Q4 2024 BBB Foods Inc Earnings Call
Thank you.
Daniela: Good morning everyone. My name is Danila and I will be your conference operator.
Daniela: Welcome to the end of Thursday, fourth quarter, and full year, 2024 conference call. All lines have been placed on mute to prevent any background noise.
Daniela: There will be a question and answer session after the speaker remarks and instructions will be given at that time.
Daniela: Please ensure that your full name is displayed correctly on Zoom and if not, please take a moment to edit your display name. Also, please note that this call is for investors and analysts only. Questions from the media will not be taken, nor should the call be reported on.
Daniela: Any 4-looking statements made during this conference call are based on information that is currently available to us.
Speaker Change: Today we are joined by Tienta Strez-Bez, Chairman and Chief Executive Officer Anthony Hattoum, and Chief Financial Officer Eduardo Bicciuto. I will now turn the call over to Anthony. Please go ahead.
Good morning everyone.
Speaker Change: And thank you for joining us on this earnings call where we're going to talk about our fourth quarter and full year 2024.
Speaker Change: I will begin with a review of our operating results and will be followed by RCFO Eduardo Pizuto.
Eduardo Pizzuto: So we'll provide an overview of our financial performance and an outline for our guidance for 2025.
Speaker Change: We will conclude with a Q&A session to answer any questions you may have.
Speaker Change: I'm pleased to report another strong year and another strong quarter for 3B.
We opened 138 net use stores during the fourth quarter.
Speaker Change: and a total of 484 new stores for the full year.
Speaker Change: Same store sales growth for the fourth quarter grew by 11.8% compared to 4 Q2 023 and for the full year grew by 13.4% compared to last year.
Speaker Change: Shelter revenues for the fourth quarter increased by 32.7% to 16.3 billion pesos.
And fully a revenues increased by 30.3% to 57.4 billion pesos.
Speaker Change: For the year, net cash flows generated by operating activity reached.
3.749 million pesos and 19.4 increase year over year
Speaker Change: We ended the year with a net cash position of approximately 1.4 billion pesos and in addition to that we have about 150 million US dollars that we've kept since our IPO last year.
Let's turn to operational performance.
Starting with store openings.
We successfully accelerated our store opening.
Speaker Change: Closing the year with a store count above our original guidance.
Speaker Change: As mentioned we opened 138 net news stores in the fourth quarter and for the full year we opened 484 net news stores at 21% increase over 2023.
Speaker Change: We continue to increase the density of our stores and the geographies where we currently operate and at the same time we are stretching to new geographies.
And in 2024, we opened two new distribution centers.
Moving on to revenues and same-store sales growth.
Speaker Change: Total revenue news for the full year, where 57.4 billion pesos growing over 30% year over the year.
Speaker Change: Not on the slide, our fourth quarter, we saw 16.3 billion pesos at 32.7 an increase over last year.
Speaker Change: In the pink bubble that you see at the bottom of this chart we have same store sales growth and for the year we saw 13 for 4 growth rate.
and that significant given the notable decrease in inflation.
Speaker Change: Going on to the next slide where we can look at quarterly same store sales growth and compare them to untouched numbers
Speaker Change: We continue to significantly perform the untaught number throughout the year and the fourth quarter are same store sales grew by 11.8% Well above untouched 2.6%
Speaker Change: And even as the overall market appears to have slowed down in the second half of the year, our momentum has remained strong.
Speaker Change: And I think our strong value proposition is driving this and when the economy is slowing down and the cost of living is rising that tends to play in our favor.
Speaker Change: Some of you will be familiar with the spaghetti chart which we updated.
Speaker Change: These are the sales curves of our 2005 to 2023 cohorts of stores.
These numbers are adjusted for inflation.
Speaker Change: You will note that the newer cohorts of stores start with a higher sales level and grow faster than our older stores.
And you'll note that no curve has yet flattened up.
Speaker Change: What is driving this is a continuous improvement in our value proposition to customers.
Speaker Change: And this happens when you scale because you drive costs down and you improve your private level quality and future features.
Speaker Change: So, as a result, you offer better value to your clients.
Speaker Change: The portfolio of products that you find today in our stores is significantly better than what you would have found in our stores five years ago.
Speaker Change: So as a result, our existing customers buy more from us and we gain new customers.
Speaker Change: I also add that our brand 3b is getting stronger, that clients know what we stand for and trust us more every day.
And that helps our new store start stronger.
Speaker Change: We go into more detail we see that our sales growth in 2024 was driven by both higher store traffic and increased ticket size.
Speaker Change: For our stores with five or more years of operations, we saw a 4.6% increase in the number of transactions per store per month, and a 3.6 increase in the average ticket size.
Speaker Change: This growth was driven by the increase in value we offer our clients in big part from our private labels.
Speaker Change: And our private labels now represent 54% of our sales up from 47% in 2023.
I'll pass the mic now to Eduardo.
Thank you, Anthony. Good morning, everyone.
Eduardo Pizzuto: S-GNA is a percentage of revenue, increased by 96 basis points, reaching 15.2% in Q4 2024.
Here's a breakdown.
Cells expenses rose 40 basis points from 11.3 to 11.7%
Eduardo Pizzuto: However, this excludes approximately 47 basis points of non-recurring non-cash expenses.
Excluding B's, self-expanded decline as a percentage of ramming.
Moving on to admin expenses increased by 56 basis points from 2.9 to 3.4 percent.
Approximately 11 basis points for non-recurrent cash expense.
Eduardo Pizzuto: Namely related to legal matters and preparing for our follow-on offering in Q1.
Excluding these, admin expenses roll up 45 basis months.
Eduardo Pizzuto: Now, this increase is mainly driven by hiring additional personnel to support a growth, public company expenses such as reporting and compliance, and expansion of our regional operations.
Bye-bye.
The first quarter
In the first quarter of 2025, we expect a record.
Approaching on about $2 million for a fall one.
to build a solid foundation for a future growth.
and comply with the public company requirements.
Moving on to Yvita and Yvita Marjim [inaudible]
Eduardo Pizzuto: Our EVW for Q4 2020 Ford, which 845 million pesos or a 5.2% margin, which represents a 51% growth versus Q4 of last year.
Eduardo Pizzuto: For the four year EB.Reach 2.8 billion pesos or a 5% margin which represents 51% growth of versus 2023.
Eduardo Pizzuto: I do remind you that we do not manage our business with an even that golden mind. Even for us it's a consequence of meeting.
Eduardo Pizzuto: Our objectives of revenue, product contribution, margin and lower cost as a percentage of sales.
Moving on to Negative Working Capital.
Eduardo Pizzuto: As you can see from the chart, our negative working capital continues to be very strong.
Eduardo Pizzuto: As of December 31, 2024, adjusted negative working capital represented 10.6% of total revenue.
Eduardo Pizzuto: It continues to reflect our operational efficiency and the strength of our company.
Eduardo Pizzuto: As mentioned in previous calls, this is a unique business model that generates a significant amount of cash.
Eduardo Pizzuto: In 2024, we once again self-funded our aggressive growth, clearly demonstrating the strength and resilience of the heart-disk and business model.
And finally, moving on to our guidance for 2025.
We are operating under a uncertain environment.
Eduardo Pizzuto: Historically, Bbb has performed well during economic downturns and periods of uncertainty, but also in economic downturns.
And thus, we continue to grow strongly.
Eduardo Pizzuto: For 2025, our SEMSTOR sales guidance is between 11 and 14 percent.
Total revenue growth in the range of 26-29%
Eduardo Pizzuto: And we plan to open between 500 and 115 new stores.
Overall, we expect a very strong beer.
Anthony Hatoum: I will now turn the call back to Anthony for closing remarks.
Thank you all once again for joining us today.
Speaker Change: Hours is a business that is robust and highly resilient in turbulent times.
We thrive irrespective of economic scenarios.
Speaker Change: We are seeing strong growth across the board and sales and same-store sales.
Speaker Change: And we are seeing continued operational leverage driven by scale and increasing operational efficiency.
We continue to scale and execute with focus and discipline.
Speaker Change: We are doing what we have always done, only faster and better.
Speaker Change: And despite what appears to be turbulent times, we are confident that 2025 is going to be a strong year for us.
Thank you. We'll now start the Q&A session, so please go ahead operator.
Speaker Change: Thank you. We will now conduct a Q&A session with both Anthony and Elango. If you would like to ask a question, please press the Raise Your Hand Button, which is located at the bottom of the screen.
If you are connected via telephone, please dial star 9.
Speaker Change: We remind you that all lines have been placed on mute. When it is your turn to ask a question, you will be given permission to speak and then you will be able to unmute yourself and ask your question.
Speaker Change: We will now pause for questions and try to catch them as they come along in.
Our first question comes from Bob Ford and Mary Lynch.
Bob Ford: Hey, good day, everybody, and thanks for taking my question. Anthony, in your commentary to share holders in the press release, I was drawn to three words, right? Expand, enhance, and improve. And with respect to, with respect to expansion.
Bob Ford: How should we think about the balance of growth across new and existing trade areas this year? And how is your view of potential stored entities evolving?
Bob Ford: With respect to enhancing capabilities which capabilities are you focused on this year and how much of the step up in the underlying cost structures associated with new competencies versus you know compliance control and and simply growth support.
Bob Ford: And then lastly, when it comes to improving value propositions, how should we think about innovation this year, new categories, price gaps, and store surface levels?
Thank you.
Bob Ford: Thanks, Bob. Multiple questions. So I'll start with the real estate one. We haven't seen any change in how we do real estate. We like to repeat that there's tremendous white space.
I had a buzz.
Bob Ford: And so our strategy, as you know, in real estate, is a very decentralized operation and...
Bob Ford: Each regional CEO is in charge of doing their own search for stores where they are stretching distances a little bit from their distribution center as well at the same time backfilling and increasing density closer to this distribution center and this approach has not really changed.
Bob Ford: So what we're likely to see is the same again this year in 2025 more density where we are and again I see plenty of white space even in the areas where we operate and an expansion of them.
Bob Ford: The locations where we are currently just a stretch of these borders that if you want to look at them this way towards more new geographies where we're not operating today.
Speaker Change: When it comes to the density view, as you drive greater density in your earliest markets are you becoming more comfortable in terms of an equilibrium population combined with disposable income.
Speaker Change: Metric that that may determine where how far you can go or you yet to see that. No, we have yet to see that but then again this place to our favorite we have
Our sweet spot is so broad in terms of
economic purchasing power
Speaker Change: And, you know, the stores that we put in high-end neighborhoods have done extremely well.
Speaker Change: And so, you know, when we look at how we hit a limit on
Speaker Change: where we can put stores in the areas where we are present.
Speaker Change: We don't see it even in areas that are extremely, you know, dense and maybe harder to put stores in like Mexican city. So again, I'd say, no, nothing that indicates that we've had a, we're about to head a wall in terms of, you know, being able to increase the density of stores in areas where we operate.
Oh, you had a second question on on on step up cost.
Speaker Change: I know you have a question of enhancing capabilities, right? So it was it's all driven by the commentary in the press release and it was just you know the capabilities that you may be focused on this year.
Bob Ford: And then how much of the step up in the underlying cost structure is associated with new competencies versus all the regulatory requirements and compliance controls or simply growth support.
Bob Ford: Yeah, um, so yeah, and as I mentioned in one of the slides.
We do expect to continue to hire a talent in 2025.
across multiple areas of the company.
Bob Ford: Um in acting several hours of the company. Um and so we will continue to focus on on on on.
On Tall and Density
Bob Ford: As far as also compliance and controls, etc. We did a good investment in 2024. We will continue to do some investment in 2025.
Bob Ford: And then, as I mentioned before, we should expect that these admin expenses over time should trend down as a percentage of revenue. But we will definitely continue to invest in talent in 2025.
Bob Ford: Understood. And then the last one was just on value propositions in terms of innovation, new categories, price gaps, store service levels.
Bob Ford: Most of you are familiar that at any point in time we are running up to 60 different tests of different products and categories of which you know some of you have seen us run the tests for fruits and vegetables and meats.
Bob Ford: And again, it's nothing new and what we do, we've always done that. We've done that when we launched cosmetics. We've done that when we launched frozen and we're continuing to do this today. So, you know.
Bob Ford: Next things on the horizon are fruits and vegetables and meats.
Bob Ford: And again, they will happen when we're ready. But innovation is core to us and continuing to improve our value proposition on existing products.
Bob Ford: is continuous. There's not a single year where we haven't either improved price.
Bob Ford: or the quality of a product or the feature of a product that's important to our clients and that in terms explains why you know we continue to see very strong same store sales growth even from our oldest vintages.
Bob Ford: So as long as we're doing this we will continue to see strong same-store sales growth and you can expect that in 2025 we're going to see also improvements across the board and if we're ready to introduce new categories that will be introduced in 2025.
Thank you so much. Very helpful.
Thank you, Bob.
Thank you. Our next question comes from Joseph Dyer-Dano.
Please state your company name and then ask your question.
Joseph Giordano: Hi, good afternoon Anthony and Eduardo. Thanks for taking my question. I would like to explore a little bit more. Thank you very much.
Bob Ford: at the same store sales composition here so we see a very
Bob Ford: Solid ticket component when we extrapolate that that what would be the proxy for mature to restore.
Speaker Change: So here like I wanted to understand like if you're being like how should break it down like so if it's more like capturing new clients because when you think about penetration we still relatively low in the neighborhoods because compared to other neighborhoods supermarkets or you actually seeing a higher volume of this and when I go to the ticket side we see kind of ticket inflation like growth but
Speaker Change: What we have been seeing on the flip side is that a penetration of private labels continue to increase so technically speaking like the average ticket would be down so I would like to understand how this basket size.
Speaker Change: is actually behaving as part of the thesis that like the customer will address more of your needs in your stores.
Speaker Change: Last but not least, like not to take much of the time, like we saw the huge gap that you opened versus entad.
Speaker Change: We see in that trading like a cause of the muted growth in the first quarter. So like to understand like how you're seeing your performance like if this like 12% kind of same Thursday level that we saw throughout the second half of the year is very likely to be maintained in the first half. Thank you very much.
Speaker Change: Let me start drove by answering your last question whether you know same store sales growth will continue.
Speaker Change: I mean, it's a million dollar, the million dollar question here in the sense that, you know, we...
Speaker Change: We look conservatively at the same store sales growth and then we're always pleasantly surprised to see it be higher than what we thought it would be.
Speaker Change: And again, when we go down to what's driving this, it sounds a little bit tried that I'll repeat. As long as we are improving the value proposition in our portfolio of products.
Speaker Change: We know that we're going to increase same-store sales growth or at least maintain high growth rates the way you've seen them develop over 2024.
Speaker Change: When we asked why, again, you refer correctly to a number of tickets increases which we also interpret as
Speaker Change: and our new clients coming into our store for the first time even on our older advantages.
Speaker Change: Add an increase, a healthy increase in the ticket size despite having very strong deflation this year.
Speaker Change: And when, you know, we look at numbers that you don't necessarily have access to which are unit sales, kilos, items etc. We see very, very robust increase.
Speaker Change: And, of course, you mentioned the two, the fact that, you know, we sell more private labels and our private labels are priced lower, you know, we need to be selling more units.
Speaker Change: to compensate and to be able to generate higher ticket size like you're seeing it today reflected in these numbers.
So, you know, in summary.
Speaker Change: We believe that as long as we're improving the value proposition, we're going to see all these metrics either maintain or improve over time.
Perfect. Thank you very much.
Okay, thank you. Our next question comes from
Speaker Change: I'd like to dig in a bit more on the store opening guidance as well maybe maybe first the retrospective on 2020 or as you mentioned you came in above the high end of your initial store opening guidance so I'm curious if you can talk this through what the factors
Speaker Change: that were that enabled you to end up coming in above and then as we look to the guidance for this year if you talk through the the scenarios that can drive you to be at the high or low end and to the same degree operationally what do you see as the main bottlenecks for accelerating the pace even further appreciate it.
Sure that.
You know the three factors in opening stores Andrew are
Availability of Real Estate, Availability of Capital
Speaker Change: Availability of human resources at the level and quality that we want to have to operate stores.
Speaker Change: And I would say that capital is not an issue. Availability of real estate as we mentioned white space is abundant.
Speaker Change: And then if you look at more detail and to real estate you get something that is a little bit out of our hands which is obtaining permits.
Speaker Change: And we've mitigated that by just increasing the pipeline of stores that we process at any one point in time.
Speaker Change: So this is just to give you a little bit of context and background on what we need to be able to open stores.
And then as you probably know.
Speaker Change: Our operations for real estate are very decentralized so every region that we operate has its own real estate team and we've published that on average each team has a throughput of about two stores per month.
in terms of stores opened.
And as we open more regions and
Speaker Change: We are expecting to open four more regions in 2025. You can expect to have four more new teams.
Speaker Change: that are focused on opening stores and these for more tuned teams we expect would be also opening about two new stores per month.
and for each of these regions.
Speaker Change: And that's how we can project and we project what we expect our new store openings to be in 2025.
There's not much more to it.
Speaker Change: And it's been very consistent over the last year. So, you know, we're confident that this is the number that we're going to achieve.
Thank you very much.
Speaker Change: Thank you. Our next question comes from Alejandro Fuchs at Itaú.
Speaker Change: And I don't believe you are on me to you may not on me yourself.
Hey, thank you.
Anthony Hatoum: Hello. Hello, Anthony, a lot of team. Thank you for the space for questions and congratulations on the results two quick ones for my end. First of the gross margin.
Anthony Hatoum: If you can elaborate a little bit, we saw an expansion in this quarter of 20 beeps, maybe you can tell us a little bit how you know, relationship with suppliers, a private label and so on, you know, is going and if you expect this trend to continue, and then second 2025, maybe a follow-up to Joseph.
Speaker Change: We're seeing a slowdown in consumption and economic activity in Mexico. I know you expect a very good year, right, given the format. But how are you seeing the competition? Anything that caught your attention during these first four months on the competitive landscape in the country? Or are you seeing the trend very similar to the end of last year? Thank you.
Speaker Change: Okay, so the first part of your question was on Gross margins.
Bbb
Speaker Change: Again, it's worth going back and looking at what drives improvements in Gross
Speaker Change: And it's fairly straightforward as we scale our purchasing power increases and and efficiencies across the board increase.
Speaker Change: So you you have an improvement in purchasing cost of the goods you're selling.
Speaker Change: And then the question is what do you do with this improvement? Do you pass it into gross margin or do you pass it into price?
Speaker Change: And we've mentioned in previous calls that what we do for our private label, especially, is we let the market tell us what the optimum.
Speaker Change: Decision is regarding to the percentage you go you put into margin and the percentage that goes into price and that we do by continuous elasticity testing of all our products.
Speaker Change: What you will see over time, of course, is there's always a small part that goes into gross margins, so you will definitely see an upward trend on gross margins over time.
Speaker Change: But as I've also mentioned in previous calls quarter to quarter, you're going to see volatility in this gross margin.
Speaker Change: Over time, over a longer period of time, you'll see an upward trending slope.
Speaker Change: So if you tell me if this is the number I expect to see in the next quarter I tell you I don't know but what I can tell you is that if you look at this trend over the next couple of years you'll definitely see an upward trend.
Daniela Bretthauer, Daniela Bretthauer, Ulises Bolio,
Speaker Change: The second part of your question had to do with competition and slow down of consumption or what appears to be a slow down income consumption.
We haven't seen it. You see it in our numbers.
Speaker Change: If there is a slowdown in consumption, as has happened in previous downturns, we have been a net beneficiary of downturns and in upturns, these clients tend to be extremely sticky and don't go back to previous purchasing habits.
So, you know, we thrive in the downturn usually.
Speaker Change: In terms of competition, competition has always been healthy in Mexico and it's one of the most competitive landscapes for grocery retail.
Speaker Change: And as you've seen, you know, we've done extremely well over the years and have held our own. So, you know, no big changes in competition just continues to be strong and robust. And we continue to perform strongly and robustly.
Daniela Bretthauer, Bbb Foods
Very clear. Thank you Anthony.
Thank you. Our next question comes from Ulises Argo de Afantanel.
Ulisses Argotea-Fantanel: Hey, Anthony, a lot of thanks for the space for questions here. One quick one from my side and I was wondering maybe you could elaborate there on the drivers behind the increase in the private label penetration we saw through 2024. Maybe if you guys could share some color on how this is evolving versus the business plan and also if you have any color as to how this could evolve or how we could expect this to evolve in the coming years. Thank you so much.
Dr. Prima, Dr. Prima,
Speaker Change: Hi, I think you may you might have the benefit of a time machine and the form of Bbb in Turkey and you can if you look at how their historical evolution has been in terms of private label.
I think that would be a fairly accurate
Speaker Change: expectation of what the future might have for us. Now in terms of what drives the increase of private label versus.
Grants
Speaker Change: It's not very simply the more value you're offering in your private labels
Speaker Change: The more percentage of her sales you are going to see shifting towards the private label.
Speaker Change: There's nothing magical about it except that, again, as you scale, and as you're continuously improving the value that you offer in your private label, whether it's an improvement in quality, an improvement in a feature, an improvement in communication sometimes and improvement in packaging improvement.
and therefore an improvement in the value proposition.
Speaker Change: Customers are going to consume more of the private label and therefore you'll see an increase in the penetration.
Speaker Change: It's as simple as that and as long as our efforts to scale and our efforts to improve private levels don't stop. You'll see this number increase.
Very clear. Thanks so much for that entry.
Thank you.
Speaker Change: Thank you. Our next question comes from Daniela Brett Howard at HSBC.
Speaker Change: Hi, good morning everyone. Thanks for taking my question and congrats on the results. I was wondering if you could share with us.
Speaker Change: the level of expenses that you understand to be optimal as a percentage of sales because you are growing sales quite fast but you're not maximizing your operating leverage or
Speaker Change: You know, you've been investing in this structure to support this growth.
Speaker Change: But just to clarify, the saline expenses one-off was 77 million pesos and for GNA was 18 million pesos.
Speaker Change: Thank you for your question. I'll start with the latter question is about 18 million on 67 million on the numbers that you just mentioned.
Speaker Change: On your first question and expenses as a percentage of sales I think we need to look at it.
Speaker Change: on the two buckets that we have one on the one side we have selling expenses and if you look at the numbers even
Speaker Change: On an annual basis, that's the way we like to look at it, not in a so in a quarterly basis, but on an annual basis.
Speaker Change: These do come down as a percentage of cells as we've mentioned before the one thing that we look as management is.
Speaker Change: Every line item should go down as a percentage of sales and that's that's the case that's been happening. [inaudible]
Speaker Change: and we expect that to continue to happen and the reason for that is.
Speaker Change: as we continue to scale up as we continue to increase our cells
And as we continue to maintain and sustain a very
efficient operation at the store level and at DC level.
We should expect to increase our leverage.
Speaker Change: Then if we look at a second bucket, which is admin expenses as I mentioned earlier. We yes we do invest and we will continue to invest in talent. And we think that this is the best way to continue our solid foundation for growth.
Speaker Change: and that will continue to happen in 2025 and as I mentioned to Bob, we should expect that over time this number will come down as a percentage of sales.
Speaker Change: We believe that investment in talent is an important topic. We've always mentioned that HR is acute.
Speaker Change: Critical function for us and we will continue to invest in that.
Speaker Change: Now we also expect that as I mentioned that eventually these these numbers will continue to come with will come down as a percentage of cells.
Speaker Change: Thank you. And if I may add for a question on the level of
Speaker Change: Tax rate that we should work in our models going forward because that's being quite volatile and indeed have to do with the currency or not so I just wanted to get
Speaker Change: Some insights on that as well. Thank you. Yeah, of course on the on the tax rate Daniel, I think.
Speaker Change: The best way to look at it is to look at it from it's true. First of all, the income tax or taxable profits are the Mexican level, the Mexican operating companies.
Speaker Change: and the foreign exchange. If you strip these two out and apply the 30% rate, you will get a pretty good idea of what the tax rate should be. That's my suggestion and how to look at it.
Speaker Change: And then on your second question on, by the way, we will, in the coming weeks, we will publish our 20th.
and in it you will have...
Speaker Change: much more detail on the on the tax calculation and if you have any questions I can can fly with the jump and then call in the group. Thank you.
Speaker Change: And then on that your second question was an FX. So the FX the positive impact that we had is because of the the amount in US dollars that we kept in in our accounts since since the IPL and that is the effect that you see mostly that it the fact that you see them.
Thank you so much.
Thank you, Daniel.
Thanks. Our next question comes from Prolamen this at JP Morgan.
Speaker Change: Hello, guys. Thank you very much for taking my question. Just one question for you guys. How big of a...
Speaker Change: Game changer you think is for the penetration of the hardest count model in Mexico is bringing the ultra fresh to the shell. I mean mainly fruit and vegetables and in that sense what needs to happen to scale this category in a margin neutral basis.
I'm hard for going I'll take this one.
Speaker Change: First, you know, the first part of the question, what does it take to launch this?
Speaker Change: Right, and the same the same with any category that we've ever launched or even any product that we've ever launched we need to make sure that it meets our criteria which basically are.
Speaker Change: Great value proposition to our customers and extremely efficient in terms of operations.
Speaker Change: So in the case of fruits and vegetables if we ever were to launch it
Speaker Change: Then we want to make sure that not only facing the customer it's great and it rotates, but then everything on the back end of the operation is working perfectly.
Speaker Change: And until we have that ironed out and working perfectly, you won't see it. And of course you won't see it if it's not the value I created or if it's not a positive, it doesn't have a positive impact.
Speaker Change: on our operations, you know, we're not interested in losing money on anything.
Speaker Change: Let me caveat all of this by saying the business remains extremely successful, stand alone without fresh fruits and vegetables and without meats.
Speaker Change: And we've never included any of these categories and any of our projections going forward. So if it does happen it's just icing on the cake for everybody.
Thank you Anthony
Thank you are next.
Speaker Change: I would marry everyone. Thank you for the space for questions. My question is on private level penetration.
Speaker Change: We saw a nice increase in 2024 and I would like to know how we should think about fresh products within the sales mix going forward. I mean, my specific question is should we consider the fresh category as part of private label sales?
Speaker Change: Any comments you could share would be helpful. Thank you very much.
Speaker Change: Um, you know, again, I'm going to answer this few radically because
Speaker Change: We have not given any indication that we will be launching fresh fruits and vegetables.
Speaker Change: At any point in time, all we said is we're testing them the same way we've tested
Speaker Change: We're testing at this point around 60 different products and categories.
Speaker Change: You know, back to the question of, you know, whether this is a private label or not.
Speaker Change: You know, just assume that it is, right? Because I don't see fruits and vegetables, I don't see branding.
Speaker Change: Playing a big role, it's more the same where you're just wanting to offer as much value as possible and that fruit and vegetable that you put on the show.
Speaker Change: to ensure that it rotates and to ensure that all the operations behind it are extremely efficient. The same way we do when we're developing a private label can of beings, exactly the same.
Speaker Change: So yeah, I know if you had to put it in one bucket put it in the bucket of private label.
Thank you, Anthony.
Speaker Change: Thank you all. We have received a written question since this participant couldn't participate in the call. This is from Ekto Ramayat at Scotia. Hi Anthony. A lot of those thank you very much for the call. Some of my questions have been answered already, but I just wanted to understand for context.
Speaker Change: Considering the current conditions, what kind of planning discussions are you happening right now with your suppliers on how to tackle the rest of the year?
Speaker Change: Particularly on the development of new product lines, just to see if the uncertainty is shifting or altering your plans there.
Speaker Change: Or maybe if there's any opportunity to grow your relationship with suppliers throughout tough times, and also if services like remittances could be coming soon, or if that would still be something that would come up more in the distant future. Thank you.
Speaker Change: Okay, thank you for that question. I'll start with a latter part which is services.
Speaker Change: And, you know, the best way to think about remittances or any other services is
Speaker Change: 3b is a platform and it's a platform that touches its client with a touch frequency that is very high on average three times a week.
And this client not only needs grocery products
And so, whatever else that client needs
Speaker Change: could be game in terms of offering it to them as long as it needs our key criteria which are value for money efficiency high rotation. Again, as I mentioned previously not interested in doing any business that doesn't make money.
Speaker Change: So, it's on the table and, you know, in the vast
Speaker Change: List of opportunities that we face. We of course go for the ones that have the biggest impact and the lowest hanging one and then we start looking at the ones that are further up.
Speaker Change: And so, you know, I cannot tell you where remittances fall on that list, but I can say that it's definitely on the list.
Speaker Change: Now, in the second part of your first part of your question, you asked...
We'll learn as we go forward.
Speaker Change: How do we manage our suppliers and the relationship with suppliers?
Speaker Change: I would tell I would start by saying that you know what we're seeing today what we'll see in 2025 has already been discussed with our suppliers.
Speaker Change: A long time ago. And what we do now is basically looking at the future two to three years down the road with our private label suppliers and the current.
Uncertainty in the markets
Speaker Change: Whether it's because of uncertainty and interest rates or funding or whatever have already been taken care of for this year. So we don't honestly we don't see any major impact.
Speaker Change: from the current volatility that we might be experiencing in 2025. It's all been planned a long time ago.
Speaker Change: Perfect. Thank you so much. Thank you. We have time for one last question.
If this is from Bbb. Yes, S Summit Management. Thank you.
Speaker Change: Could you try that microphone now please because I believe you're not on mute.
I'm sorry, I think we're not getting your audio.
Speaker Change: Let's go to the next question and then we can come back to Pablo.
All right, please hold.
Operator, have we been able to get
Bye-bye.
Can we get Pablo's question operator?
Speaker Change: No, it's not coming through so we can conclude the call.
Speaker Change: Alright Pablo, please feel free to send it by email that we have a turn through.
Speaker Change: Any further questions can also be sent out to the IR team but I will hand the call back over to Anthony Hutum for his closing remarks.
Speaker Change: Again, thank you all. Thank you investors. Thank you analysts for your continued support and confidence in our strategy. And, you know, we're very open to receiving your questions after this. So please feel free to reach out to us.
And also welcome to come and visit us anytime.
Thank you again and we'll be talking again soon. Bye bye.