a follow-up, very helpful what you said about the competitive environment in Mexico and how you're reacting to it. But I was also curious if you sort of from a consumer standpoint, you made a comment that the consumer is sort of is showing elasticity to prices. Would you also, or when you sort of think into the back half of the year, do you foresee a potentially more difficult demand environment, given that we're coming sort of off the election cycle, or you're not necessarily seeing this? I was just curious sort of how you're planning when you think about promotions, et cetera, and maybe even what you've seen along the second quarter, whether that gives you reason to believe that we have a potential slowdown in consumer demand ahead or not. And then the second question was on the gross margin. You had a pretty nice expansion, if I'm not mistaken, and I was curious if you could just break down sort of what the main drivers were, if there was a contribution also from the real estate division, where you had higher occupancy rates, and how much of that was commercial margin? Maybe also paint a picture for us, how we should think about that gross margin into coming quarters as you also step up the aggressiveness on the competitive side? Thank you. Sure, Irma. I will try to answer the best, the two questions. First of all, going about the competition and the environment and the client perspective for the following months, we are not seeing something that really worries us. I mean, talking about a decrease in the purchasing power of the client or an important decrease in the confidence of the consumption. But as a matter of fact, we also have to consider, and if this is public information, if you analyze the amount of money and the federal programs that were going into the market, and that money flowing to the market, mainly before the elections, because that is how the regulation works, you will see thousands of millions MXN that flow previously in the first four months of the year. That actually was an advance of the programs of the following months, again, because that is the way in which the regulation works. So for sure, it will be a disadvantage if you compare first semester to second semester, sorry, about the money that it will be outstanding out there, Irma. Just talking about the million of pesos of the federal programs, that for sure, an important part of that money goes to the supermarket format. Because, again, we are basically focused low-income sector and low-income families, that basically for them, a very important percentage of that money goes to buy basic products. So yeah, we are expecting that the second half of the year it will be more complex, but I'm not seeing any structural damage in the purchasing power of the client. We are not seeing a shifting, again, to expensive protein, to cheap proteins, or a very important increase in the purchasing of products that we can say is a reflection of a loss of purchasing power in the client. So I think that basically in the second half of the year will occur two things: for sure, the competitiveness and the competition will continue really, really aggressive. And yes, in the second half of the year, we will not have that extra money going from the government to the population that we have in the first half. Basically, that. And talking about the second question, Irma, about the increase that we have in the gross margin, we have several factors that help us to increase the gross margin. For sure, one of them is better negotiations in Julio Regalado that we are really happy to obtain that. Secondly, we have another important combination, the real estate, as I mentioned in the-... In my introduction, is growing, is recovering in a very important and continuous way since the COVID crisis. And that business is important to, to the company. Remember that it's less than 2% of the total income, but it's around 16%-17% of the EBITDA. So, it's a, it's a business that really have an important impact when you talk about income, not sales. And also, we have other factors like, like the question that Alejandro from Itaú was asking to me. The other businesses or the other income is also growing because all the financial services that we have, like the partnership and the JV of, or, or the alliance with Nubank, that is just an example. We have a lot of alliances like that with several very important partners that also represent a direct income for the P&L that goes directly to the EBITDA or to the net income. And finally, and it's something that probably I have a couple of quarters mentioning, every quarter we are having an improvement in the management of the shrink of the company. That, to be honest, still we have plenty of room to continue improving the performance of the managing of the shrink, but it's something that every quarter we are obtaining a couple of points coming from that. So as you basically can see, Irma, it's a combination of several factors. Super helpful, Rodrigo. Could you just also maybe comment how we should think about this margin to the back half? Thank you so much. Sorry, I can't hear you. If I can comment about what, Irma? How to think- The margin? -about the gross... Yeah, the gross margin, because there's obviously some that is maybe, Yeah. Well, no- Yeah. I mean, I think that we will continue with a very healthy gross margin. I cannot, I don't want to say that we will have, again, in the third and the fourth quarter, an increase of close to 200 basis points, but I think that we will maintain a very healthy gross margin. Helpful. Thank you. Thank you very much for your question. As a reminder, if you have a question, please enter star eight on your telephone keypad. Our next question is from Mr. Miguel Ulloa from BBVA. Please go ahead. Hi, Rodrigo. Hi, Claudia. Thanks for taking my question. The first one would be regarding top line growth, specifically, same-store sales growth for the quarter. Do you think you will be able to revert the position you are in in coming quarters? Or how long will it take for the market to recognize your price aggressiveness? Have you budget that, or what should we expect going forward? Hi, Miguel. Thank you very much for your question. Well, I think that, it's something that I mentioned in previous conference call. Soriana lose competitiveness in the last couple of years, and it's something that we know, and it's something that we are addressing with a very important investment in prices and in publicity campaign. But we also have to be clear, change the perception of the client is not something that you achieve in one year, and we have competitors that invest for several years to have the perception that they have right now. So we have that perfectly clear. Build a perception of cheap prices is something for the long term. So no matter if we see a reaction or not in one quarter, we will continue investing in that. If you remember, when we start all the campaign with the basic prices and all the initiatives that we start a couple of years ago, and also the increasing the participation of the private brand, increasing the participation of entry-level products, all of that things that are basically targeting to create perception, and we have to continue with that. And we will not surrender just because one quarter or one year, we still doesn't have the reaction from the client. This is for the long term, and we will continue investing in create that perception. Not only in prices, but also in create the perception, because sometimes for the client, perception is more important than reality. So we will continue investing in both. We believe that is the right strategy to recover the perception of competitiveness in the market. We also believe that is a very good strategy to continue building our private brand and to convert it into one of the main differentiation and competitive advantage against competitors. So I think that the following quarters, for sure, as I mentioned, we will have very fierce competition, probably, and we cannot achieve the same-store sales that our competitors will have for the whole year. Right now, we have an important difference against the than that and against the competitors, and we know about that. But that fact only push Soriana to be more aggressive and more aggressive and to continue strengthening the strategies that we already have. And again, it's something that is not just for the next quarter, it's something that probably will take a longer period of time, and we are willing to continue investing on that. It's the same happened with the expense, Miguel. If you see, we have a healthy gross margin, we are investing in price, but still the expenses is really high. And we are investing in expenses, and we said investment and not expense, because we are basically investing in more personnel, and we need to increase the level of service, and we need to increase the quality that the client receives every time that go to our stores. So we have to have more personnel in the point. Into the past, if you analyze the number of employees per square meter, in the last probably five, six years, we are the one of the, the operators with the less concentration or saturation of personnel per square meter. And obviously, that have an impact in the, in the service to the, to the client. So, again, have a, an impact in the P&L, yes, but it's something that we have to invest. And right now is that part of the time we just only see the investment, not the results, but we have to, to do it. Sure. Thank you, thank you, Rodrigo. Very clear. Thank you very much for your question. Our next question is from Miss Irma Sgarz, from Goldman Sachs. Please go ahead. Yeah, thanks for allowing me to come back for another question. I was just actually. You partly answered it, Rodrigo, but I was hoping to just get your view on how you're thinking about potential labor cost pressures into 2025, in terms of sort of the minimum wage increase that you're expecting, and maybe also if you could highlight anything that you're able to do in terms of, I don't know, whether it's automation or or in terms of labor scheduling. It sounds like you still have to invest a little bit more, but any sort of efficiency gains or productivity gains that you can highlight on the horizon for either later this year or for 2025 would be helpful. Thank you. For sure. Well, I think, I, we have to, to say probably two important things. It's a matter of a fact, Irma, that the pressure in the salaries will continue. I think that is something that all the Mexican companies already have discounted in their future P&L and in their budget. That will continue. So once that we understand that, we have to create a strategy to take advantage of that environment. So, one of the first things that, that right now we are doing is how we can optimize all the personnel that is in the stores, doing activities that are not relating to serving the client. So, like an example, a couple of the activities that we have changed and implemented in the, in the last couple of months, Irma. For sure, something that you can see really clear is the self-checkouts. It's something that the clients really want, they prefer. They have a psychological effect that create more satisfaction when they go to the self-checkout. Obviously, gives an optimization in the personnel, and increase the productiveness. So right now, we have a little more than 170 stores with self-checkout, and every time that we are opening a store, it's something that have a tremendous success. Another process that probably you doesn't see, because it's in the backstage of the store, but right now we are changing completely the way in which we deliver the product to our stores, in order to make all the controls before, I mean, merchandise controls, before they arrive to the store, in order that in the store, they doesn't have to spend a lot of people and a lot of time verifying that they are receiving complete or the whole products from the distribution center or direct from the suppliers, and make very easy and very quick, just take the product and take it to the shelf. We don't want that the people spend a lot of time in the backstage of the stores, and spend the major part of the time serving the client. But also we have to consider, and it's something that I, I already said, Irma, that we have to increase the personnel. In a lot of stores, we have a lack of personnel that provoke not the best service, and we have to continue investment on that. Probably, in this moment, see just like an expense, but we believe that it's a, an investment that in the following months, have to be paid by an increase in the sales. And again, we cannot continue to be the company with the less intensive service, saying that as the number of personnel per square meter in the, in the, in the market. I mean, we cannot aspire to be a better player in the supermarket segment in Mexico if we continue with a important less of personnel in the, in the sales floor, Irma. So we have to continue investment on that. Obviously, we will want to make it more efficient. We are implemented technology in the backstage of the store, in the, in the front part of the store, like the self-checkout. In here, in the headquarters, obviously, several areas of the company right now are operating with both, with, artificial intelligence. But at the end of the day, we have also to say it, we are a, a company that, by its nature, is intensive in the use of personnel, and that will not change. So we have to also be focused and to be more productive in the use of that personnel. I don't know if I'm clear with, with the, with the explanation. Absolutely. Very clear. Very clear. Thank you so much, Rodrigo, and, and good luck with it. Thank you. Thank you very much for your question. That was the last question. This concludes the Q&A session for today. I will now hand over to Mr. Rodrigo Benet Córdoba for final comments. Please go ahead. Well, again, thank you very much for joining us in this conference call. As I always say, Claudia and I were pleased if you. We have served you. If you have any other questions, just send us an email or a call, and we will be really glad to respond. Have a good weekend. Thank you. Organización Soriana would like to thank you for participating in today's conference call. You may now disconnect.