Sonae - SGPS SA
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Welcome to the Sonae's First Quarter 2021 Results Conference Call. [Operator Instructions] I will now hand the conference over to Mr. Joao Dolores. Please go ahead, sir.
Thank you. Good morning, everyone, and welcome to Sonae's Q1 results conference call. As usual, besides myself and the Investor Relations team, we have on the call Rui Almeida from Sonae MC, Paulo Simões from Worten, Hugo Martins from Sonae Fashion, Luís Mota Duarte from Sonae Sierra, and Cristina Novais from Sonae Investment Management. In this presentation, I will basically cover a brief overview of these first 3 months of the year. And at the end, we will naturally have time for Q&A as usual. And so starting with a brief introductory note. And just to mention that, as you all know, we continue to face a quite challenging backdrop in the beginning of 2021. The first quarter was marked by an acceleration of the COVID-19 pandemic across several countries, with Portugal, in particular, facing a new lockdown since the middle of January, which naturally affected the activity of our businesses. This implies that we were practically forced to shut down a great deal of our operation. And only food and electronics retail stores were allowed to be open, although with important restrictions, such as reduced schedules and limited situation of people on weekend as well as the prohibition of sale of certain product categories. Our shopping centers were only allowed to have a very small number of stores open, and NOS had its cinema theaters closed throughout the quarter. We faced the situation until April 19, when nonfood stores and shopping centers started to reopen. That being said, and given this context, we believe that the performance of the portfolio was quite positive, as we will see later on. Just before diving into the results, I would also like to give you a few notes on our portfolio management activity, which saw important developments in the quarter. We completed the restructuring of our operations in Porto, Spain, as you know, which was an important milestone for the company and enables a more focused management of a stronger business with the results that we are seeing in the last few months. We also increased our stake in Sonae Sierra at a significant discount to NAV, that's N-A-V, and are now an 80% shareholder of that business. We also launched the partnership between Sonae Financial Services and Banco CTT, which I will also talk about later on. And Sonae IM continues to see important revaluations in the portfolio, namely regarding Feedzai, which is now the company's third unicorn company. So moving on to the business-by-business results, and starting with Sonae MC. Sonae MC had a very strong start to the year. It continues to follow the growth dynamics of the last few quarters in the context of full lockdown in Portugal from mid-January onwards. But once again, the company was able to reinforce its leadership position, both in terms of sales, but also in terms of customer perceptions and satisfaction. Total turnover reached EUR 1.27 billion, driven by a 6.6% year-on-year growth and a strong like-for-like sales evolution of 3.6%, especially if we take into account the negative calendar effect and the difficult comparison with last year, which registered a sales peak at the end of March as a result of the stockpiling in the first sign of the pandemic. This strong top line performance was mostly underpinned by the food retail formats, both online and offline, that more than compensated the impacts of the forced closure of some of the nonfood banners. Online sales more than doubled in the quarter, showing that Sonae MC's omnichannel customer base continued to grow, benefiting from an expanded e-commerce capacity and an enhanced supply chain. I think it's fair to say that our long-standing investment and leadership in e-commerce is clearly proving its merit as the company is in a privileged position to respond to the online shopping demand. Sonae MC continues to be focused on growing its digital footprint with several initiatives underway, such as developing different fulfillment models and also partnering with instant delivery services. In terms of profitability, Sonae MC was able to deliver an improved margin. Underlying EBITDA increased 55 basis points to 8.6%, mainly due to its food retail formats, which more than offset the closure and limitations imposed on the other brand, as well as the extra costs directly related with the pandemic, which are still significant -- or were still significant in Q1. Finally, Sonae MC's net debt at the end of March stood at EUR 530 million, EUR 164 million below last year. And this was obviously backed by the company's solid cash flow generation of EUR 239 million in the last 12 months. Moving on to Worten. In Q1, Worten also continued to show a very strong performance, taking advantage of the favorable market momentum caused by the pandemic, where we saw the electronics market growing both in Portugal and in Spain, mainly driven by the online channel, but also in this case, growing well above the market and increasing its market share. Worten's total turnover jumped to EUR 272 million at the end of Q1, growing by 17.4% year-on-year on the back of a strong like-for-like sales growth of 29.3% in the period. The online operations continued to represent a double-digit weight in total turnover, growing 2.5x year-on-year, with the marketplace being a key contributor to this growth. This consolidated performance remains highly anchored, obviously, on the Portuguese operation, where Worten managed to consolidate an outstanding top line evolution, with a robust like-for-like sales performance of 28% versus last year and another quarter of market share growth. In Spain, and as you know, we performed a strategic repositioning with the aim of focusing on e-commerce in Mainland, while retaining a leading omnichannel presence in the Canary Islands. As such, during Q1, Worten closed 14 stores in the territory and sold 17 stores to Media Markt. These stores were opened until the end of February, and the repositioning was implemented as planned. Regarding profitability, the underlying EBITDA grew from EUR 8.2 million to EUR 17.3 million at the end of Q1, with a margin improvement from 3.5% to 6.4%. This was mainly driven by the soft -- strong sales growth in Portugal. As for Sonae Fashion, at Fashion, the performance in Q1 continued to be strongly hit by the pandemic, which resulted in a total turnover decrease of 22% year-on-year to EUR 61 million. This impact was particularly heavy in the Portuguese operation after the declaration of the new lockdown since mid-January, which implied the shutdown of all physical stores. From March 15 onwards, restrictions started to be lifted, first, with sales allowed at the wicket, and later, with smaller high street stores allowed to open. And we know now that most stores were only allowed to operate as of mid-April, with very positive post-reopening sales. Online sales were critical during this period to sustain this level of revenues as they continue to register strong growth and doubled year-on-year in the quarter, with important contributions from all brands, leveraging a larger customer base, enhanced digital tools and properties and a growing willingness to shop online. Regarding profitability, underlying EBITDA decreased year-on-year to negative ground and reached a negative EUR 4 million, which, given the context, we believe, was a remarkable achievement, only possible due to additional cost-reduction measures that partially mitigated the sales evolution in the quarter. As for ISRG, as you know, we consolidated the company's fourth quarter, so that runs from November to January into our Q1 [ health ]. In this quarter, ISRG continued to be impacted by the restrictions to the normal functioning of physical stores, both in Portugal and in Spain, which culminated with the shutdown of all stores in Portugal Mainland since mid-January. Nevertheless, the last quarter of 2020 was a quarter of recovery, with turnover only decreasing 6% year-on-year to EUR 221 million, also with a strong contribution from the online channel, which increased by a factor of 3 versus last year. Regarding profitability, this was also a quarter of recovery, with EBITDA reaching EUR 31 million, EUR 3 million above last year, and a margin of 14.2%, mainly due to the company's cost-saving measures during the period. ISRG's performance allowed for an equity method contribution to Sonae's results of EUR 4.6 million, EUR 2 million above last year. At Sonae Sierra, the performance in Q1 continued to be highly hampered by the pandemic, as you know, mainly in Portugal, where the new lockdown forced all shopping centers to practically shut down since mid-January, implying further rent discounts. In the remaining European countries, some restrictions were temporarily in place, also with negative impacts on both traffic and sales. As a result, total discounts across the European portfolio totaled 38%, with Portugal being by far the country most severely hit as discounts were in the order of 47% of rents. Considering the last 12 months, total discounts in Portugal amounted to 64% rent, which compares to 28% in the remaining European countries. Nevertheless, occupancy rates continue to be high, with an average in our European portfolio of 96% and 98% in Portugal. Regarding valuation, Sonae Sierra does not conduct asset revaluations in Q1 and Q3. And so net results stood at EUR 3 million in Q1. And at the end of March, Sonae Sierra's NAV stood at EUR 897 million, basically flat when compared to December, with some adverse FX impacts offsetting the net results in the period. As the restrictions on traffic and opening hours are being gradually lifted, Sonae Sierra is placing a strong focus in close collaboration with its tenants to ensure that the entire shopping center ecosystem is well equipped and well placed to rapidly return to normality, whilst meeting the highest possible health and safety standards in omnichannel environments. For Sonae FS, this was a very important quarter as it was marked by the implementation of the new business model for the Universo Card after the termination of the commissioning agreement with BNP already at the end of 2020. The new business model was successfully implemented during the quarter, and the operation is perfectly stabilized. The partnership with Banco CTT was successfully concluded already in the beginning of April and was a crucial step in the development of a new integrated business model, leveraged for the capabilities of both parties. The business model changed by the means of remuneration on the outstanding credit stock instead of an upfront commissioning on every loan that is achieved. Due to this business model change and as the credit tax flow only started being generated in December 2020, the company turnover naturally shows a discontinuity that will be mitigated in the coming months with the growth of the credit stock. In any case, it should be noted that the company's activity continued to be affected by the reduction in product consumption in a lockdown context, resulting in lower income, especially in business lines such as ATM withdrawals, personal loans and store purchases. Overall, in Q1, turnover stood at EUR 4 million, and profitability evolved from EUR 2 million in Q1 2020 to minus EUR 4 million in Q1 this year. It's also worth highlighting that Universo's market share in Q1 was 16.2%, 1.5 percentage points above Q4 of last year. And its digital strategy let the company have already 470,000 digital clients at the end of March, a 42,000 increase versus the end of 2020. So again, in Financial Services, the business was affected by the restrictions, but better -- performing better than the competition. A quick note to MDS, our insurance brokerage company. That registered double-digit growth and more than doubled its operational profitability year-on-year in Q1. As for Sonae IM, Sonae IM's consolidated turnover reached EUR 24 million in Q1, a decrease of EUR 2 million when compared to last year. This is mainly explained by lower transactional activity of third-party products, which was partially offset by a stronger performance of the cybersecurity area, which continued to record double-digit growth. As to profitability, there were relevant improvements in cybersecurity companies as well, with underlying EBITDA increasing EUR 1.6 million when compared to a negative figure last year. In terms of portfolio activity, and with a cash invested of more than EUR 150 million at the end of March, the company's NAV reached EUR 323 million. Apart from some follow-on investments, Sonae IM added a new retail tech company to the portfolio, Sellforte, and reached important achievements in some of its minority investments, namely at Feedzai, which I already spoke about. Feedzai announced a Series D round with an input valuation that turns the company into a unicorn. Outsystems, that reached the unicorn status back in 2018, announced a new capital raise at an underlying valuation of USD 9.5 billion, which is a strong sign of the company's recent track record and also its future prospects. And already in April, following a secondary market transaction, Sonae IM sold part of its stake in Arctic Wolf, resulting in a gross capital gain of circa EUR 12 million and a gross cash in of EUR 36 million. Finally, NOS. As you know, NOS has already published its results last week. Turnover slightly declined 2% year-on-year to EUR 337 million. And this was mostly driven by the impacts of the lockdown in the cinema exhibition business, which saw revenues decrease by 55% year-on-year. The core telco segment was very resilient and grew revenues by 1% year-on-year, very much supported by the B2B segment, with B2C still affected by reduced roaming revenues. At the EBITDA level, the performance was slightly better, with a year-on-year decrease of minus 0.4% to EUR 152 million, with reported efficiency measures driving the margin improvement. Net income recorded a significant improvement year-on-year in Q1 to EUR 31 million, implying a higher equity method contribution to Sonae's accounts, mostly due to the high level of negative nonrecurring items registered last year, the majority of which related to the reinforcement of provisions related with the pandemic. NOS continues to have a very sound financial situation, with a net debt-to-EBITDA ratio of 1.5x and average cost of debt of 1.6% and a liquidity position of roughly EUR 500 million. Moving on to the consolidated results. Consolidated turnover surpassed EUR 1.6 billion, representing a 6% year-on-year increase, underpinned by the strong contributions of Sonae MC and Worten. Underlying EBITDA reached EUR 114 million, EUR 14 million above last year. If you recall, nonrecurring items last year included the recognition at Sonae of a EUR 21 million capital gain from the transaction of Sierra Prime, which led consolidated EBITDA in Q1 to be in line with last year, despite the positive evolution of equity method results at both NOS and ISRG. In such a challenging environment, direct results stood at negative EUR 1 million, significantly above last year when a high level of COVID-19 provisions were registered. Indirect results mainly reflected the revaluation of Sonae IM's portfolio, leading to Sonae's net results group share to positive ground at EUR 1 million, practically a EUR 60 million improvement year-on-year. In terms of cash flow, operational cash generation in the last 12 months stood at EUR 205 million, EUR 31 million above last year. And this was driven by the improvement of operating profitability, an optimized working capital management and also lower operational CapEx in the period. As you know, the last 12 months saw significant and extraordinary increase in M&A investments, which reached EUR 317 million in total and enabled Sonae to increase shareholder position in NOS, Salsa and more recently, Sonae Sierra. This strong investment in our portfolio was partially offset by EUR 71 million of a cash-in from asset sales, mainly related to Sonae IM and Sonae MC's sale and leaseback transactions and also by dividends received of EUR 8 million in the period. All in all, Sonae's free cash flow before dividends paid in the last 12 months and on a comparable basis stood at a negative EUR 64 million. I recall that these figures do not include dividends from NOS, which are temporarily held at ZOPT's. Considering dividends paid in the period, Sonae's consolidated net debt reached almost EUR 1.4 billion, implying EUR 164 million year-on-year increase. This figure excludes the Sonae FS backlog of EUR 122 million, which is no longer in our balance sheet given the partnership with Banco CTT, which was signed in April. And all in all, Sonae continues to hold a solid and conservative capital structure with a comfortable financing position, which includes a low cost of debt of 1.1%, an average maturity profile of 3.7 years and an LTV of 14%. Additionally, if we look at the leverage profile of our main businesses, it also remains quite solid and prudent across the portfolio. Sonae MC reached 3x total net debt-to-underlying EBITDA ratio. NOS, as I already mentioned, maintain a ratio of net financial debt-to-EBITDA of 1.5x. And Sonae Sierra currently holds a loan-to-value of 25% and has a very strong liquidity position. So just a final note to our people. I think it's very fair to say that without their tremendous dedication and hard work, we will not be able to present this set of very positive result. And also, a word to all our other stakeholders that trust us, including our shareholders to whom we paid in May 17 a 5% dividend increase to EUR 0.0486 per share, a total of EUR 97 million, corresponding to a quite strong dividend yield. Looking forward, we see now all of our business -- all of our businesses opening up again since mid-April, and the signs we are seeing in these first few weeks are very encouraging. At the same time, we see the COVID-19 vaccination program across the globe being implemented, obviously, with very promising signs as well of a return to a more normal business activity. And we have been preparing to return to this new normality across the portfolio. And today, we truly believe that we have businesses which are leaner, more digital and more prepared for the future. And the future is now. And so we will remain focused on ensuring that our people and our businesses have the right conditions to outperform and reinforce their competitive positions. We will be focused also on unlocking value across the portfolio so as to improve our financial position even further and obviously, also on capturing opportunities that are already arising in the aftermath of the pandemic. So that's it for me for now. Thank you all. And please, you can now open the session to Q&A.
[Operator Instructions] Our first question comes from José Rito from Caixabank BPI.
Yes. On Sonae MC, I have 3 quick questions. The first one, on the like-for-like. I'm not sure if you detail on the presentation. But what was the Easter effect on sales in Q1? Or if you could provide the accumulated like-for-like at the end of April to basically adjust for this potential Easter effect in Q1.The second question, on the reopening of restaurants from mid-April, if the company witnessed any major change in the like-for-like dynamics or if the momentum remained strong?And finally, on the margin side, if there were any change on the operating leases, not just the 5 -- the 55 basis points margin improvement. Also, bear in mind that EBIT margin was up by 10 basis points in the quarter. So let's focus on these 3, please, first. And then I have 2 further questions on Porto, but I would prefer to go by division, if it is possible.
Very good. Thanks, José. Luís, do you want to take his questions on MC first?
Sure. Well, going to first questions, due to the Easter effect in our P&L and now our trading activity in the first quarter, well, we need -- as Joao said in the very beginning, last year was a leap year. And we have a disadvantage comparing to last year's of roughly 1% in terms of like-for-like. This year, the Easter effect was, yes, was in the beginning of April. We benefit -- we slightly benefit, but it was not major impact in our trade activity. I would tend to say that the fact that we were having a less 1 day in comparison were much more -- what -- was penalizing much more our activity than the fact that we have the Easter effects helping us during the first quarter. The second question you raised was regarding the April, April activity. April activity market is not growing at the same pace it was growing in the years -- the months before. The fact is, as you may understand, the -- we compare, yes, compare -- as Joao said in the very beginning in his presentation, in his presentation in the very beginning, we were not -- we were comparing to the fact that the market last year was in a total lockdown -- total -- in a lockdown situation. The government is implementing the -- some relaxing measures in order to start having the market working regularly. And we are not -- the people are starting moving from eating at home as they were having in the last year's situation to start going to restaurants, and then the HORECA channels are benefiting from that situation. The market is not growing at the same pace. It is not growing. It's -- according to our figures of last figure that we are having, it's growing at between 2%, 3% to 4%, but we continue to gain market share. Our like-for-like in April were positive, but we continue to -- not having the same levels as we were having in the first quarter, but gaining market share, which is the most important issues. Margins. During the first quarter, margins, as you -- we mentioned and Joao mentioned as well in the very beginning, we have a very significant positive like-for-like in volume. The inflation rate was about 0.9% in our company, very much aligned with the inflation rate in the Portuguese market. We have almost in the food channels, in the food segments, aftermarket and supermarkets, we have like-for-like above 4%, meaning volumes grew more than 3%. That means we benefit from that situation. And meaning as well that team, we as a retailer -- as soon as -- when we are having growth in terms of volumes, we benefit from that situation. Meaning as well, that the -- when we compare to last year's situation, we have this huge situation where people were hoarding. And we were surprised by the increase of volumes. Today, we are totally prepared. We can manage quite well the shrinkage. And we saw a huge decrease in terms of shrinkage in our operation as well as we out -- and we saw some restrictions in order to have the total marketing campaigns that we were having according to the law. And that means that we take some costs in terms of marketing campaigns. In terms of shrinkage, we will optimize our operation as well, and we benefit in terms of EBITDA margins during the first quarter. Going forward, yes, there are some issues that we need to take into account in the second quarter last year. We had also some formats that they were totally closed, for instance, Arenal, the beauty in Spain segment. Even the foodservice formats, like Bagga, Go Natural, et cetera, they were penalizing the -- our activities. So we are -- today, we are benefiting from that situation. So our margins, it's fair to say that we are expecting to maintain the levels that we were having last year in the second quarter. Thank you.
Okay. And just to -- just a follow-up on this margin evolution. You mentioned that the marketing spending. So can you say how much was the reduction in the marketing spending in Q1? Was it like 50% reduction year-on-year? Because, as you mentioned, I understand that volumes -- because like-for-like evolution volumes has a positive contribution to the margin. But last year, you actually has even higher like-for-like, and the margin was, in some quarters, flattish. So that's why I'm -- I would like to understand what's the main driver for the margin? I understand that like-for-like is positive. But on the marketing spending, you mentioned that you witnessed a reduction. Can you give a little bit more detail how much was the reduction in this marketing spending in the quarter?
Perfect. Well, I told you that the evolution of shrinkage and the evolution of marketing campaigns were the most important drivers to increase our margin in the first quarter. I apologize, but I am not very confident to release more than that. And I think according to the figures -- I mean, according to the volumes that I mentioned to you, it's fair to anticipate which would be the evolution of these 2 items. Okay?
Okay. Great. So then on Worten, 2 questions. The first one is, which categories performed better in the period, in these Q1 results? And secondly, just to confirm if there are any positive contribution to EBITDA in this quarter from the restructuring in Spain? Or that should only be expected over the coming quarters?
Very good. Thanks, José. Paulo, may I take you through?
Yes. Sure. Thank you for your questions. Regarding the categories that performed better during the quarter, in fact, we saw a quite positive sales performance from most of business areas, notwithstanding that the growth rates were higher in IT, including the IT accessories and small domestic appliances and also entertainment. So those are the areas where the -- with higher growth. But growth was quite transversal to most categories. Regarding the impacts of the restructuring in Spain, we had some impacts, some positive impact, but the most -- most of the profitability gain comes from increasing sales performance. During the quarter, we had the store in Spain selling off the remaining stock. So we had some costs regarding that liquidation of stock. So that's why we don't still -- still don't have a significant impact from Spain, from that restructuring, I mean.
The next question comes from João Pinto from JB Capital.
On Sonae MC, 2 follow-up questions on José Rito's previous questions. On sales, you already told us that like-for-like was positive in April. The same applies for the beginning of May. I'm just asking is because the comparable was -- for the second quarter looks even tougher than -- on a 2-year basis than the first quarter. Also, a follow-up on margins. So the reasonable assumption would be for stable margins next quarters, right? And the third question on Sonae MC is regarding competition. Are competitors including promotional activity to recover share? And are there any material changes in the competitive landscape? And finally, on ZOPT, is there any news regarding the dissolution process and the issue with the dividends?
Thank you, João. Maybe I can take the ZOPT question first, and then I'll hand it over to Rui to take the Sonae MC-related questions. So the answer on the ZOPT question is quite straightforward. It's no. We do not have any new developments on this front. We are obviously not standing still. And we are evaluating all the different possibilities and maintaining a close dialogue with the involved parties, namely our partner and the court. But there is nothing new to communicate at this moment in time. We remain confident that the situation with -- the judicial situation will be untied soon. But I think the good news is that the company is functioning perfectly normally, with no impact from the situation. And so that we -- that's our main focus, to ensure that the company continues its normal activity and generating value. And in the background, we are working on trying to solve the situation. But no new facts to communicate at this point in time. Rui, do you want to take the Sonae MC question?
Sure. Regarding the like-for-like in May, just start giving you some figures about our activity. Yes, as you may know, last year, last year during the second quarter, we had a terrific performance. We continue to grow comparing to 2019 at a very high level. But last year, specifically in May, we had -- we grew a lot. This year is obviously -- the situation, as I mentioned, rather than to say, it's not comparable. They're not comparable because we were totally in a situation of a total lockdown just last year, not this year. And we feel that the market is not growing. In fact, it's not growing at all or at least according to the internal figure that we are getting. It's not growing at the same pace it was growing in the past. That is to say to start giving you the like-for-like figures regarding May. But naturally, according to the figures that we are getting, we continue to not be losing in terms of market share. Regarding the promotional activity, well, the promotional activity, as I mentioned in the -- I don't know, probably last year when we were talking about the performance of first quarter, I said that the -- all players in Portugal were totally devoted to supply and deliver products to customers during the period of hoarding that the customers were having -- in the -- when lockdown started. Well, even possibly in April and in May, that situation happened as well. So the majority of these players were not so focused in trying to manage promotional activity. But they are totally focused in order to grant that all customers were having the products they need in order to have that situation surpassed. Meaning, yes, the promotional activity increased slightly in the first quarter of 2021 comparing to first quarter of 2020. But I would tend to say that this is totally in a normal situation, compare it, for instance, with the first quarter of 2019. Having said, well, we reached the figure that we were having in the past. Nothing is different comparing to the '19 -- sorry, 2020 -- 2019. So it's -- everything is moving accordingly. And we see that the majority of the players are in a total rational way, doing promotional in a rational way, not damaging the market. And then -- that's something that we are seeing going forward as well. Thank you.
Thanks, Rui.
And the question about margins?
Well, João, if you don't mind, could you repeat the question about margin?
Yes. I think, Rui, I think...
It got to be second quarter, right? Second quarter.
Yes. But let me just remind everyone that we do not give guidance on financial results. I think that's an important -- to bear in mind. But the question was if we are -- we will -- we should expect stable margins in the next quarter, next few quarters.
Well, that's what I talked to. Yes, the market is -- as I mentioned to you a while ago, the market is pretty much the -- aligned what we have in terms of margins, in terms of what we had last year and up to now. And we need to consider that situation. The market is huge, and the market is aggressive in terms of personal activity, more aggressive when comparing to last year, yes? But it is also to consider that last year, during the first and second quarter, we had some formats that were totally closed, with some difficult -- difficulties and leaving the bank at that time. And we were penalized by the situation as well. So having those formats now start working and start delivering some cash flow, we will benefit from that situation as well. But up to now, I can't give you any guidance regarding the second quarter in terms of margins.
The next question comes from Artur Amaro from CaixaBank de Investimento.
I think part of my question has been answered. It was related with the Sonae MC EBITDA margin. So just to have an idea, what led to the EBITDA margin gain in the first quarter? 8.6%, if I'm seeing correctly, versus 1.10%. The reason why I'm trying to understand what led to these efficiency gains is if -- to see if it's possible to extrapolate for the rest of the quarter. So this was a very particular complicated quarter due to the 2.5 months full lockdown. Just to understand, if based on the performance achieved during this first quarter, if I could increase the estimates for further margin for the rest of the year.
Thank you, Artur. I think Rui already touched upon that topic. But Rui, do you want to add something else and address to his question?
Well, I think -- at least I try to explain that situation. We -- in fact, during the first quarter, we have significant volumes increase in a like-for-like basis, just to start. And back -- last year, in the very first quarter, we were surprised by the peak of sales due to the start -- the starting of the lockdown period here in Portugal. And we didn't have our operation totally fine-tuned. This year, we have our operation totally fine-tuned. And we benefit from that situation because we have the processes and the procedures all totally fine-tuned in terms of operations. We benefit by the decrease in terms of shrinkage as a percentage of sales. And also, we were surprised by some restrictions in order to start having marketing campaigns, in terms of marketing campaigns, in terms of promotional activity. The -- and then also, what we started to have is we're back a lot, and we were totally very well received. And then we have to get very good results in terms of digital marketing. And that digital marketing doesn't cost us so much as the other channels that we were using to start having this [ last year ] in terms of marketing. And we benefit from that situation as well. That's why we benefit in terms of -- we grew in terms of margin comparing to what we do during the first quarter. But I think I need to confess that despite the fact that we grew a lot in terms of volumes, was probably the main driver to continue to grow in terms of margins during the first quarter.
Okay. Very clear. So just as a second question, if I may. Clearly, Worten has been benefiting from the strong -- from the huge or almost exponential increase of demand on the online channel during the last year and the first quarter of this year. Do you think that this trend will be sustainable, assuming that the pandemic will slowly get over control, and 1 day will end up by disappearing? So do you think that this increase on revenues will be sustainable for the coming quarters? Basically, this is the question.
Paulo, do you want to take it, this one?
Yes. Thank you, Artur, for your question. So regarding the sales growth that we have been observing, it's very clear that the pandemic benefited sales in Worten. The categories that we sell clearly were appealing to consumer during this period. So sales grew significantly from the second quarter last year mainly. So the comparison basis from the second quarter onwards will be more difficult, more -- so we -- the -- if you are asking if we believe that the current increase in sales will continue throughout the year, the sales -- the increase that we saw in the first quarter, no, I don't think so. I think that the increase last year was very significantly different [ context ]. So the comparison basis is much more demanding.
The next question comes from António Seladas from A|S Independent Research.
Congratulations for the figures. So just one question with Sonae Sierra. I know that we would like to talk about the current quarter. Nevertheless, if you can provide some color how the stores are opening, how shopping centers are performing since they are -- they opened.
Very good. Thank you, António. This one's for you, Luís.
Super. Thank you. Our shopping centers across Europe are witnessing a strong and encouraging performance or recovery, I would say, very much in line with what we have seen in late summer, early autumn last year, reflecting a clear return to normality. Having said that, there are still 3 factors that limits comparability and that limit footfall, particularly working from home, which is affecting mainly shopping centers located in city centers and where offices are nearby. The lack of tourism, which typically is an important factor driving footfall in our centers, that is clearly limited at this point in time. And then we are seeing still some tight restrictions, particularly in Portugal, in terms of the number of people that we can have the 100 square meters, which has led to frequent shopping center temporary closures in terms of the number of people that could enter the shopping center. But the worst is that it actually affects the experience in the sense that a lot of people spend time doing and far less time in the shops. We are also still seeing some limitations in terms of the opening hours or in terms of capacity also across other countries in Europe. And that is particularly affecting food and beverage. So these 3 factors are clearly -- I mean, not normal, are very temporary and are affecting comparability of numbers. But we are seeing a generally very good recovery in line with what we have seen during the late summer, early August -- or sorry, late summer, early autumn. The other good thing to note is that we are seeing a very meaningful increase in average basket size, which can also be led by people going to the shopping center with a much more targeted approach to purchase something specific rather than doing a lot of window shopping. That means that sales tend to be less impacted than footfall. That's broadly where we are. We are -- we remain positive on the remainder of the year, and we are seeing a gradual recovery to normality.
Okay. There are no further questions from the participant lines. I hand the floor to Mr. Joao Dolores.
Okay. So if there are no further questions, I would like to thank you very much for your time. Thank you for listening. And I hope to be with you again soon in our Q2 results conference call later in the year. Thank you very much. Goodbye.
This concludes today's event. We thank you all for your presence today. Ladies and gentlemen, you may now disconnect your lines.