Good afternoon everyone. Welcome to Organización Soriana's second quarter 2025 earnings conference call. With us today are Mr. Rodrigo Benet Córdova, 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 2025 and providing a summary of the latest news on the company. At the end of the presentation, there will be a Q and A session to answer any questions you might have. We would like to mention that all lines have been placed on mute to prevent any background noise. At the beginning of the Q and 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 Córdova, CFO of Organización Soriana. Please go ahead. Thank you. Good afternoon everyone and thank you for joining us in this conference call today. With me, as you already hear, is Claudia González, Head of FInancial Planning, and together we will lead through the results of some important information of what has happened during this period. Regarding the financial results of this second quarter, it's important to highlight that the Mexican retail has shown moderate resilience, adapting to both global and domestic challenges. Consumer confidence has played a key role in retail performance with a mixed trend during the quarter as well as the effect of the remittances reduction combined with the same quarter of 2024. As a result, we were facing caution expending patterns particularly in durable goods and discretionary spending in all of our store formats. In the second quarter, the top line of the income statement closed in $45.8 billion pesos with a nominal increase of 1.7%. This derived from the net effect of the opening of three new stores, the two stores that we have to close and a large number of rented premises. Another income mainly coming from one time concepts like insurance recovery. On the last week of May this quarter we started with our emblematic promotional campaign Julio Regalado, including several categories within the supermarket's complete basket, private label innovation and we incorporate also different categories in general merchandise and other kind of products, trying to offer to our clients a very complete value proposition in order to increase the sales of the company. We also had a greater offer of products with the lowest market price under our promotional campaign Precios Relocos. Also we added VAT refunds to some of the general merchandise categories and we were very focused in pushing the sale of our private label. As we already mentioned, but at this date we have renovated hundreds of SKUs with a renewed design and quality for all divisions. In this regard, private label products have been very well accepted and in fact increase the loyalty of these products due to the high quality and variety that we can offer. As of today, the total sales of the private label have an increase of 9.3% and the participation is almost 13%. In Soriana format and in CDC loop we can say that the number it has doubledouble-digit growth. In addition, the loyalty program of Soriana Ya at this second quarter closed with 8.1 million active clients where the average ticket is 62% higher than the non-registered clients. Reason why we are confident and we continue pushing very hard to accelerate the affiliation of our clients to be able to enjoy multiple benefits that have at the moment that they take the Soriana Ya card. Also I'm talking about the performance by region. We can outstand the performance in the states of Baja California Norte, Zacatecas, and Jalisco, particularly for the hypermarket format. In the case of the supermarket format, basically we have a better performance also in the north part of Mexico, Baja California Norte, Chihuahua, and also a good performance in Tamaulipas. Going to the performance of our digital business, this line had an increase of 19% in the total sales and a very important increase in the number of total orders of 44% compared with the same quarter of last year. Finally, and to end with the top line of the P&L regarding the real estate business, the total income reaches a figure of more than MXN5 billion, showing an increase of 12% due to new rent premises and the attraction of more institutional rent at our national level. Right now the occupancy rate is practically 90%. Going down in the P&L, the gross profit reached MXN10.9 billion in this quarter which represents a gross margin of 23.9%, an increase of 4.6% against the same period of last year as a result of better negotiations with suppliers regarding Julio Regalado campaign and a very good performance in the shrinkage reduction. Also regarding the operating expenses line, there was an increase of 8% versus last year reaching MXN7.9 million which represents almost 17% of the sales. This increase in the operational expense is basically attributable to the cost of personnel derived from improving the coverage of vacancies and increasing the salaries and also the net effect of the new stores that we opened in the last 12 months. As a consequence of the variation just mentioned, the company's EBITDA for the quarter reached MXN3 billion, which represents 6.6% over the sales and represents a decrease of 3.7% compared with the same quarter of 2024. Going down, r egarding the financial items, net financial cost closed in MXN694 million pesos, showing a decrease of 11% basically to the net effect of the financial product increase of more than 120% due to a higher cash balance and the reduction of 7.6% in the cost of the average in the cost of the debt to the company. Also with a reduction in the balances of the debt. Finally, the net income of the quarter reached MXN743 million, which represents 1.6% over the sale. That is basically a percentage very similar to the one that we obtained last year. Moving to talk about the progress of the business that we have with our partner Falabella, I'm pleased to inform you that Sodimac already have 15 stores operating with very good performance and we are planning to open one more store still in 2025 with very important plans to accelerate the growth for next year. On the other hand, I'm talking about the financial business. The portfolio of the credit card that we have with Falabella is continue growing in a very important pace. Right now we have more than 980,000 active cardholders. We are operating with physical models in more than 100 stores. Basically we have digital vision of the credit card in all the chain of the company, in all the other formats of Soriana. Right now the credit portfolio closes in MXN6.1 billion, which actually represent an increase of more than 30% compared to the portfolio that we used to have in the second quarter of last year. We are very pleased with the performance of Falabella and it starts to be every day a more important commercial tool to attract clients and to give more benefits to the clients of Soriana. Finally, and as an update of the expansion plan and investment, the program of the CapEx for the company in the last 12 months we have invested close to MXN3 billion, mainly in store remodeling, maintenance and as you already hear, the opening of 13 stores in the last 12 months. Finally, I would like to share with you that the recent alliance that we have with FAZT has been a total success. Right now we have three charging stations already working in Ramos Arizpe, in Valle de Bravo, in Morelos and also here in Monterrey. This alliance is intended to build the biggest network of ultra-fast charging stations in Mexico, which shows very high potential growth in the electric vehicle market. It is also an important part of our social responsibility. The main goal of this initiative is the installation of more than 1,000 charging stations by the year 2030. We are very confident that everything is going very well. The performance of this first station has been very, very positive. Basically, we already send the results and the information to the Bolsa. With this, we can end with my intervention. Please, if anyone have any other question, we can go to the Q and A session in order to try to answer all the doubts that you can have. Thank you very much for joining us. We will now start the Q and 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. Bob Ford from Bank of America. Please go ahead. Hey, Rodrigo, thank you so much for taking my question. Thank you. Can you expand a little bit on the plans to accelerate the growth in Sodimac? I'm just curious what you've seen in terms of the evolution of the four wall returns, your ability to maybe begin to fund or more than fund all the central administrative functions, the scale that you're beginning to enjoy, maybe how the maturation periods are evolving. When you think about growth, how do you think about the magnitude of the operation within Mexico, and then your ability to really leverage the real estate that you currently hold to facilitate that expansion. Thank you. Sorry, Bob, we have a misunderstanding here in the communication. Can you repeat the question, please? Sorry. Of course, it was a fairly long one. I'll try to do it even shorter this time. My question was about Sodimac and you commented on accelerating the growth of Sodimac. I was just curious how it's evolved with the four wall returns or whether or not you're covering all the central administrative expenses at this point, and then how you can really leverage the real estate that you're holding to accelerate the growth. I'm just curious of adjacencies to existing hypermarkets or maybe reducing the size of some stores or how you're envisioning this growth path. Sure. First of all, we are very happy with the performance of Sodimac, Bob, mainly because we start to see all the investigation that we have in terms of marketing, that the brand starts to be much more recognized in Mexico as a good solution for the improvement sector. That is something really important for us. At the end of the day, no matter that Sodimac is a very well known name in South America, in Mexico, the first time of the brand in the country with a competitor that has a very important participation in the sector. The main goal was to position the name not only in front of the client but also in the name of the suppliers. At the end of the day it's also something that we have to work and that we have been working in the last years to have an important relation with the key suppliers for the home improvement sector. Saying that, it's part of the strategy to have a critical mass. The idea, Bob, is to open at least another five stores next year. Yes, we will take advantage of the real estate platform of Soriana. Still, Bob, in Soriana we have not too much but close to 60 stores of hypermarket that still have a huge sales area, more than 9,000, 10,000 sq m of sales area. That makes sense to make a reduction and take probably part of the reserve area or part of the parking lot and try to have a combo of hypermarket with Sodimac or supermarket with Sodimac. It is something that we already have done actually, particularly in the offices that we used to have, the headquarters of Comercial Mexicana. That is exactly what happened. We put a combo between a Soriana hypermarket with a Sodimac. Yes, the short answer is yes, we will take advantage of the Soriana real estate platform. Still, we have a couple of units that we can give to Sodimac in order to accelerate the growth. No matter that Sodimac has their own real estate strategy, their own real estate structure, looking for very good locations in order to ensure the growth of the company. How many stores still we see in Mexico? Hundreds. I mean, particularly remember that the home improvement sector has a lower penetration than the food retail sector. I think that still the opportunity is really, really important. Still, we have very important cities where we don't have a presence of a single store: Guadalajara, Puebla, Aguascalientes. There is a lot of opportunity, or even in Monterrey, where we already have stores. Particularly in Monterrey, very easily we can talk about another five to six stores just in the metropolitan area of Monterrey. There is a lot to do in terms of expansion. Yeah, I guess that's my curiosity. Right, because five on a base of 15, it's a big number. Five when you're thinking about a market that can hold hundreds and you've got adjacencies that could facilitate 60 seems small. So. It gets me back to the beginning of my question, which is how are the returns on invested capital evolving and how should we think about the profitability of the concepts? There are not the returns on invested capital that we want. Mainly, I think that particularly the main important goal is to increase still the sales more than the margins in terms of the gross margin. We feel a little more comfortable with the margin that right now we have. The more important opportunities are coming from the sales. Also, it is related with the penetration of the brand and that we have to continue leveraging the structure of the company. Obviously, the returns on capital as a company still are not at the level that we want. When you look at our store level, because still the mass, the critical mass that we have is not enough. When you see it at the store level, they are not too bad and they are continuously growing year by year. At the end of the day, it makes sense. We need more critical mass in order to start to obtain the returns on invested capital that we want as a company, not at store level. That makes perfect sense. Thank you so much. Thank you. Thank you very much for your question. Our next question is from Mr. Alejandro Fuchs from Itaú BBA. Please go ahead. Thank you, operator. Hola, Rodrigo. Claudia, thank you for questions. I have two quick ones, if I may. The first one, wanted to see if you can break down semester sales maybe between average ticket and traffic. That'll be very helpful. The second one, Rodrigo, maybe if you can walk us through a little bit of how is the company thinking about top line semester sales growth relative to gross margin? We saw another big gross margin improvement this quarter, maybe a little bit more pressure sales. How are you guys thinking going forward between that relationship? Thank you. Sure. First of all, going up about the breakdown of the ticket and the average ticket and the clients, unfortunately, and I say unfortunately because obviously it's not what we want, we have an increase in the ticket, in the average ticket and an increase in the number of clients. That is basically the response for the first question. Talking about the performance in the sales and the relationship with the gross margin is something that I repeatedly said in different conference scope. We are right now protecting the gross margin, trying to be more efficient in particular in terms like the reduction of the shrink, better negotiation with suppliers or even in the other income sources like the real estate or the financial business that have been very important in the past to increase the gross margin. At the end of the day it's very clear that the main lack of the company is in increasing same-store sales and increase the productivity of the sales. If your question is going in the sense that if we are willing to invest more gross margin to accelerate the sales, the response is, yes, we. Particularly right now when we see like promotion like Julio Regalado, in which we are very aggressive in prices, or the prices that we have for the basket products that actually we show every week to the federal government, the basic basket, in all of that measures, we are competitive. It is very clear that obviously price is very important. It is one of the top values that the client needs in order to take a decision between Soriana or other stores. It is very clear that it will not be only the reduction of price, the one that will give us more sales. That is why we are also working to have a more comprehensive value proposition, growing our private label. That acceptance of the private label is really, really good. I mean, it's very. In some sense, it's difficult to see that our private label sales are growing basically almost a double digit, but the total same-store sales of the company are the lowest of the market. Obviously it makes sense that say, okay, we have to increase the value proposition of the private label and the number of articles that we have with that and the number of categories that we cover with the private label. It's also very clear for us that we have to continue investment, making important investment in remodeling the stores and the appearance of our facilities to the client. Another kind of thing, obviously working with the personnel that we have in the stores, because at the end of the day, there are other important things that for us is very clear that still we have an opportunity and the client is demanding from Soriana. That is the reason behind the results in which we don't have the same-store sales that we want, and we are very conscious that we have the lowest end same-store sales in the market. We are working on that. If we see that making investment of more gross margin into prices will give us that recovery of traffic, we will do it without any doubt. Right now we believe that we also have to change and invest in other things, not only price. Again, I don't want to say that price is not critical, because it is. It's just that right now we know, because we are hearing the client, that we need to work in several other things, not only price. I don't know if I'm clear with the response, Alex. No, it was super clear. Rodrigo, thank you very much for the very detailed answer. Thank you very much for your question. As a reminder, if you have a question, please enter star eight on your telephone keypad. As a reminder, if you have a question, please enter star eight o n your telephone keypad. It. Our next question is from Bob Ford from Bank of America. Please go ahead, Mr. Ford. We cannot hear your question. I think that probably was a mistake because. I was in the queue and I was muted. I apologize for that. I wanted to take advantage and just with a quick follow up. Would you, would you, could you. Comment a little bit on what you're seeing from a competitive perspective, particularly FEMSA with the emphasis on Bara in the north. I was just curious in areas where you're beginning to overlap if you're seeing any impact from Bara whatsoever. Sure, Bob. As you already know, Bob, you know perfectly the Mexican market is really competitive in all the regions. Every year the regional players start to be much more aggressive and start to be more important. If you ask me about the regional players going out from the Chedrauis and the Walmarts and these big names, which are the ones that are making more noise, I will not say Bara particularly. If you ask me. I will say that, particularly in terms of supermarket, (S-mart) is doing a very, very good job in the north part of Mexico, particularly in the area of Juarez and all the areas, I mean the region where they are coming. The performance of these guys is really good. If you ask me to go more to the central parts of Mexico, without any doubt, every month, they start to be more important and to make more noise and start to appear more in the statistics of triple B guys with this different value proposition and with this. I'm not saying that Bara is not important and obviously important competitors, and we know which company is behind Bara, and we every month take a look to see what the store managers told us about that. If you ask me about regional players that are making more noise, I will say these other two names. Not Bara. Out of curiosity, are you seeing H -E- B more or less aggressive in Mexico? More or less focused in Mexico? H -E- B is not aggressive in terms of price, if you're talking about. Right, no more value proposition. The value proposition of H -E- B for sure is very aggressive. I think that is one of the players that knows better how to penetrate the middle class and obviously upper levels. It's very good creating an aspirational consumption to the middle class, even middle low class. Their marketing strategies are very, very good ones. They have presence basically in all the events, social events, sports events. They are very active on this kind of strategies and they do it very well and create a very important link, an emotional link with the clients and obviously are our competitor. That is very important here in the north parts of Mexico. As you know, they start to going step by step more to the central part of Mexico, start in Bajío, and we have information that obviously they have taken an important look in trying to go to Mexico City. As you know, going to Mexico City in a massive way is very complicated because the real estate, so it's difficult. I will not say that they will not try to have a couple of stores in Mexico City, but have a bunch of stores in Mexico City is complicated. For sure, I'm pretty sure that they have in their strategy plan going to the central part of Mexico makes sense and the strategy stores that are having in Querétaro is a very good one. Actually, if you remember, Bob, it's a store that Soriana sold to them because. Yeah. It's a shame. No, that's very helpful. Rodrigo, thank you so much. You're welcome. Thank you very much for your question. The next question is from Ms. Irma from (Sachs). Please go ahead. Yes, thank you. Just a follow-up question on maybe if you can expand a little bit on how you're thinking about the macro into the back half and just coming out of the sort of summer promotional period. How are you thinking when you think about back to school and the campaigns, how you're planning for that, and what you're feeling just right now in terms of consumer demand? I was also curious how you're thinking about loyalty programs and just sort of collecting more data on your customer and using that to integrate that more into your value proposition. You can talk a little bit about that. Thank you. Irma. Going about your first question, the macro and the consumer environment. Unfortunately, I'm not very positive about the macro and the consumer environment going forward into the following months Irma, particularly there are a couple of signs that make me think that if you obviously if you see the same-store sales of the company but also of the market, you start to see a kind of deceleration even in campaigns like Julio Regalado that particularly probably Soriana has things to improve and to do better. No matter that, we are seeing the people much more cautious to take volume purchases and high ticket articles. I think particularly that the consumption will be more restrictive going forward. If you see other important factors that are relevant to the Mexican economy like the remittances, the first five months of the year, comparing January to May of this year to last year, we also have a reduction. Obviously, all the things that we hear from the restrictive policies of the government of the United States about the migrants and the Latinos is not something that is helping. Remittances for several Mexican homes is like the salary. That is not something positive. Also, Irma, if you see the trend of the creation of formal employees in the last 36 months, it is basically a decreased trend. Still, the rate of unemployment in Mexico, I think that is a very good one. If you see the creation line, the line of creation of new employees every month is going down and that trend has at least more than 24 months. Also, it's saying something. In general, I think that it will be tough. Buen Fin will be really, really difficult. Particularly, Buen Fin is a seasonal campaign that is not also against the Walmarts and the Chedrauis and the traditional competitors of Soriana. It's also against the department store, the specialty stores, even the clothes stores, the e-commerce. I think that it will be really, really tough in terms of prices and promotion the Buen Fin campaign. I mean, just imagine how tough we believe that it will be that from the beginning of the year we are creating accounting reserve to face up the discount that we will have to do in the Buen Fin. Thank you, that's helpful. Your second question about the loyalty program. Yes. Remember that inside Soriana we have a couple of years working with Dunnhumby in order to use the information of the loyalty, the cut to be more accurate in the commercial strategy and right now even in the financial strategy because it's also information that we use for Falabella, the credit card. We are making important changes. One of the important changes that we have made in the last six months is that we make it much more easy to the clients to enroll in the loyalty program and also to use it, allowing them to use the cellular phone, I mean the digital card of the Soriana loyalty program. Also, we have a couple of probably like one month that the people doesn't. The client doesn't require to present their electronic or physical card. With the number of their mobile phone, we can recognize them and give them the points or they can use the electronic money that they have in order to pay. We have to do it much more easy to our clients and we are working also on that. Right now we are including another extra benefit to the loyalty program in terms of financial services, in terms of very basic products. Let me give you a couple examples. Right now with the loyalty program points you can make recharge of money for all the cellular phone companies in the country, not only for Soriana Móvil but also for Telcel, Movistar, you name it. We start to give some benefit in other companies related, like an example if you go and buy some medicines we give benefits with a loyalty card in pharmacy but also we give benefit with laboratories in order to do laboratory check offs or exams with other companies related with Soriana but not Soriana or third party in order to create a more comprehensive ecosystems of benefits for our clients in the loyalty program. Obviously, in the bottom of all of this is the use of the information and use that data in a more intelligent way and we are working with Dunnhumby beyond that. Great. Thank you. Thank you very much for your question. That was the last question. This concludes the Q and A session for today. I will now hand over to Mr. Rodrigo Benet Córdova for final comments. Thank you very much for your question and your time for joining us in this conference call. If you have any other question, please just send me an e-mail to me or Claudia and we will be really glad to answer you as soon as possible. Have a good day. Bye. Organización Soriana would like to thank you for participating in today's conference call. You may now disconnect.