Q1 2026 BBB Foods Inc Earnings Call

May 7, 2026

Sophia: Good morning, everyone. My name is Sophia. I will be your conference operator. Welcome to Tiendas 3B Q1 2026 conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speaker's remarks and instructions will be given at that time. Please ensure that your full name is displayed correctly on Zoom. If not, please take a moment to edit your display name. 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. Any forward-looking statements made during this conference call are based on information that is currently available to us.

Operator: Good morning, everyone. My name is Sophia. I will be your conference operator. Welcome to Tiendas 3B Q1 2026 conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speaker's remarks and instructions will be given at that time. Please ensure that your full name is displayed correctly on Zoom. If not, please take a moment to edit your display name. 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. Any forward-looking statements made during this conference call are based on information that is currently available to us.

Operator: Today, we are joined by Tiendas 3B Chairman and Chief Executive Officer, Anthony Hatoum, and Chief Financial Officer, Eduardo Pizzuto. I will now turn the call over to Anthony. Please go ahead.

K. Anthony Hatoum: Good morning, and thank you for joining us today. I will begin with a review of our operating results for Q1, and will be followed by our CFO, Eduardo Pizzuto, who will provide an overview of our financial performance. We will conclude with a Q&A session to answer the questions you may have. We delivered another Q1 of excellent performance and started the year with a strong momentum. Let me briefly highlight a few key results from Q1. We opened 123 net new stores in this Q1 for a total of 3,469 stores, bringing the LTM net store openings to 580. As of the end of this Q1, we had 20 distribution centers up and running. Our same-store sales growth grew 16% versus Q1 2025.

Anthony Hatoum: Good morning, and thank you for joining us today. I will begin with a review of our operating results for Q1, and will be followed by our CFO, Eduardo Pizzuto, who will provide an overview of our financial performance. We will conclude with a Q&A session to answer the questions you may have. We delivered another Q1 of excellent performance and started the year with a strong momentum. Let me briefly highlight a few key results from Q1. We opened 123 net new stores in this Q1 for a total of 3,469 stores, bringing the LTM net store openings to 580. As of the end of this Q1, we had 20 distribution centers up and running. Our same-store sales growth grew 16% versus Q1 2025.

K. Anthony Hatoum: Revenues in the Q1 of 2026 increased by 33% year-over-year to MXN 23 billion. Again, in this Q1, reported EBITDA was MXN 554 million. If we exclude non-cash share-based compensation, EBITDA increased by 39% to reach MXN 1.3 billion. Finally, for the first 3 months of 2026, cash flow generated from operating activity reached MXN 2 billion, or a 64% increase year-over-year. Let's take a look at operational performance. When we look at store openings, as we mentioned before, we opened 123 net new stores in the Q1. For the last 12 months, we opened 580 net new stores. That's a 20% growth compared to the number of stores that we reported in March of 2025. Our expansion strategy remains consistent.

Anthony Hatoum: Revenues in the Q1 of 2026 increased by 33% year-over-year to MXN 23 billion. Again, in this Q1, reported EBITDA was MXN 554 million. If we exclude non-cash share-based compensation, EBITDA increased by 39% to reach MXN 1.3 billion. Finally, for the first 3 months of 2026, cash flow generated from operating activity reached MXN 2 billion, or a 64% increase year-over-year. Let's take a look at operational performance. When we look at store openings, as we mentioned before, we opened 123 net new stores in the Q1. For the last 12 months, we opened 580 net new stores. That's a 20% growth compared to the number of stores that we reported in March of 2025. Our expansion strategy remains consistent.

K. Anthony Hatoum: We continue to densify existing regions while gradually expanding into new ones. Revenue growth remains strong. We continue to be one of the fastest-growing retailers globally. Total revenue in the first quarter reached MXN 23 billion, an increase of 33% year-over-year. We've seen very strong same-store sales growth of 16%. This same-store sales growth is driven in large part by the ongoing improvement in our value proposition to customers and also a stronger brand recognition of the brand, 3B, that we see every day getting stronger and stronger. When we compare our same-store sales performance with ANTAD, the gap remains notable. What we're seeing is a gap of more than 14 percentage points, and that despite operating with very low internal inflation. I will now pass the microphone to Eduardo.

Anthony Hatoum: We continue to densify existing regions while gradually expanding into new ones. Revenue growth remains strong. We continue to be one of the fastest-growing retailers globally. Total revenue in the first quarter reached MXN 23 billion, an increase of 33% year-over-year. We've seen very strong same-store sales growth of 16%. This same-store sales growth is driven in large part by the ongoing improvement in our value proposition to customers and also a stronger brand recognition of the brand, 3B, that we see every day getting stronger and stronger. When we compare our same-store sales performance with ANTAD, the gap remains notable. What we're seeing is a gap of more than 14 percentage points, and that despite operating with very low internal inflation. I will now pass the microphone to Eduardo.

Eduardo Pizzuto: Thank you, Anthony. Good morning, everyone. Sales expenses as a percentage of revenue increased by 5 basis points to 10.3% year over year in Q1 2026. Most of the expense lines showed operating leverage with a slight increase, mainly driven by utilities, permitting, and a higher D&A. Admin expenses, excluding share-based payment, remain unchanged. In Q1 2026, we continue our investment in new regions and additional talent to support our growth. Separately, Q1 2025 include a one-time expense of MXN 54 million related to the secondary follow-on. With respect to share-based payment expense, these charges are non-cash and already reflected in our fully diluted share count. Additional details are available in the appendix of this earnings release, where we also provide projections for this non-cash expense.

Eduardo Pizzuto: EBITDA for Q1 2026, excluding non-cash share-based payment expense, increased 39% to MXN 1.3 billion, primarily driven by strong sales growth. The adjusted EBITDA margin increased by 22 basis points year-over-year. As you know, we don't drive to an EBITDA. It will continue to increase over time, driven by the work we continue to do. Our business model generates significant negative working capital, which in turn supports strong operating cash flow. In Q1 2026, adjusted negative working capital reached MXN 9.4 billion compared to MXN 6.5 billion in 2025, excluding IPO proceeds. This represents approximately 11.3% of total LTM revenue, also excluding IPO proceeds. Our accelerated growth continues to be self-funded. I will now turn the call back over to Anthony for some final remarks.

K. Anthony Hatoum: This is a very strong start to our 2026 that looks very promising. We operate a high-growth business model that is resilient and that does very well across economic cycles.

Anthony Hatoum: This is a very strong start to our 2026 that looks very promising. We operate a high-growth business model that is resilient and that does very well across economic cycles.

K. Anthony Hatoum: It is a business that offers very attractive unit economics, generates cash, and becomes more competitive as it scales. The market potential is enormous, and the runway for opening stores is very long. I am excited and remain confident about the future of 3B. Thank you for joining us today. We will start the Q&A session. Please go ahead, operator.

Anthony Hatoum: It is a business that offers very attractive unit economics, generates cash, and becomes more competitive as it scales. The market potential is enormous, and the runway for opening stores is very long. I am excited and remain confident about the future of 3B. Thank you for joining us today. We will start the Q&A session. Please go ahead, operator.

Sophia: Thank you. We will now conduct a Q&A session with Anthony Hatoum and Eduardo Pizzuto. If you would like to ask a question, please press the raise your hand button located at the bottom of the screen. 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. You will then be able to unmute yourself and ask your question. Our first question comes from the line of Héctor Maya López. Please state your company name and ask your question.

Operator: Thank you. We will now conduct a Q&A session with Anthony Hatoum and Eduardo Pizzuto. If you would like to ask a question, please press the raise your hand button located at the bottom of the screen. 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. You will then be able to unmute yourself and ask your question. Our first question comes from the line of Héctor Maya López. Please state your company name and ask your question.

Héctor Maya López: Hi, Anthony, Eduardo, Joaquin. Thank you very much for taking my questions, and congratulations on the results. We saw a key competitor implementing some adjustments, which they said led to better results in March. Have you seen anything different in the competition dynamics? Particularly, could you please comment if you have seen any kind of change or impact on your sales in March and April? Also just a quick clarification. From your press release and different filings, we have seen that the expiration of the lock-up period is coming in 6 August 2024. In your 20-F, we saw that it expires in 8 July. Just to double-check when exactly does the lock-up expire, and how should investors think about it in terms of stock overhang? Thank you very much.

Hector Maya: Hi, Anthony, Eduardo, Joaquin. Thank you very much for taking my questions, and congratulations on the results. We saw a key competitor implementing some adjustments, which they said led to better results in March. Have you seen anything different in the competition dynamics? Particularly, could you please comment if you have seen any kind of change or impact on your sales in March and April? Also just a quick clarification. From your press release and different filings, we have seen that the expiration of the lock-up period is coming in 6 August 2024. In your 20-F, we saw that it expires in 8 July. Just to double-check when exactly does the lock-up expire, and how should investors think about it in terms of stock overhang? Thank you very much.

Hi, Anthony, ISU. Thank you very much for taking my questions, and congratulations on the results. Um, we we saw a key competitor implementing some adjustments, which they said led to better results in March. Um, have you seen anything different in the competition Dynamics? Uh, particularly could you, please comment, if you have seen any kind of change or impact on your sales in March, and April and also, just a quick, uh, clarification uh, from your press release and and different filings we have seen, uh, that the expiration of the local period is coming in August 6th of this year. Uh, but in your 20th, we saw

That it expires in July 8th. So just to double check. Uh, when exactly does the lock up expire and how should investors think about it in terms of uh stock overhang thank you very much.

K. Anthony Hatoum: Hi, Héctor. Good to hear from you. Yeah, it's just to be super clear, it's 6 August for the expiration of the lock-up. In terms of competition, you know as well as we do, this is a very competitive market, always has been. Specifically, if we have seen anything different this quarter, the answer is no.

Anthony Hatoum: Hi, Héctor. Good to hear from you. Yeah, it's just to be super clear, it's 6 August for the expiration of the lock-up. In terms of competition, you know as well as we do, this is a very competitive market, always has been. Specifically, if we have seen anything different this quarter, the answer is no.

Hi, ha good to hear from you. Yeah it's um just to be super clear. It's August 6th for the expiration of the lockup.

In terms of competition you know as well as we do this is a very competitive market. Always has been

But specifically, if we have seen anything different this quarter, the answer is no.

Héctor Maya López: Understand. Thank you. Thank you very much.

Hector Maya: Understand. Thank you. Thank you very much.

Eduardo Pizzuto: Héctor, we will amend the 20-F for the just to be specific on the 6 August, just so you know.

Understand. Thank you. Thank you very much.

Héctor Maya López: Super. Yeah, it was a bit confusing, but, thank you for the clarification. Thank you.

Hector Maya: Super. Yeah, it was a bit confusing, but, thank you for the clarification. Thank you.

actor, we will amend the 20th for the uh just to be specific on the August 6th, just so you know,

Thank you for the clarification. Thank you.

Sophia: Our next question comes from the line of Andrew Rubin. Please state your company name and ask your question.

Operator: Our next question comes from the line of Andrew Rubin. Please state your company name and ask your question.

Our next question comes from the line of Andrew Rubin. Please State, your company name, and ask your question.

Andrew Rubin: Hi. Andrew Rubin from Morgan Stanley. One of the items you mentioned as one of the same store sales drivers was brand recognition, that it continues to improve. I'm curious first how you measure and identify this. Second, we know it's a minimal marketing approach, so if you talk about brand building as you move into the newer regions and how you would kinda compare that brand recognition in your newer versus more dense markets, would be interesting. Thank you.

K. Anthony Hatoum: Hi, Andrew. Let me start with the latter part. you know, brand recognition is a little bit of an interesting beast in a sense. We measure it just to be very concrete. We do massive surveys every year. Roughly 15,000 customers and non-customers on a wide geographical area are polled and gives us a fairly good sense of what the 3B brand means to most people that are relevant to us. In terms of, you know, another factor that you want to take into account is because of our expansion strategy, which is stretching, by the time we get to a new region, we've already, you know, people already know us because we're not jumping to a completely new region. It's been a gradual stretching of the areas in which we operate.

Anthony Hatoum: Hi, Andrew. Let me start with the latter part. you know, brand recognition is a little bit of an interesting beast in a sense. We measure it just to be very concrete. We do massive surveys every year. Roughly 15,000 customers and non-customers on a wide geographical area are polled and gives us a fairly good sense of what the 3B brand means to most people that are relevant to us. In terms of, you know, another factor that you want to take into account is because of our expansion strategy, which is stretching, by the time we get to a new region, we've already, you know, people already know us because we're not jumping to a completely new region. It's been a gradual stretching of the areas in which we operate.

Hi Andrew Rubin from Morgan Stanley. Um 1 of the items you mentioned as 1 of the same store sales drivers was brand, recognition that it continues to improve. I'm curious first how you uh how you measure and identify this and second we know it's a minimal marketing approach. So if you talk about brand building As you move into the the newer region and how you would kind of compare that brand recognition and your newer versus more dense markets, I would be interesting. Thank you.

Hi Andrew, let me start with the latter part. Um, no brand recognition is a little bit of a

An interesting beast, in a sense. Um, we measure it, just to be very concrete. We do massive surveys every year.

Roughly 15,000 customers and non-customers.

on a wide geographical area are are bold and

U gives us a fairly good sense of

what the 3B brand means to most people that are relevant to us.

uh in terms of, you know, another factor that you want to take into account is because of our expansion strategy, which is stretching

By the time we get to,

A new region.

We we've already, you know, people already know us because we're not jumping to a completely new region. It's been a gradual um,

K. Anthony Hatoum: There's, you know, that helps a lot in terms of, you know, coming into something new and people already know you. They might have already shopped with you in an existing store, et cetera. That goes a long way. In terms of, you know, what we spend, you're absolutely right. We're a minimal spend in terms of advertising, and it's mostly word of mouth and social media. You know, if you just go and Google 3B on the Internet, you'll see that there is a slew of, you know, materials talking about 3B and 3B products, et cetera. A large part of it is not us. It's, you know, our customers posting about us, and that helps a lot.

Anthony Hatoum: There's, you know, that helps a lot in terms of, you know, coming into something new and people already know you. They might have already shopped with you in an existing store, et cetera. That goes a long way. In terms of, you know, what we spend, you're absolutely right. We're a minimal spend in terms of advertising, and it's mostly word of mouth and social media. You know, if you just go and Google 3B on the Internet, you'll see that there is a slew of, you know, materials talking about 3B and 3B products, et cetera. A large part of it is not us. It's, you know, our customers posting about us, and that helps a lot.

stretching of the the areas in which we operate. So there's, you know, that helps a lot in terms of, you know, coming into something new and people already know you they might have already shopped with you.

An existing store Etc. So that that goes a long way.

Uh, in terms of, you know what, we spend your absolutely right. We're minimal spend in terms of advertising, uh, and it's mostly word of mouth and social media.

And, you know, if you just go and Google 3B on,

on the internet, you'll see that there is a slow of

Materials talking about 3B and 3B products, Etc. And and a large large part of it is, uh, not us, it's, you know, our customers.

Posting about us and that helps a lot.

Andrew Rubin: Very helpful. Thank you.

Very helpful. Thank you.

Sophia: Our next question comes from the line of Robert Ford. Please state your company name and ask your question.

Operator: Our next question comes from the line of Robert Ford. Please state your company name and ask your question.

Robert Ford: Hey, good morning, everybody. This is Bob over at Bank of America Corporation. Anthony, how advanced are you in the process of building out the skill sets and the redundancy in your central administrative staff? I was wondering if you could also provide us a short update on the progress of the new ERP and maybe the window for your expected deployment. Lastly, you know, I'm really excited about your Irrepetibles, right? I was curious how they're evolving and maybe how you're thinking about merchandising in Q2, particularly when it comes to things like Mother's Day and the World Cup.

Our next question comes from the line of Bob Ford. Please State your company name, and ask your question.

K. Anthony Hatoum: Great. Let me start with the latter one, as it's fresh in my mind. Irrepetibles are very important, and they add a lot of excitement to the shopping experience in our store because, as most of you know, they're products that change roughly every 2 week, and it's always like a treasure hunt and a wow effect that you find in these baskets. We've been able to sell in these baskets of Irrepetibles a lot of things. We've sold bicycles, we've sold white and brown goods. We've sold clothing, and we continue to do so, and it's a very exciting category for us. One that's shown tremendous potential and growth. Don't be surprised if you see this continuing to evolve and take more participation within 3B sales.

Anthony Hatoum: Great. Let me start with the latter one, as it's fresh in my mind. Irrepetibles are very important, and they add a lot of excitement to the shopping experience in our store because, as most of you know, they're products that change roughly every 2 week, and it's always like a treasure hunt and a wow effect that you find in these baskets. We've been able to sell in these baskets of Irrepetibles a lot of things. We've sold bicycles, we've sold white and brown goods. We've sold clothing, and we continue to do so, and it's a very exciting category for us. One that's shown tremendous potential and growth. Don't be surprised if you see this continuing to evolve and take more participation within 3B sales.

Hey, good morning everybody. This is Bob over at Bank of America Corp. Um, Anthony, how advanced are you in the process of building out the skill sets and the redundancy in your central administrative staff? And then I was wondering if you could also provide us a short update on the progress of the new ERP and maybe the window for your expected deployment. And then, lastly, you know, I'm really excited about your right, and I was curious how they're evolving and maybe how you're thinking about merchandising in the second quarter, particularly when it comes to things like Mother's Day and the World Cup.

Right. Let me start with the latter 1, as it's fresh in my mind.

Um,

are very important and they add a lot of excitement to the shopping experience in our store. Because

As most of, you know, their products that change roughly every 2 weeks, and it's always like a treasure hunt and a wow effect.

Um, that you find in these baskets and we've been able to sell in these baskets of a lot of things and we've sold bicycles, we've sold fights and brown Goods. We've sold. We've sold clothing and we continue to do so. And it's a very exciting category for us and then 1, that's shown, um,

K. Anthony Hatoum: In terms of hiring and what's happening in central offices, as you know, we're very focused on increasing the density of talent, as we firmly believe that that's what drives everything at the end of the day. If you're gonna punch above your weight and if you're gonna move at the speeds at which we move, the key ingredient is talent. We will continue to invest in talent this year and probably through 2027. I mean, at some point it tapers off in relation to the total size of the company, but at this stage, consider that we're in growth mode, and I think it's an excellent investment that we're making here for the future. The deployment of the ERP is well underway, and I personally am very happy with the progress we're seeing.

Anthony Hatoum: In terms of hiring and what's happening in central offices, as you know, we're very focused on increasing the density of talent, as we firmly believe that that's what drives everything at the end of the day. If you're gonna punch above your weight and if you're gonna move at the speeds at which we move, the key ingredient is talent. We will continue to invest in talent this year and probably through 2027. I mean, at some point it tapers off in relation to the total size of the company, but at this stage, consider that we're in growth mode, and I think it's an excellent investment that we're making here for the future. The deployment of the ERP is well underway, and I personally am very happy with the progress we're seeing.

Tremendous potential and growth. So, don't be surprised if you see this uh, continuing to evolve and uh, take uh, more participation within uh, within 3B sales.

Uh, in terms of um hiring and um what's happening in central offices. As you know, we're we're very focused on increasing the density of talent uh as we firmly believe that, that's what drives everything at the end of the day.

If you're going to punch above your weight and if you're going to move at the speeds at which we move, uh, the key ingredient is talent. And so we will continue to invest in Talent this year and probably through 2027 that mean at some point. It tapers off.

In relation to the total size of the company. But at this stage consider that we're in growth mode, and I think it's an excellent investment that we're making here for the future.

K. Anthony Hatoum: This is, as I mentioned in previous calls, a 3-year project, and so I think we're halfway through now.

Anthony Hatoum: This is, as I mentioned in previous calls, a 3-year project, and so I think we're halfway through now.

Um, the deployment of the Erp is well underway and I personally am very happy with the progress we're seeing. So this is, as I mentioned in previous calls at 3 year project,

Robert Ford: When you deploy, will you deploy in modules? Will there be some functionality introduced to the stores before?

And so I think we're halfway through now.

Robert Ford: Yeah, always.

Anthony Hatoum: Yeah, always.

Robert Ford: The final completion?

Will there be some functionality introduced to the stores?

K. Anthony Hatoum: Yeah, always it's gradual and modular. That's the way to do it, low risk, right? You deploy, you test, you expand it.

Anthony Hatoum: Yeah, always it's gradual and modular. That's the way to do it, low risk, right? You deploy, you test, you expand it.

Robert Ford: When it comes to changing functional POS systems or just the hardware at the point of the sale, how should we think about that timeframe?

Before the final completion. Yeah, always, it's gradual and modular and that's the way to do it, low risk, right? You deploy you test, then you expand it.

K. Anthony Hatoum: Yeah. Again, the deployment is planned to be gradual to minimize risks.

Anthony Hatoum: Yeah. Again, the deployment is planned to be gradual to minimize risks.

Robert Ford: Understood. Thank you so much.

K. Anthony Hatoum: You will see it appear in one region and then it will be fine-tuned, refined, and then once it's, let's say bulletproof, it gets deployed to the rest of the company.

Anthony Hatoum: You will see it appear in one region and then it will be fine-tuned, refined, and then once it's, let's say bulletproof, it gets deployed to the rest of the company.

And when it comes to changing functional POS systems or just the hardware at the point of sale, how should we think about that time? Yeah. Again, the deployment is planned to be gradual to minimize risks.

Understood, thank you so much. You will see it appear in one region and then—

Robert Ford: Got it. Thank you.

It will be fine, tuned, refined. And then once it's, let's say bulletproof it gets deployed to the rest of the company.

Got it.

Thank you.

Sophia: Our next question comes from the line of Alejandro Fuchs. Please state your company name and ask your question.

Operator: Our next question comes from the line of Alejandro Fuchs. Please state your company name and ask your question.

Our next question comes from the line of Alejandro. Fuchs, please State, your company name and ask your question.

Alejandro Fuchs: Thank you, operator. Alejandro Fuchs from Itaú BBA. Hello, Anthony, Eduardo. Thank you for the space for questions and congratulations on a very strong start of the year. I just have two brief ones. First one for Eduardo. Was wondering, Eduardo, if maybe you could break down for us the semester sales growth between traffic and ticket, so we can get a little more color. The second for Anthony. Wanted to see, Anthony, if maybe you could provide, you know, more details on how you're seeing these new stores performing, you know, outside the center of Mexico. How has been the relative performance this quarter between the different regions? If you can maybe elaborate a little bit more into differences, you know, in different parts of Mexico, that would be very interesting. Thank you.

Thank you, operator. Alejandro Fuchs from thank you for the space for questions and congratulations on a very strong start of the year. Um I just have to brief once first 1 for Eduardo was wondering a lovely few. Maybe you could break down for us, the semester of self growth between traffic and ticket. Uh, so we can get a little more color and in the second for Anthony, I wanted to see Anthony. If maybe, you could provide, you know more details on how you're seeing this new stores. Performing, you know, in outside the center of Mexico, how has been the relative performance this quarter between the different regions? If you can, maybe a lot of elaborate a little bit more into differences you know in

K. Anthony Hatoum: Hi, Alejandro. It is 2/3 coming from volume, which is transactions and number of SKUs per ticket, and 1/3 by average price per SKU. Just to be clear, the latter one is largely driven by a better mix, because our internal inflation remains close to it's very low. Again, it's 2/3 from volume and 1/3 from average price per SKU. Hi, Alejandro. We have seen very consistent performance across the board in new stores, irrespective of geography. The reason we believe is because we are selling basic goods, and behavior in consumption when it comes to basic goods tends to be quite similar across the board. We all consume roughly the same amount of toilet paper, irrespective of where we live. You'll see that apply.

Anthony Hatoum: Hi, Alejandro. It is 2/3 coming from volume, which is transactions and number of SKUs per ticket, and 1/3 by average price per SKU. Just to be clear, the latter one is largely driven by a better mix, because our internal inflation remains close to it's very low. Again, it's 2/3 from volume and 1/3 from average price per SKU.

Different parts of Mexico. That would be very interesting. Thank you.

Hi Alejandro. Um,

2/3 is coming from volume, which is a transactions and number of sqs per ticket.

Eduardo Pizzuto: Hi, Alejandro. We have seen very consistent performance across the board in new stores, irrespective of geography. The reason we believe is because we are selling basic goods, and behavior in consumption when it comes to basic goods tends to be quite similar across the board. We all consume roughly the same amount of toilet paper, irrespective of where we live. You'll see that apply. It's been fairly consistent, I would say. It's no change in that regards.

And and, and 1/3, by average price per Esky U and just to be clear. The latter 1 is largely driven by a Better Mix because our internal inflation remains close to. It's it's it's very low. Um, so again it's 2/3 from volume and a third from the, from average price per risk, are you?

Hi Alexandra. Um,

we have seen very consistent performance across the board, a new stores, irrespective of geography.

And, um, the reason we believe is because we are selling basic goods and behavior in consumption when it comes to basic Goods, tends to be quite similar across the board and we all consume roughly the same amount of toilet paper irrespective of where we live.

K. Anthony Hatoum: It's been fairly consistent, I would say. It's no change in that regards. Mm-hmm.

And you'll see that uh, apply. It's, it's been fairly consistent. So I would say it's, um,

Alejandro Fuchs: Muchas gracias, Anthony and Eduardo.

No changes.

Sophia: Our next question comes from the line of Lorena Romanato. Please state your company name and ask your question.

Operator: Our next question comes from the line of Lorena Romanato. Please state your company name and ask your question.

Gabriela Lemi: Hi, everyone. This is Gabriela Lemi from Goldman Sachs. I would like to explore a bit more the SG&A dynamics in the context of the minimum wage increase and the reduction in work week in Mexico. Is there any measures that are being implemented to address this continuing increase in labor costs? We know that G&A also came roughly stable year-over-year with revenues, and we know there's a quite a variable component there as you accelerate extension. How should we think about that trajectory during the course of the year? Thank you.

Our next question comes from the line of Lorena Romano. Please state your company name and ask your question.

Hi, everyone. This is Gabriel from Goldman Sachs. Um, I would like to explore a bit more DSGN dynamics, uh, in a context of the minimum wage increase and the reduction in work week in Mexico. Is there any measures that have been implemented to address discontinuing increasing labor costs? And we know that G&A also came, uh, broadly stable year over year with revenues, and we know there's quite a variable component there as you accelerate expansion. But how should we think about that trajectory during the course of the year? Thank you.

K. Anthony Hatoum: Hi, Gabriela. Multiple questions here, but I'll start with You, you mentioned labor. Labor, yes, it's a component. What I would say is, as you saw in my presentation, for selling expenses, we saw leverage in most of line items, including labor. When we look at expenses, and this is the way we look at expenses as a percentage of revenue, this is something that continues to decrease. If we compare last year versus this year, labor did decrease as a percentage of revenue. The reason for that is twofold. One is because our sales continue to increase. The second one is we do a number of initiatives inside the store and not only the store, but also at the distribution centers.

Anthony Hatoum: Hi, Gabriela. Multiple questions here, but I'll start with You, you mentioned labor. Labor, yes, it's a component. What I would say is, as you saw in my presentation, for selling expenses, we saw leverage in most of line items, including labor. When we look at expenses, and this is the way we look at expenses as a percentage of revenue, this is something that continues to decrease. If we compare last year versus this year, labor did decrease as a percentage of revenue. The reason for that is twofold. One is because our sales continue to increase. The second one is we do a number of initiatives inside the store and not only the store, but also at the distribution centers.

Hi. Uh, Gabriella. Um,

multiple questions here, but I'll start with, um,

With you mentioned labor. Um,

Labor. Yes, it's a it's a it's a component. And what I would say is uh as as you saw in my presentation um

for selling expenses, uh, we saw Leverage

K. Anthony Hatoum: As we've mentioned before, we measure everything on hours worked, so we're always having initiatives to reduce the number of hours worked in, at the store level. Even with the increase in minimum wage, we were able to see leverage on that line item. In terms of the reduction of hours worked. This is something that, yes, we have been testing and we have been considering, and when it happens, it happens, which will happen next year. This is something really not a big concern on our side. We will continue to drive efficiencies at the store level to be able to cope with that.

Anthony Hatoum: As we've mentioned before, we measure everything on hours worked, so we're always having initiatives to reduce the number of hours worked in, at the store level. Even with the increase in minimum wage, we were able to see leverage on that line item. In terms of the reduction of hours worked. This is something that, yes, we have been testing and we have been considering, and when it happens, it happens, which will happen next year. This is something really not a big concern on our side. We will continue to drive efficiencies at the store level to be able to cope with that.

Uh, in most of line, items, including labor. So when we look at expenses and this is the way we look at expenses as a percentage of Revenue, this is something that continues to decrease if we compare last year versus this year. Uh, labor did, uh, decrease as a percentage of Revenue. And the reason for that is twofold 1 is because our sales continue to increase. And then the second 1 is, we do, uh, a number of initiatives inside the store and not only the store. Also at the, uh, distribution centers. As we've mentioned, before we measure everything on ours worked. So we're always, uh, having initiatives to reduce the number of hours worked in at the store level,

Eduardo Pizzuto: Eventuality.

K. Anthony Hatoum: With that even-eventuality. In terms of overall SG&A for the year that you also asked, we don't really provide any type of guidance on SG&A. What we've said before is that in the long run, you can expect that SG&A will continue to decrease as it will decrease as a percentage of revenue. For this year, G&A, we should expect that it's fairly stable as what you saw last year. As you heard Anthony, we will continue to increase our talent pool here in headquarters, and also because we're adding more distribution centers this year, that also has a portion of admin expenses.

Anthony Hatoum: With that even-eventuality. In terms of overall SG&A for the year that you also asked, we don't really provide any type of guidance on SG&A. What we've said before is that in the long run, you can expect that SG&A will continue to decrease as it will decrease as a percentage of revenue. For this year, G&A, we should expect that it's fairly stable as what you saw last year. As you heard Anthony, we will continue to increase our talent pool here in headquarters, and also because we're adding more distribution centers this year, that also has a portion of admin expenses.

And, uh, this is something really not a big concern on our side. Um, we will continue to drive efficiencies of the store level to be able to cope with that uh, with that, uh, eventuality with that eventuality, um, in terms of overall sgna for the year that you that you also asked

We don't really provide any type of guidance on on, on sgna. Um, what we've said before is that in the long run, you can expect that sgna will will

Continue to decrease as it will will decrease as a percentage of Revenue. Um, for this year, uh, GNH we we should expect that. It's, uh, fairly stable as what you saw last year, as you heard Anthony, uh, we will continue to, uh, increase our talent pool here in headquarters and also, because we're adding more distribution centers, this year that also has a portion of admin expenses.

Gabriela Lemi: Perfect. Thank you.

Perfect, thank you.

Sophia: Our next question comes from the line of Froylan Mendez. Please state your company name and ask your question.

Operator: Our next question comes from the line of Froylan Mendez. Please state your company name and ask your question.

Our next question comes from the line of Frey land Mendes, please State, your company name and ask your question.

Froylan Mendez: Hello, Eduardo, Anthony. Thank you for taking my question. Froylan Mendez from J.P. Morgan. Eduardo, could you just give a little bit more granularity on the sources of gross margin expansion during the quarter? I know you mentioned commercial, this was mainly coming from commercial margin, but was it on improved terms, product mix, or some operational efficiencies? Secondly, you mentioned those big surveys you do every year. I was wondering what have been the key findings from this year's survey, compared to last year's surveys, regarding changes in consumer habits, preferences, and how is this information influencing your strategic decisions at the store? Thank you so much.

Hello Anthony. Thank you for taking my question for this from JP Morgan, um,

K. Anthony Hatoum: Let me take that one, Froylan. How are you?

Anthony Hatoum: Let me take that one, Froylan. How are you?

Could you just give a little bit more granularity on the sources of gross margin expansion? During the Border? I know you mentioned commercial. This was mainly coming from from commercial margin, but was it on improved terms product mix or some operational? Efficiencies, and secondly, uh, you mentioned those big service. You do every year. I was wondering, what have been the key findings from this year's survey, uh, compared to last year's Service, uh, regarding changes in consumer habits preferences and how is this, uh, uh, information, influencing your strategic decisions at the store. Thank you so much.

Froylan Mendez: All good.

K. Anthony Hatoum: On the massive surveys, you know, they're basically, they ask questions about, you know, where do you shop? How do you shop? Why do you shop? How do you make a decision? Where do you spend your money? What do you think of the brand? Do you know what it means? Et cetera, et cetera, et cetera. What we do see over time is an increasing brand recognition of the 3B brand and what it stands for. We also see shifts in decision making. You know, where do you shop first versus where do you shop second? I think all the tendencies favor 3B, and you see a very strong favorable tendency over the last 5 years. In terms of exactly influencing our decision, yes, it does, because there's definitely shifts in consumption patterns.

Anthony Hatoum: On the massive surveys, you know, they're basically, they ask questions about, you know, where do you shop? How do you shop? Why do you shop? How do you make a decision? Where do you spend your money? What do you think of the brand? Do you know what it means? Et cetera, et cetera, et cetera. What we do see over time is an increasing brand recognition of the 3B brand and what it stands for. We also see shifts in decision making. You know, where do you shop first versus where do you shop second? I think all the tendencies favor 3B, and you see a very strong favorable tendency over the last 5 years. In terms of exactly influencing our decision, yes, it does, because there's definitely shifts in consumption patterns.

Um, let me take that 1 through and how are you? Oh, good on the, on the, on the massive surveys. You know, they're basically, they ask questions about, you know, where do you shop? How do you shop, why do you shop? How do you make a decision? How do you spend your money? What do you think of the brand? Do you know what it means?

Etc. Etc, etc. So what we do see over time is an increasing brand recognition of the 3B brand and what it stands for. And then we also see shifts in, um,

Decision making, you know, who's your—where do you shop first versus where do you shop second? And I think all the tendencies is favorite 3B.

And you see a very strong, favorable tendency over the last five years.

K. Anthony Hatoum: Some categories gain strength, and some lose strength. You know, post-COVID and during COVID, anything related to pets saw strengthening and anything related to consumption of alcohol are decreasing. You see those things and of course, you adapt and you focus more on those that have more promise. That's completely normal, and we do that on a continuous basis. Froylan, in terms of your question on gross margin, yeah, we did mention that commercial margin on the increases. This is, it's both on the two topics that you mentioned. It's mix, it's efficiencies. But I'll end up with saying that it continues to be volatile, right? But this specific quarter, yes, it's both. It's mix and driven by efficiencies with our suppliers.

Anthony Hatoum: Some categories gain strength, and some lose strength. You know, post-COVID and during COVID, anything related to pets saw strengthening and anything related to consumption of alcohol are decreasing. You see those things and of course, you adapt and you focus more on those that have more promise. That's completely normal, and we do that on a continuous basis. Froylan, in terms of your question on gross margin, yeah, we did mention that commercial margin on the increases. This is, it's both on the two topics that you mentioned. It's mix, it's efficiencies. But I'll end up with saying that it continues to be volatile, right? But this specific quarter, yes, it's both. It's mix and driven by efficiencies with our suppliers.

In terms of exactly influencing our decision. Yes it does because there's definitely shifts in consumption patterns some categories gain.

uh, strength, uh, and some lose strength, so, you know,

Postco and during co, uh, anything related to pets.

Saw strengthening and anything related to consumption of alcohol or decreasing and you see those things and of course, you adapt.

And you focus more on those that have more promise.

And that's completely normal, and we do that on a continuous basis.

K. Anthony Hatoum: Yeah. I mean, I'll add, Froylan, that, you know, it's no secret that as you scale, you are improving your purchasing power across the board and not only ours, but you know, whoever is supplying us with products also gains purchasing power. Gains efficiencies, and those translate partially into margin and partially go into price, and that basically drives the virtuous circle. Perfect. Thank you very much, gentlemen.

Eduardo Pizzuto: Yeah. I mean, I'll add, Froylan, that, you know, it's no secret that as you scale, you are improving your purchasing power across the board and not only ours, but you know, whoever is supplying us with products also gains purchasing power. Gains efficiencies, and those translate partially into margin and partially go into price, and that basically drives the virtuous circle. Perfect. Thank you very much, gentlemen.

Right. Uh, in terms of, uh, your question on gross margin. Um, yeah, we did mention that on Commercial margin on the increases. This is It's both, uh, on, on, on, on the 2 topics that you mentioned. It's a, it's a, it's mix its efficiency. Um, but I, I, I'll end up with saying that it it continues to be volatile. Right. So but this specific quarter. Yes, it's both. It's mix and and and and driven by efficiencies with our suppliers. Yeah. And I mean I'll add froyland that you know, it's no secret that as you scale

You are improving your purchasing power across the board and not only ours, but, you know, whoever is supplying us.

With products also gains purchasing power. So,

Uh, and gains efficiencies and those translate partially into margin and partially go into price and that basically drives the virtuous circle.

Perfect. Thank you very much gentlemen.

Sophia: Our next question comes from the line of Antonio Hernandez. Please state your company name and ask your question.

Operator: Our next question comes from the line of Antonio Hernandez. Please state your company name and ask your question.

Antonio Hernandez: Hi. Good morning. Congrats on your results. This is Antonio Hernandez from Actinver. Just a quick one regarding which categories were best performing during this quarter and also regarding your recent pilots. Any findings that you have there? Thanks.

Our next question comes from the line of Antonio Manes. Please state your company name and ask your question.

K. Anthony Hatoum: Across the board, all categories have done extremely well this quarter. I would say, you know, if you look at some subcategories, we've seen a decrease in sweetened beverages. That's driven by a new tax on sweeteners that kicked in in January. It was more than compensated for by the non-sweetened beverage subcategory. Net, net, you know, an increase across the board in all categories. What was your second question? Sorry.

Hi, good morning. Congrats on, on your results, with Antonio Lanes from acting B. Just a quick 1 regarding uh which categories were best performing during the water and and also regarding your uh recent pilots in your any findings that you have there. Thanks.

Anthony Hatoum: Across the board, all categories have done extremely well this quarter. I would say, you know, if you look at some subcategories, we've seen a decrease in sweetened beverages. That's driven by a new tax on sweeteners that kicked in in January. It was more than compensated for by the non-sweetened beverage subcategory. Net, net, you know, an increase across the board in all categories. What was your second question? Sorry.

Yeah. On the across the board, all categories have done extremely well this quarter. And I would say, you know, if you look at some subcategories,

A new tax on the sweeteners that kicked in in January, but it was more than compensated for by the non-sweet and beverage subcategory.

And so net, net, you know, and increase across the board in all categories. What was your second question? Sorry.

Antonio Hernandez: Well, regarding, for example, the fridge, frozen, all these different, like, new product categories, within the store. Any new findings or how are these new categories working out for you? Thanks.

K. Anthony Hatoum: Well, they're doing extremely well. One thing to keep in mind is that we don't launch a new category unless it's been extensively tested, maybe obsessionally tested. By the time we do launch it, we're fairly certain that it's going to do extremely well. These, you know, these categories you just mentioned are extremely promising.

Anthony Hatoum: Well, they're doing extremely well. One thing to keep in mind is that we don't launch a new category unless it's been extensively tested, maybe obsessionally tested. By the time we do launch it, we're fairly certain that it's going to do extremely well. These, you know, these categories you just mentioned are extremely promising.

Well regarding, for example, the fridge Frozen, all these different uh like new product categories. Uh within the store, any new findings or how are these new categories uh working out for you? Well, they're doing extremely well. And 1 thing to keep in mind is that we don't launch a new category unless it's been extensively tested, maybe Obsession tested

Uh so by the time we do launch it we're fairly certain um that it's going to do extremely well.

Antonio Hernandez: Okay. Perfect. Thanks a lot. Have a nice day.

And so, this—you know, these categories you just mentioned—are extremely promising.

K. Anthony Hatoum: Thank you.

Anthony Hatoum: Thank you.

Sophia: Our next question comes from the line of Joe Thomas. Please state your company name and ask your question.

Operator: Our next question comes from the line of Joe Thomas. Please state your company name and ask your question.

Okay, perfect. Thanks a lot. Have a nice day. Thank you.

Joe Thomas: Good morning, Anthony and Eduardo. It's Joe Thomas here from HSBC. Just digging into that last question a little bit more. Could you talk about the fresh trial specifically, please? If there's any sort of sales uplift associated with that and what the opportunity is to extend that to sort of retrofit existing stores for that. Then on a related topic, CapEx for the year, I'm just wondering if you could give some sort of update around that and how you expect it to be phased over the courses. Thank you.

Our next question comes from the line of Joe Thomas. Please state your company name and ask your question.

Uh, good Morning. Anthony and Eduardo is Joe Thomas here from HSBC. Uh, just digging into that. That last question a little bit more. Could, could you, um, uh, talk about the fresh trial, uh, specifically please? Um, and uh, if there's any sort of sales uplift associated with that and and what the opportunity is to um to extend that to uh but it's retro.

K. Anthony Hatoum: No, it's worth just stepping back and saying that, you know, at any point in time, there's about 60 different products, slash, new lines being tested in our stores in parallel, and some of them make the final cut, and then you see them deployed across the companies. In the case of fruits and vegetables, in particular, you know, the results are promising. As, you know, the test has been running and been fine-tuned and refine-tuned, and we remain quite optimistic that it's a worthwhile category to have. In those test stores, yes, you know, it's no surprise then when you have fruits and vegetables, you do see an uplift in tickets. It's normal. We remain quite excited about this category.

Anthony Hatoum: No, it's worth just stepping back and saying that, you know, at any point in time, there's about 60 different products, slash, new lines being tested in our stores in parallel, and some of them make the final cut, and then you see them deployed across the companies. In the case of fruits and vegetables, in particular, you know, the results are promising. As, you know, the test has been running and been fine-tuned and refine-tuned, and we remain quite optimistic that it's a worthwhile category to have. In those test stores, yes, you know, it's no surprise then when you have fruits and vegetables, you do see an uplift in tickets. It's normal. We remain quite excited about this category.

Fits existing stores, uh, for that and then On a related topic. Um capex uh for the year. Um, I'm just wondering if you could give some sort of update around that and how you expect it to be phased over the quarters. Thank you.

No, it's worth just stepping back and saying that, you know, at any point in time there's about 60 different products, slash new lines being tested in our stores in parallel. And

Some of them make the final cut, and then you see them deployed, the companies.

Uh, in the case of fruits and vegetables in particular um you know, the results are promising.

uh as you know the test has been running and been fine-tuned and refined tuned and uh we remain quite optimistic, that it's um a worthwhile category to have

Eduardo Pizzuto: Hi, Joe.

Eduardo Pizzuto: In terms of your second question was CapEx. I'm going to let Eduardo answer.

Anthony Hatoum: In terms of your second question was CapEx. I'm going to let Eduardo answer.

Um, and those test stores—yes, you know, it's no surprise that when you add fruits and vegetables, you do see an uplift in tickets. It's normal. And, uh, so we remain quite excited about this category.

Eduardo Pizzuto: Hi, Joe. On CapEx, what we disclosed in our 20-F, it's about MXN 5.2 billion. That includes the number of stores that we guided. It also includes additional distribution centers, and of course, all the equipment around that, including trucks and cars, et cetera. We are today quite comfortable with that number and executing on that for the balance of the year.

Sure, terms of use. Second question was capex. I'm going to let it, worth the answer. Hi Joe.

Um, capex. Uh, what we just closed in our 20th? It's about 5.2 billion pesos.

Which that includes. Um, the number of stores that we guided uh also includes additional distribution centers. Uh and of course all the equipment around that including trucks and cars Etc.

So we are today quite comfortable with that number and uh and uh, and executing on that for the balance of the year.

Joe Thomas: Thanks a lot. Thank you.

Hello, thank you.

Sophia: Our next question comes from the line of Alberto Rodriguez. Please state your company name and ask your question. Please unmute yourself to ask your question.

Operator: Our next question comes from the line of Alberto Rodriguez. Please state your company name and ask your question. Please unmute yourself to ask your question.

Our next question comes from the line of Alberto Rodriguez, please State your company name and ask your question.

Please unmute yourself to ask your question.

Alberto Rodriguez: No question here. Thank you.

[Analyst 2]: No question here. Thank you.

No question here. Thank you.

Sophia: We have a follow-up question from Héctor Maya. Please ask your question.

Operator: We have a follow-up question from Héctor Maya. Please ask your question.

We have a follow-up question for Mia. Please ask your question.

Héctor Maya López: Hi again. Hector Maya, Scotiabank. Thank you again for the chance of another question. I recall that the penetration of private label last quarter was 58% of sales. Could you give us an update on what the level was this quarter? Also, is there a threshold at which the business starts structurally changing from what we have now with higher penetration? Or would you say that everything remains the same if you operate at 60% of private label compared to 70% or 80% penetration? I mean, more than at the margin level, how would things change with suppliers, their scale, their relevance, and how do you think about development of new SKUs and how you arrange them at the store with a higher penetration? Thank you.

Hector Maya: Hi again. Hector Maya, Scotiabank. Thank you again for the chance of another question. I recall that the penetration of private label last quarter was 58% of sales. Could you give us an update on what the level was this quarter? Also, is there a threshold at which the business starts structurally changing from what we have now with higher penetration? Or would you say that everything remains the same if you operate at 60% of private label compared to 70% or 80% penetration? I mean, more than at the margin level, how would things change with suppliers, their scale, their relevance, and how do you think about development of new SKUs and how you arrange them at the store with a higher penetration? Thank you.

Hi again. Hi again nectar May. Thank you again, for the chance of another question. Um, I recall that the the penetration of private label last quarter was 58% of sales, uh but could you give us an update on what the level was this quarter? And also is

K. Anthony Hatoum: Hi, Héctor. No, we don't. We update this number once a year, but you can imagine that the trend continues upwards. In terms of, you know, do I see a change of how we operate with more private label? The answer is no, not really. Here I will tell you just take a look at Grupo Bimbo, who's been in this market way longer than we have. It's a little bit like a time machine that gives you a fairly good answer as to, you know, what things might look like a few years down the road. Immediately for us, there is absolutely no change if you go from 50 to 60 to 70. No structural change. In terms of, you know, Part of your question was how do things change with suppliers?

Anthony Hatoum: Hi, Héctor. No, we don't. We update this number once a year, but you can imagine that the trend continues upwards. In terms of, you know, do I see a change of how we operate with more private label? The answer is no, not really. Here I will tell you just take a look at Grupo Bimbo, who's been in this market way longer than we have. It's a little bit like a time machine that gives you a fairly good answer as to, you know, what things might look like a few years down the road. Immediately for us, there is absolutely no change if you go from 50 to 60 to 70. No structural change. In terms of, you know, Part of your question was how do things change with suppliers?

Zero Threshold at, which the business starts structurally changing from what we have now with higher penetration, or would you say that everything Remains the Same? If you operate at 60% of private label compared to 70% or 80% penetration? I mean more than at the margin level, how, how would things change with suppliers their scale, their relevance? And how do you think about development of new skus and how you arrange them at the store with a higher penetration? Thank you.

Um, in terms of, you know, do I see a change of how we operate with more private label? The answer is no, not really. And here I will tell you, just take a look at Bim, uh, who's been in this market way longer than we have. It's a little bit like a time machine.

That gives you a fairly good answer. As to, you know, what, things might look like a few years down the road, but immediately for us, there is absolutely no change. If you go from 50 to 60 to 70, uh, no structural change in terms of, you know, there was part of your question was, how do things?

K. Anthony Hatoum: I would answer that by saying things change naturally as you get bigger. I mean, suddenly you're selling 30% more, you're buying 30% more. Everybody has to march in lockstep to sustain that growth, and that has not stopped. For the last 10 years, it's been the case. It will continue to be so in terms of planning ahead of time and, you know, projecting growth and projecting, you know, procurement needs, et cetera, et cetera. As you know, we plan way ahead of time, and that has allowed us to sustain, you know, these growth rates above 30% now for over 12 years without any hiccups. You know, to be able to do that, you need to be very disciplined in terms of execution and in terms of planning, and I expect that to continue.

Anthony Hatoum: I would answer that by saying things change naturally as you get bigger. I mean, suddenly you're selling 30% more, you're buying 30% more. Everybody has to march in lockstep to sustain that growth, and that has not stopped. For the last 10 years, it's been the case. It will continue to be so in terms of planning ahead of time and, you know, projecting growth and projecting, you know, procurement needs, et cetera, et cetera. As you know, we plan way ahead of time, and that has allowed us to sustain, you know, these growth rates above 30% now for over 12 years without any hiccups. You know, to be able to do that, you need to be very disciplined in terms of execution and in terms of planning, and I expect that to continue.

Change with suppliers. I would I would answer that by saying things change naturally, as you get bigger. I mean suddenly you're selling 30% more, you're buying 30%, more everybody has to march in lock step.

Uh, to sustain that growth—and that has not stopped for the last 10 years, it's been the case—so it will continue to be. So, in terms of planning ahead of time and, you know, projecting growth and projecting, you know, procurement needs, etc., etc., as you know, we all, we plan way ahead of time.

And that has allowed us to sustain, you know, these growth rates above 30% now for over 12 years without any hiccups.

And uh you know to be able to do that, you need to be very disciplined in terms of execution and in terms of planning and I expect that to continue.

Héctor Maya López: Excellent. Muchas gracias, Anthony. Eduardo, thank you very much.

Hector Maya: Excellent. Muchas gracias, Anthony. Eduardo, thank you very much.

Excellent, thank you very much.

Sophia: Our next question comes from the line of Guli Arshad. Please state your company name and ask your question. Please unmute yourself to ask your question.

Operator: Our next question comes from the line of Guli Arshad. Please state your company name and ask your question. Please unmute yourself to ask your question.

Our next question comes from the line of guli arshad please State, your company name and ask your question.

Please unmute yourself to ask your question.

Guli Arshad: Hi, can you hear me now?

[Analyst 1]: Hi, can you hear me now?

K. Anthony Hatoum: Yes, Guli. Please go ahead.

Anthony Hatoum: Yes, Guli. Please go ahead.

I can hear you now.

Guli Arshad: Yes. Anthony, congratulations on your usual strong results. I know that a strong IT department is one of the pillars of the 3B, the growth story. So how are you incorporating AI mentality and processes inside the company? Or is it relevant?

[Analyst 1]: Yes. Anthony, congratulations on your usual strong results. I know that a strong IT department is one of the pillars of the 3B, the growth story. So how are you incorporating AI mentality and processes inside the company? Or is it relevant?

Yes, Goody, please go ahead. Yes. So, Anthony, congratulations on your usual strong results.

K. Anthony Hatoum: Yes. No, absolutely. Great to hear from you, Guli, to start with. You know, there was a question earlier on about, you know, SG&A and expenses. I made a comment about our investment in talent. A big chunk of that investment in talent is actually in IT.

Anthony Hatoum: Yes. No, absolutely. Great to hear from you, Guli, to start with. You know, there was a question earlier on about, you know, SG&A and expenses. I made a comment about our investment in talent. A big chunk of that investment in talent is actually in IT.

Uh, I know that a strong. It department is 1 of the pillars of the BB, the growth story. So how are you incorporating AI mentality and processes inside the company? Or is it relevant?

yes, uh, no absolutely great to hear from you Google to start with, you know, there was a question earlier on about, you know, sg&d and expenses and

K. Anthony Hatoum: You know, with the firm belief that, you know, a lot of our future growth is driven by executing across the board an IT strategy. You know, sometimes I joke internally that we're an IT company selling groceries. Yes, there is a very strong component of artificial intelligence that's starting to take root in the company. Very similar to what's happening in many companies, and you can see already the effects in terms of improved efficiency and gains of time across the board. I think this tendency will continue and get stronger, especially as, you know, companies providing these tools start providing better and better tools. The speed at which we've seen improvements in these tools is absolutely staggering. Expect that, you know, this becomes part of normal life in 3B.

Anthony Hatoum: You know, with the firm belief that, you know, a lot of our future growth is driven by executing across the board an IT strategy. You know, sometimes I joke internally that we're an IT company selling groceries. Yes, there is a very strong component of artificial intelligence that's starting to take root in the company. Very similar to what's happening in many companies, and you can see already the effects in terms of improved efficiency and gains of time across the board. I think this tendency will continue and get stronger, especially as, you know, companies providing these tools start providing better and better tools. The speed at which we've seen improvements in these tools is absolutely staggering. Expect that, you know, this becomes part of normal life in 3B.

I made a comment about our investment in talent and a big chunk of that investment in Talent is actually in it.

You know, with the firm belief that, you know, a lot of our future growth is driven by executing.

Across the board, MIT strategy. You know, sometimes I joke internally that we're an IT company selling groceries. So, yes, there is a very strong component, um, of artificial intelligence. That's starting to take root in the company. Uh, very similar to what's happening in many companies and you can see already the effects

In terms of improved efficiency and gains of time across the board, I think the tendency will continue and get stronger, especially as you know.

Companies, providing these tools start providing better, and better tools. And the, the speed at, which we've seen improvements in these tools is absolutely staggering

Guli Arshad: Very good. Thank you.

[Analyst 1]: Very good. Thank you.

So expect that, you know, this becomes part of normal life, in Q3,

Very good. Thank you.

Sophia: Our next question comes from the line of Federico Galassi. Please state your company name and ask your question.

Operator: Our next question comes from the line of Federico Galassi. Please state your company name and ask your question.

Federico Galassi: Hi, guys. Federico Galassi, The Rohatyn Group. One question from my side is, in the last year and a half, the corporate business, if you want, for more information to the ADR, to the new counselor, et cetera, was of one of the teams that dragged the machine. With taking out the operational side, do you believe that you have the structure necessary to growth in the next years? Thank you.

Our next question comes from the line of Federico galassi. Please State your company name, and ask your question.

Hi, guys. From my side, it's in the last year and a half.

The corporate business, if you want more information to do with the area, the new Consul or etc., was—

of 1 of the the the teams that dragged the margin.

K. Anthony Hatoum: Sorry, Federico, let me see if I understood your question. You're asking that, you know, do you think we have built the right structure centrally to sustain our growth rates going forward? Would that be your question or?

Anthony Hatoum: Sorry, Federico, let me see if I understood your question. You're asking that, you know, do you think we have built the right structure centrally to sustain our growth rates going forward? Would that be your question or?

With taking out the operational sides, do you believe that you have the structure necessary to grow in the last in the next 8 years? Thank you.

Federico Galassi: Absolutely.

K. Anthony Hatoum: Yeah.

Anthony Hatoum: Yeah.

Federico Galassi: Beyond the operational side. Now that that will continue.

K. Anthony Hatoum: Yeah

Anthony Hatoum: Yeah

Federico Galassi: We continue to grow the new stores.

K. Anthony Hatoum: Again, this belief and philosophy that we have of planning ahead of time, which has served us extremely well and explains how we can sustain such rapid growth rates over time and not have any hiccups, applies to everything. It applies to thinking about what the corporate structure centrally should be and what kind of talent needs you need and how many people you need in which areas, so that you can execute on your plans and across the board, how do you raise the level of performance of the team in general? That's been all planned for, not today. We're executing on it, and I think we're in very good shape to sustain future growth. I come back to this very strong belief we have that, you know, it's the team that makes the difference, right?

Anthony Hatoum: Again, this belief and philosophy that we have of planning ahead of time, which has served us extremely well and explains how we can sustain such rapid growth rates over time and not have any hiccups, applies to everything. It applies to thinking about what the corporate structure centrally should be and what kind of talent needs you need and how many people you need in which areas, so that you can execute on your plans and across the board, how do you raise the level of performance of the team in general? That's been all planned for, not today. We're executing on it, and I think we're in very good shape to sustain future growth. I come back to this very strong belief we have that, you know, it's the team that makes the difference, right?

Sorry for the RICO. Let me see if I understood your question that you're asking that, you know, do you think we have, we have built the right structure. Um, centrally to sustain our growth rates going forward. Would that be your question or absolutely? We, yeah, beyond the operational side. Not that, that will continue. We continue to grow the, the new start.

and again, this, um,

belief and philosophy that we have of planning ahead of time which has served us extremely well,

To everything—and it applies to thinking about what the corporate structure centrally should be, and what kind of talent needs you need, and how many people you need, and which areas, so that you can execute on your plans and, across the board, how do you raise the level, um, of performance of the team in general?

And that's been all planned for and not today.

So,

We're executing on it and I think we're on that we're in very good shape. This is future growth.

K. Anthony Hatoum: Everybody knows how to sell groceries, and it's all a question of how well do you execute and how fast do you execute.

Anthony Hatoum: Everybody knows how to sell groceries, and it's all a question of how well do you execute and how fast do you execute.

And I come back to this very strong belief, we have that, you know, it's the team that makes the difference, right?

Everybody knows how to sell groceries. And it's all a question of how, well do you execute and how fast do you execute?

Federico Galassi: Perfect. Thank you so much, Anthony.

Perfect. Thank you so much. And

Sophia: We have run out of time for further questions. I would now like to hand the call back over to Anthony Hatoum for his closing remarks.

Operator: We have run out of time for further questions. I would now like to hand the call back over to Anthony Hatoum for his closing remarks.

We have run out of time for further questions. I would now like to hand the call back over to Anthony Hattam for his closing remarks.

K. Anthony Hatoum: Well, thank you, everybody, for participating and joining us today. I'd like to thank all our investors, current and future, for believing in us. I'd like to thank all the analysts who have joined us today for their continued coverage and their excellent questions. Thank you again, we look forward to talking to you in the next earnings call.

Anthony Hatoum: Well, thank you, everybody, for participating and joining us today. I'd like to thank all our investors, current and future, for believing in us. I'd like to thank all the analysts who have joined us today for their continued coverage and their excellent questions. Thank you again, we look forward to talking to you in the next earnings call.

Well, thank you, everybody, for participating and joining us today. I'd like to thank all our investors, um, if you're in, and future, for believing in us.

And I'd like to thank all the analysts who have joined us today for their continued coverage and their excellent questions. Uh, thank you again and uh we look forward to talking to you in the next turning call.

Sophia: Thank you. You may now disconnect. Goodbye.

Operator: Thank you. You may now disconnect. Goodbye.

Thank you. You may now disconnect

goodbye.