Marisa Lojas SA

BOVESPA:AMAR3

Earnings Call Transcript 2020-Q1

[Operator]

Ladies and gentlemen, good morning, everyone, and thank you very much for standing by. You're welcome to the conference call of Marisa to announce the results of the first quarter of 2020. This conference call is being recorded and is available at Marisa's Investor Relations website [Operator Instructions]

Before continuing, we would like to [ clarify ] that statements made during this conference call relative to Marisa's business prospects, operational, financial projections and goals, our beliefs and assumptions of the company's management and are based on information currently available. Forward-looking statements are no guarantee of performance because they involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, the industry conditions and other operational factors may affect the future performance of Marisa and may lead to results that are materially different from those expressed in such forward-looking statements.

Now I would like to turn the conference over to Mr. Adalberto Santos, CFO and IRO, who's going to start the presentation. Please, Mr. Santos, good afternoon. Thank you for the opportunity. Please, the floor is yours.

[Adalberto Dos Santos, executive]

Good afternoon to everyone. Welcome to the conference call of the first quarter of 2020 of Marisa. And today, we have Marcelo Pimentel, our CEO. And remotely, we also have our Commercial VP and our Operations VP, too.

And needless to say, the performance in this quarter, as most companies in Brazil, has been very much affected by the almost full interruption for our -- the operations in our physical stores as of the second half of March. And in our press release, the company was following firm on its growth path based on work we had done before. And so SG&A and financial services, everything is in compliance with what we had planned, and our balance sheet situation is much better balanced and more efficient. And this was what we did before the crisis. But because of the work we did before, we are now much better prepared to deal with the hardship ahead of us or the hardship that we are facing now. Today, Marisa is a much more efficient company and very agile in terms of decision-making and implementation, which has demonstrated to be of fundamental importance right now. So there are many measures that have been adopted for us to deal with COVID-19, and these measures have been grouped in 2 sets: One, people protection that we started in February; and the other one is related to governance.

I'm going to briefly go over the numbers of the quarter. And then I'll go report to you about the current state of the operation and also a little bit of future prospects, considering the low degree of visibility that we have.

So starting on Page 2. At the top, we have the total net revenue, 1.4% -- with a drop of 8.4%. And then we have same-store sales, one, for the full period, minus 4.4%; on the top part, for the period that we call pre-COVID, saw a significant growth of 11.7%. That would have been the real performance in the quarter of many consecutive quarters of improvement. And so January and February, with 41% of e-commerce orders with a repurchase rate of 20.7%. Also important is the growth of ship from store in April and May, and almost 100% of our growth comes from same-store sales. And there was also an accelerated expansion of omnichannel operation with pick up in-store in 267 stores at the end of the period, with very important operations in our store, in the streets and then, once again, with very good performance of our e-commerce orders. And on comparable basis, same-store sales would be 11.7%.

Now on Page 3, you can see the evolution of gross profit and SG&A. Gross profit, with a drop to 44.7% because we wanted to regain market. So we feel the effect of COVID in the second half of March, precisely when we will launch the new collection, and the margins weren't better. So in the lower part, you can see SG&A. So the important thing is the main group in SG&A and sales expenses, which account for almost 80%, have had a drop of -- a drop thanks to teamwork with structural and efficiency gains again. So in terms of G&A, with a slight growth, as a result of investments in technology and provisions for the variable remuneration.

On the next page, you can see the evolution of the margin of financial debts and services with a drop of 17%, a lower PL contribution to the result. And with a difference in comparison basis, we had a reversal of BRL 14 million. Other than that, the result would be practically the same. And the result is 65%, and the maintenance of the contribution margin, in spite of the provisions for losses as widely disseminated in the press.

On Page 5, you can see our loss portfolio in private label. Private label, we had an increase that was affected by the reversal in the previous period. On the bar, you can see a cycle that is affected by other events, as the change in the final loss that was 180 days. And now it is realized in fewer days with -- there is a mathematical effect. For the portfolio on the whole, it has a quite healthy performance. As you can see below, both the level of losses and in mature are at very healthy levels as compared to the period before.

On Page 6, you can see the evolution of the consolidated adjusted EBITDA. In spite of a positive contribution of FPS and a good result in retails, led the result to be negative. So in retail, it is a result not just because of drop in revenue and margin, but especially because of the expense structure, which had a quite interesting leverage for the company because in Q4, we had a growth of 9%. And our EBITDA was 4x the one before. And then this rigidity is corrected.

On Page 7, you can see net results reflecting especially the drop on the retail operations, going from BRL 40.9 million to BRL 107.1 million negative.

And then on Slide 8, you can see the cash flow, a drop of EBITDA from BRL 44 million to BRL 13 million. And then it was negative by BRL 25 million, the gross cash flow, which was the result of sales but also advanced payments to suppliers. And so it had this effect on the cash flow. Also, these advances -- that payments that we made because of the follow-on of December, and in spite of that, our cash is still the BRL 251 million. And this was pre-COVID. So our net debt had a significant reduction from BRL 670 million to BRL 391 million. And net debt over EBITDA went up to 3.3x, basically due to the reduction in the LTM EBITDA.

These were my considerations, and I would like to say a few things about the current status of our business. And now we'll address the first 3 bullets and then the evolution of the company's strategy for the small [ lift ] in digital operation. So the cash position of our company, as I said, pre-COVID was BRL 250 million today because of the measures to facilitate receivables and cash burning and new fund raising. Today, we have BRL 400 million, which makes us quite confident for the recovery period. We are simulation -- we are simulating recovery scenarios, and we can go until the end of the year with -- without having to worry about cash.

Now thinking of April and May, what we have in terms of receivables, in terms of reversal of provisions, we have a more positive status because the company has implemented many measures, massive renegotiation with customers, encouraging them and making negotiations in point of sales. And as the stores were closed, we had to work with our suppliers. We also used robots, which makes it more convenient in terms of checking balance, issuance of revenues or -- rather invoices. And in May, the effective cash receivables is around 30%, 35% above our initial projection. And again, it's likely that this process might lead to a reversal in the provisions for bad debt in the next quarter.

As I mentioned in the opening, this is related to the agility of the company. Of course, it was impossible to implement any measures related to SG&A after the second half of March. It was good for sales increase. But when we need to adjust it down, it's just a bit more difficult. And when we closed our stores in April, our SG&A had an effective reduction of 50% as compared to the budget, with only 40, 45 days the measures that we took in terms of lease contracts and also providing greater flexibility to work shifts. And most of our company's contracts are still going on, and we have been able to attain a very significant reduction.

Now I would like to turn the floor -- to give the floor to Pimentel, and he's going to talk a little bit more with you.

[Marcelo Pimentel, executive]

Thanks, Alberto. Good afternoon to everyone. Now in talking about our strategy and consolidation of the company's strategy, we are still steady in our growth strategy in the first quarter, confirming the assertiveness in winning back our customers and increasing the volume of items, too. As Adalberto said, with that event, we have had a growth in the first quarter in volume. So items per ticket grew 60%. And in March, we will continue to strengthen this strategy. We want to continue to have a close relationship to our customers, especially at the time of the gradual recovery.

The digital channel has been the leader right now as a result of work that we started in 2017 when we launched our digital platform and also our multichannel project, and we have advanced phases in implementation that were originally planned for 2021. In 2 months, we already have more than 120 (sic) [ 115 ] sales able to work with the Ship from Store model, which account for about 20% of sales on the digital platform. We are present in 5 marketplaces, the 5 leading ones in Brazil. And more recently, we joined in Magalu portal. We should also draw your attention to the last EBIT report, and Marisa has joined the top 10 most accessed websites in April and the 5 top biggest accumulated growth of the year.

Looking into the future and looking at the recovery process, since April, we have a Recovery Committee preparing the go back -- to go back even stronger and prepared for the new time. Our focus was to focus on digital strategies but also on the recovery of physical stores. As mentioned before, we continue the project with the new store model, opening our concept store as planned in the end of July. So our strategy remains intact. And we have our Magalu kiosk in more 300 stores until the end of the year. And we also have expansion of the equipment in our stores as things happen. And we are going to have a partnership, and we want to get to 300 stores still in 2020.

Marisa is well positioned to deal with the crisis. 44 of our stores have reopened up already and performing well above our expectations. Today, overall, we have 84 units in operation with the performance above the originally expected numbers. And we have a positive growth for the same period of 2019. We are working very intensely, bearing health in mind and prepared for the reopening of all our stores.

So I would like to close reaffirming our trust and confidence in the strategy that we defined in 2017, to be close -- closer to our customers. We are dealing with this moment very cautiously, and we are very well positioned to continue growing. So this time, it has given us the opportunity to accelerate our digital strategy, which will provide many more benefits still in 2020. We have the commitment of providing more fashion trends, qualities at affordable prices to our customers. Thank you very much.

And now we are available if you want to ask any questions or make any comments. Thank you.

[Operator]

[Operator Instructions] We are going to start with Felipe Cassimiro from HSBC.

[Felipe Cassimiro de Freitas, analyst]

Adalberto, my first question is, I would like to talk a little bit more about e-commerce but in more qualitative aspects. So the channel has had quite strong growth in the past quarters. So could you give us some more details about the NPS of e-commerce, the satisfaction levels, delivery times once you started with the quarantine? It's important to understand. And the performance of the channel in April and May, can you tell us more about that? Has it accelerated? You say that -- I would like to have more of a flavor of the qualitative aspects.

And question number two, maybe to Adalberto, is about financial products. We have seen a strong growth in personal loans. Can you give us more details about that? We are not seeing the effects of the COVID prices in terms of provisions and losses. What should we expect in terms of performance for financial products over the next quarters?

[Marcelo Pimentel, executive]

So this is Pimentel answering. Then I'll turn it over to Marcelo (sic) [ Adalberto ]. As to e-commerce, the digital platform, as a whole, the benefit that Marisa is having right now is precisely because of the fact that this is part of a project that started in late 2017. We changed the platform to hybrid. In 2018, we started the channel ship [indiscernible]. So what was already consolidated in our store in the beginning of the first quarter, we already had 30 stores in the Ship from Store concept. So all this process of buoying up the operation was already going on. So when demand came, we were very well prepared.

What we have been seeing, 2 very positive things and one challenge. Number one, looking at the good things is Marisa's speed. If you note that in March, we had 30 stores in pilot. We have 130 stores [ operating ] with Ship from Store model and very well. And so this agility continues. We had training, digital training, and the whole process of the IT and digital process in terms of putting it up was really phenomenal.

So the digital NPS, we have already just started monitoring that. We were not following up it originally. We were not monitoring the NPS for our digital sales, only the physical stores. But our NPS, when we look at first, in regards sales, in terms of sales, we're doing very well. We are above the market average. We want to work on after receiving. We dropped from 1 city. In Santa Catarina, our e-commerce distribution center, 230 distribution centers, all our stores. So we have broken it down. It's much more complex, and we had to solve that very briefly and very fast. In the last 3 weeks, they have improved drastically.

And before giving it -- the floor to Adalberto, we don't want to say no to our customers. As we empty our inventory, sometimes even if I don't have a product in a distribution center, we ship that. And this has been successful for our digital because it no longer depends on the availability of an item in Santa Catarina distribution center because wherever customers are, they are receiving products. So as we open our stores and as they start operating in this model, they start immediately working. And as you know, Mother's Day is the second most important day in a year for retail. We were expecting the performance not to be so good. But in the end, we didn't have any drop. So it was very high. We had 85% growth in April, and we have grown by more than 100% in May.

[Adalberto Dos Santos, executive]

Felipe, good afternoon. Going back to what happened in the first quarter, strictly speaking, we haven't yet felt any material effect of COVID. There has been a drop in production. But it's basically immaterial because the generation of revenue from the cards operation, as installments mature, we work with them, as our portfolio is relatively long. In terms of revenue generation, we do not see any significant effect in our performance. We will see an advance in a provision for bad debts. It will grow at least 30% as compared to our historical levels, and this will affect the results. Although from what we have seen, I think these provisions for the bad debt will be reversed later on. So consumers are more careful, and we can see that in terms of the evolution of sales. And as everything indicates, consumers want to leverage less and less. The predominance is cash sales in all modalities with all cards, not just Marisa. Consumers are concerned with not leveraging themselves. That's it.

[Operator]

Now our next question comes from Helena Villares from Itaú.

[Helena Villares, analyst]

I have 2 questions actually, the first, regarding e-commerce. How do you seek customers? Are you seeing new customers? Do you see the growth of any mix, especially more casual or stay-at-home clothes? About the crisis, people value much more the value proposition. And Marisa is very well positioned for that value proposition. And now people who didn't use to buy at Marisa might now be migrating to Marisa. What do you think the informal clothing market? Is it all -- will be migrating to your stores? Or is it so decapitalized that what I'm saying doesn't really make much sense. You mentioned the result of the financial products will continue to evolve, but the provision for bad debts will grow about 50%. So is it going to be all in the second quarter? Is it -- how are you thinking of that? How are you going to deal with it?

[Unknown Executive]

Thank you, Helena. Let me tell you about e-commerce. You are right, we have had an experience of 30%, 35% new customers joining our base. And us, together with our marketing team, we did very careful research work for Marisa customers, Marisa Card customers and customers who haven't bought for more than 12 months. And during April and May, we have had a directed -- contact focused on that audience, and we have reactivated the base that is very important for us in our e-commerce. What we have been learning more and more is to create something we call multichannel customer. All our -- all the research we have conducted show that they have much higher frequency and they are much more loyal. So all the work that has been done together with the digital team is to increase the spaces.

As to our value proposition, let me tell you a little bit about categories. Apart from Marisa's traditional categories, and here talking about women's apparel, we have had a major increase in underwear, to give you an underwear. Underwear today is positive in total sales. So underwear is an absolute success, especially the night line of pajamas, more traditional underwear. We also have seen a significant increase in children's clothes, especially because of the -- children are home and they are not going to school. And we also have had the chance of increasing our share in male or men's store. So it's women buying basic items for their partners. So we have been working again, both the digital team and the marketing team, to assure that once they try the Marisa value proposition, we can keep and make loyal the bases. So we really believe in that. All the work that has been done since we launched the brand in early 2019, when we launched our more fashion, more trend, more quality at affordable prices, at the times such as this, Marisa is becoming a very well-positioned player and to have a trade-out behavior that we might have. So what we have been seeing, yes, it's a new customer bases coming in, customers that were trying another place. And right now, Marisa has become a very interesting value proposition, a very good value for money. I think that once again, we have an opportunity here, not just because that they are short in capital, but because people will try and find solid brands that they can trust in. And certainly, on the streets, Marisa is the most solid, reliable and traditional brands. We have more -- has been seeing a behavior of one-stop shop. So women go to buy clothes for themselves, but they end up buying clothes for the men and the children. And we are very well positioned to make the most of this new reality and this new model as stores reopen. So our street stores that are already open and operating, some of them for 2 months, have been performing well above the original expectations that we had planned in March. And obviously, this is very lively. And every week, we try to adapt our projections. But we've been having very good performance, especially as compared to last year.

As to provision for bad debts, we have the Central Bank and we have a growing trend in the provision for bad debts. As we roll the debts and we confirm the deterioration, there is a confirmation of growth. On the other extreme, there is a reversal of [ ISRI ], which provides some stability to the provision for bad debt. We might have another high in July, but the projections indicate that there will be a process of reversal beginning from now until June. And then we have a growth until July and then from July on, a reversal in the provision for bad debts.

[Operator]

Now our next question is by Bob Ford from the Bank of America.

[Robert Ford, analyst]

How are you thinking about inventory and gross margin? How much of the inventory is going to go for e-commerce?

[Unknown Executive]

So [ inventory ], one of the measures that we are taking and is part of the plan from now on for this year is to accelerate inventory. But as we had planned in the beginning of the year, we wanted to reduce 10% of total inventory. And now we could become even more aggressive with that regard. Secondly, the quality of our inventory, we changed part of our strategy. It's to have a much more perennial inventory. And by doing intense research with our customers, and then that's why we have been so successful in basic categories, in terms of underwear and others. As to -- in terms of [ markdown inventory ] I can use in digital, I can't tell you everything and this is how much we've been using. Our entire inventory now is available for multichannel purchases. And the success this has provided, in 2 months, it's already accounting for 25% of our total digital sales, this exponential growth that we can see for the future and then can consider it has come to stay. So our confidence in terms of inventory, what I can say, we don't have the needs of having any markdown strategy, the behavior we've been seeing of intense competitiveness in the market without the need of doing anything more extreme. We are also starting winter. We're very well positioned with very good quality products at affordable prices, which is -- again, positions Marisa very well.

[Robert Ford, analyst]

Just to make it clear, this 25% of e-commerce sales, is it on the basis of 2020 as compared to 2019?

[Unknown Executive]

It's much bigger than that.

[Operator]

Now we are going to have with us Luiz Guanais from BTG Pactual.

[Luiz Guanais, analyst]

Pimentel, can you tell us about your investment plans post-coronavirus in terms of store renovation? So you talked about e-commerce. What is Marisa's mindset in terms of future investments?

[Marcelo Pimentel, executive]

In the context of the investments related to the digital strategy, much to the opposite, we are accelerating investments. So -- and this channel has responded so intensively. So very soon, we expect to bring -- to share with you some novelties of the things we are doing. And I can't close this to you right now, everything. But I can tell you that in June, we're going to have Marisa app. We did -- Marisa did not have an app. And now our Digital Director, Rodrigo Poço, and his team, together, they are working very intensely to make it happen. We want to synchronize financial products and services and fashion, combining everything on the app. So digital is full priority, total priority. We are knocking at a channel of economy by broader investment. Another point that I mentioned in my initial address and something we did not interact is the project of the new store model. This is very important to us. And we believe if it happens now, it might be an interruption. And we don't think the organization strategy will need to change. We believe in all the feedback from the organization, customers and everybody [indiscernible]. Even after the pandemic, we want to keep the investment. And now in late July, we will be launching the first store model. And I had talked to many of you in all our meetings. And the plan was to put the first store up and then to learn more and make any minor adjustments in the second half of the year, so that the model of recovery and renovations and expansion will take place in 2021. This was our original plan, and it did not change because of the pandemic.

[Operator]

Our next question is from Marcelo Audi from Cardinal Partners.

[Marcelo Audi;Cardinal Partners;Analyst, analyst]

Pimentel, number one is about consumer behavior. You have talked a little bit about that, but I would like to hear more about it. What's the first perception you have in terms of consumption behavior? Is it more conservative? Are you noticing any lower tickets as compared to before? You said it's better than you initially planned. But how much better compared to the period until mid-March? As compared to before, is the tickets lower and how can it be better? Do you think consumers are not spending on other things and they are focusing on clothing right now? This is my first question.

Can you tell us more about your supply chain, any problems? What are the problems that you are finding to keep your operational and cost efficiency in an environment that -- where there might be, in the continuity of your supply chain?

[Marcelo Pimentel, executive]

As to behavior, as I told you, obviously, in March, as a very responsible company, we had to project the worst-case scenario. So right then, we were projecting 0 for the next 3 months, which will lead to an expense restructuring that was done very fast by Adalberto. What happened is as stores opened, what we are seeing is an increase of [ cost ] per ticket on top [indiscernible]. It is stable, and in some cases, it increased. What we are seeing is that the customers are much more objective. They do what they want. They go in. They spend less time in the store, but they go there and buy. That's why important for us to continue investing in our digital platforms, of continuing investing in our digital marketing. The feeling we have is that most customers, especially in shopping mall stores, they know very well where they want to go and what they want to buy. Marisa, however, has a benefit, and this is a competitive difference, it's our -- the number of store -- street stores that we have. And the behavior is even better, even more frequent [indiscernible] to shopping malls and the higher volume of items per ticket. And what we are seeing, as compared to last year, it's a film, like a movie, that starts slowly in April and it starts growing. And what we have been seeing, and I am very careful in saying that because this is an example, 20% of our complex, so you need to always be very careful. But what we have been seeing, sales much closer to the year before. The last 3 days, to be even more specific, of the group of 84, sales, if I look at same-store sales for open stores, we have positive sales as compared to the year before. So we are feeding the chain, feeding digital marketing and the complementary digital sales. And this is being very positive for us. So this is the behavior of customers that we are seeing now.

As suppliers change, this is a two-way work. And our Commercial VP, together with the commercial team, does this exceptional work, very respectful with the supply chain, with financing to pay whatever we had to pay. And now when you're looking into the future, obviously, 2.5 months with most of our stores closed, we need to reconfigure our portfolio. So this is done supplier per supplier. Right now, we have been able to meet all our commitments with our vendors. And as we recover sales, especially in the last 4 months of the year, we believe we will be getting closer to normal. So right now, we are negotiating -- we are not seeing much of an impact with our supply chain. What is the follow-up?

[Marcelo Audi;Cardinal Partners;Analyst, analyst]

Showing a drop in margin, do you think there might be a pent-up demand in terms of behavior? So people are staying more at home. There were things that needed to be changed, and they're buying more items for their home. Do you think this is stronger than normal and things will still change? Or do you think this is already the new normal?

[Marcelo Pimentel, executive]

We also have that assumption, and we have that experimentation that there was an initial rise followed by a drop in trend. But the reality is that we are seeing now is not this. As I told you, the curve is more and more positive as compared to the year before. So we already have a critical mass of 20% that is already open for at least 2 months and have been demonstrating a flattening of the curve as compared to last year. Now how the new normal is going to be, this is yet to be defined. So we need to work on this new normal. It's difficult for us to define. But definitely, it will not be similar to what we have now. Some customers want to go out, to go back to their shopping behavior and reinforce Marisa's position in a possible trade-down customers -- of customers that will need to find a more affordable alternative, and Marisa is very well positioned to meet those needs.

[Operator]

The next question will be from [ Carlo Gelima ].

[Unknown Analyst]

I would like to explore your partnership with Magalu. With regards to your new customer base, do you think you've been able to reach new people with the partnership? And what is the conversion rate of people that were just going to use Marisa to pick up something that they bought from Magalu?

[Unknown Executive]

What I can tell you is what had been going on pre-COVID. The project, and it was not a process -- a project of rollout until then, we had just launched one of our main attractions for this partnership, in addition to the office commissioning, was click and pick up of all Magalu companies, Magalu, Zattini and Netshoes plus our stores. Just to give you an idea what was happening was about 600 orders per store once we started the rollout. And we had not gone to the states where they do not have physical stores, where we think it's going to be even bigger. Of course, with the pandemic, that stopped. And during the process, something that really gets our attention, and it's worth emphasizing, was the commitment of the 2 companies to move forward with the project. We are recovering the building of kiosks in our stores. We did not reduce neither Magalu nor Magalu's -- Marisa, not even one store in the project. We are going to deliver all stores this year, and we are going to expand the click and pick up because this has been bringing many new customers to our physical stores.

[Unknown Analyst]

If you allow me to ask another question about the omnichannel strategy, how have you built your exchange policy? We know that it's kind of difficult, too complicated to exchange products. Are you going to limit exchanges? They -- for example, they buy and pick up at one store. They can change their items at another store because sometimes, when they go change, you can convert. Then there might be a new purchase.

[Unknown Executive]

Now that we are in multichannel, our changes or exchanges are multichannel, too. So they may buy on the digital channel and go change in a physical store, vice versa. We have repurchase rates. We monitor 3 repurchase rates. It is the repurchase rate of click and pick up and financial products and services, customers that go pay their invoice and then we end up selling. And then also, customers that come to our stores, and we can leverage. It's interesting that you mentioned that because one of the main conversion for us to buy at stores precisely was they try on the product. So changes are very important because usually, they change, they pick up another product and then to make sure they try it on and then we add an extra item and there is a new sale. The team has done great work in that regard.

[Unknown Executive]

There's a question from [ Victor Gaspar ] asked through the webcast, asking about SG&A for the second quarter in sales. I think you've mentioned that, the dynamics of the omnichannel operation.

[Unknown Executive]

So first, a little bit about expenses and talking about the numbers in April with the reduction of 50%. Of course, we cannot bring this number structurally to 50. But structurally, the company, when we started SG&A work, and for those who have been following us for longer, so Marisa has an SG&A per square meter that's one of the best in the industry. In spite of that, we reopened our work. And the idea is to incorporate some of the practices that we incorporated during the COVID period in the future. For example, home office is going very well. We were among the first ones to adopt it. As early as February, we already had people working from home. [indiscernible] central office is working from home, and we are going to continue that.

Now 100% of the company's contracts are being reviewed, seeking structural reductions, especially with the most relevant ones regarding occupation. So we have -- COVID, sometimes it has brought advantages, other times disadvantages. But it has provided some savings. For example, a store that wouldn't pay itself pre-COVID, and now after the COVID, it has become sustainable after a structural review of its occupation, people. And that lowers costs, including technology, the times and the law. So there should be an overall contract review for the company, and this is something we are already doing.

[Unknown Executive]

Now a question from Will [indiscernible]. He wants to know about the performance of street stores as compared to shopping mall stores.

[Unknown Executive]

Well, it's going very well. As I mentioned before, this is something we had done. I don't know if you will remember, but in the middle of last year, we had many strategic projects. And one of them was regarding street stores. And part of this, all the research movement, was to understand that 70% -- we've conducted a survey with 70 million taxpayers. Many of them did not migrate from street to mall and vice versa. Therefore, here we launched, in the last quarter of 2019, a specific program for street stores working with windows, video merchandise, pricing, FPS, an entire portfolio of actions that we have already been telling you, and this is providing great results. This is working very well. We had a [ performance ] between street and shopping mall stores, and the performance is very similar. Now after -- and during the pandemic, we have seen a behavior that is very similar because of shopping mall stores. And we are going to find more details of how they are going to perform because this is an increasingly more specific behavior. And it depends on the work that shopping mall managers are doing to provide confidence for customers to go back to shopping malls.

In the meantime, Marisa has a competitive differential with our street stores because not only are very well positioned in terms of stores, very well-positioned stores, close to subway stations, but also we have collection points for the click and pick up in benefits pre-COVID. 40% of our online sales were already in a click and pick up model. And most of those sales were for collection in street. And then we have the repurchase work done by the team of [indiscernible] was already 25%. When people go pick up, they end up buying something else. We think this is only going to become stronger and stronger, and we are going to benefit a possible behavior of the closing of smaller competition stores, regional stores. It will not be able to overcome this moment, and Marisa will be very well positioned in these locations because of our street stores.

[Unknown Executive]

And other questions that were asked through the webcast, and they are related to each other, one [ Victor Barkus ] from [ Capital ]. He's asking about cash burn well into the end of the year.

[Unknown Executive]

As I said, Victor, we are relatively confident and not worried about cash until the end of the year. We shouldn't look just at the cash burn here. We need to look at the inflow of cash and the recovery of sales. Most of our investments, we have rethought, especially regarding to strategic and new omni-stores and the positive surprise in terms of cash influx. And after some recent fundraisings and the roll of -- rolling of debt, we don't have any financial commitments for Q3, maybe a little bit for Q4. So it's relatively easy for -- in terms of cash, especially considering compressed sales. Because thinking of the worst-case scenario, we are okay in terms of cash.

[Unknown Executive]

The second question, in terms of covenant terms. Antonio Castrucci from Banco Plural is asking us about covenant, whether it would be difficult for us to comply with the 3.5.

[Unknown Executive]

Well, certainly, we have already had this conversation with banks. We formalized a waiver for the next 2 months because although -- and we are not worried about cash. We have the EBITDA. We're in the process of recovery. We've been recovering EBITDA. It was being recovered. And if we have an interruption in that process, it might be negative for 1 or 2 periods. And we are in conversation with banks. Many companies, not to say most of them, will have strength right now. But we have been finding that banks are very receptive.

[Unknown Executive]

No more questions.

[Operator]

Very well then. So Marisa conference call has now ended. We give the floor back to the speaker, Mr. Marcelo Pimentel, for his closing remarks. Please, Mr. Pimentel.

[Marcelo Pimentel, executive]

Good afternoon, everyone. I would like to thank you for your attendance. It was very positive to be here with you and shed some light that everything that has been going on and to reinforce that how much we believe in our strategy. We want to remain faithful to our strategy that has been working very well, and I would like to thank the team that has done excellent work. Adalberto mentioned the speed of the team. And undoubtedly, at a moment like this, this is a competitive differential for Marisa. We are optimistic looking into the future very carefully with caution but with the determination of coming out stronger, seeking the gain in market share, not just for survival. And we hope that soon, we will be able to continue the strategies that we started. Thank you all very much for your attendance.

[Operator]

So the conference call of Marisa has now ended. We thank you very much for your participation, and we wish you a very good afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]