Lojas Renner SA

BOVESPA:LREN3

Earnings Call Transcript 2020-Q2

[Paula Picinini, executive]

Good afternoon, everyone. Let us proceed to Lojas Renner's webcast. And before we start, I would like to make a short disclaimer. First of all, this webcast is being recorded and simultaneously translated. You may access the slide presentation in our Investor Relations website and the webcast platform at the MZiQ platform. All questions must be sent via chat at this platform, and questions from journalists may be forwarded to our press office at [phone].

Before proceeding, we would like to inform you about forward-looking statements that might be made during this webcast in relation to the company's business outlook and operating and financial projections and targets, our beliefs and assumptions of our management as well as information currently available to the company. Forward-looking statements are no guarantee of performance as 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 the general economic conditions, industry positions and other operating factors may also affect the future events of the company and therefore would lead to results that may differ materially from those expressed in such forward-looking statements.

This is our disclaimer, and I'll give the floor over to Laurence. And after the presentations, we will proceed to the Q&A session.

[Laurence Beltrão Gomes;CFO, executive]

Thank you, Paula. Good afternoon, everyone. First, I would like to thank you very much for joining us this afternoon in our release conference call. Here with me, we have Fabio and Paula, and we will also entertain your questions through the chat in the bottom of the platform.

The second quarter was absolutely unusual in terms of results. In addition to all of the issues related to the temporary shutdown of our stores that had a negative impact in our results, but we were also successful in recognizing credit stemming from the exclusion of ICMS from the PIS/Cofins calculation base, which benefited our EBITDA and our net income. This quarter, we also recognized this benefit in 2 of the main accounting lines, where we posted around BRL 700 million in other operating results and BRL 500 million in financial income. However, it's also important to make a few comments about our operation and the numbers that were published yesterday.

There are 4 main operating accounts and I wish therefore to mention them. First of all, I would like to comment on our sales. We had a net revenue of BRL 540 million, 73.3% lower vis-à-vis the same period of the year before. This was obviously impacted by the fact that for almost the entire month of April, all of our stores were shut down, and they were gradually reopened in May, but it was only by the end of June, where we reached 412 stores in operation.

In addition to a lower number of units, we were also impacted by a significant reduction in the limited working hours of the stores due to restrictions of days and working hours imposed by local authority, combined yet with the effects of the lower traffic in the store.

Now when we look at the monthly performance, we had a declining performance. I mean a effort performance as the stores resumed their operation. In April -- at the end of the month of April, only 10% of the stores were open, but in June, 69% of the stores were already opened. Our sales in July continue to evolve, and in August, we were already overperforming in the last few days of the month. We were even above our original plan for 2020, the point before COVID.

On the e-commerce side, digital sales performed way above our initial forecast. All of e-channel initiatives were adopted, all of the improvements in development on the digital side allowed us to reach 36% of sales in the quarter through all of our digital means. This is 36% penetration. Thus, we grew only 25% in April due to all of the operating investments in our DCs and the social distancing requirements that were made necessary. But in June, we were able to post growth of 214% in that channel. In August, we were -- we went even further because now we have [ reopened ] all of our stores in operation, and we continue to grow more than 200%.

Another important point was our gross margin that as of April was 11.6% because we increased the promotion of our winter items. And since April, we offered 30% discount on these items and at the stores we're reopening, we also marked down the transition item for March and April.

At Renner, the gross margin was 12.7 percentage points lower when compared to the second quarter of '19, whereas Youcom experienced a reduction of 8.5 percentage points. Camicado, on the other hand, posted a reduction in gross margin of only 1 percentage points resulting from the commercial management improvement process and also our efforts to adjust our inventories and the mix of products we sell.

We understand that all of these measures of anticipated markdowns in relation to the competition are very assertive. And our internal indicators [ and talking ] back down pointed to more mature gains in the period. The commercial decision that we made in April also allowed us to adjust our inventories between the second and the third quarter of 2020. Therefore, in the fourth quarter, we will be able to reach a more normalized level of margins with the new collection as the highlight. Customer response to the newly arrived items to the stores has been very positive. And this certainly encourage us to see even a better performance at the end of April.

The third item that I would like to highlight refers to our operating expenses, where we were very agile in terms of adjusting our cost and due to our strong culture to propel our budget, which was very favorable at the site. Even though we experienced an abrupt drop in sales, we were able to follow the reduction of expenses by the same token. Our SG&A presented a reduction of 38% in the second quarter. And in April alone, when all of our stores were shut down, we were able to reach a reduction of more than 40%.

For the following months, we will continue to focus in controlling our budget and focus in ensuring the growth of sales in both channels, both online and off. From now on, all of our stores have been already open and we see the normalization of store traffic, which will gradually allow us to resume our profitability through our operating leverage.

Finally, I would also like to highlight our results in financial product, which was BRL 43 million (sic) [ BRL 52.8 million ] with a reduction of 42% vis-à-vis 2019. Considering the current scenario, we were able to maintain our conservative position and even with better performance as -- when compared to what we initially anticipated, we continue with good provisions and higher coverage when compared to historical levels.

Revenues in the period did not grow as much due to a lower number of new loans, especially in our private label part. In terms of net losses, the increase was due to higher levels of portfolio coverage that went from 13.1% in the second quarter of '19 to 23.7% in the second quarter of 2020 due to uncertainties in the macroeconomic landscape and the aging of the portfolio itself.

On the private label side, we had the effect of the carryover in the transactions that were then being accounted for at Realize as of April 2019. It's also important to emphasize that revenues from now on will be impacted by lower credit originations that occur in the second and third quarters of the year when the stores were closed and also due to lower spending in the co-branded during this period of social distance.

As of the third quarter of 2020, delinquency is under control and with adequate provision levels in relation to estimated losses, our efforts are now more focused on origination of new credits that we have reached in the stores and also due to the launching of several actions and campaigns that seek an increase in our credit or loan portfolio, benefiting from improvements in wholesale products that we are then launching, particularly after the digitization process of loans and an enormous learning curve based on the new behavior of consumers.

So these were my initial comments, and I'll give the floor to Fabio for his remarks. And at the end of his presentation, we'll be available to take your questions.

[Fabio Faccio, executive]

Good afternoon, everyone. Before we begin the Q&A. I would also like to thank you all for your interest in our conference call, and I would also like to take this opportunity to make a few comments. We understand that we are now going through a moment where we are resuming or going back to business as usual. So I will talk a little bit about the past quarter, but I will talk about what the future holds.

You may be certain that this was one of the most challenging period that we have ever experienced. Our team has been through other challenges, but this is unprecedented time. But we made decisions based on our convictions, our failures, and we were quick to react and we reacted in a very responsible way to overcome the initial phase of the pandemic be ready to face the precedented future.

We've been going through restrictions for the past 5 months in terms of stipulation and social distancing. But rest assured that, that made us more resilient, stronger, quicker and better. Through our ecosystem, we exchanged experiences, we advanced a series of initiatives that are already benefiting all of our businesses, but they will even benefit us further in the future. And together with RFID and the construction of our new DC and it was by chance yesterday, I visited the site and the construction is well-advanced and all of that, combined with our digital initiatives and all of the improvements that we made, will certainly increase our productivity and gives us more speed.

As Laurence already said, our digital sales are increasing more than 200% in August, even with 100% of the stores already open. This led us to be for another year we were -- we were the recipient of E-bit award in the Diamond category as one of the most cherished stores by our customers. During this period, the last few months, we've tripled the number of new customers, and almost half of our sales are now done through our app. In fact, our app is one of the most downloaded apps in the segment with more than 1.3 million monthly downloads. In a few weeks, it was the most downloaded app. And conversion also almost doubled in the last few months and active customers tripled in size.

Our customers are already responsible for half of our digital sales. WhatsApp sales on the hand, are also growing day after day, and they are already available in 70 stores. And we already increased revenues by fourfold since the beginning of the operation. This tool has been well accepted by our clients, and we experienced a 30% conversion in the contacts received, with a higher average ticket when compared to the stores. It is an intermediary point between digital and physical sales. This has been a very well accepted means of selling.

Drive-thru deliveries have also become quite relevant because they expedited further our delivery process, and they foster larger number of e-commerce orders with store pickup. So you have the option of picking up in the store or through the drive-thru in the shopping mall. Currently, we have 216 stores offering drive-thru services. And since we started with this service, our drive-thru deliveries already delivered 13,000 orders.

Digital sales, because even when you go to the store, when the customer buy through our digital channel and Pague Digital, our digital payment, when the customer can pay through their own device, these are 2 things that are performing quite strongly. These 2 services have been available since 2019. And from then on, we've seen that they have become very important because they ensure customer enchantment.

Minha Sacola or social sales is another important reality. Since May, any person in the country can be an associate. The -- all they have to do is register in the platform, and they can make sales and receive a commission. We have over 12,000 people registered and the number of participants more than doubled in the last month.

The ship-from-store initiative started in March at Renner, and it's based in artificial intelligence that identifies the location of consumer and it resorts to the inventory of the stores that are closer to that consumer to reduce the delivery time of items. So through e-commerce, also bringing about more convenience. We are operating with an inventory of 180 stores. In fact, 180 stores that also operate as the distribution center. And this is available in the main capital of the country and the expectation is that we will be able to expand that to all of our locations very soon.

We are ready to serve all of these locations. But at the time, we are working through the more needed places. Our orchestrator developed internally in the last year is already ready to operate and hence, we can offer shorter delivery types. We will have an increased participation of ship from stores in our e-commerce sales. Currently, 10% of online orders are being catered from the stores and the delivery times that were -- that vary from 3 to 5 days in the past, are now 2 days on average [indiscernible]. We already have other functionalities in the website and [indiscernible]. These are the specific menu with suggestions, comfort items and a virtual dressing room that increases user conversion. We are also developing improvements, a new feature, to serve our customers even better.

In terms of Youcom and Camicado, we are also introducing new services and improvements and the same thing we are doing with marketplace in Camicado. We are adding new sellers, but the priority is quality. And therefore, we will bring on more, better partners. But that's not all. At Realize, we made several new developments to offer improvements that allows people to pay their payment books digitally in addition to service improvement that allows customers to ask for new limits in their credit cards, to post traveling notices, and we had more than 20 million monthly fix in our systems, in our e-commerce in the last few months, both on the website and app, and we are constantly monitoring customers and offering services and credit products aligned to our value proposition.

As part of this plan, in September, we will also offer Meu Cartão or Renner Card to all customers in the stores without the need of being holders of a private label card. Thus, we will be able to cater to their needs and to be part of their lives in a more encompassing way. Our Co-branded card has been a very important loyalty tool and posted a 10 percentage point improvement in our NPS after it was embarked in our app. This was the highest growth when you look at all of other fashion retailers. We also launched a CDB that was distributed by XP Investimentos that was a pilot plan that will allow us to evolve to another offering of other loan products and investment products, placing [indiscernible] and easy more and more [indiscernible] likes of our clients. With this backdrop, we continue to offer a more personalized and efficient communication.

Also, we planned to increase distribution of the company through the use of AI and we already reached 13%, and our goal is 17%. And we also have other initiatives to evolve RFID, which is important to evolve in our channels and this allows to use inventories from the stores for online sales with a higher safety margin and lower margin of risk. We can, therefore, use almost the totality of our inventory. Not only that, this will allow customers to make their purchases and pay for their purchases in a much more convenient way, including their purchases and making everything virtually.

And in order for all of that to happen, we continue to invest. We invest in the restructuring of our IT team. They are also distributed through our business area.

But finally, I would like to emphasize that we are always very much engaged, looking for alternatives that are best in quality. So in terms of the environment, operating in a more responsible way, we will maintain our trends to keep our plans for 2021 with initiatives towards having a more eco-efficient management of our operations with sustainable products and services and with further engagement of the audiences in our ecosystem. Rest assured that we are quite well prepared to navigate through the present and the future.

So these were my initial comments. And now we are available for your questions. Thank you very much.

[Paula Picinini, executive]

I think we will open the floor. We have a question from Helena Villares from Itaú BBA. Helena asks about the company's strategy to reduce the inventory level. And when do you think we will see gross margin reaching more normalized level?

[Laurence Beltrão Gomes;CFO, executive]

As we said before, we pursue a more aggressive commercial strategy, focusing on selling our inventory. But certainly, we also looked at our market position. We also understand that this was a very assertive decision given the low flow or traffic in the stores and low activities. But we are already seeing a recovery, a recovery in our gross margin levels. And also, we see some positive effect in our inventory levels.

And looking forward from an [indiscernible] as we continue to evolve and launch the new collection which are already coming to the stores, some cocoon collections, and certainly, they are already showing its high acceptance. So as we are getting to the new collection at full speed, we can certainly move towards more normalized levels of gross margins. So this is our view in terms of the trajectory towards normalizing our gross margin looking forward.

[Paula Picinini, executive]

Thank you, Laurence. I think now it's a question to go for Mr. Victor Saragiotto from Crédit Suisse asks, number one, e-commerce since it's a channel that has picked up very quickly and part of that comes from customer expedition and marketing investments. What is the profitability of the channel? And how do you think this would evolve in the second quarter and the third quarter of the year?

And the second question is, how do you see the infrastructure of the company, given the fact that with the reopening of the stores, we are now spending more with working capital based in EBITDA that is below normal levels?

[Fabio Faccio, executive]

Well, I will -- sorry, I was not picking up and opening my microphone. I'll start by talking about our digital sales, and then Laurence can talk more about the working capital environment. Sales are picking up -- even after all the stores were open, we are above 10%, with 100% of the stores fully operational. And this just reinstates our belief in omni, in the integration of channels. And by the same token, our financial structure and our results are different when compared to other companies that are 100% online or they're 100% brick and mortar. I think we already talked to [indiscernible] about that.

Usually, some people reflect the numbers of an online operation, 100% online, as though that was a reality of an omni operation with the growth of the digital channel, but that's not the case because these are 2 different operations. I will just give you some examples. Most of our exchanges occur in the stores, and this generates traffic in the store. This generates an expense compared to other companies that are 100% digital.

Another important aspect of the financial accretion when it comes to the digital sale is that you generate -- when you highlight a store, you generate traffic in the store. The only important aspect is that we already have 180 stores shipping from the stores in terms of volume. But we can also do that from all of our stores. But we are using those that can increase our productivity. With that, we see an improvement in this as well, and this impacted sales. As well, we see a reduction in the last mile cost, which are the highest cost because we have 180, or I'd say, 102 DCs in addition to the stores. And a digital player does not have that capillarity. Now 100% digital because in order to do that, we would have to open new DCs, and we already have that. Therefore, increases in digital sales does not play against the equation, but on the contrary, it plays on the positive side.

[Laurence Beltrão Gomes;CFO, executive]

Victor, in relation to the capital structure, looking forward, our capital structure is well balanced. I don't think we need to add any additional working capital, and we are going towards an increased cash generation looking forward. Therefore, we don't see anything relevant, but more like a balance in terms of our capital structure. And as part of that capital allocation in working capital, we see the situation very well balanced in terms of capital structure looking forward.

[Paula Picinini, executive]

A question from Tobias Stingelin from Citi. The first question is about the loan portfolio and with the payments of the loan book have been delayed even after the opening of the stores.

[Fabio Faccio, executive]

I think Paula's connection is down. I think Paula's connection is down.

[Technical Difficulty]

[Paula Picinini, executive]

We do apologize for the inconvenience. With the question addressed to Fabio from Tobias and it relates to sales in our August that are above the pre-COVID budget. Could you please elaborate on that a bit, please?

[Fabio Faccio, executive]

Tobias, thank you for your question. This gives me the opportunity to clarify. We mentioned that just for a few -- in a few days, sales in August have been above our sales budget for the year, pre-COVID. And we report from a few days, I'm not saying that it happened throughout the entire month. Just to shed some more light, there are some municipalities where the stores do not open every day, even though 100% of the stores are open, there are some restrictions about working hours. There, in some instances, working hours are normal. In other instances, they are restricted. And in other towns, some stores do not open every day. Some of them do not open on Sunday or they open one every other weekend. What happens is that sales of Mondays and Tuesdays are above normal. But we say that in some days, we supersede our target even before the COVID period. They usually occur on Mondays and Tuesdays. On the following days it's close and on Saturdays and Sundays it's slow because in some places, the stores are not opening. But on average, we are still slightly below our original budget with a slight decline. Well, it's a very different situation when compared to the first half of the year. And this allows us to say that we will soon be very close to the levels prior to COVID-19. Things are improving day after day.

[Paula Picinini, executive]

Thank you, Fabio. Now I'll turn the question to Laurence. So what happened in terms of payment delays after the stores were reopened, there is a question by Tobias tests with the CDB offering and what is the launching strategy for new products and the opportunities with PIX. And if you can talk a little bit about [indiscernible]?

[Laurence Beltrão Gomes;CFO, executive]

I think that, first of all, yes, it's important to say that we are recovering and resuming our levels of receivables. We are going back to historical averages. Another important point, Tobias, is that the quality of the new season has improved. And on the side of collection, our efficiency index of collections is better when compared to last year. Throughout the first month, we anticipated many initiatives. In our collection operation, we digitalized things. We opened more channels. We made use of more AI. We revisited our negotiation portal. We also introduced other digital portals, portals from third parties were also introduced in our platform. And all of that intended to increase our relationship with our customers.

We also introduced some renegotiation brands offering special renegotiation terms, and they were also successful and impacted our collection department. We continue evolving in this digitalization journey. And Fabio mentioned some of them, given the virtual card or Meu Cartão or the Renner Card that performed quite well in the initial weeks, and our communication was revisited. It's much more friendly. Our digitalization of means of payment went from 30% to 80%, and this was quite important. We also introduced insurance at Meu Cartão or Renner Card. We didn't have that before. And this also brings about more wearability.

In addition to an important point mentioned by Fabio, which is that we are also offering Meu Cartão or the Renner Card directly. Customers to -- depending on the credit risk, of course. They already received that offer right at the beginning of the transaction. In addition, we are building our digital account. We are also building up all of the links and all the connection channels with the Central Bank to be ready for PIX next year, which is the instant payment need. Until then, we also believe that we will launch our digital account and also our entry to PIX.

In terms of retailer, Renner regionally is well advanced to be accepted by PIX, and we will -- we should be ready as soon as PIX is introduced. Paula, I don't know whether I left anything behind or I have failed to answer the question.

[Paula Picinini, executive]

No. I think it's fine. Now what is the proportion of expense reduction with sales that are recurrent? And what should we think about your cost structure when sales resumed more?

[Laurence Beltrão Gomes;CFO, executive]

Well, thank you for your question. Once we already reached 100% of our stores already reopen. So some of our expense lines may be challenging at the moment. It depends now -- we depend on restrictions. There are one-off restrictions or geographic restrictions, working hour restrictions. So that has an impact on occupancy. Given the fact that some regions and geographies are already back to normal, we have to look at this on a case-by-case basis. We are not adhering to [ campaign 90-day fix ]. We do not extend that because we are open to our employees. Renner is one of the companies that invest the most in training and capacity building in the retail industry, and this is quite important as we are reopening our store. And it's important that all of our employees are ready and operating at full speed to take advantage of this momentum.

But there is one more thing here because we viewed all of our expense structure right on the onset of the pandemic, right after the stores were shut down. That represented a very strong threat in the company. And then later on, we resumed some initiatives, mainly focusing on our restructuring projects and our digitalization projects. But we do believe that this very encompassing review has been very good because it allowed us to review and take the second look at expenses of our business as usual. And we saw some of the opportunity. It's also important to say that this process of expediting the transformation process also carrying out or involve some expenses, and they mitigate or compensate for the cuts we did in our operation. I think that from now on, as our operations go back to normal, our expense level should go back to more normalized levels. But with that caveat, that it was -- we were very stringent and it was very -- we were very diligent when we reviewed our expenses back in April, the end of March and beginning of April.

[Paula Picinini, executive]

Thank you. I think now Fabio can answer this question from Irma from Goldman Sachs. And it's about the structuring project about the single customer view. Could you elaborate a bit? And in terms of the new digital customers, can you confirm that these are not customers from the physical store?

Also, here, I would like to add another question from Joe Giordano from JPMorgan. Can you describe the profile of this new online customer? If you could also talk a bit more about the average ticket and also about what you can to do to retain these new customers once you have a more normalized landscape?

[Fabio Faccio, executive]

I mean the middle part of the question was cut off. Let me start by talking about new customers. And part of the ticket, I didn't get it.

[Paula Picinini, executive]

Well, considering the profile of this new online customer, what could you say about the ticket and the items per chart?

[Fabio Faccio, executive]

Okay. I think Irma began asking about this single customer view. All of our data lake is ready. We already worked with the referral part and suggestion, omni recommendations and suggestions. Most recommendation or referral engines are online. We have an omni engine. So we look at the customer in a very unique fashion. Customer could be applying online or in the brick-and-mortar store. We are now understanding the customer's consumption, and we can track back the entire journey of the customer no matter what channel he or she uses.

We are decreasing the contact frequency that the contact's much more asserted. With that, we have higher conversion, generating a better sales volume with lower projects. So you don't bother them as much and you help them rather than you bother them. And every recommendation generates a conversion. This is just an example of an initiative of this new structure readiness bringing about the results. The other aspect refers to the service we render to customers. And we understand their entire journey. No matter where they purchase, we will understand their entire journey, and this will help us to serve them better in every point of contact.

Now speaking about the entry of new customers. We do have this whole new set of new digital customers. Some customers were already our customers. They bought from our brick-and-mortar stores, but now they are buying from both channels. On average, they have an annual spending with us, 3x higher than the customer that only uses a single channel. This is really happening with customers that bought from us, but they were not digital customers.

In addition to that, we have the entry of new customers. Some only buy online, and some buy in both channels. They are now being more -- they're now more acquainted with the grid. And these customers have a lower ticket. Most of newer digital customers, they do not access as frequently. And throughout their lives as a customer, they increase in frequency, they increase the ticket and once they start buying from both channels, then they triple their overall spending. And a customer that is already a customer, the increase is consumption. And the new only online customer starts not buying that much, but throughout their lifetime, they will start buying more as their relationship and their purchasing experience increases. They become more confident, and they start buying more.

And your last question, Paula, what was it? What was your last question? I missed that last part.

[Paula Picinini, executive]

I think you answered all of the questions. Was -- we started with the profile and what -- how do you think you can retain these customers?

[Fabio Faccio, executive]

I think retaining customers has a lot to do with how we serve them and how we can intend them and offer the products they want. Customers that buy digitally, they buy just a little bit just to test, and then they buy more and more because they like both the product and their experience. Then we see their purchasing profile improving. And the way we can retain them is by enchanting them, by offering products and services that can really enchant and inspire customers to buy more.

[Paula Picinini, executive]

Fabio, we continue with you. There's a question from [ Pedro Kakunjas ] from [ XP ]. How did the pandemic impact our relationship with suppliers? And whether the company sees any benefit from getting closer to your suppliers in the last few months? And the question -- there's another question whether you intend to have different pricing strategies for online and offline. And what will be your marketing strategy in both channels once the inventory levels go back to normal?

[Fabio Faccio, executive]

Well, [ Pedro ], thank you for your question. One thing that happened to our chain is that we were able to strengthen our relationships because it becomes very clear every time when we -- certainly, this has not been an easy ride for us or our suppliers. But if it wasn't for the pandemic, but the pandemic is around. So to that end, we made all the necessary efforts to support our suppliers and to keep them very active. Well, certainly, if we had better sales before, it would have been better, but this was not possible for a whole lot of reasons. But as Laurence said, when we talk about margins, we decided to increase our promotions, even anticipating promotions vis-à-vis our competition because we wanted to turn our inventory over. And at the same time, we wanted to offer new products to our customers.

And in terms of our entire chain, we wanted to help our suppliers to supply more, not at the level they would wish, but much better than if we just did nothing. We continue to provide technical support, educational support and also financial support to our suppliers. We are both supporting them and also offering them financial resources, especially to micro companies. We are taking the risk ourselves. We are prepaying receivables. And mainly, we are trying to keep things moving. We will try and make production arrangements as soon as possible, helping them to support the situation the best possible way. Certainly, these past months have not been easy for anyone, but all of our suppliers have been very pleased. People from -- are being -- paid us many complements. And this has reinforced our partnership with our suppliers. We do believe that this partnership will make a lot of difference.

Now demand is picking up, is increasing. Consumption is increasing. Not all suppliers will benefit from this increase because it's not a significant increase, but it's a good increase, not everyone is prepared. Ours are more prepared vis-à-vis the others, and our partnership helps us to be better served by them. And they -- because they need to have necessary production to serve the demand. We have a very competent partnership with our suppliers. They are good and also because it's our role, we have to help them, and this will now make a difference.

[Paula Picinini, executive]

Thank you, Fabio. Now we have a question from Felipe Cassimiro, and then I will jump to the next -- for the last question. Felipe Cassimiro from HSBC asks, how is the evolution of digital sales per brand and whether we have anything specific to say about Camicado and the other brands? And what are the opportunities to accelerate Camicado's marketplace opportunities?

[Fabio Faccio, executive]

Digital sales per brand were very similar in terms of growth. They all performed quite well. They all grew 3 digits. What we noticed, and it's not necessarily in the channel, but in terms of types of product. There was a better sales performance and the demand picked up quickly at Camicado. Camicado, due to the type of products they sell, they experienced better sales. Renner, Youcom, they were more similar. And all the digital channels grew 3 digits, they grew well. What else was in that question, Paula? I'm sorry.

[Paula Picinini, executive]

Camicado's initiatives with marketplace and the online performance.

[Fabio Faccio, executive]

Okay. The brand performance online. I forgot to refer to Camicado's marketplace. Marketplace at Camicado, we reaccelerated that gradually. We were not in a hurry. We placed players focusing on quality rather than quantity because we do not want to have a lot of sellers, a large number of sellers. But we want to have differentials in ourselves. We could accommodate more sellers than what we have today, but we were looking at compliance and quality, and they have to be more aligned with our company. We looked at all of the contracts, we looked at different products and the sellers to guarantee a better operation. But things are escalating in a significant way at Camicado, and this certainly helps our ecosystem. Not only we have the sellers offering to our customers, but there are still many others things that we could do to help our business further, and this leads to better process to our customers and better revenue lines to our company, with many opportunities in terms of building up Camicado's marketplace. It's beginning quite well, but it's still at the beginning.

[Paula Picinini, executive]

Thank you, Fabio. And now our last question from Andrew Ruben from Morgan Stanley. This question is, what makes us believe so much that we will reinstate -- reinforce our target for 2025 with over 500 stores considering this landscape of uncertainty?

[Laurence Beltrão Gomes;CFO, executive]

Well, Andrew, in fact, we are very much convinced of that because of our omni model. All of our omni model, and we are talking about Renner in terms of the target, we still need to expand the other [indiscernible] that increase popularity to add more convenience target. This full model gives a full experience to customers. They can purchase from whatever channel they want. They can pick up whatever they want. They need convenience. Whatever it is, if they want to have a quick delivery or to try out the product. So whenever we talk about Brazil, I'm not even talking about the rest of the Americas, I'm only referring to Brazil. Geographically speaking, it's a continent, geographically speaking.

So we need more [indiscernible] and we are still far from reaching the volume of stores we would need to be able to give a better experience to our customers. Therefore, we need a better footprint, geographic expansion if we want to provide a better shopping experience to our customers. Even with the digital channel, I mean, we always incorporated that into our plans. The pandemic period just enhanced that further. This was accelerated because of the pandemic, but we never exploited the full potential of our stores even because we knew that we could grow more. Therefore, it is just the pace of store opening when we put that target.

What is the pace of opening new stores? We have the potential to do a lot more. We deaccelerated because of the pandemic and some of the construction on new stores had to be interrupted because of COVID-19. So the number of stores that we wanted to open this year, we postponed some inaugurations to what happened this year. So now it will happen next year. We pushed the days forward.

But if we look in terms of the next 5 years, we will be able to accommodate everything in figures to come. A little bit more stores year after year, and we will keep the pace going till end of the 5-year period. As, in fact, I think we will need even more than that. So I can't see why we shouldn't do it even because we understand that we still have important market gains looking forward, given all the initiatives we are focusing on at the moment.

[Paula Picinini, executive]

Thank you. Thank you, Laurence. And I think with that, I would like to thank you all for joining us. And we are certainly available to answer any further questions you may have. Now I'll turn the floor back to you for your final remarks.

[Fabio Faccio, executive]

We weren't able to answer all the questions, so if you could just comment more generally -- generalized comment. We -- Q3 and Q4, you will probably help to answer other questions. Thank you very much. Laurence, would you like to go first?

[Laurence Beltrão Gomes;CFO, executive]

When it comes to credit, I think as resume our operations and the reopening stores and this production process within the stores, we then get mobilized to recover more quickly. And then we focus more in the origination of our portfolio, looking at the new moment, which is a moment of renewal and digitalization of our products.

In regards to retail or Renner, our structure, our capital structure is well in place. Our credit volume are all open. We are going through a different moment now. We have more visibility in terms of cash generation, and we are now moving towards cash generation in the next coming months, moving towards a more normalized scenario. So these are just my final remarks. Thank you very much. Thank you for joining us.

[Fabio Faccio, executive]

I'd like to take this opportunity to say maybe a few things that we fail to say because Laurence talked about [indiscernible] in terms of the past scenario, the current situation and the scenario looking forward. In terms of the past scenario now looking at the second quarter, it's important to [ recall ], not only we were the first retailer to shut down all of our physical stores, the gradual reopening that occurred after April 24, and it was a very gradual reopening, we were also the last one to reopen. We waited between 3 to 5 days to reopen the stores after the rest of the market. And this also had a negative impact on our sales in the second quarter. And this -- it's because we prioritize the safety of our employees and our customers, And throughout the second quarter, we were already reopening our stores following the government lifting off of their restrictions after we made sure that everything was safe.

So the second quarter and the third quarter differences. But maybe if we look back, we should have been more affected compared to the other retailers. But even though, it doesn't seem that that's happened. But we -- I should recall that we had less operational -- operating days when compared to the rest of the market. We started with enhanced promotions. We started with the promotion right from the beginning to turn over our inventory. And having customers consuming more of our winter items. And now we already have some spring item and then response to these items have been quite well. Not only we are selling more, but the margins are also there.

I would say, in a nutshell, that the worst is over. Well, we certainly know that we are still going through a very challenging period just dealing with the challenges. When it comes to controlling the safety and the health of people, we think that the worst moment is already in the past. Even though we may not rebound, it may happen in one or another geography, this is already factored in. And I don't think it will be in the same magnitude as we experienced in the past months.

So I think that we are better off than we expected. We are more positive looking forward. And one thing that I think that's important is that we see even better improvements ahead. We learned a lot. We grew a lot, and we improved a lot. We gained a lot in efficiency, productivity, innovation, technology, engagement of our people, and we are certainly well prepared to press the future and to press all the opportunities we see ahead of us.

I'd just like to thank you very much. And I am sure that very soon, we will have better and better news for you despite of all of the difficulty we endured. Thank you very much, and all the best.