Q2 2026 Companhia Brasileira de Distribuição Earnings Call

August 5, 2026

Speaker #1: Good morning. Welcome to the video conference to announce GPAs results of the second quarter of 2026. If you need translation, just click on "Interpretation" button in the globe icon at the bottom of your screen and choose your preferred language.

Rodrigo Manso: Good morning. Welcome to the video conference to announce GPA's results of the Q2 2026. If you need translation, just click on the interpretation button in the globe icon at the bottom of your screen and choose your preferred language. The information contained in this presentation and any statements that may be made during this video conference regarding GPA's business prospects, projections, and operational financial goals are beliefs and assumptions of the company's management and are based on information currently available. Forward-looking statements are not guarantee of performance because they involve risks, uncertainties, and assumptions as they refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operating factors could affect GPA's future performance and lead to results that would be materially different from those forward-looking statements.

Speaker #1: The information contained in this presentation and any statements that may be made during this video conference regarding GPAs, business prospects, productions, and operational financial goals, are believed an assumptions of the company's management and are based on information currently available.

Speaker #1: Forward-looking statements are not guarantee of performance because they involve risks and certainties and assumptions, as they refer to future events that may or may not occur.

Speaker #1: Investors should understand that general economic conditions, market conditions, and other operating factors could affect GPAs' future performance and lead to results that would be materially different from those forward-looking statements.

Rodrigo Manso: Investors should understand that general economic conditions, market conditions, and other operating factors could affect GPA's future performance and lead to results that would be materially different from those forward-looking statements.

Speaker #1: Today, with us, we have GPA CEO Alexandre Santoro, and GPA CFO and investor relations officer Pedro Abuquerque. Now, I'm going to give the floor to Mr. Santoro to start the presentation.

Rodrigo Manso: Today with us, we have GPA CEO Alexandre Santoro and GPA CFO, Investor Relations Officer Pedro Albuquerque. I'm going to give the floor to Mr. Santoro to start the presentation.

Speaker #2: Thank you, Rodrigo. Good morning, everyone, and thank you for being once again with us here in announcing the results of the second quarter of GPA.

Alexandre Santoro: Thank you, Rodrigo. Good morning, everyone, and thank you for being once again with us here in announcing the results of the Q2 of GPA. This is a Q2 that starts to show the first effects of the changes that we started just over six months ago. We have advanced in profitability, reducing costs and expenditures, and strengthened our financial discipline. Obviously, we still have a lot of work ahead of us, the initial results start to show and indicate that we are going down the right path. When we arrived here in GPA, we found a business of brands with strong assets, very loyal customers with a huge potential to generate value. Over time, the company has become very complex, and as the business has reduced in size and changed its profile, it has not simplified in the same speed.

Speaker #2: This is a second quarter that starts to show the first effects of the changes that we started just over 6 months ago. We have advanced in profitability, reducing costs and expenditures, and strengthened our financial discipline.

Speaker #2: But obviously, we still have a lot of work ahead of us, but the initial results start to show and indicate that we are going down the right path.

Speaker #2: When we arrived here in GPA, we found a business, brands with strong assets, very loyal customers, with a huge potential to generate value. But over time, the company has become very complex, and as the business has reduced in size and changed its profile, it has not simplified in the same speed.

Speaker #1: Bom dia a todos, e sejam muito bem-vindos à videoconferência de divulgação dos resultados do 2o trimestre de 2026 do GPA. Quem precisar de tradução, basta clicar no botão "Interpretation" através do ícone do globo na parte inferior da tela e escolher o seu idioma de preferência.

Speaker #1: informações contidas nesta apresentação, e eventuais declarações que possam ser videoconferência, relativas às perspectivas de negócios, projeções e metas feitas durante a operacionais e financeiras do GPA, Ressaltamos que as constituem sem crenças e premissas da administração da companhia, bem como informações atualmente disponíveis.

Speaker #2: We started to carry structure, processes, and systems which are no longer compatible to the new reality of GPA. This complexity has increased costs, reduced agility, and made the execution at the edge more difficult.

Alexandre Santoro: We started to carry structure, processes, and systems which are no longer compatible to the new reality of GPA. This complexity has increased costs, reduced agility, and made the execution at the edge more difficult. This is why our first decision was to return the focus to the company, a focus on customers, a focus on the operation, a focus on executing the strategies and discipline and strictness in using our resources. The big challenge here is to concentrate energy on what is truly the point and to make the basic things very well done. It's with this vision that we've defined the three main priorities for GPA: to increase our customers' experience, to increase operational and commercial efficiency, and to strengthen financial discipline. Talking about the first part, which is client centricity.

Speaker #1: Considerações desempenho, elas envolvem riscos e incertezas e premissas, pois se referem a eventos futuros e, portanto, dependem de circunstâncias que podem ou não ocorrer.

Speaker #2: This is why our first decision was to return the focus to the company, a focus on customers, a focus on the operation, a focus on executing the strategies and discipline and strictness in using our resources.

Speaker #1: Investidores devem compreender que condições econômicas gerais, condições de mercado e outros fatores operacionais podem afetar o desempenho futuro do GPA e conduzir a resultados que futuras não são garantias de diferem materialmente daqueles expressos em tais considerações futuras.

Speaker #2: The big challenge here is to concentrate energy on what is truly the point, and to make the basic things very well done. And it's with this vision that we've defined the three main priorities for GPA.

Speaker #1: Estão conosco hoje o CEO do GPA, Alexandre Santoro, e o CFO e diretor de relações com investidores, Pedro Albuquerque. Agora, passarei a palavra ao senhor Alexandre Santoro para dar início à apresentação.

Speaker #2: To increase our customers' experience, to increase operational and commercial efficiency, and to strengthen financial discipline. Talking about the first part, which is clients' centricity, since the onset we have strengthened that it has to be at the center of all company decisions, and experience improving the experience at the edge continues to be our main priority.

Speaker #2: Obrigado, Rodrigo. Bom dia a todos. E obrigado por estarem novamente conosco aqui na divulgação dos resultados do 2º trimestre de 2026 do GPA. É o 2º semestre que começa a mostrar os primeiros efeitos das mudanças que iniciamos há pouco mais de seis meses por aqui.

Alexandre Santoro: Since the onset, we have strengthened that it has to be at the center of all company decisions and improving the experience at the edge continues to be our main priority. The behavior of consumers has changed. Today, they mix different channels, formats based on each occasion and purchase journey. The same customer can have a purchase to supply in a supermarket as Extra uses Pão de Açúcar for buying perishables and high added value products and uses Minuto or Mini Extra for purchases during the week. They always have the option of using the convenience of e-commerce, depending on the moment and their needs. Our responsibility and challenge is to guarantee that each one of these flags has a clear value proposition which is relevant and well executed.

Speaker #2: The behavior of consumers has changed, today they mix different channels, formats, based on each occasion and purchase journey. The same customer can have a purchase to supply in a market, a supermarket as extra, uses Pão de Açúcar for buying perishables and high-added value products, and uses Minuto or Mini Extra for purchases during the week.

Speaker #2: And they always have the option of using the convenience of e-commerce, depending on the moment and their needs. And our responsibility and challenge is to guarantee that each one of these flags has a clear value proposition, which is relevant and well executed.

Speaker #2: We also believe that a company with a presence of GPA needs to deeply know the characteristics of each market we are in. A more regionalized management allows us to offer a better supply increased frequency of customers, and to strengthen as a consequence the relationship with them.

Alexandre Santoro: We also believe that a company with a presence of GPA needs to deeply know the characteristics of each market we are in. A more regionalized management allows us to offer a better supply, increase frequency of customers, and to strengthen, as a consequence, the relationship with them. The second priority we decided is obviously the operational and commercial excellence, the heart of our business. Efficiency doesn't mean only to reduce expenditures. It means to reduce complexity, revisit processes, adequate structures, increase productivity, and enhance the quality of our operation. This is something which is ongoing and involves the entire organization, our systems, logistics, stores, and even the way in which decisions are made. The same logic guides our investments. We will not grow just to grow.

Speaker #2: The second priority we decided is obviously the operational and commercial excellence, the heart of our business. Efficiency doesn't mean only to reduce expenditures. It means to reduce complexity, revisit processes, adequate structures, increase productivity, and enhance the quality of our operation.

Speaker #2: This is something which is ongoing, and involves the entire organization. Our systems, logistics, stores, and even the way in which decisions are made. And the same logic guides our investments.

Speaker #2: We will not grow just to grow. We will use capital and direct it to where we have higher return, proving our stores the stores that already exist, to strengthen and enhance our logistics, and to increase the productivity of assets, and at the end of the day, enhance our customers' experience.

Alexandre Santoro: We will use capital and direct it to where we have higher return, improving our stores, the stores that already exist, to strengthen and enhance our logistics and to increase the productivity of assets and at the end of the day, enhance our customers' experience. The third pillar is financial discipline. This means that we have to make choices to allocate capital with discipline, control expenditures, and increase cash generation. It is with this mentality that we have structured our efficiency program. We have already advanced in reducing costs from the organizational structure to general expenditures, identifying a series of additional opportunities which need to be captured with speed and urgency by our team. This agenda also requires a change in culture. We need to have a more simple organization with clear priorities, quicker decision-making, and greater responsibility on costs, productivity, and results.

Speaker #2: The third pillar is financial discipline. This means that we have to make choices. To allocate capital with discipline, control expenditures, and increase cash generation.

Speaker #2: And it is with this mentality that we have structured our efficiency program. We have already advanced in reducing costs from the organizational structure to general expenditures, identifying a series of additional opportunities which need to be captured with speed and urgency by our team.

Speaker #2: This agenda also requires a change in culture. We need to have a more simple organization with clear priorities, quicker decision-making, and greater responsibility on costs, productivity, and results.

Speaker #2: And for this to happen, we need to have a strong and team-aligned and engaged today. We are over 35,000 associates, placing the strategy in practice every day, store by store, distribution centers, and here at our service center to the stores, which is the way we call our headquarters.

Alexandre Santoro: For this to happen, we need to have a strong team, aligned and engaged. Today, we are over 35,000 associates placing this strategy in practice every day, store by store, distribution centers, and here at our service center to the stores, which is the way we call our headquarters in São Paulo. This only exists for one purpose, which is to make the lives of those who are out in the field easier. A strategy alone, we know, does not transform a company. Execution transforms it is our capacity to make this company more simple, to change the way we work, and to execute with efficiency, which will determine how quickly GPA is able to recover. Going now to the second slide. This is one of the most important steps to highlight this part in my presentation.

Speaker #2: In São Paulo. This only exists for one purpose, which is to make the lives of those who are out in the field easier. A strategy alone, we know, does not transform a company.

Speaker #2: Execution transforms it. And it is our capacity to make this company more simple, to change the way we work, and to execute with efficiency which will determine how quickly GPA is able to recover.

Speaker #2: Going now to the second slide, this is one of the most important steps to highlight this part in my presentation. That in order to make this agenda feasible, one of the important steps for us to execute it was to reorganize the financial structure of the company.

Alexandre Santoro: In order to make this agenda feasible, one of the important steps for us to execute it was to reorganize the financial structure of the company. When we arrived, we found a company with an indebtedness which was incompatible with the business reality, especially with the debt expiring in a very short term. Only in 2026, we had approximately BRL 2.3 billion in the debts expiring, and this concentration of obligations and passive in the short term used cash, limiting our flexibility and restricting our capacity to execute any strategy. It also would take an important amount of the time of the company's leadership. That is why amongst the options we had, we decided to have our extrajudicial recovery process.

Speaker #2: When we arrived, we found a company with an indebtedness which was incompatible with the business reality. And especially with the debt expiring in a very short term.

Speaker #2: Only in 2006 we had approximately 2.3 billion reais in a debt expiring, and this concentration of obligations and passive in the short term used cash, limiting our flexibility, and restricting our capacity to execute any strategy.

Speaker #2: And it also would take an important amount of the time of a company's leadership. And that is why, amongst the options we had, we decided to have our extrajudicial recovery process.

Speaker #2: We understood it was the best manner to enhance the company's financial situation continuing with what we continue to believe is unnegotiable. The operation, our customers, our associates, our suppliers, and our stores.

Alexandre Santoro: We understood it was the best manner to enhance the company's financial situation, continuing with what we continue to believe is unnegotiable: the operation, our customers, our associates, our suppliers, and our stores. In May, we protocoled our plan with the support of creditors, which represented over 57% of the credits. After that, approximately 95% of the creditors opted for one of the participation with a very low number of questions, which shows that this is a balanced plan. At this moment, we are waiting for the judicial approval, which we hope to conclude during Q3. The impacts are very significant for the company. The debt at the end will reduce in more than 50%. The average term will go from approximately 2 to 6.4 years. The cost of CDI plus 1.8 to 0.5.

Speaker #2: In May, we protocoled our plan with the support of creditors which represented over 57% of the credits for this. And then after that, approximately 95%, 95% of the creditors option opted for one of the participation with a very low number of questions, which shows that this is a balanced plan.

Speaker #2: At this moment, we are waiting for the judicial approval, which we hope to conclude during the third quarter. The impacts are very significant for the company.

Speaker #2: The debt at the end will reduce from more than 50%, the average term will go from approximately 2 to 6.4 years. The cost of CDI plus 1.8 to 0.5, and the consequence of all of these factors is that the payments from 2006 to 2008, which were foreseen of approximately 5.2 billion reais, between the principal and interest rates, will be reduced to 400 million reais.

Alexandre Santoro: The consequence of all of these factors is that the payments from 2026 to 2028, which were foreseen of approximately BRL 5.2 billion between the principal and interest rates, will be reduced to BRL 400 million. Above all, more important than these numbers is what they will make possible. Our recovery process was an instrument to strengthen the company and not an objective in itself. Our objective has always been to create the conditions for GPA to concentrate its energy on what really adds value: customers, operation, and executing our strategy. The approval of this process represents an important step in this direction. It gives us back financial flexibility and creates the conditions to accelerate the operational transformation of our company. That is what we continue to be focused on day in, day out, because at the end of the day, credibility is built through execution.

Speaker #2: But above all, more important than these numbers is what they will make possible. Our recovery process was an instrument to strengthen the company and not an objective in itself.

Speaker #2: Our objective has always been to create the conditions for GPA to concentrate its energy in what really adds value, customers, operation, and executing our strategy.

Speaker #2: The approval of this process represents an important step in this direction. It gives us back financial flexibility and creates the conditions to accelerate the operational transformation of our company.

Speaker #2: And that is what we continue to be focused on day in, day out. Because at the end of the day, credibility is built through execution.

Speaker #2: So now, continuing with our presentation, going to slide three, to talk a little about our quarter performance, and then further we'll go into more detail.

Alexandre Santoro: Now, continuing with our presentation, going to slide three to talk a little about our Q2 performance, and then Pedro will go into more detail. The results presented start to reflect the changes which we started throughout the last few months. We are still aware that we are just at the onset of this journey, but we already have a relevant evolution in indicators we consider to be crucial for the recovery of GPA, which is profitability, operational efficiency, and financial discipline. At the same time, we are aware that we still have relevant challenges ahead of us, especially to have a growth of sales and to strengthen cash generation. Q2 had factors which were timely, which impacted our revenues, and at the same time, where we follow decision-making, which is important to have a more simple, efficient, and better-prepared company to grow in a consistent manner.

Speaker #2: The results presented, start to reflect the changes which we started throughout the last few months. We are still aware that we are just at the onset of this journey, but we already have a relevant evolution in indicators we consider to be crucial for the recovery of GPA.

Speaker #2: Which is profitability, operational efficiency, and financial discipline. At the same time, we are aware that we still have relevant challenges ahead of us. Especially to have a growth of sales and to strengthen cash generation.

Speaker #2: The second quarter had factors which were timely, which impacted our revenues, and at the same time where we follow decision-making which is important to have a more simple, efficient, and better prepared company to grow in a consistent manner.

Speaker #2: The total sales reached 4.7 billion reais, which is a reduction in 7% compared to the same period in the last year. This performance was influenced above all by three factors.

Alexandre Santoro: The total sales reached BRL 4.7 billion, which is a reduction of 7% compared to the same period of last year. This performance was influenced above all by three factors. The first was the temporary impact of our recovery process on the supply of stores. The announcement of this process brought greater care by some of our suppliers, temporarily increasing our levels of stock-outs. We were very close to our commercial partners in order to minimize this impact. I would also like to make a recognition of the majority of our vendors, which were big partners during this entire process and continue to be so. The most challenging moment, as you can see in the graph, took place between April and May, right at the beginning of this process.

Speaker #2: The first was the temporary impact of our recovery process on the supply of stores. The announcement of this process brought greater care by some of our suppliers, temporarily increasing our levels of stockouts.

Speaker #2: We were very close to our commercial partners in order to minimize this impact. I would also like to make a recognition of the majority of our vendors which were big partners during this entire process and continue to be so.

Speaker #2: The most challenging moment, as you can see in the graph, took place between April and May, right at the beginning of this process, and in June, we already are able to see an improvement, not only of supply, but allowing the growth of sales in this graph, which is comparable in the same moments.

Alexandre Santoro: In June, we already are able to see an improvement, not only of supply, but allowing the growth of sales in this graph, which is comparable in the same moments. The second factor which led to the drop in revenue, we made some decisions to improve the quality of the business. We prioritized operations and channels with a greater capacity to generate cash, discontinuing the format of Aliados, allies, and rebalancing, and many initiatives in e-commerce and a more regionalized management of our product supply. Our objective continues to be to grow, but to grow maintaining profitability, generating cash, and return on invested capital. The third factor, which obviously impacts the revenues, is the macroeconomic landscape. The food retail as a whole operates in a very competitive and challenging scenario.

Speaker #2: The second factor which led to the drop in revenue we made some decisions to improve the quality of the business. We prioritized operations, and channels with a greater capacity to generate cash, discontinuing the format of aliados, allies, and rebalancing and many initiatives in e-commerce and a more regionalized management of our product supply.

Speaker #2: And our objective continues to be to grow, but to grow maintaining profitability, generating cash, and return on invested capital. And the third factor which obviously impacts the revenues is the macroeconomic landscape.

Speaker #2: The food retail as a whole, operates in a very competitive and challenging scenario, despite indicators such as employment and income continue to be resilient consumers have growing pressure on their budget, high interest rates, greater indebtedness, increase of default, and a higher fight for this available income.

Alexandre Santoro: Despite indicators such as employment and income continue to be resilient, consumers have growing pressure on their budget, high interest rates, greater indebtedness, increase of default, and a higher fight for this available income. In this context, this changes the behavior during the purchase process, and we permanently need to adapt this sector. Despite this environment, we continue to advance in executing our strategy. In an environment where we reduce our revenues, we are able to grow our EBITDA in 7.3% compared to the same period of the last year. We were able to obtain more than half of the efficiency foreseen for the year. We've reduced costs and expenditures in a relevant manner and strengthened the profitability of our operation. These results do not mean that the transformation has reached an end. Far from that, but they show that the strategy is starting to bring concrete results.

Speaker #2: In this context, this changes the behavior during the purchase process, and we permanently need to adapt this sector. Despite this environment, we continue to advance in executing our strategy.

Speaker #2: Though in an environment where we reduce our revenues, we are able to grow our bidder in 7.3% compared to the same period of the last year.

Speaker #2: We were able to obtain more than half of the efficiency foreseen for the year. We've reduced cost and expenditures in a relevant manner. And strengthened the profitability of our operation.

Speaker #2: These results do not mean that the transformation has reached an end. Far from that. But they show that the strategy is starting to bring concrete results.

Speaker #2: Now we need to speed up this process. We still have a lot to do regarding adequating our costs and contracts, for example. We shall continue to simplify the company bringing new efficiency opportunities, strengthening cash generation, and creating the conditions to continue to grow in a consistent manner.

Alexandre Santoro: Now we need to speed up this process. We still have a lot to do regarding adequately our costs and contracts, for example. We shall continue to simplify the company, bringing new efficiency opportunities, strengthening cash generation, and creating the conditions to continue to grow in a consistent manner. That is what will determine the speed in which GPA will recover. I will stop now, and I will give the floor to Pedro, my partner and CFO, to detail the financial performance of our quarter.

Speaker #2: And that is what we'll determine the speed in which GPA will recover. I will stop now, and I will give the floor to Pedro my partner and CFO to detail the financial performance of our quarter.

Speaker #1: Thank you, Santoro. Thank you, everybody, who's with us. Now continuing on slide eight, I would like to highlight the evolution of gross profit and adjusted EBITDA.

Rodrigo Manso: Thank you, Santoro. Thank you, everybody who's with us. Continuing on slide eight, I would like to highlight the evolution of gross profit and adjusted EBITDA. In the quarter, the gross margin reached 30.5%, an expansion of 3.1 percentage points compared to the same period the previous year. This evolution was explained mainly by three factors. The first was profitability, the prioritization strategy, the rebalancing of e-commerce sales mix, and other profitability actions. The second was the change in certain products of the ICMS-ST regime to ordinary ICMS. Finally, we had incremental and non-recurring recognition of credits. These factors had an impact in the contribution of both gross margin expansion. We move forward with rigor and discipline. We want to implement continuing improvement and the very judicious use of resources to improve the experience of our customers.

Pedro Albuquerque: Thank you, Santoro. Thank you, everybody who's with us. Continuing on slide eight, I would like to highlight the evolution of gross profit and adjusted EBITDA. In the quarter, the gross margin reached 30.5%, an expansion of 3.1 percentage points compared to the same period the previous year. This evolution was explained mainly by three factors. The first was profitability, the prioritization strategy, the rebalancing of e-commerce sales mix, and other profitability actions. The second was the change in certain products of the ICMS-ST regime to ordinary ICMS. Finally, we had incremental and non-recurring recognition of credits. These factors had an impact in the contribution of both gross margin expansion. We move forward with rigor and discipline. We want to implement continuing improvement and the very judicious use of resources to improve the experience of our customers.

Speaker #1: In the quarter, the gross margin reached 30.5% and expansion of 3.1 percentage points compared to the same period the previous year. This evolution was explained mainly by three factors.

Speaker #1: The first was profitability, a prioritization strategy, and the rebalancing of e-commerce sales mix, and other profitability actions. The second was the change in certain products of the ICMS ST regime to ordinary ICMS.

Speaker #1: Finally, we had incremental and non-recurring cognition of credits. These factors had an impact in the contribution of gross margin expansion. So we move forward with a rigor and discipline.

Speaker #1: We want to implement continuing improvement and the very judicious use of resources to improve the experience of our customers. In the quarter, SG&A had a face reduction of 23 million or 2.6 year on year.

Speaker #1: In real terms, considering accumulated inflation of 4.6 in a period of reduction of 6.9%. As for capex, we invested 162 million BRL in the first half of the year, down 55% compared to the same period the previous year.

Rodrigo Manso: In the quarter, SG&A had a phased reduction of BRL 23 million or 2.6% year-on-year in real terms, considering accumulated inflation of 4.6% in the period, a reduction of 6.9%. As for CapEx, we invested BRL 162 million in H1, down 55% compared to the same period the previous year. This reduction mainly reflects the greater selectivity investments in technology and logistics and discontinuation of the plan to open new stores. We expect to end the year with investments between BRL 300 and BRL 350 million. At the same time, we continue to prioritize essential investments for store maintenance. In costs and expenses, we captured BRL 244 million in gains. These results affect mainly the adaptation of the workforce, the review of relevant contract gains in operational efficiency and freight, and implementation of new spending policies.

Pedro Albuquerque: In the quarter, SG&A had a phased reduction of BRL 23 million or 2.6% year-on-year in real terms, considering accumulated inflation of 4.6% in the period, a reduction of 6.9%. As for CapEx, we invested BRL 162 million in H1, down 55% compared to the same period the previous year. This reduction mainly reflects the greater selectivity investments in technology and logistics and discontinuation of the plan to open new stores. We expect to end the year with investments between BRL 300 and BRL 350 million. At the same time, we continue to prioritize essential investments for store maintenance. In costs and expenses, we captured BRL 244 million in gains. These results affect mainly the adaptation of the workforce, the review of relevant contract gains in operational efficiency and freight, and implementation of new spending policies.

Speaker #1: This reduction mainly reflects the greater selectivity investments in technology and logistics and this continuation of the plan to open new stores. We expect to end the year with investments between 300 and 350 million BRL.

Speaker #1: At the same time, we continue to prioritize essential investments for storage for stores, sorry, maintenance. In cost and expenses, we captured 244 BRL million in grades.

Speaker #1: These results affect mainly the adaptation of the workforce, the review of relevant contract gains in operational efficiency and freight, and implementation of new spending policies.

Speaker #1: As a result of the set of initiatives, the adjusted EBITDA margin reached 10.6%, up 1.7 percentage points compared to the previous year, moving to slide nine.

Rodrigo Manso: As a result of this set of initiatives, the adjusted EBITDA margin reached 10.6%, up 1.7 percentage points compared to the previous year. Moving to slide nine, net loss of continuing operations was BRL 204 million in the quarter compared to Q2 '25, adjusted for the positive and non-recurring effects associated with tax proceedings. The loss was reduced to 28.5%, reflecting the operational and financial advances mentioned before. On slide 10, you can see the evolution of cash flow, which was influenced by two important factors. The first was a more cautious posture of suppliers. We're very diligent in managing these commercial relationships, seeking to preserve supply and limit levels of disruption. Even so, we had a reduction of 12 days in the average term of suppliers with a BRL -677 million impact in the annual comparison.

Pedro Albuquerque: As a result of this set of initiatives, the adjusted EBITDA margin reached 10.6%, up 1.7 percentage points compared to the previous year. Moving to slide nine, net loss of continuing operations was BRL 204 million in the quarter compared to Q2 '25, adjusted for the positive and non-recurring effects associated with tax proceedings. The loss was reduced to 28.5%, reflecting the operational and financial advances mentioned before. On slide 10, you can see the evolution of cash flow, which was influenced by two important factors. The first was a more cautious posture of suppliers. We're very diligent in managing these commercial relationships, seeking to preserve supply and limit levels of disruption. Even so, we had a reduction of 12 days in the average term of suppliers with a BRL -677 million impact in the annual comparison.

Speaker #1: Net loss of continuing operations was 204 million in the quarter, compared to Q2 25, adjusted for the positive and non-recurring effect associated with tax proceeding.

Speaker #1: The loss was reduced to 28.5%, reflecting the operational and financial advances mentioned before. On slide 10, you can see the evolution of cash flow, which was influenced by two important factors.

Speaker #1: The first was a more cautious posture of suppliers and then were very diligent in managing this commercial relationships, seeking to preserve supply and limit levels of disruption, even so we had a reduction of 12 days in the average term of suppliers with a negative impact of 677 million BRL in the annual comparison.

Speaker #1: We have already observed a recovery of the times after the conclusion or the completion of the definitive agreement. Another relevant effect for cash flow was the sale of sticks, which resulted in a this consolidation of 185 million.

Rodrigo Manso: We have already observed a recovery of the terms after the completion of the definitive agreement. Another relevant effect for cash flow was the sale of Stix, which resulted in a disconsolidation of BRL 185 million. Excluding this accounting impact, we generated BRL 663 million in operating cash flow after CapEx. This generation was supported mainly by three factors. First, the evolution of the adjusted EBITDA. Second, improvement in the line of other non-operating assets and liabilities. Third, a reduction of BRL 287 million in CapEx in line with initiatives in the efficiency plan. Also considering the improvement of BRL 236 million in line with operating revenues and expenses, free cash flow increased by BRL 267 million compared to the previous year in the 12-month period. The quarter's results already reflect part of the benefits of the initiatives implemented by the company.

Pedro Albuquerque: We have already observed a recovery of the terms after the completion of the definitive agreement. Another relevant effect for cash flow was the sale of Stix, which resulted in a disconsolidation of BRL 185 million. Excluding this accounting impact, we generated BRL 663 million in operating cash flow after CapEx. This generation was supported mainly by three factors. First, the evolution of the adjusted EBITDA. Second, improvement in the line of other non-operating assets and liabilities. Third, a reduction of BRL 287 million in CapEx in line with initiatives in the efficiency plan. Also considering the improvement of BRL 236 million in line with operating revenues and expenses, free cash flow increased by BRL 267 million compared to the previous year in the 12-month period. The quarter's results already reflect part of the benefits of the initiatives implemented by the company.

Speaker #1: Excluding this accounting impact, we generated 663 million BRL in operating cash flow, after capex. This generation was supported mainly by three factors. First, the evolution of the adjusted EBITDA; second, improvements in the line of other non-operating assets and liabilities; and third, a reduction of 287 million BRL in capex in line with initiatives in the efficiency plan.

Speaker #1: Also considering the improvement of 236 million in line with operating revenues of expenses, free cash flow increased by 267 million compared to the previous year, in the 12-month period.

Speaker #1: The quarter's results already reflect part of the benefits of the initiatives implemented by the company, at the same time, this has been a difficult quarter.

Speaker #1: We remain focused on executing our strategy with the aim of resuming sustainable sales growth, improving profitability, increasing cash generation, and maintaining a disciplined capital allocation.

Rodrigo Manso: At the same time, this has been a difficult quarter. We remain focused on executing our strategy with the aim of resuming sustainable sales growth, improving profitability, increasing cash generation, and maintaining a disciplined capital allocation. I would like to give the floor back to Santoro for his closing remarks.

Pedro Albuquerque: At the same time, this has been a difficult quarter. We remain focused on executing our strategy with the aim of resuming sustainable sales growth, improving profitability, increasing cash generation, and maintaining a disciplined capital allocation. I would like to give the floor back to Santoro for his closing remarks.

Speaker #1: Now I would like to give the floor back to Santoro for his closing remarks.

Speaker #2: Thank you, Pedro. And before opening for Q&A, I'd like to leave a last message. In the last few months, we have taken some very important steps to build the basis of our GPA plan to strengthen the company's financial conditions.

Alexandre Santoro: Thank you, Pedro. Before opening for Q&A, I'd like to leave a last message. In the last few months, we have taken some very important steps to build the basis of our GPA plan to strengthen the company's financial conditions. We've started to simplify our structure. We've reduced costs, obviously with a focus of increasing the efficiency of our business. The quarter's results start to show their first effects of this work and job, but we are very much aware that this journey is only at the beginning. We have important opportunities. We still have important opportunities to capture here, both in the operation and reducing costs in productivity, and as a consequence, in cash generation.

Speaker #2: We've started to simplify our structure, we've reduced costs, and obviously, with a focus of increasing the efficiency of our business. The quarter's results start to show their first effects of this work and job, but we are very much aware that this journey is only at the beginning.

Speaker #2: We have important opportunities. We still have important opportunities to capture here, both in the operation and reducing costs in productivity and as a consequence in cash generation.

Speaker #2: Our focus will continue to be exactly the same, to place the customer at the center of decisions, simplify the company, execute our strategy with discipline, and to build an operation which is more and more efficient and competitive.

Alexandre Santoro: Our focus will continue to be exactly the same, to place the customer at the center of decisions, simplify the company, execute our strategy with discipline, and to build an operation which is more and more efficient and competitive. The results of the quarter point clearly that we are in the right direction, it is now up to us to be able to speed up this transformation with focus and discipline and execution capacity. That is how we will build a more simple, agile, and better-prepared company to generate value for consistency with clients, associates, vendors, and shareholders. Thank you very much. Let us continue now to Q&A. We will now start the Q&A session. To ask questions, you must click on the Q&A icon on the menu and ask your question. When you are accepted, activate your microphone to ask your question.

Speaker #2: The results of the quarter point clearly that we are in the right direction, and it is now up to us to be able to speed up this transformation with focus and discipline and execution capacity.

Speaker #2: And that is how we will build a more simple, agile, and better prepared company to generate value for consistency with clients, associates, vendors, and shareholders.

Speaker #2: Thank you very much, and let us continue now to Q&A. We will now start the Q&A session, and to ask questions, you must click on the Q&A icon on the menu and ask your question.

Alexandre Santoro: We will now start the Q&A session. To ask questions, you must click on the Q&A icon on the menu and ask your question. When you are accepted, activate your microphone to ask your question.

Speaker #2: When you are accepted, activate your microphone to ask your question. So let's start with the first question from Ellington Santana, Bank of America. Wellington, please.

Rodrigo Manso: Let's start with the first question from Wellington Santana, Bank of America. Wellington, please. Good morning, everyone. Thank you very much for this opportunity, for accepting our questions. Congratulations for your restructuring plan. I have two questions from my side. I think the first question, I think you very well touched the situation on the negotiation with vendors, that you had some stock outs during your recovery process. I'd like to understand, I know that this is close to being normalized, I'd like to know if there has been any change in terms of payments, of obtaining funding, et cetera, with your vendors after this situation has become more normal after the month of May. To understand if you are now working with a different approach in terms of cash availability, and we'd want to know how the situation with vendors is currently.

Operator: Let's start with the first question from Wellington Santana, Bank of America. Wellington, please.

Speaker #2: Good morning, everyone. Thank you very much for this opportunity for accepting our questions. Congratulations for your restructuring plan. I have two questions from my side.

Wellington Santana: Good morning, everyone. Thank you very much for this opportunity, for accepting our questions. Congratulations for your restructuring plan. I have two questions from my side. I think the first question, I think you very well touched the situation on the negotiation with vendors, that you had some stock outs during your recovery process. I'd like to understand, I know that this is close to being normalized, I'd like to know if there has been any change in terms of payments, of obtaining funding, et cetera, with your vendors after this situation has become more normal after the month of May. To understand if you are now working with a different approach in terms of cash availability, and we'd want to know how the situation with vendors is currently.

Speaker #2: I think the first question and I think you very well touched the situation on the negotiation with vendors, but you had some stockouts. During your recovery process, but I'd like to understand.

Speaker #2: I know that this is close to being normalized, but I'd like to know if there has been any change in terms of payments, of obtaining funding, et cetera, with your vendors after this situation has become more normal, after the month of May, to understand if you are now working with a different approach in terms of cash availability and we'd want to know how the situation with vendors is currently.

Speaker #2: And my second question, you're currently making a very significant advancement, especially in Gen 8, but I'd like to understand what you highlight as the main internal changes, how do you see what are the main leverages which still are available, and how are you balancing this reduction of cost and customer's experience in the store?

Alexandre Santoro: My second question, you're currently making a very significant advancement, especially in G&A. I'd like to understand what you highlight as the main internal changes. How do you see what are the main leverages which still are available, and how are you balancing this reduction of cost and customers' experience in the store? What do you see that you're going to be able to handle very well this cost reduction and to maintain customers' experience in stores? I think those are my two questions, please. Thank you very much. Wellington, thank you very much for your question. As you very well mentioned, I'm going to go a little bit into the dynamic with our vendors and cash flow.

Wellington Santana: My second question, you're currently making a very significant advancement, especially in G&A. I'd like to understand what you highlight as the main internal changes. How do you see what are the main leverages which still are available, and how are you balancing this reduction of cost and customers' experience in the store? What do you see that you're going to be able to handle very well this cost reduction and to maintain customers' experience in stores? I think those are my two questions, please. Thank you very much.

Speaker #2: What do you see that you're going to be able to handle very well this cost reduction and to maintain customer's experience in stores? I think those are my two questions, please.

Speaker #2: Thank you very much. Wellington, thank you very much for your question. As you very well mentioned, I'm going to go a little bit into the dynamic with our vendors and cash flow.

Alexandre Santoro: Wellington, thank you very much for your question. As you very well mentioned, I'm going to go a little bit into the dynamic with our vendors and cash flow.

Speaker #2: Obviously, when we go into this process, when we do this out of court restructuring process, this is something which allows us to define the perimeter vendors, clients, rents, et cetera, this is never part of the big dealings, right?

Alexandre Santoro: Obviously, when we go into this process, when we do this extrajudicial recovery process, this is something which allows us to define the perimeter, vendors, clients, rents, et cetera. This is never part of the big dealings, right? All of our vendors, all our operational vendors were all protected, and we continued without any delay, with any default, in no way whatsoever. Obviously, this is something which generates some noise and concern. Therefore, we've had to adjust some specific aspects of negotiations, the amount of limits we had.

Speaker #2: All of our vendors or our operational vendors were all protected and we continued without any delay with any default in no way whatsoever, but obviously, this is something which generates some noise and concern.

Speaker #2: Therefore, we've had to adjust some specific aspects and negotiations. The amount of limits we had, and that's

Pedro Albuquerque: This was natural, and there were some business processes and what was going on. As we started the reorganization, and once we normalize and there is the final agreement, and we somehow recover, and then we move on and continue with the objective of finalizing the approval to go back to more normal levels in terms of working capital. This is what we've been seeing, but we didn't change anything more structurally in the way we operated. I don't think there have been any major changes. Much to the opposite. I think that the process has been very intense and strong throughout the process. Now, following on your second question, Wellington, and thank you once again for the opportunity, but go into more detail. Now, sort of discriminating what's been done and what we still have to do.

Alexandre Santoro: This was natural, and there were some business processes and what was going on. As we started the reorganization, and once we normalize and there is the final agreement, and we somehow recover, and then we move on and continue with the objective of finalizing the approval to go back to more normal levels in terms of working capital. This is what we've been seeing, but we didn't change anything more structurally in the way we operated. I don't think there have been any major changes. Much to the opposite. I think that the process has been very intense and strong throughout the process. Now, following on your second question, Wellington, and thank you once again for the opportunity, but go into more detail. Now, sort of discriminating what's been done and what we still have to do.

Speaker #1: This was natural. And there was some processes, business processes, and what was going on. But as we started the reorganization, and once we normalize and there is the final agreement, and we somehow recover, and then we move on and continue with the objective of finalizing the approval to go back to more normal levels in terms of working capital.

Speaker #1: This is what we've been seeing, but we didn't change anything more structural in the way we operated. So I don't think there have been any major changes.

Speaker #1: Much to the opposite, I think that the process has been very intense and strong throughout the process. Now, following on your second question, Wellington, and thank you once again for the opportunity.

Speaker #1: But go into more detail. So now, sort of discriminating what's been done and what we still have to do. So we have reorganized first the structure in terms of staffing, and personnel.

Speaker #1: We had clearly an opportunity of streamlining, not just the administrative headquarters of the company, but also some operations in some regions. And we did this with a lot of discipline, and part of your question is how can you isolate the things or the customer?

Alexandre Santoro: We have reorganized, first the structure in terms of staffing and personnel. We had clearly an opportunity of streamlining not just the administrative headquarters of the company, but also some operations in some regions. We did this with a lot of discipline, and part of your question is how can you isolate the things or the customer. What is clear is that we want to have the right staffing per store. This is the last thing we are going to do something about. If there are any changes, it needs to be done. We have very clear understanding of the reality of the store in order to avoid negative effects, because we were losing sales just because we didn't have the appropriate structure. We're very surgical, very accurate, precise in some stores or some of our units that could have some adjustments.

Speaker #1: So what is clear is that we have want to have the right staffing per store and this is the last thing we are going to do something about if there are any changes, it needs to be done we are very clear understanding of the reality of the store.

Speaker #1: In order to avoid negative effects because we were losing sales just because we didn't have the appropriate structure. So we're very surgical, very accurate precise in some stores that or some of our units that could have some adjustments.

Speaker #1: But this was more in administrative, but with no impact on the day-to-day operation of our units. But the other area with relevant gains we still have opportunities.

Rodrigo Manso: This was more in administrative, with no impact on the day-to-day operation of our units. The other area with relevant gains, we still have opportunities. We have centralized direct purchase. Everything that is indirect for the company, this was very much decentralized. It is a lot of things. Our company has lots of departments, lots of people, lots of contracts, all spread out through the company. There was an area we reinforced in redesigning the company, and there have been significant gains and there is new negotiations. Sometimes it is service provision, cleaning, rent, labor, third parties or temporary labor. Many things. A company as big, as complex as us, has great benefits once you centralize these kinds of negotiations. In parallel, we also have an expense committee.

Alexandre Santoro: This was more in administrative, with no impact on the day-to-day operation of our units. The other area with relevant gains, we still have opportunities. We have centralized direct purchase. Everything that is indirect for the company, this was very much decentralized. It is a lot of things. Our company has lots of departments, lots of people, lots of contracts, all spread out through the company. There was an area we reinforced in redesigning the company, and there have been significant gains and there is new negotiations. Sometimes it is service provision, cleaning, rent, labor, third parties or temporary labor. Many things. A company as big, as complex as us, has great benefits once you centralize these kinds of negotiations. In parallel, we also have an expense committee.

Speaker #1: We have centralized direct purchase but everything that is indirect for the company. This was very much decentralized. It's a lot of thing. Our company has lots of departments, lots of people, lots of contracts, all spread out through the company.

Speaker #1: So there was an area we reinforced in redesigning the company and there have been a significant gains and there is new negotiation. Sometimes it's service provision, cleaning, rent, labor, third parties, or temporary labor.

Speaker #1: So many things a company as big as complex as us has great benefits once you centralize these kinds of negotiations. And in parallel, we also have an expense committee.

Speaker #1: All expenses may be it may sound too much. So about 40,000. It's not 40 million. It's 40,000 needs to have an approval. And then we want to leave some ideas that might be good, but we are no longer doing.

Rodrigo Manso: All expenses, it may sound too much, above BRL 40,000, it's not BRL 40 million, it's BRL 40,000, needs to have an approval. We want to leave some ideas that might be good, but we are no longer doing. One thing is to renegotiate, to buy better, so to speak, to find new partners, new suppliers for these indirect services. There have been decisions of no longer doing things that were not priority at this time of the company. This sets the backdrop for many things and things that we have already captured. There is a capture of gain in terms of cost reduction. When we streamline, we have associated costs in terms of terminations. The benefit is yet to come more than we saw in the Q1.

Alexandre Santoro: All expenses, it may sound too much, above BRL 40,000, it's not BRL 40 million, it's BRL 40,000, needs to have an approval. We want to leave some ideas that might be good, but we are no longer doing. One thing is to renegotiate, to buy better, so to speak, to find new partners, new suppliers for these indirect services. There have been decisions of no longer doing things that were not priority at this time of the company. This sets the backdrop for many things and things that we have already captured. There is a capture of gain in terms of cost reduction. When we streamline, we have associated costs in terms of terminations. The benefit is yet to come more than we saw in the Q1.

Speaker #1: So one thing is to renegotiate to buy better, so to speak, to find new partners, new suppliers for these indirect services. But there have been decisions of no longer doing things that were not priority at this time of the company.

Speaker #1: So this sets the backdrop for many things and things that we have already captured. So there is a capture of gain in terms of cost reduction.

For.

Speaker #1: So when we streamline so we have associated costs in terms of terminations. So the benefit is yet to come. More than we saw in the first quarter.

Speaker #1: There have been a number of initiatives that were implemented and I'm going to give you more details further ahead. That. Awesome. Specific adjustments to be made, which is natural in terms of structure.

Rodrigo Manso: There have been a number of initiatives that were implemented, I'm going to give you more details further ahead. There are some specific adjustments to be made, which is natural in terms of structure. There are two major initiatives where there is a lot to be done and is not going to be done in one month. They're going to be done over the next few months. I would point out logistics and technology. While logistics, clearly, I can give you examples. We have a logistics system that has been designed for a reality that is no longer true. We have distribution centers with idle capacity. This is because we had hypermarkets, different structure, big units. Now we have some idleness in our business. You know very well the margins with which we operate.

Alexandre Santoro: There have been a number of initiatives that were implemented, I'm going to give you more details further ahead. There are some specific adjustments to be made, which is natural in terms of structure. There are two major initiatives where there is a lot to be done and is not going to be done in one month. They're going to be done over the next few months. I would point out logistics and technology. While logistics, clearly, I can give you examples. We have a logistics system that has been designed for a reality that is no longer true. We have distribution centers with idle capacity. This is because we had hypermarkets, different structure, big units. Now we have some idleness in our business. You know very well the margins with which we operate.

Speaker #1: But there are two major initiatives where there is a lot to be done and is not going to be done in one month. They're going to be done over the next few months and I would point out logistics and technology.

Speaker #1: Well, logistics clearly, I can give you examples. We have a logistics system that has been designed for a reality that is no longer true.

Speaker #1: So we have distribution centers with idle capacity. And this is because we had hypermarkets, different structure, big units, but now we have some idleness in our business.

[Company Representative] (GPA): Bom dia a todos e sejam muito bem-vindos à videoconferência de divulgação dos resultados do Q2 de 2026 do GPA. Quem precisar de tradução, basta clicar no botão Interpretation, através do ícone do globo na parte inferior da tela, e escolher o seu idioma de preferência. Ressaltamos que as informações contidas nesta apresentação e eventuais declarações que possam ser feitas durante a videoconferência relativas às perspectivas de negócios, projeções e metas operacionais e financeiras do GPA, constituem-se em crenças e premissas da administração da companhia, bem como informações atualmente disponíveis. Considerações futuras não são garantias de desempenho. Elas envolvem riscos, incertezas e premissas, pois se referem a eventos futuros e, portanto, dependem de circunstâncias que podem ou não ocorrer.

For.

Speaker #1: You know very well the margins with which we operate. It's impossible to have any idleness. So but these are contracts are not easy to solve.

Speaker #1: They are not simple problems to solve, but they're being addressed with focus and discipline. I think logistics. Both in terms of redesigning distribution centers that we have already started doing and we have recently announced an action and then trading contracts, distribution partners, on the last mile of our business.

Rodrigo Manso: It's impossible to have any idleness. These are contracts that are not easy to solve. They are not simple problems to solve, but they're being addressed with focus and discipline. I think logistics, both in terms of redesigning distribution centers that we have already started doing, we have recently announced an action. Trading contracts, distribution partners on the last mile of our business. Logistics is an important aspect considering the size of the company and our complexity. Technology is important. These are changes that are kind of complex, we do things with lots of responsibility considering a company as big as ours. Just to give you an example, we have mainframe. We operate with mainframe. Aside from banks, I don't know of any other companies working with mainframes. This is a heritage, a legacy system.

Alexandre Santoro: It's impossible to have any idleness. These are contracts that are not easy to solve. They are not simple problems to solve, but they're being addressed with focus and discipline. I think logistics, both in terms of redesigning distribution centers that we have already started doing, we have recently announced an action. Trading contracts, distribution partners on the last mile of our business. Logistics is an important aspect considering the size of the company and our complexity. Technology is important. These are changes that are kind of complex, we do things with lots of responsibility considering a company as big as ours. Just to give you an example, we have mainframe. We operate with mainframe. Aside from banks, I don't know of any other companies working with mainframes. This is a heritage, a legacy system.

Guys.

Speaker #1: So logistics is an important aspect considering the size of the company and our complexity. So technology is important. These are changes that are kind of complex and we do things with lots of responsibility considering our company as big as ours.

[Company Representative] (GPA): Investidores devem compreender que condições econômicas gerais, condições de mercado e outros fatores operacionais podem afetar o desempenho futuro do GPA e conduzir a resultados que diferem materialmente daqueles expressos em tais considerações futuras. Estão conosco hoje o CEO do GPA, Alexandre Santoro, e o CFO e diretor de relações com investidores, Pedro Albuquerque. Passarei a palavra ao senhor Alexandre Santoro para dar início à apresentação.

For.

Speaker #1: And just to give you an example, we have mainframe. We operate with mainframe. So aside from banks, I don't know of any other companies working with mainframes.

Alexandre Santoro: Obrigado, Rodrigo. Bom dia a todos e obrigado por estarem novamente conosco aqui na divulgação dos resultados do Q2 de 2026 do GPA. É um segundo semestre que começa a mostrar os primeiros efeitos das mudanças que iniciamos há pouco mais de seis meses por aqui. Nós avançamos em rentabilidade.

Speaker #1: And this is a heritage, a legacy, system so today we don't have much flexibility because of the mainframe, lots of many different systems that do not interact with each other as they should and this is cost.

Rodrigo Manso: Today we don't have much flexibility because of the mainframe, lots of many different systems that do not interact with each other as they should. It's just cost. It's cost, not just in terms of structure, but also in terms of expenses with suppliers, different systems which is not reflected into productivity. If I could summarize, a lot has happened. There's a lot going on right now. There are relevant things going on right now, but we're being very responsible when we talk about our units and how we define them. We have a specific department where we can define the size per sector, and we're being very accurate in doing that. There is a significant set of stores. We have more staffing. We have increased the headcount instead of reducing because we wanted to have the appropriate headcount.

Alexandre Santoro: Today we don't have much flexibility because of the mainframe, lots of many different systems that do not interact with each other as they should. It's just cost. It's cost, not just in terms of structure, but also in terms of expenses with suppliers, different systems which is not reflected into productivity. If I could summarize, a lot has happened. There's a lot going on right now. There are relevant things going on right now, but we're being very responsible when we talk about our units and how we define them. We have a specific department where we can define the size per sector, and we're being very accurate in doing that. There is a significant set of stores. We have more staffing. We have increased the headcount instead of reducing because we wanted to have the appropriate headcount.

Speaker #1: It's cost, not just in terms of structure, but also in terms of expenses. With suppliers, different systems, which do not which is not reflected into productivity.

Speaker #1: So if I could summarize a lot has happened. There's a lot going on right now. There is relevant that are relevant things going on right now.

Speaker #1: But we're being very responsible when we talk about our units and how we define them. And we have a specific department where we can define the size per sector and we're being very accurate in doing that.

Speaker #1: And there is a significant set of stores we have more staffing. We have increased the headcount instead of reducing because we wanted to have the appropriate headcount.

Speaker #1: But well, in some other places it was the opposite. But we've been doing it with lots of discipline and very close follow-up.

For.

Rodrigo Manso: Well, in some other places it was the opposite. We've been doing it with lots of discipline and very close follow-up.

Speaker #2: Okay. Thank you very much. That was very clear. The next question is from Nicholas Lahai, JP Morgan. Nicholas, please the floor is yours. Good morning, everyone.

Rodrigo Manso: Well, in some other places it was the opposite. We've been doing it with lots of discipline and very close follow-up.

Rodrigo Manso: Okay. Thank you very much. That was very clear. The next question is from Nicolas Laham, J.P. Morgan. Nicolas, please, the floor is yours. Good morning, everyone. Thank you, Santoro, Pedro. I have a few questions here. The first is I would just like to confirm something that you've mentioned in your initial comments regarding the margin, the gross margin. If I understand well, the gross margin was split more or less between those three different channels and also the credits. I just wanted to confirm that item. My second question is related to FIC. We're still waiting for the central bank to confirm to approve the operation. I want to know if you have advanced in obtaining a new plan for the stores and if you're able to share how much this could be in terms of money available for the company. My third question is related to your tax partners.

Wellington Santana: Okay. Thank you very much. That was very clear.

Speaker #2: Thank you, Santoro, Pedro. I have a few questions here. The first is I would just like to confirm something that you've mentioned in your initial comments regarding the margin, the gross margin.

Operator: The next question is from Nicolas Laham, J.P. Morgan. Nicolas, please, the floor is yours.

You.

[Analyst] (JPMorgan): Good morning, everyone. Thank you, Santoro, Pedro. I have a few questions here. The first is I would just like to confirm something that you've mentioned in your initial comments regarding the margin, the gross margin. If I understand well, the gross margin was split more or less between those three different channels and also the credits. I just wanted to confirm that item. My second question is related to FIC. We're still waiting for the central bank to confirm to approve the operation. I want to know if you have advanced in obtaining a new plan for the stores and if you're able to share how much this could be in terms of money available for the company. My third question is related to your tax partners.

Speaker #2: If I understand well, the gross margin was split more or less between those three different channels and also the credits. I just wanted to confirm that item.

Speaker #2: And my second question is related to we're still waiting for the central bank to confirm to approve the operation. I want to know if you have advanced in obtaining a new plan for the stores and if you're able to share how much this could mean in terms of money available for the company.

Speaker #2: And my third question is related to your tax partners. I'd like to understand if you have any update on that process and anything you can tell us would be very welcome.

Pedro Albuquerque: I'd like to understand if you have any update on that process. Anything you can tell us would be very welcome. Thank you. Thank you, Nicolas. Let me go here to the more financial issue. Yes, you are correct. The impact is a BRL 300, or it's normally one third, one third, one third. Yes, that is in line with what we said. Regarding FIC, we already have met some of the conditions for the wrapping up of this transaction. We have the approval of the central bank. We continue operating. Again, just reminding you that this is a JV which is linked to Casas Bahia, Assaí, and this is a relationship of several different parties, including Itaú Unibanco. We are looking at this step by step.

Speaker #2: Thank you. Thank you. Nicholas. Let me go here to the more financial issue. Yes, you are correct. The impact is a 300 it's normally one-third, one-third, one-third.

Pedro Albuquerque: I'd like to understand if you have any update on that process. Anything you can tell us would be very welcome. Thank you.

For.

Pedro Albuquerque: Thank you, Nicolas. Let me go here to the more financial issue. Yes, you are correct. The impact is a BRL 300, or it's normally one third, one third, one third. Yes, that is in line with what we said. Regarding FIC, we already have met some of the conditions for the wrapping up of this transaction. We have the approval of the central bank. We continue operating. Again, just reminding you that this is a JV which is linked to Casas Bahia, Assaí, and this is a relationship of several different parties, including Itaú Unibanco. We are looking at this step by step.

Speaker #2: So yes, that is in line with what we said regarding a fix. We already have met some of the conditions for the wrapping up of this transaction.

Discipline.

Speaker #2: We have the approval of the central bank. We continue operating. Again, just reminding you that this is a JV which is linked to Alcatraz Bahia SAI and this is a relationship of several different parties including Itaú Bank.

For.

Speaker #2: We are looking at this step by step. Once again, I was trying to maintain the customer's experience and this is a bit in line with your next question.

Speaker #2: What we will be doing, we don't have a clear forecast. We think this is something which will go towards the beginning of the year and it ended up being a bit delayed.

Alexandre Santoro: Once again, I was trying to maintain the customer's experience, and this is a bit in line with your next question. What we will be doing. We don't have a clear forecast. We think this is something which will go towards the beginning of the year, and it ended up being a bit delayed on the central bank process. Regarding the exploration of the financial bank services, we are studying possibilities and potential partnerships. I believe that this has to be dealt with very carefully because I believe the FIC is something which has had objectives and priorities which are slightly different when this has become a partnership with much complexity considering the amount of partners. Remembering this, like everything we are doing here, we're trying to set up a strategy which works for the different flags we have and different formats.

Pedro Albuquerque: Once again, I was trying to maintain the customer's experience, and this is a bit in line with your next question. What we will be doing. We don't have a clear forecast. We think this is something which will go towards the beginning of the year, and it ended up being a bit delayed on the central bank process. Regarding the exploration of the financial bank services, we are studying possibilities and potential partnerships. I believe that this has to be dealt with very carefully because I believe the FIC is something which has had objectives and priorities which are slightly different when this has become a partnership with much complexity considering the amount of partners. Remembering this, like everything we are doing here, we're trying to set up a strategy which works for the different flags we have and different formats.

Speaker #2: On the central bank process and regarding the exploration of the financial bank services, we are studying possibilities and potential partnerships. I believe at this has to be dealt with very carefully because I believe the thick is something which has had objectives and priorities which are slightly different when this has become a partnership with much complexity considering the amount of partners.

Speaker #2: And then remembering this like everything we are doing here, we're trying to set up a strategy which works for the different flags we have and different formats and financial services will also be talking with this design.

Speaker #2: Now in the beginning, in this recovery process, we might delay the definition of this service because we have to have more clarity on what we're going to develop with this partner.

Everything.

Alexandre Santoro: Financial services will also be talking with this design. Now in the beginning in this recovery process, we might delay the definition of this service because we have to have more clarity and what we're going to develop with this partner. It's not something that we're going to be doing in the short term. I can't tell you exactly what would be the impact and value, but obviously the phone customer has a very relevant value for the exploration of this type of service. We see this in the card. In the last aspect regarding the tax partners and what is the negotiation status, we have been advancing. This is nothing new to report to the market. As soon as we see a transaction, we will see this.

Pedro Albuquerque: Financial services will also be talking with this design. Now in the beginning in this recovery process, we might delay the definition of this service because we have to have more clarity and what we're going to develop with this partner. It's not something that we're going to be doing in the short term. I can't tell you exactly what would be the impact and value, but obviously the phone customer has a very relevant value for the exploration of this type of service. We see this in the card. In the last aspect regarding the tax partners and what is the negotiation status, we have been advancing. This is nothing new to report to the market. As soon as we see a transaction, we will see this.

Let's see what's going on.

Speaker #2: But it's not something that we're going to be doing the short term. So I can't tell you exactly what would be the impact and value, but obviously the bone customer has a very relevant value for the exploration of this type of service.

Speaker #2: We see this in the card. And in the last aspect regarding the tax partners, and what is the negotiation status, we have been advancing this is nothing new to report to the market.

The qualification.

Speaker #2: As soon as we see a transaction, we will see this. This is something that I've arrived five months ago and we have had very interesting conversations with this process.

Speaker #2: I think this out of court recovery process in a certain manner helps us to look at the sense of urgency and all the issue.

Rodrigo Manso: This is something that I've arrived at five months ago, and we have had very interesting conversations with this process. I think this extrajudicial recovery process in a certain manner helps us to look at the sense of urgency and all the issue of CapEx, how we can evolve this. This comes from speeding up some of the processes inside the attorney's office and the tax revenue service. We have nothing to share with the market. As soon as we have any information, we will share this with you and update this with the rest of you. Thank you very much, and congratulations for the advances you have obtained. Thank you, Nicolas. Continuing, the next question is from Andrew Ruben, Morgan Stanley. Andrew, you can continue, please.

Pedro Albuquerque: This is something that I've arrived at five months ago, and we have had very interesting conversations with this process. I think this extrajudicial recovery process in a certain manner helps us to look at the sense of urgency and all the issue of CapEx, how we can evolve this. This comes from speeding up some of the processes inside the attorney's office and the tax revenue service. We have nothing to share with the market. As soon as we have any information, we will share this with you and update this with the rest of you.

Speaker #2: Of CAPAG, how we can evolve this. And this comes from speeding up some of the processes inside the attorney's office and the tax revenue service, but we have nothing to share with the market.

Speaker #2: As soon as we have any information we will share this with you and update this with the rest of you. Thank you very much and congratulations for the advances you have obtained.

Speaker #2: Thank you, Nicholas. So continuing the next question is from Andrew Rubin, Morgan Stanley. Andrew, you can continue, please.

[Analyst] (JPMorgan): Thank you very much, and congratulations for the advances you have obtained.

Pedro Albuquerque: Thank you, Nicolas.

Speaker #3: Hi. Thanks very much. I'm curious if you could detail a bit more about the consumption backdrop. How you're planning for the second half compared to the first half.

Operator: Continuing, the next question is from Andrew Ruben, Morgan Stanley. Andrew, you can continue, please.

Speaker #3: We saw you mentioned the impact of sports betting. I think that was a new callout. So just to understand, anything behind that specifically. And then bigger picture, if you're seeing any divergence by banner or by socioeconomic class or the talk of consumption difficulties is more broad-based.

Andrew Ruben: Hi. Thanks very much. I'm curious if you could detail a bit more about the consumption backdrop, how you're planning for the H2 compared to the H1. We saw you mentioned the impact of sports betting. I think that was a new call-out, so just to understand anything behind that specifically. Bigger picture, if you're seeing any divergence by banner or by socioeconomic class, or the talk of consumption difficulties is more broad-based. Thank you very much.

Speaker #3: Thank you very much.

For.

Speaker #2: Your first question. On the consumer behavior in terms of indebtedness and above all the issue of what we are seeing for the future, if I understood your question well.

Alexandre Santoro: Your first question on the consumer behavior in terms of indebtedness and, above all, the issue of what we are seeing for the future, if I understood your question well. Andrew, I would say that we're not going to see any change in this sense. The macro scenario today, I think the food retail has always had a very correct relationship to income availability. If you had an increase in income, a reduction in unemployment, this naturally generates an increase in consumption. We have not seen this for some time already. The scenario is slightly different. You speak to our competitors and to specialized people in this sector that do research and have data readily available. What we see is that the performance has reduced a bit, the income has improved, but consumption hasn't increased.

Speaker #2: Andrew, I would say that we're not going to see any change in the sense the macro scenario today I think a food retail has always had a very correct relationship to income availability.

Speaker #2: So if you had an increase in income, a reduction in unemployment, this naturally generates an increase in consumption. We have not seen this force in time already.

Speaker #2: The scenario is slightly different. You speak to our competitors. And to specialized people in the sector that do research and have data readily available.

Speaker #2: What we see is that the performance has reduced a bit. The income has improved. But consumption hasn't increased. It's over 20 month at the sales in volumes.

Speaker #2: In our sector as a whole, reduces. It drops. So this is a trend which is few signs of improvement in the short term. And this is for several reasons.

Be attorney's office and the tax revenue service, but we have nothing to share with the market. As soon as we have any information, we will share this with you and update this with the rest of you.

Alexandre Santoro: It's over 20 months that the sales and volumes in our sector as a whole reduces, it drops. This is a trend which is few signs of improvement in the short term, and this is for several reasons. I think income, the level of interest rates that we see, obviously, the families are becoming more indebted and are consuming part of this additional income in this indebtedness, because of the natural situation of interest rates. Today, the habits have changed a lot. I think people have streaming services and very similar things at home which end up consuming part of your income. The bets, sports betting, I think becomes something very important in the country. We have access to surveys that shows that 26% of homes that declare, obviously, the number might even be bigger, 26% of homes, households today bet.

Speaker #2: I think income the letter the interest rates that we see obviously the families are becoming more indebted. And our consuming part of this additional income in this indebtedness because of the natural situation of interest rates.

Thank you very much and congratulations for the advances. You have obtained.

Thank you, Nicholas.

So, continuing, the next question is from Andrew Rubin, Stanley. Andrew, you can continue, please.

Speaker #2: Today the habits have changed a lot. So I think people have streaming services and very similar things at home, which end up consuming part of your income.

Thanks very much.

Speaker #2: The bets sports betting, I think becomes something very important in the country. We have access to surveys that shows that 26% of homes that declare obviously the number might even be bigger, 26% of homes, households today bet so they get part of their income and use it to place bets believing that a bet will increase their income.

I'm curious if you could tell us a bit more about the consumption backdrop—how you're planning for the second half compared to the first half. We saw you mentioned the impact of sports betting; I think that was a new call-out, so I just want to understand if there's anything specific behind that. And then, bigger picture, are you seeing any divergence by banner or by socioeconomic class, or is the talk of consumption difficulties more broad-based? Thank you very much.

Speaker #2: Which obviously is not what happens. And in this type of survey, which we've been able to go more in depth in, the half of these people that place bets 50% of them adjust their budget in food purchases.

Your first question on consumer behavior.

Alexandre Santoro: They get part of their income and use it to place bets, believing that a bet will increase their income, which obviously is not what happens. In this type of survey, which we've been able to go more in depth in, the half of these people that place bets, 50% of them adjust their budget in food purchases. Let's suppose if a person places a bet, the income that already had some restrictions has improved a bit, what is available is reduced, and the main adjustment placed in the household in that example ends up being in food. That is a fact that is happening. We can see that our other competitors, everyone is saying the very same thing.

In terms of indebtedness.

Speaker #2: So let's suppose if a person places a bet the income that already had some restrictions hasn't proved a bit what is available is reduced.

And above all the issue of what we are seeing for the future if I understood your question. Well, Andrew, I would say.

That we're not going to see any change in percents.

The macro scenario today.

Speaker #2: And the main adjustment placed in the household in that example ends up being in food. So that is a fact that is happening. We can see that our other competitors, everyone is saying the very same thing.

I think a food retail has always had a very correct relationship to income availability.

Had an increase in income.

Uh, a reduction in an employment. This naturally generates an increase in consumption.

Speaker #2: But at the end of the day, we are competing for this available income which is not only a competition in our sector. It's a competition with.

Speaker #2: New habits and other aspects and obviously the macroeconomic scenario. So I'm not able to see a reasonable timeline where we will see a big shift in this scenario.

Alexandre Santoro: At the end of the day, we are competing for this available income, which is not only a competition in our sector, it's a competition with new habits and other aspects, and obviously the macroeconomic scenario. I'm not able to see a reasonable timeline where we will see a big shift in this scenario. It is much more how you adapt this, how you create supply and be more appealing for your consumers, for you to grow in this dispute. I said this very quickly at the beginning. The importance of the product supply, regionalization of the appropriate value prop for each one of our formats. In that sense, you have the issue of GLP-1 pens, which I'm not going to go into much details here. This is a habit we're just going to change, the weight loss pens.

Speaker #2: It is much more how you adapt this, how you create supply and the big more appealing for your consumers for you to grow in this such in this dispute.

We have not seen this force in time already. The scenarios might be different. You speak to our competitors and to specialized people in this sector that do research and have data readily available. What we see is that the performance has reduced a bit, the income has improved, but consumption hasn't increased. It's over 20 months that the sales in volumes in our sector as a whole have reduced — it drops.

So this is a trend.

Which is few signs of improvement in the short term and this is for several reasons I think income.

Speaker #2: And I said this very quickly at the beginning. The importance of the product supply, regionalization of the appropriate value prop for each one of our formats.

The letter of interest rates that we see obviously, the families are becoming more indebted and are consuming part of this additional income in this indebtedness. So because of the natural situation of interest rates,

Speaker #2: So in that sense, you have the issue of the pens, which I'm not going to go into much details here. This is a habit which is going to change.

Speaker #2: The weight loss pens. This is a situation which we have an important burden in terms of fruits, vegetables, proteins. This is a very big level in as these are categories that are growing.

Today, the habits of changed a lot. So I think people have streaming services and very similar things that home which uh, end up consuming part of your income.

the bets, uh,

Speaker #2: So I think we also have some important advantages which we need to know how to do this well done to become attractive and appealing to our customers.

Alexandre Santoro: This is a situation which we have an important burden in terms of fruits, vegetables, proteins. This is a very big level in Pão de Açúcar, as these are categories that are growing. I think we also have some important advantages, which we need to know how to do this well done to become attractive and appealing to our customers, for us to gain a share in this challenge, this dispute, which is not easy for the income availability, considering that there are other things that are fighting for the same income availability.

Speaker #2: For us to gain a share in this challenge this dispute which is not easy for the income availability considering that there are other things that are fighting for the same income availability.

Sports betting, I think becomes something. Definitely, I be very important to the country. We still we have access to surveys that shows that 26% of homes, that declare, obviously, the number might even be Bingo, 26% of homes households today, bet. So they get part of their income and use it to place bets believing that a bet will increase their income which obviously is not what happens.

Speaker #1: Well, he was just talking about consumption. The expectations for the second half of the year Sentaro was saying well in our brands are very strong in terms of perishables, fruits and vegetables.

and in this type of survey, which we've been able to go more in depth in

is the half of these people but place bets.

50% of them.

are just

Their budget and food purchases?

Pedro Albuquerque: Well, he was just talking about consumption, the expectations for H2. Santoro was saying, well, Pão de Açúcar and our brands are very strong in terms of perishables, fruits and vegetables. Yeah, sometimes even though you might have a lower volume, there is a priority. We have a more resilient format. This recovery of growth is going to be very much based on these areas, our own bakeries, perishables, fruits, vegetables, and this is what we are working on for H2.

Alexandre Santoro: Well, he was just talking about consumption, the expectations for H2. Santoro was saying, well, Pão de Açúcar and our brands are very strong in terms of perishables, fruits and vegetables. Yeah, sometimes even though you might have a lower volume, there is a priority. We have a more resilient format. This recovery of growth is going to be very much based on these areas, our own bakeries, perishables, fruits, vegetables, and this is what we are working on for H2.

Speaker #1: So sometimes even though you might have a lower volume, there is a priority. We have a more resilient format. And this recovery of growth is going to be very much based on this these areas are own bakeries, perishables, fruits, vegetables.

So, let's suppose that if a person places a bet, the income that already had some restrictions has improved a bit, but what is available is reduced, and the main adjustment placed in the household, in that example, ends up being in food.

So, that is a fact that is happening. We perceive that our other competitors—everyone is saying the very same thing.

Speaker #1: And this is what we are working on for the second half of the year.

so, at the end of the day,

Speaker #2: Great. That's very clear on the backdrop and how you're addressing it. Thank you.

We are competing for this available income which is not only a competition in our sector. It's a competition with new habits and other aspects and obviously the macroeconomic scenario. So I'm not able to see

Speaker #1: If there are no further questions, I would like to give the floor to Mr. Santoro for his closing remarks. So basically, I would like to thank everybody for your attendance, for your questions.

Andrew Ruben: Great. That's very clear on the backdrop and how you're addressing it. Thank you.

Speaker #1: And since Father's Day is going to be soon, so it's 67 years. Very proud of so please enjoy everything, all the opportunities in our stores.

a reasonable timeline, where we will see a big shift in this scenario. It is much more how you adapt, this, how you create Supply and be big more appealing for your consumers for you to grow in this search in this dispute.

Rodrigo Manso: If there are no further questions, I would like to give the floor to Mr. Santoro for his closing remarks. Basically, I would like to thank everybody for your attendance, for your questions. Since Father's Day is going to be soon, it's 67 years, very proud of Pão de Açúcar, please enjoy everything, all the opportunities in our stores. We are making many very interesting offers and promotions, lots of good things. Go there. Once again, thank you so much for your participation in our video conference. We thank everyone for your presence, and this conference call has now ended. The investor relations department is available to answer any other questions you may have. Thank you very much for your attendance, and have a very good day.

Operator: If there are no further questions, I would like to give the floor to Mr. Santoro for his closing remarks.

And I said this very quickly at the beginning.

Alexandre Santoro: Basically, I would like to thank everybody for your attendance, for your questions. Since Father's Day is going to be soon, it's 67 years, very proud of Pão de Açúcar, please enjoy everything, all the opportunities in our stores. We are making many very interesting offers and promotions, lots of good things. Go there. Once again, thank you so much for your participation in our video conference. We thank everyone for your presence, and this conference call has now ended. The investor relations department is available to answer any other questions you may have. Thank you very much for your attendance, and have a very good day.

Speaker #1: We are making many very interesting offers and promotions lots of good things. So go there. And once again, thank you so much for your participation in our video conference.

The importance of the product supply regionalization of a probe, the appropriate value prop for each 1 of our formats.

Speaker #1: So we thank everyone for your presence and this conference call has now ended. Investor relations department is available to answer any other questions you may have.

So in that sense, you have the issue of the pens, which I'm not going to go into much detail here. This is a habit. We're just going to change the weight loss pens. This is a situation in which we have an important burden in terms of fruits, vegetables, and proteins. This is a very big, uh, level in volume. Just could be as Visa categories, but are growing.

I think we also have some important advantages that we need to recognize.

How to do this. Well, done to become attractive and appealing to our customers for us to gain a share in this, uh,

Well, he was just talking about consumption. Uh, the expectations for the second half of the Year. Santoro was saying, well bondia, super and our brands are very strong in terms of perishables, uh, fruits and vegetables. So yeah, sometimes even though you might have a lower volume, there is a priority, uh, we have a more resilient format and this recovery of growth is going to be very much based on this these areas. Our own bakeries perishables, uh, fruits vegetables. And this is what we are working on uh, for the second half of the year.

Thank you, Andrew.

Further questions and would like to give the floor to Mr. Santoro for his closing remarks. So basically, I would like to thank everybody for your attendance, for your questions. And since Father's Day is going to be soon. Uh, so, uh, it's 67 years, very proud of bonja Suka, so please enjoy everything. All the opportunities in our stores. We are making many, very interesting offers and promotions, lots of good things. So go there,

And once again, thank you so much for your participation in our video conference.

So we thank everyone for your presence. And this conference call has now ended the best of relations department is available to answer. Any other questions, you may have, thank you very much for your attendance and have a very good day.

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Q2 2026 Companhia Brasileira de Distribuição Earnings Call

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