Vivara Participacoes SA

BOVESPA:VIVA3

Earnings Call Transcript 2020-Q2

[Operator]

Good morning. Welcome to the conference call of Vivara to announce the results of the second quarter of 2020.

Today, here with us, we are going to have Mr. Márcio Kaufman, CEO; Paulo Kruglensky. Operations VP; and Otavio Lyra, CFO and IRO, along with the IR team of the company. This conference call will be recorded.

[Operator Instructions] The audio is being simultaneously presented at the internet at the address ri.vivara.com.br. This conference call is being conducted remotely. And there may be interruption in the speakers' lines during the conference call. If that happens, please, we kindly request you to remain connected until they are reconnected. That will take place as soon as possible to continue the conference call.

We would also like to say that statements made during this conference call relative to Vivara's business projects, projections and operational and financial goals and targets are beliefs of the company's management and are based on information currently available. They involve risks, uncertainties and assumptions because they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that the overall economic scenario and other operational factors may affect the future performance of Vivara and may lead to results that will be materially different from those expressed in such forward-looking statements.

Now we would like to give the floor to Mr. Kaufman, who's going to start the presentation. Please, Mr. Kaufman.

[Márcio Kaufman, executive]

Good morning, everyone. Thank you very much for taking part in our conference call for Q2 2020. We are still doing it remotely. We are going to have Otavio Lyra, our CFO and IRO; Paulo Kruglensky, our Operations VP and Melina Rodrigues, our IR Manager.

In the whole history, this may have been the most challenging time that we have been through. And this crisis is different from others we have gone through. First of all, it was very unexpected. And then there isn't predictability in the scenario, and it's lasting for very long. Different from other times, we were caught by surprise. There was no sign or indications such as recession or no other business indicators that led us to prepare. In a few days, we came across the pandemic, requiring us to make quick decisions, but we were very responsible and conscious. We are aware that the recovery will come. It's been faster than we first thought. We still have a long way to go until we go back to normal.

During the 5 months since the beginning -- since we started closing down our operations, we have moved our teams to find effective solutions to minimize the effects of the pandemic on our businesses. We had countless discussions, joint decisions, multidisciplinary work groups and many different projects, all of that without losing sight of the constant concern of the safety of our partners, employees, suppliers, customers and the financial health of our business.

The quarter that we are announcing today has exceeded our initial expectations. But in looking back, we see that it could not be any different. Our teams worked very hard in executing projects with great capacity of adapting to new conditions and to find the [ best solutions for us to move forward. We are a company with deeply rooted values, and we are very result focused. Our vertical ] model has made it possible to protect our margins to work on the most appropriate product mix.

At the end of March, we temporarily suspended the [ operation of our factory in Manaus when we had already a good enough inventory that was easily to be -- that could be easily adapted. We resumed production in early July to produce the Life wristlets. And then shortly ] after we resumed the production of our jewelry, so that we could have the right inventory composition. Well trained and engaged sales force conducted, with mastery, the mission of engaging customers.

We have direct sales with Joias em Ação or Jewelry in Action project. We have a strong brand value proposition. We involved our salespersons with the most frequent customers. Now customers can request an online consulting through WhatsApp, so that new customers may also have access to assisted sales that is so well accepted in our physical stores. In the quarter, the sales in this format reached 17%.

Our brand management and the way we adapted the communication of changes that were so obvious in the behavior of consumers during social isolation also deserve a highlight. We adopted a more emotional approach in our campaigns, seeking new ways of interacting with our customers. We talked about purpose while being in connection with others, everything in a very subtle way and focusing on meaning, which is what jewelry is about.

We're focused on the use of data to communicate, and we made our customer database an important tool to maximize sales in the online channel.

Result sales were materially affected by the closing of our stores, but we are seeing a great evolution in the pace of sales since the gradual reopening of our physical stores, and e-commerce has kept the acceleration of 3 digits. In July, we reached 90% of our total sales in 2019 with a greater share of stores that were already totaling 214 stores reopened. Until August 24, we are very close to 100% of the sales of 2019 with 261 stores open, still with a lot of limitation of law and limited were opening times.

In regards to operational breakeven, by protecting our growth, profitability and expense control, our online channel was the highlight in the quarter growing 387%. In fact, we do not know yet how big will e-commerce be in future years. But we are sure that our strategy will come out from the crisis strengthened with stronger and stronger channels, that are customer-centered, and so that customers may decide where and how to buy.

On August 5, we delivered 23 new operations, 21 stores: 16 Vivara stores and 5 Life stores, in addition to 2 kiosks. In the beginning of the pandemic, we reviewed our expansion plan for the pandemic, reviewing the plan for the opening from 50 to 21 stores considering the uncertain scenario.

In the short term, we are prepared to seize opportunities that might come up, such as having relationships with malls that are mature and other new shopping malls. We want to strengthen our presence in the main shopping malls of the country with Vivara and Life channels.

We have focused on preserving cash. And we ended the quarter with a strengthened bottom line so that we have a long-term strategy in the company that's still very promising. We are happy with the work that we did. The definitive recovery or resumption will come back, and we are ready to make the most of the reopening to consolidate our leadership in the market.

Now I would like to give the floor to Otavio.

[Otavio Chacon Amaral Lyra, executive]

Thank you, Márcio. I'm going to start on Slide #3, where we briefly go back or recap everything that we did this quarter and the timing. And then I'm going to go over the impact of each one of these strategies and how they translated in terms of effective actions and results. And also I'll be talking a little bit about the months of July and August.

So starting, talking about the beginning of the pandemic in March and the first 2 weeks of March or on March 20 when we all went home. On March 21, we made the decision of shutting 21 -- 100% of our physical stores, only keeping e-commerce sales. On March 25, we made the decision of shutting down our factory in Manaus, with a quite robust inventory, we had time to do that in a scheduled and blend way, and we very quickly structured our crisis committee as we communicated to you. We made quick decisions that were very effective that made it possible for us to keep profitability during the quarter. When we have reached -- we're very close to the operational breakeven, we have conducted corporate restructuring and laying the foundations for a cycle of growth that was very strong.

We very quickly compliant to Law 14.020, initially (MP) 936, make use of reduced labor hours and shifts and work contracts renegotiated with 100% of our suppliers, using the opportunity to be able to match everything that we had with times, not just times, but we also got significant discounts in our lease contracts or different other contracts for the services provided.

In combination with the actions we took, we worked on retail as a whole, and then we felt the effect of that in an operation that was very fast. And then we piloted initiatives to maximize portfolio, as we are going to see shortly.

At the end of the month, we started, as of April 29, with a reopening of 9 points of sale, that's when we started the reopening. And then we reopened or resumed revenues from the physical channel. So we intensified the sales leverage initiatives. We implemented actions worth BRL 1 million for Brazil Foundation, and we had other smaller actions. And we closed the month with 26 stores reopened.

In June, we recovered or reopened our factory with access to the malls. With more markets open, we could finish the stores we were already working on. And we closed the month with 186 operations reopened with much more significant offline revenues.

Now on Slide #4, you can see the key initiatives. Márcio has gone over a few of them briefly. And I would like to emphasize the main points that helped us to navigate with slightly more confidence in -- through the troubled waters of this quarter. So we had acceleration of inventory integration with OMS with 18 markets in the country, adding convenience to our customers and the delivery of -- that was very rapid in key regions. So we have drive thru in the main shopping malls, it's convenience and safety for customers.

We reinforced and intensified the use of data, especially CRM data, so that we could get closer to our customers during this period using a very strong relationship basis. And we could do that with more accuracy. So we intensified and expanded our digital presence, acceleration of marketplace. We expanded our customer base in this period.

Jewelry in Action, the most relevant of our projects, had the participation of more than 1,600 sales women, which is direct sales through our sales women. And in the beginning of the quarter, they were home, and they gradually resumed activities, and they had time of interacting more directly with our customers by WhatsApp or telephone, using an app that we developed, and this made it possible to have a very interesting leverage for our online channel.

We also started an online consulting service, bringing even closer the online experience to the physical experience. We also implemented assistance to our customers. We made significant investment in the digital channel to seek new channels of sales. So we invested 30% more in the channel. We adapted our communication in this channel.

On Slide #5, you can see the evolution of our operating revenues. And so in Q2 2020, we built BRL 167.7 million (sic) [ BRL 169.7 million ], retraction of 56% as compared to the same period in the year before, with the highlights to physical stores that had a reduction of 83.2% because they were closed during part of the period. And after they opened with very intense limitations in its operations and a very positive highlight for e-commerce, which, during this period, built BRL 108.4 million more than we had the last year as a whole on this channel, which represented a growth of 387% in the period.

Net revenue followed very similar trends. We had BRL 137.7 million in the period, a shrinking of 54.6%. Same-store sales of the company in this period, considering e-commerce operations was very similar to our revenue growth and closed the quarter at 55%. E-commerce, as Márcio said, accounted for 64% of our sales approximately in this period, that has provided a quite significant change in mix in the period if we compare to the same period last year. The gold jewelry accounted -- the sales of gold jewelry accounted for 46% share in the period, a drop of 4.9 percentage points that were absorbed by watches, which gained 3.3 percentage points, by Life, which gained 1.1 percentage points, and accessory that gained 3.8. So this change in our mix was very much driven by our intensification of e-commerce. And it's more similar to the shares we had in sales in e-commerce.

Year-to-date numbers, our gross revenue was BRL 433 million, down by 34.3%. Our net revenue was BRL 343.8 million, down by 34.3%. In spite of the significant drop in the quarter, we saw an acceleration between the months of the quarter.

So if you look at the next slide, in April, we had a drop in revenue of 75.2%. In June, we had many more stores opened, from 9 to 186 operations, and then we were down by 36%. And now we have many more stores open with more time open during the months of July and August, we had much better sales trends considering, not just the nature of our product, but also the fact that operation hours limitations are still significant in July. We were down by 10%. And in August, until 24, we are down by only 0.6% in the month with 261 operations in operation.

On the next slide, you can see the evolution through the weeks of these months. And so as we open the new operations, you can see -- same-store sales, an important trend, as you can see here in more recent periods. From -- in the week from 20th -- in April -- last week of April. In the beginning of the reopening, we had minus 74%. So that at the end of July, when we already had 72% of our stores open, and the same-store sales were at about 36%. So we were losing a little bit, something like 1/3 of our sales in that period. And now in July and August, this is very similar to our revenue trends that we had in the previous sales with same-store sales at 11.5%, and in August, very close to -- the retraction will be lower than 1% of revenues in the period.

On the next slide, you can have a little bit more detail about the company's online channel, which has taken our customers from the offline channel a significant way. So in the beginning, they were not really migrating from offline to online. And now more recently, they have migrated more to the online channel and buying more and more on the online channel. So this recovery was more significant in May and June, July, which is typical of the seasonality of our sales with Mother's Day, Valentine's. And so this really drove the growth of our channel, so that its share in total sales became very significant. So this channel accounted for more than 98% of our sales in April, 75% in May, more than 45% in June. And now as many more physical stores are open, as we said, it stabilized, still with a very strong growth in excess of 200% in the months of July and August but with a smaller share of total revenue, slightly more stabilized as compared to what we were seeing in previous months.

In July, it accounted for almost 34% of sales, and now in August, slightly more than 21% of our total sales. It's also interesting to see the -- our sales mix if we compare this Q2 to last year. So jewelry again increased its share, and now it accounts for 39.2% of our sales. And then eating -- or taking share from watches that lost 8.9 percentage points in the period; and accessories, which lost 0.7 PP in the period in Life, and this channel remains stable, with approximately 1/3 of the sales in the quarter. And this share came, especially because of the Jewelry in Action initiative which we are going to describe better on next slide.

So it started in April, with -- accounting for only 5.4% of our online sales to 25% of our online sales along the month of June, towards the end of the quarter. Now in August, as Márcio said, it accounts for about 30% of our sales. These sales had a much higher ticket than the average online ticket that we used to have before, of about BRL 500, but it also contributed with a much greater mix of golden items. So this quarter, 70% of our sales of Jewelry in Action with gold items, 19% Life, 9% watches and 2% accessories, which has contributed greatly for the evolution of the mix, as I showed to you in the previous slide.

On next slide, you can see the gross profit and gross margin in that period well through an appropriate pricing policy, well-composed inventory, good compliance in all categories. And especially in our own collections with our own design, we were able to reverse the trend of margin that we saw in the first quarter when there was a slight pressure on gross margin as compared to the same period in the year before, especially when we consulted our -- considered our expenses in the factory. But in this period, we recorded BRL 93 million approximately, with a drop of 51.3% because of the lower sales. However, with additional 4 points -- more than 4 percentage points in the margin, which now accounts for 67.5% in the period.

So we had BRL 229 million in the first half of the year of gross profit in the period with 66.9% margin, expansion of 2 percentage points as compared to the same period last year in spite of the 32.3% drop in the period. We still suffered the pressure because we had expenses in our factory that affect our costs. We had 1.3 percentage points of pressure in the first half as a whole.

On Slide #11, you have our sales expenses, where we had 51.9% (sic) [ BRL 51.9 million ] sales expenses, down by 42.7% as compared to the same period last year. However, because there is lower operational dilution, it had almost 8 percentage points more than last year, with 37.7%. The main drivers for this reduction were our compliance to law, 14.020/2020, when -- which we adopted since early April, the suspension of our employees in our stores and along the quarter, the reduction in the shift, and we negotiated strongly our lease, the lease of our stores. And we were able to obtain significant discounts during the quarter and more allocation of digital marketing, which were -- which partially offset or partially affected this reduction that we had in personnel expenses and rent and condominium.

Year-to-date numbers, we had BRL 130.7 million sales -- or expenses, a drop of 20.5% as compared to the same period last year, which accounts for 38% of the net revenue of the period, up by 6.6 percentage points, still with pressure on the profitability of the period.

Next page, you can see more details about the evolution of G&A. So they also had a positive impact of our adherence to Law 14.020. With shift reduction for 100% -- almost 100% of our employees in administrative areas. We had BRL 28.6 million, down by 13% as compared to last year, still because of operational dilution also pressuring operational results, accounting for 20.8% of net revenues, almost 10% greater than we had in the same period last year. Year-to-date numbers, we have almost BRL 60 million SG -- sorry, G&A, accounting for 17.4% of the revenue, 6 percentage points greater than the same period last year, however, showing stability in terms of the amount in the quarter, not just we had a positive impact by our adherence to the Law, as I said before, but also with additional expenses of the investments that we have made for digital acceleration, technological improvements and also lawyer fees in the period.

As a consequence of all of this, on the next slide, in operational profitability, where we can see adjusted EBIT and EBITDA margin. Now it's translated on what you see in the slide. We were able to almost reach not breakeven, but we almost got there considering only adjustment of expenses -- of rental expenses with discounting IFRS 16 effects. And in 2019, eliminating the positive effect of the tax credits of ISMS on the PIS/COFINS basis, so that they are more comparable. So we had BRL 421 million in the period, down -- negative EBITDA, a strong reduction as compared to the year before, accounting for 0.3% of net sales, retraction of 20 percentage points in the margin.

Year-to-date numbers, we have BRL 29.4 million, accounting for 8.5% of the revenue, down by 10.5 percentage points as compared to the same period last year. It's also important to highlight that this quarter was affected by BRL 2.2 million expenses solely related to COVID-19, and BRL 4 million expenses related to terminations.

On the next slide, you can see the evolution of net income and net margin. You can see the adjusted net income that we had BRL 1.7 million loss in the second quarter of 2020, down by 1.2% in net margin as compared to BRL 41 million approximately last year with 13.4% margin. And here, we are excluding the BRL 116 million of effects of accounting tax credits of ISMS over PIS/COFINS basis in operational results, also in financial revenue of almost BRL 50 million, and also the effect of all of this income tax and social contribution of 116%, down by 20 percentage points in adjusted EBITDA, to a retraction of 14.7% in adjusted EBITDA. We had a significant contribution to our financial results, that was more attractive because of the capital structure of the company with more net cash balance and also lower interest rates contributing to the amount of interest that we paid.

So the numbers you can see here, the EBITDA, so there is depreciation that is more relevant because of additional investments in acceleration of organic growth of the company over the past few quarters. And we also have a negative impact of the financial results here, not excluding the positive effect of BRL 50 million in financial revenues because of the monetary correction of our tax credit cash balance. And we also had income tax and social contribution. We have deferred tax that was booked in the period because our operational results were affected during the quarter.

Year-to-date numbers, we have BRL 17.3 million net income, 5% margin [ compared ] to 69.9% (sic) [ BRL 69.9 million ] in the first half of last year with 13.3% net margin, down by 8.3 percentage points.

On the next slide, you can see the evolution of our investments, so the company's CapEx. So we have the BRL 12.2 million in the period, with acceleration of investments as compared to last year, especially in new stores, renovations and maintenance, a trend that we had started last year. We had accelerated the expansion in relation to previous quarters and years, and they accounted for almost total investments in this period. Whereas in other lines, we slowed down investments in the short term in our factory or IT systems and others.

On the next slide, you can see our debt and the company's net cash, which has grown in the period, almost 52% to BRL 264.2 million, broken down by net -- gross debt of BRL 320.5 million, BRL 50 million approximately larger than we had in December last year. And here, especially BRL 23 million additional of debt in the -- because we rolled over in the quarter, we had the dollar sprint in the period and BRL 1 million of interest rate that were not paid. The company is very much deleveraged and robust cash position to deal with the end of the year and to accelerate the operation taking part of this additional funds that we have constituted in the year.

On the next slide, you can see operating cash generation in period, BRL 111.1 million pre-CapEx in contrast with BRL 9.2 million in the same period last year. And here, especially, obviously, because of divestment of working capital that we had in this period of lower revenues, especially coming from lower accounts receivable, so installment sales from other periods and along this quarter of 2020.

And also, we had divestment in inventory because of the efficient balancing of our inventory in this period with the ideal match where the cash flow was slightly more than BRL 24 million in period, adding BRL 94 million for these 2 lines. As free cash generation in the period, we're almost BRL 100 million, almost BRL 99 million in contrast with BRL 2.6 million in Q2 last year, of course, with a completely different trend in our businesses. So after this quarter, 2019, we are starting an acceleration of revenue with investment, not just in inventory, with accounts receivable because of the strong seasonality in the month of June. And for this reason, we see this very significant impact that was different in the quarters that we are describing.

Year-to-date numbers. We had free cash generation, BRL 117 million in contrast with cash investment of BRL 22 million last year, once again affected by the different trajectory of the company and the different trend of growth in the company, if we compare the 2 periods, especially this quarter. So if you see the bottom of the table, we always adjust and we eliminate the effect of the non-advancement of receivables, no prepayment of receivables, so that we have more comparable results showing -- as a reminder, the company changed its prepayment of receivables policy along this year. And this affects this accounts receivable line that you're seeing here with BRL 43 million in the period, BRL 9 million in year -- the last year. So in the period, this BRL 111 million in contrast with BRL 16 million in the quarter or BRL 144 million operating cash in contract with almost BRL 53 million in the period, even so a significant growth of 173.4% in the quarter in terms of cash from management of operating activities.

So that's it. Thank you very much for your participation. I hope all effects and trends are crystal clear to you. And we are now available to answer any questions you may have.

[Operator]

[Operator Instructions] Our first question comes from Helena Villares, Itaú.

[Helena Villares, analyst]

So just question that we are having here regards your channel dynamics. On one hand, you have shopping malls with greater vacancy, as you said, in the release, which will provide better conditions for the opening of stores, but on the other hand, your e-commerce showed to be much stronger than we initially imagined, selling jewelry. So we want to understand how these 2 dynamics relate to your expansion plan, thinking of the long term.

[Márcio Kaufman, executive]

Helena, thank you for your question. We've been thinking a lot about that. And in our opinion, the growth of e-commerce gave us much greater visibility of how big this channel can be. Its growth was really significant. We don't know where this is going to stabilize, whether it's going to be 20% or 25% or even more. The fact is that it has grown, and we don't think it's going to go down in its significance. On the other hand, we are pleasantly surprised to see the reopening of our stores, and the fact that in a very short time, we were able to go back to sales levels that were very close to what we used to have before.

I have not imagined that when stores were closed. And as they were closed most of the time and e-commerce was doing so well, I didn't expect stores -- physical stores to sell as much as they're selling today. I believe that as stores reopen and they are open for longer hours, I think that stores are going to go back to very favorable sales levels.

As to the expansion possibilities, in my opinion, we still see a much higher growth in malls in cities where we are not present. So smaller cities, whenever we open a store, because our brand is very well known, we very quickly can breakeven in a very short time. And I see that pandemic accelerated the trend that was going to take place in any way in a few years, and it has made the omnichannel strategy to become something that I had never imagined. So the flow of customers going from one channel to the other, intensified customers that never bought on the site, started buying and customers that used to buy on the website, go to the stores to pick up their products. What I am seeing that I didn't really believe that e-commerce will reach such high levels and so rapidly. So the main change was this.

[Operator]

Our next question from Robert Ford from the Bank of America.

[Robert Ford, analyst]

Considering the challenges that you are dealing with that is very much related to your success, what percentage of sales will be in Life? And how much -- as the pandemic goes on, do you see a normalization of your rates?

[Márcio Kaufman, executive]

Thank you for your question, Bob. As to cash from marriages, we still do not have a visibility what will happen. I believe that with the pandemic, relationships became more important. Couples that were doing well or better and couples that were not supposed to stay together, could end their relationship. And we are seeing the sale of rings or wedding bands more stable without any significant changes. So I don't see anything that could justify a reduction or increase in the number of marriages. But this is a good reflection because I think that if there is a structural change that is bigger, there might be some changes.

Then what was your first question? I'm sorry, I couldn't get it.

[Robert Ford, analyst]

What percentage of your sales are related to lifetime events?

[Márcio Kaufman, executive]

So lifetime event sales when relatively low elasticity. Well, I can see that the elasticity of this type of product doesn't really change. What I see that has more elasticity today in our product is related to watches. So whenever there are any price changes or any promotions, watch changes change -- or watch sales change. We had a promotion in July of watches, and we had very high sales, well above the expected. And in case of Life, the elasticity is intermediate. In the case of Life, when we change the price or there is any Life event, it doesn't really change. What changes in Life more when there is like Christmas or Black Friday, the Life sells more, sales go up. So this is a product that in commemorative dates, it increases its share.

Gold is where we have a more stable sales throughout the year with a lower elasticity both in promotional events and in celebration dates. I don't know if I have answered your question, have I? Or would you like me to add something?

If I could add it's really difficult to isolate specific lifetime events. But I think that the sales trend that we are seeing that are supporting the company's sales right now when everybody is staying home and sales are more difficult is evidence that our product is good gift, the good present. So people were buying more for others than for themselves. And this shows the strong feature with less elasticity in periods such as the ones that you have mentioned, Bob.

[Robert Ford, analyst]

Considering how weak the BRL is and also precious metals, are you witnessing jewelry being bought as investment?

[Márcio Kaufman, executive]

Well, Bob, I don't really know. I think that this is one of the reasons why we are seeing sales above what we had expected when the pandemic started.

I usually say when gold prices go up, as now, customers really value jewelry more. They start valuing a product, which will last forever. Even because of the circular economy, people don't want disposable products. They want long-lasting products. People do not buy jewelry to sell it later, but they know that, that gold item will last forever. It's going to go from other to the other. So if they buy a 3-gram jewelry, they're paying more than they would have paid in the past, it's because it's worth more. It's a more -- it's a product with value.

The interesting thing is that no matter how much we feel the pressure in margins as prices go up, so price transfers is a reality. So customers assign more value to our products. So customers buy gold as a value reserve, but not because they're thinking of selling it someday, but because they know that jewelry has an intrinsic value and meaning.

[Operator]

Our next question comes from Marco Nardini from XP Investments.

[Marco Nardini;XP Investimentos;Equity Research Analyst, analyst]

Could you give us more details about your customer base? So how much of your customer base were existing customers or new customers?

The other question regarding marketplace. Could you tell us more about your vision of that and the product mix and flow in the past few months?

[Márcio Kaufman, executive]

We have seen that something very important for us is that in Q2, we had an increase of 30% in new customers. So to me, this is a number that is very revealing of our capacity of attracting customers. And now I'm going to give the floor to Otavio and Melina.

[Otavio Chacon Amaral Lyra, executive]

So adding to the 30% new customers, completely new customers for Vivara, additional asset. In addition to new customers, what supported this growth in online, as we said during the presentation, was the customers who were Vivara stores customers, but they were not e-commerce customers. There was another 30% that along the quarter, migrated to the digital environment. And this is what drove growth. And then slightly less than 40% were existing customers that were already digital and physical store customers that also bought during the period. But we have seen this consumption profile taking place.

And then your second point, marketplace is a material strategy. Because it's a way for us to gain ground and popularity with our products, but we must be very careful in terms of the brand. Vivara has a quite strong brand with our customers. And the development of these channels follow a very strong principle of us having the right product in the right channel. We have been very careful with SKUs that we activate in each one of the channels we are going in.

And then we have the opportunity of being more relevant in these channels. They still account for a very small share of our revenues, almost nothing, and we are integrating different channels, some are more general. And this is a trajectory that is going to be the basis for our growth in the specific channel.

Just to add something regarding customers. I think that one efficient work that was done to bring new customers to the e-commerce platform, especially people who were at Vivara stores, customers that had never bought on the website was work that was leveraged by Jewelry in Action that bought -- customers to complete their buying transactions in the website, and once they had the first contact with the platform, somehow, we break a barrier in terms of their buying online, which is very important for them to come back to assure some recurrence for the online platform.

[Operator]

Our next question comes from Olivia Petronilho from JPMorgan.

[Olivia Petronilho, analyst]

There are two questions. The first is your performance, especially in Q3, but between price and volume and the price transfers that we are seeing.

And the second question is the retail offers of -- we've been seeing the retail of fashion and accessories going better -- or better performance and going up. But what are you seeing in the jewelry sector?

[Márcio Kaufman, executive]

Thank you for your question, Olivia. I think that we are in fact seeing quite different trends. And we are still -- and obviously, we are closing the gap every month with more and more of our stores operational. And in terms of price, slightly negative, but we're almost there. However, we have a price effect that is close to about 20% in the average ticket as a whole. And there is a mix effect. When we isolate the price effect. When you have slightly more than 10% and additional, contributions will be based on the mix as we presented with different tickets between categories.

So today, we would have this distribution with almost -- offsetting almost 100% of this effect. As to the competitors, we can see price increases across the board at national level for the players and the lowers with faster transfers as usual. And then we have a higher increase than we saw in the beginning of the year and along the year of '19.

And as a reminder, we adjusted prices in late June and July, and we are still making specific adjustments for the categories where we have less elasticity. And even so we are seeing an adherence in terms of pricing that is really great and as Bob said, in terms of value reserve. And so our weeks are being very robust. We are getting gold at a price -- market prices, and this has also supported part of our sales.

We have a few specific players in smaller market niches, such as Life, making more -- making stronger price adjustments and especially concentrated with imported products. And we are also using opportunities so that it -- we can make the most of it. We have our brand positioning as compared to our competitors in main markets. So we are also transferring prices gradually in more traditional lines with the transfers concentrated in the more exclusive lines.

[Otavio Chacon Amaral Lyra, executive]

Olivia, as to the scenario as a whole, we still do not have an accurate number of the changes in market share. I believe that our market share has gone up in this period for a few reasons. Number one, because of the marketing investments that we have made that we have increased in this period because of the online -- relevance of the online channel. This was very important for us to get to the levels that we got and the more robust website that we have with more variety with superior online experience. And I believe that it has provided us an increase in market share, especially for the online channel, and this is also reflected in store.

I think that the omnichannel strategy that we have that is superior as compared to the market, has made us be able to navigate through the crisis with more strength or more -- or better than the rest of the competition.

I would like to highlight the fact that in scenario, in spite of a significant increase in price -- in metal prices, the gold has gone up by more than 80%, silver more than 120% up. And so there is intense market volatility. And as a reminder, we have this inventory reserve, so that we can do it gradually. And also the fact that we are vertically integrated, makes it possible for us to adapt the product rather efficiently. And this is being demonstrated in our results.

I believe when we isolate the cost of products and the unit cost of products, whether silver or gold, we have managed to be more efficient. And the increase in unit costs is better, which has translated in higher profitability for us in the short term.

[Operator]

[Operator Instructions]

[Márcio Kaufman, executive]

Great. It's been a pleasure to talk to you today. We are now ending on our conference call. Thank you very much for your questions, and good health for all of you and good luck.

[Otavio Chacon Amaral Lyra, executive]

Thank you all very much.

[Operator]

Vivara's conference call has now ended. Please disconnect your telephones, and have a good afternoon. Thank you.

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