Atacadao SA

BOVESPA:CRFB3

Earnings Call Transcript 2021-Q2

[Operator]

[Interpreted] Good afternoon. Welcome to the Carrefour Brasil conference where the group's results for the second quarter of 2021 will be presented. This conference is being recorded and live streamed and will later be available at ri.grupocarrefourbrasil.com.br along with the corresponding slide deck. [Operator Instructions]

Before we proceed, please be advised that any statements made during this conference about business prospects, projections and operating and financial targets are mere forecasts based on management's expectations about the future of the company. These expectations rely heavily on market conditions as well as the general economic performance of the country, the industry and the markets, in which the company operates and, therefore, are susceptible to change.

I will now turn the floor over to our CEO, Mr. Noël Prioux, who will open the conference. Please, Mr. Prioux, you may proceed.

[Noël Frederic Prioux, executive]

[Interpreted] Good afternoon, everyone, and thank you for joining us as we release our results for the second quarter of 2021. We had to unfortunately delay our conference due to technical difficulties, and we appreciate you being so understanding. Here with me are our CEO (sic) [ CFO ], David Murciano. By the way, welcome David and all our heads of business.

The second quarter results, the acceleration of our business was in full display. Despite a very challenging comparison basis, our business posted strong sales growth and robust profitability. In 2 years, we moved to another level, a result of structural gains and competitiveness and assorted strategies, which proved to be effective even 1 year after the pandemic began. Atacadão once again showed the strength of its model. We accelerated its expansion with 19 new stores and 1 new wholesale delivery center during that quarter. This contributed 9.5% to our sales growth.

We also finished integrating our Makro stores 6 months ahead of schedule with an initial performance that exceeded every expectation. Atacadão's e-commerce is off the charts, and sales through the digital channel increased 70% over the previous period. In 2 years, we've opened 59 regular stores, plus 4 wholesale delivery stores, and our revenue increased by 36%, which goes to show how strong is the potential of this wholesale model.

In retail, we had an impact, on the comparison basis, focused essentially on the nonfood segment. But when we look at how the business evolved over the past few years, its strong performance is very clear. Our customers are more engaged. The food segment gained competitive edge and sustained its healthy margins. And when we look at retail as a whole, in 2 years, we had an EBITDA margin increase by 1.2 percentage point, an impressive result, which was supported by structural changes in this side of the business.

Our bank is rebounding to its pre-pandemic growth levels and has already posted an increase in revenue this quarter. Delays remained under control, which attests to the quality of our portfolio. Its EBITDA reached BRL 248 million and also a sharp increase. We are now strengthening our growth levers for another cycle.

Thank you very much to all of you for joining us today. And I will now turn the call over to David, who will talk in greater detail about our figures.

[David Murciano, executive]

[Interpreted] Thank you, Noël, and good afternoon, everyone. First of all, I would like to say how grateful I am for the opportunity to join this team, which has done such an outstanding job, accelerating and enhancing Carrefour Brasil's digital growth strategy and putting it in the lead. I also hope to meet all investors and all the stakeholders very soon, either in person or virtually.

Brazil is a country of many opportunities, and it will be a great pleasure to be part of this story in the coming years and to help accelerate this journey of success and achievements.

Well, let's now go to Slide 3. I'd like to quickly go over the consolidated figures for the second quarter. First, I'd like to point out our total gross sales, which came to BRL 19.5 million in the quarter, up 10.7% over the previous year. This rise in sales was caused by a strong basis of comparison. And if we compare it to 2 years earlier, the change is even more significant, 28%.

On a like-for-like basis, we saw an overall increase by 3.4%, which breaks down into 10.2% like-for-like growth in Atacadão, with the strategy to maintain a competitive edge remains in place, and double-digit growth was recorded for the fourth consecutive quarter. And on the other hand, an 11.4% drop in retail, where as expected, a very challenging comparison basis in the nonfood segment affected the results, but I will detail this in the next few slides.

The bank's continued rebound, combined with our assertive commercial strategies for Atacadão and retail, led to a 23% EBITDA increase in 2 years. This shows how well we maintained our operational efficiency, keeping our SG&A steady at 12.7% of revenue. Compared with last year, we were essentially flat, largely because of the nonfood sector, which was impacted by a rather strong comparison basis. After all, this was a time in the pandemic when retailers were forced to shut down.

Our adjusted net income in the quarter was BRL 592 million, a steep 45% over 2 years earlier. Finally, our leverage and indebtedness levels remained at healthy levels, and our net financial debt was approximately 1x our EBITDA, even after [ selling ] the acquisition of Makro stores and the events for BIG. We still have BRL 1.7 billion unsold receivables as part of the company's capital structure improvement strategy, all of which shows the strength of our balance sheet.

On Slide 4, I'll dive into operations, starting with Atacadão, whose quarter featured accelerated growth and robust profitability. Gross sales increased by 19.7% or BRL 2.5 billion in the second quarter with like-for-like sales of 10.2%, posting double digits for the fourth quarter in a row and a 9.5% expansion with the opening of 19 new stores, plus 1 wholesale delivery center. During the quarter, we reopened 17 Makro stores, completing the integration 6 months faster than we'd initially planned.

In addition to that, I'd also like to point out the above-expected performance these stores have been showing, which has led us to raise our original projections. In 2 years, the model opened 59 stores, plus 4 wholesale delivery centers and managed to boost revenue by 36%. As we saw in the first quarter, accelerated expansions had a natural impact on the bottom line. However, this quarter, the swift ramp-up in our new stores was able to mitigate much of the fallout. We're already seeing an EBITDA margin of nearly 7%, a result that is consistent with Atacadão's historical margin levels. During the quarter, the adjusted EBITDA went up 31% over 2 years earlier, confirming that our profitability remains at extremely healthy levels.

On Slide 5, with regard to our retail performance, I'd like to break down the analysis between food and nonfood categories, which, as expected, followed different trends over the quarter. As you all know, the second quarter of 2020 had very particular characteristics because of COVID-19, with a massive impact on sales of nonfood items, given our hypermarkets one stop shop quality. Because of the basis of comparison and this category's characteristic nonrecurrence, it was only natural to think that it would not be possible to repeat last year's performance. However, if we look at a slightly less exceptional 2-year period, our sound sales performance becomes clear with 12.4% growth in nonfood.

In food products, we sustained the nominal sales levels of a pandemic scenario, thanks to the quality of our operations and customer engagement. Compared with 2 years ago, again, we see a significant 13.8% increase in this category. Moreover, with the loyalty program we've launched, we've seen that customers, who have engaged, are using the points of our ecosystem a lot more. Actually, they're using it in over 40% more than the clients who have not enrolled in the program. It's important to remember that even in a slightly more flexible scenario in 2021, these results were obtained in a quarter when there were restrictions on our operations, such as opening hours and items sold. On top of that, our property operation, despite having shown significant year-over-year growth, has not yet returned to the levels of 2019, which further reinforces the performance of our retail business.

Even so, our overall growth in the past 2 years has outpaced the market. With a steady gross margin compared to 2019, our substantial EBITDA margin improvement of 120 basis points in 2 years was essentially a result of our more efficient operations given the structure improvements we have made over the past few years. In nominal terms, our expenses increased by only BRL 25 million during this period, which is below inflation. And this is considering expenses we've incurred because of the pandemic. In 2 years, our retail EBITDA rose 33% from BRL 238 million to BRL 360 million.

Now moving on to Slide 6 in regard to e-commerce. We have a very similar story to that of retail in terms of top line behavior, seeing growth across all categories over a 3-year period. It's interesting to note that prominent food products are gaining in this channel, having totaled 1/3 of the overall GMV in Q2 2021 and sustaining the highest levels reached at the peak of the pandemic. We continue to evolve in our business model with more integrated physical assets, a better assortment and better pricing. And we'll be rolling out the pick-in-store service to 60 more retail stores throughout the year.

As Noël mentioned, Atacadão's digital channel is gaining momentum quarter-by-quarter and itself has shown a 70% sequential increase. We already have 117 hubs and expect to have 160 running a digital operation by the end of the year. We believe the acceleration in food products will be the main driver of nonfood in terms of traffic, a synergy that will be unique in the market with potential to generate sustainable growth.

On Slide 7, a little bit about our bank. We had a quarter where the recovery cycle stabilized and results followed an upward trend as we have been talking about since the second half of 2020. With strong growth in revenue gain upwards of 50%, for the first time in 12 months, we recorded revenue growth for this operation. Following the same trend of recent quarters, delinquency rates remain subdued at levels very close to those of the first quarter of 2021 when we posted the lowest, over 90 in the history of Banco Carrefour. This is evidence of the quality of our portfolio and the accuracy of our decision to cautiously resume lending in the second quarter of 2020.

By keeping our expenses flat, we managed to have our financial operation contribute a very similar amount to what we've seen before the pandemic with BRL 248 million in EBITDA, which makes us very pleased and excited about the future. Using the Brazilian central bank methodology, which impacts short-term results less because of the accelerated growth, our EBITDA accelerated by over 200%, exceeding BRL 300 million.

We are very confident in our ability to accelerate and potential recovery of our financial services as we diversify and launch new products, such as the public payroll line, and digital account with less credit for Atacadão purchases, which will enhance the relationship and the engagement of our customers with our bank.

On Slide 8, I will discuss the advances we've had on the ESG front during the quarter. In June, we launched our 2020 annual sustainability report, which details the many breakthroughs we made throughout the year. I'd like to invite all of you here to access the final document, which is available on our Investor Relations website. This quarter, we made significant headway, especially on the social and environmental fronts.

On the social front, in line with the 8 commitments we made in our antiracist struggle, we issued 3 calls for tenders to fund 40 different organizations that operate on 3 different fronts: institutionally strengthening of African-Brazilian civil society organizations; supporting black entrepreneurship; and combating and raising awareness about racism and discrimination. We've received over 1,600 applications, and the result of the process will be announced soon.

Since the beginning of the year, we have also grown our hiring of black employees by 154% in our bank and head offices, in addition to increasing the share of black operational hires to 63%, up from 59%. As a step forward in our work to promote diversity, we launched the TransForma program designed to train and educate trans people for the job market.

On the environmental front, we had progress on signing the group's livestock commitment term with which 75% of our suppliers are now committed. We also avoided 12.5 tons of plastic in our packaging over the quarter. Finally, the first sustainable livestock products have arrived as Carrefour stores in July. The first results of the Juruena project, an effort to sell sustainably source meat at affordable prices.

On that note, I'd like to turn the floor back to Noël for his final remarks, and thank him for his immense contribution to Carrefour Brazil, bringing us to new levels of efficiency and growth. Thank you very much. Over to you, Noël.

[Noël Frederic Prioux, executive]

[Interpreted] Thank you so much, David. I'd like to conclude by emphasizing how sharply our ecosystem is accelerating. All our operations are showing consistent results, and our model is proving itself again and again in different scenarios. With this excellent cash and carry format, Atacadão managed to absorb the Makro stores in record time. Our experience with this acquisition makes us very optimistic about the future after the acquisition of the BIG Group is concluded following CADE's approval.

The structural changes in retail have been proving effective, and we're reaping the benefits with a much more efficient and profitable operation. E-commerce is growing stronger in both segments and gaining traction with Brazilian consumers. And our bank, which is an invaluable asset to our operations, is already progressing at the excellent pace we were seeing before the pandemic. Again, ours is a unique model in this country. Our footprint extends to every class and region in Brazil with a full-fledged ecosystem that allows us to accelerate significantly while sustaining our earnings.

I would like to take this opportunity to thank all of you, who were close to me over these past 4 years, especially the over 90,000 employees, who welcomed me with open arms in this country that is so full of opportunities. I am forever optimistic about Brazil, and I really believe in our ability to accelerate further and make good use of our physical assets to leverage our digital operations combining the best of recurrence that comes with food products with the value generated by financial services and an extremely well-positioned asset base. There is a lot of power in that.

Thank you very much for your attention. And I think now we can move on to our Q&A session with the other executives.

[Operator]

[Interpreted] [Operator Instructions] Our first question comes from João Soares from Citibank.

[Joao Pedro Soares, analyst]

[Interpreted] Congratulations on your very successful trajectory, Noël. I have 2 questions. The first then with regard to Atacadão, which [ set back ] in Y-o-Y terms and also focusing on competitiveness. I'd like you to explore a little bit more what should we have in mind when you talk about competitiveness. And I'd also like to understand a little bit better because not everyone have a good picture about your gross margin?

The second question is, actually I'd like to understand a little bit better about Makro. You were able to deliver these stores in a shorter-than-expected time. So I'd like to know if you see any possibility to redo your synergies with these learnings in terms of your gap in maturation with the BIG stores? I know you still haven't started the integration of those stores, but I'd like to know if we can expect some sort of revision in those deadlines?

[Unknown Executive]

[Interpreted] Roberto, your microphone.

[José Müssnich, executive]

[Interpreted] Is it better now?

[Unknown Executive]

[Interpreted] Yes.

[José Müssnich, executive]

[Interpreted] Okay. Thank you, João, for your question. I will start with the second one. Naturally, the experience with integrating new stores is important. And Makro was ahead of this expansion with the Makro stores. And the challenge for us was to have that done in 6 months, and we were able to achieve that. There is a slightly different characteristic to BIG stores, which is that they were closed. So it's like we will have to fix the aircraft as it's flying. So I do not believe we will have any sort of trouble. I don't think we will run into any setback, but we are still expecting the antitrust authorities' decision.

Now with regard to Atacadão, we have to wait for a year because if we look at last year with the opportunities we had with the pandemic, we actually have the opportunity to run an extremely full-fledged operation in terms of purchases, for example. Because when the pandemic began, we were very well equipped to run that negotiation and to celebrate our anniversary in April. So we were able to value our inventory, and there was good demand, so negotiations were easy.

Now if you look at our figures today, we are going back to our traditional margin standards and our traditional top line business strategy, strategically striving to have the best prices in the market and trying to stay ahead of the competition and becoming those that the competition has to run after. We are now seeing already stabilized prices, especially with the slightly higher commodity prices and also the effect of, what we call, dollar revision with purchasers who take the dollar-real exchange rate in consideration when dealing with their prices.

So now we were able to negotiate that very -- from a very good perspective. And for the first time since last year, we saw tickets stabilizing. There was a decline in tickets and a rise in the average ticket. Now in Q2, we saw our ticket -- the tickets of our operation stabilizing at BRL 42 million, which puts us in a place where we're expecting an increase, especially in those tickets that have not come to their pre-pandemic levels. So we are now feeling optimistic not only about our demand but also about our future margins.

And speaking about margin, you also have to consider the 19 stores that were open. Naturally, when you open a store, you have several costs to open it, the cost of training staff, the cost of having the store set up and being able to open it. And now all we have to do is open the doors to avoid crowded places. All we have to do is open our doors and wait for customers to come in, and that has been extremely healthy in terms of keeping our staff safe as well as our customers.

But the ramp-up is slightly smaller, but it increases over time. So 19 stores in Q2, plus 9 in Q1, that's a lot. So it really will impact our margins. But as Noël said, we are always thinking about the future and not today. And tomorrow is very close. So I hope I was able to answer your question.

[Joao Pedro Soares, analyst]

[Interpreted] I think we could talk about -- a little bit about how relevant those openings that you had. We just wanted to understand how much that could have affected your margins? Do you -- could you give us an approximate number?

[Marco de Oliveira, executive]

[Interpreted] Well, I could take that one. Well, if you consider that since November, we've converted 28 Makro stores with fixed organic openings as well. That will have a much greater impact on our operations than they would in the past when we had only 2022 organic store openings. With these Makro stores that we finished here in June, which were Q2 and Q3, so there's all the preoperational cost, [ it's not just ] about margin, which had a significant impact. And now as of July, that impact does not exist. So the margins will no longer be negative, but positive. Makro has also reached breakeven in July. So it's become positive in July and the next -- or the following months will all be positive, because as the store progresses, the sales also begin to rise. So in Q1 and Q2, a relatively negative impact but a positive impact starting in Q3.

[Natália Lacava, executive]

[Interpreted] Sébastien, João asked a second question, which was -- did you see room to revise your synergies up considering how well we did with Makro?

[Sébastien Durchon, executive]

[Interpreted] Well, I think Roberto talked quite enough, but I could add to his reply. We were in an integration process, and obviously, we have to wait until the antitrust authority delivers its decision. So we obviously will take into account everything that we learned from the integration from Makro stores and to our projections. The only thing we have to say here is we announced a synergy. And we took a serious commitment. We announced a number of measures and a number of targets in Makro's case, and we were able to meet those -- all of those targets. So what we've announced in terms of synergy is the lease we expect from these new stores.

[Operator]

[Interpreted] Our next question comes from Maria Clara from Bank Itaú.

[Maria Clara, analyst]

[Interpreted] I actually have 2 questions. First of all, I would like to understand a little bit better what's going on with your Atacadão stores. The type of customer? What has changed compared to the old stores? Could you talk a little bit about the new dynamics of these stores that you reopened?

And the second question, I'd like to know, over those 2 months, you devoted yourself to explore different options in your bank, especially with new cards. We would like to understand that new dynamics, whether that's structural or not? And what type of payment options you will adopt?

[José Müssnich, executive]

[Interpreted] Thank you for your question. We did have that in our plans with no impact on our Atacadão card. We are now rolling out the meal ticket card across Brazil because we do want to attract new customers. And that is the experience of the pilot we were in a while ago, and that's the good news. We have been able to draw new customers to our operations in that sense.

Now with regard to the profile of our new stores, I'd like Marco to talk a little bit about our expansion and the profile of our new converted Makro stores.

[Marco de Oliveira, executive]

[Interpreted] Well, with regards to our strategy for these new stores for organic expansion and to -- the strategy is to consolidate those new markets and the markets we already operate in. And we have to prevent high impact on our margins. It's been some time since we've adapted the layout of our stores even for regional markets, where large stores are not a good fit. So we've drastically reduced the size of a few stores, those that are included in the expansion. We have had stores with 4,000 meters. We recently opened one store in the north side of São Paulo. This is a very densely populated area. And the outlook of the stores is very much in line with the other ones. So a lot of stores with a smaller potential than before. We are moving into those areas with smaller, small-sized stores. And in those places where there's no room for -- there's no space for really larger stores, we have these stores that are 600 meters or 2,000 meters large. And we expect to have higher margins as a ratio of their size.

[José Müssnich, executive]

[Interpreted] And I would like to remember that this model has no impact on the Atacadão stores. We could make use of the same structure, not changing anything. And now we have about 14 stores under construction. So we should have about 250 store points plus 33 Atacadão stores. I'm sorry, this changes every day. So sometimes we stay out of the loop.

[Maria Clara, analyst]

[Interpreted] What about the customer profile? Is it the same as those of older stores?

[José Müssnich, executive]

[Interpreted] Well, I would say that customers go from Class A to Z. A planned expansion, as Marco said, to new markets and to markets within state capitals, it's all about how long the customer has to go to reach the store. So if he has to travel 30 kilometers, if we give him a store 15 kilometers away from him, then we get the client. The profile is the same.

[Noël Frederic Prioux, executive]

[Interpreted] It's also about the ability of Atacadão to adapt to every area, keeping the same model with more or less space depending on the customers' profile.

[José Müssnich, executive]

[Interpreted] That was perfect, Noël. We also have a few stores which are more focused on retailers rather than end consumers. So this is something that we've adapted, and Atacadão is a master in that art, the art of becoming closer to customers and adapting to regional requirements.

[Natália Lacava, executive]

[Interpreted] If you could also answer her second question, which was about the acceptance of the Atacadão card?

[José Müssnich, executive]

[Interpreted] I mentioned that in the beginning, Natália. I opened the answer with that. We are rolling out those cards, and we are tracking new customers with those options to pay with several different cards, including meal ticket cards. Not long ago, all we accepted was debit and credit card and cash. So we put up the -- or we set up the Atacadão Bank, and we are now mature with a competitive edge that is extremely sharp seeing as these new payment options are being very well accepted.

[Operator]

[Interpreted] Our next question comes from Ruben Couto from Bank Santander.

[Ruben Couto, analyst]

[Interpreted] Could you talk a little bit about your debt, since last year we saw a decline in expenses compared to the first quarter? But I'd like to understand what are the structural improvements that you mentioned. And should we expect a similar trend in the next few quarters considering what's going on these days? And could you also tell us how much you are spending on COVID-19-related measures, seeing as we expect these expenses to no longer be necessary, not long in the future?

[Luis Moreno, executive]

[Interpreted] Thank you for your question. First of all, with regard to our expenses, we've had nominal expenses that were 1% lower than the previous quarter. Also, nonrecurring expenses on COVID-related matters, we still have about 2,000 employees on leave, employees that are in risk groups, elders and those with chronic diseases. So we are keeping them at home until they take their second shot of the vaccine, and we are also keeping every sanitization measures in our stores. Still, our nominal expenses were lower than those in the previous quarter.

Still, if you compare to 2019, 110 basis points less than in 2020. The basis -- the 2020 comparison basis is affected by extraordinary events, especially a very extreme performance on food items, which grew over 56%, driven by electronics and also driven by the shutdown of store -- street stores. Because we are an essential business, in the second quarter compared to last year, the result is essentially a result of the decline in nonfood items. Still when you compare to 2019, there was a healthy increase, which was over 13%. So the continued increase in expenses was 120 basis points compared to 2019, which was still higher if we excluded nonrecurring expenses in relation to COVID-19, which we didn't have in 2019.

[Operator]

[Interpreted] Our next question comes from Irma from Goldman Sachs.

[Irma Sgarz, analyst]

[Interpreted] I'd like to ask you to give me the breakdown of Atacadão more so than in retail. And I'd also like to know if you have quantified in Atacadão, how much you lost in terms of sales because of the lack of demand? If you could quantify that for me in any way, that would be great.

[José Müssnich, executive]

[Interpreted] Irma, obviously, with restaurants shutting down and the lack of customers in restaurants that took a dent in our restaurant sales, which was replaced widely by end consumers, who came to us to fill their entries. So the demand was not -- there was not a loss in demand. However, once these restaurants adapted to takeaway and delivery and now with their return to in-person services, I can't really tell you how much we've lost, but it wasn't much.

Now with your first question about like-for-like, I couldn't really understand. So did anyone understand what the question was?

[Unknown Executive]

[Interpreted] No, I think she could repeat that. So Irma, if you can repeat your first question?

[Irma Sgarz, analyst]

[Interpreted] Okay. So like-for-like sales, did any of that come from your average ticket? Or how much did come from average ticket? And how much came from a change in prices?

[José Müssnich, executive]

[Interpreted] Well, in Q2, Irma, we saw an increase in the average ticket. But the good news in Q2 is if you look at like-for-like and same-store sales and the pace of the ticket, we have stabilized since the start of the pandemic when the number of operations decreased. In Q2, for the first time, we maintained the number of operations. So on average 41 operations. For the first time that remained flat. What we expect now is to see an uptrend as the economy rebounds and especially with the reopening of restaurants.

[Marco de Oliveira, executive]

[Interpreted] Also adding to your first question, with regard to the loss of sales to professionals, Atacadão's corporate customers are very segmented. So you have churches, restaurants, small retailers, bakeries, pizza [ bread ] parlors. Obviously, a large share of these customers were lost.

But on the other hand, within these categories, for example, if you look at small stores, those also started purchasing more from us. So that was an opportunity for us to offset the loss we've had with bars and restaurants, for example. We feel that that is picking up, although very mildly, but that rebound can already be seen since stores started to reopen.

[Operator]

Our next question is coming from [ Nicolas Marion ] of JPMorgan.

[Unknown Analyst]

I wanted to ask a bit on how you see the promotional environment, especially on the retail side. And also my second question is regarding cost of debt. How you -- how should we think about cost of debt for Carrefour in the coming quarters considering the rising in Selic that is forecasted?

[David Murciano, executive]

[Interpreted] (sic) [In the coming quarters, we do not see big evolutions in the cost of debt. We think that we will have volatility in 2022, now that we have a context of elections in Brazil. So we may have volatility next year, for sure, but this year we are not] expecting big movements on the cost of debt.

[Operator]

Our next question is coming from Andrew Archer of Morgan Stanley.

[Andrew Archer, analyst]

I was hoping you could talk more about the loyalty program. It seems that there's incremental cost before the top line benefit goes through. So how are you judging success? What are you seeing in terms of engagement? And what can investors look at to judge the success of loyalty?

[Noël Frederic Prioux, executive]

Should I answer in English or Portuguese?

[Unknown Executive]

You can answer in Portuguese.

[Noël Frederic Prioux, executive]

[Interpreted] So our loyalty program was launched 8 months ago in early November. This was a truly customized program where every customer has a personal target to increment their relationship with us. The relationship between investment and additional increase in income is 1% to 8%. So we expect 8 points an increment in revenue for every 1 point in investment in the program. In addition to that, it also is designed to connect all our ecosystem. So for example, the loyalty program also connects with our bank card for Carrefour customers. So if this -- for example, a bank Carrefour card customer participates in the loyalty program, can participate in their revenues in over 30%. It's also designed to digitize our customers. We had digitalized customers before the program. But after the program, we multiply by 3 the number of customers engaged and active users. So for now, this is a program that is funding itself. It's a way for customers to engage and it doesn't translate in any expense for customers who are now purchasing from us because it neutralizes itself. It only generates rewards for the customer as he spends more with us. And that -- those targets, those spending targets are specific for each customer.

In addition to that loyalty program, we've recently launched a new functionality, which called multichoice, which recommends to each customer products with a better nutritional score and also more affordable within every category. So the program is not isolated. It's actually part of our entire digitalization and customer engagement strategy and offers additional rewards in addition to the discounts.

[Operator]

[Interpreted] Our next question comes from the chat and it's from Miguel Ospina.

[Miguel Ospina, analyst]

[Interpreted] Could you give us some color on SG&A with Atacadão as stores are reopened? What is the impact of store openings? Did you think of any repurchase program considering the current costs?

[Marco de Oliveira, executive]

[Interpreted] Well, with regard to your cost historically, [ Miguel ], we've always tried to balance, and we have been rather successful at it. Our new stores, both in margin and expense within our total pool of source. If you think that in 2007, we had 34 stores, and we've opened 12 every year. So we had 33% of stores, which had a big impact. So every year, our basis increases. So this year, with 28 new stores because of Makro, but usually, 22 stores within a 250 pool of stores, the impact is smaller every time. So those stores can bear the cost very well, and the investments in margin will be made in those new stores. So that impact is decreasing every year. This first quarter specifically, we saw a very big impact because it was a large number of stores considering our new Carrefour stores and the converted Makro stores.

[José Müssnich, executive]

[Interpreted] Also, expenses were diluted within the quarter because our structure is set up to essentially plug and open our new stores without increasing expenses for the head office. So that gives us a competitive edge given the scale of our operations.

[Marco de Oliveira, executive]

[Interpreted] And also like-for-like sales, this quarter were 10.2 like-for-like sales. Obviously, you can see that general expenses and staff expenses, most of that is indexed. So inflation affects that directly. It doesn't come to 10.2. So expenses always increase less than like-for-like sales, which also helps us to decrease costs.

[Operator]

[Interpreted] Our next question from the chat comes from [ Renan Ulrich ].

[Unknown Analyst]

[Interpreted] Why the changes in [ DCO ] and CFO considering how well the group has been doing in the past few years?

[Noël Frederic Prioux, executive]

[Interpreted] Is my microphone working? Okay. Well, that's very interesting to think whenever we advance, not only does the group decide to invest in professionalism but also in people. So the Carrefour organization is one where everyone has the responsibilities and can autonomously make decisions. So that's something that's very difficult to replicate.

So when I came on 6 months after the IPO, I didn't understand why Carrefour wanted to change its CEO. Now 4 years later, we are seeing some of the best results in the history of Carrefour Brasil. And I believe they will be even higher in the next 4 years. So I think it's very healthy to change the leadership when you're accelerating. Because you have what you know with acquisitions, but also we have several other projects. So I think it's good to stay ahead of the curve.

We consider -- for BIG, for example, we thought that it was there to change the CEO right now, so that the new CEO could be part of the preparation because I believe this is being the most important step. And then the [ application ], which is a challenge, but if the CEO is well prepared, then it's easy. And it's also about giving opportunity to new people. We see integration with good eyes, especially thinking about the future. [ So the sailing this year ] with us as well, touched on a very important point, which is the integration of BIG and the first steps, the preparation in that sense. Stéphane is very experienced. He has been in several different countries and several different companies, especially several years in Argentina, which is not an easy country to do business in. We will continue to work together throughout the year. And you will see that ultimately, this was a good decision. I really don't see why this is difficult to understand.

[Natália Lacava, executive]

[Interpreted] (sic) [David, can you take the question from Miguel that was not answered?]

[David Murciano, executive]

[Interpreted] (sic) [Yes. Concerning share buyback, so far we do not have any projection of share buyback. It is not something that we have discussed. As you know, Carrefour Group in France, they just announced today share buybacks of $200 million, and we are not doing this here in Brazil. And there was another question on the impact of growth, of expansion. In Atacadão, you have the information on the release, it is plus 9.5%. Just keep in mind that we opened 19 stores in 2Q, and most of the stores were opened at the end of the quarter. So we do not have the full impact of the expansion during the quarter. We will have the full impact on the coming months, the coming quarter. We opened nine stores in the 1Q, we opened 13 stores in 4Q20. So we will have a strong impact of expansion in the coming months. We do not have it yet, the rampup of Makro stores will come later this year and the beginning of 2022].

[Operator]

[Interpreted] Our next question in the chat comes from Lucas Oliveira.

[Lucas Oliveira, analyst]

[Interpreted] I'd like to know whether the decrease in retail results was somehow affected by the decline in emergency relief payments or because of the strong comparison basis of Q2 2022, and whether you see the segment recovering in the next few quarters?

[Luis Moreno, executive]

[Interpreted] Thank you for your question. Once again, the basis of comparison is absolutely exceptional. We are 30% like-for-like in Q3 2020. So now we're reporting negative like-for-like sales, but it's a comparison basis of over 30% in 2020. This business, as I said, is very much driven by nonfood items, especially textile and electronics. And that increase will be found in 3 structural elements. One of them, as I said, was the temporary shutdown of street stores. The second would be, yes, the impact of the pandemic relief payments. And also, we had the shutdown restaurants last year, which several people in working from home and ordering through the home. So we think that it's much -- a much better idea to look the like-for-like -- the advanced like-for-like over the last 2 years.

As for the EBITDA margin, this quarter, 5.5% is 100 basis points better than Q1 and also better than Q1 '20 -- or Q2 2019. And also this quarter compared to the same quarter in 2019, we still did not have the full spread because it's not in the same level as it was in 2019. And as I said, we have specific COVID-related expenses with 120 basis points of EBITDA margin. We should compare to 2019 with a potential to improve, and also thinking of the second quarter of last year where the decline in expenses was much caused by this peak in sales.

[Operator]

[Interpreted] Our next question comes from Diego Santos.

[Diego Santos, analyst]

[Interpreted] Will we have more dividends throughout this year?

[David Murciano, executive]

[Interpreted] (sic) [We will see. So far, we are not communicating on dividends. We keep the policies that we used to have. So far, we are not communicating on dividends.]

[Operator]

[Interpreted] With no further questions, we turn the floor to Mr. Prioux for his closing remarks.

[Noël Frederic Prioux, executive]

[Interpreted] Well, with no further questions. Thank you for joining us, and we will see each other next quarter. Thank you very much.

[Operator]

[Interpreted] The Carrefour Group Brasil Results Video Conference is now closed. Thank you for your participation, and have a nice day.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]