Operator: Good morning, everyone, and thank you for standing by. Welcome to Cencosud Q3 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. Following the prepared remarks, we will open the call for questions. I will now turn the call over to Oscar Bentjerodt, Investor Relations. Please go ahead.
Oscar Bentjerodt: Thank you, Daniela, and good morning, everyone. The presenters on this call today are Rodrigo Larraín, our Chief Executive Officer, Andrés Neely, our Chief Financial Officer, and Irina Axenova, Investor Relations Director. Before we begin today, let me remind you that statements made today by the company may include forward-looking statements. These statements are subject to risks and uncertainties and may affect influences by future events, including changes in macroeconomic conditions, political development, legislation, and operational factors that may affect Cencosud's future performance. The company undertakes no obligations to publicly update or revise these statements, except as required by law. Please note that no part of this call may be recorded in whole or in part without the company's prior consent. The earnings presentation accompanying this call, which includes additional information, is available on the company's website in the Investor Relations section.
Oscar Bentjerodt: Please note that this call is being recorded. With that, I will now leave you with our CEO, Rodrigo Larraín, who will begin with his opening remarks. Rodrigo, please go ahead.
Rodrigo Larraín: Thank you very much, Oscar. Good morning, everyone, and thank you for joining us today. I would like to make three basic points today. First, what changed this quarter? Secondly, why we believe it is structural and provides an avenue for sustained improvement in growth and profitability, and why and where we are focused from here. First, what changed this quarter? Our sales are growing again. Consolidated revenue rose 2.3% after declines of 4.4% in Q1 and 1.2% in Q2. Four of our six markets post positive same-store sales. Most importantly, supermarkets in Chile returned to positive same-store sales, up 0.6%, with online sales growing 17.6% and online penetration reaching a record of 16.6%. Last quarter, we said we expected a stronger H2, and we are starting to see evidence of the beginning of this trend. Second, why do we believe this is structural?
Rodrigo Larraín: Over the past year, we have simplified our organization and moved to shared platforms and capabilities across countries and formats, so that we develop a solution once and scale it everywhere. You can see it in Prime, first developed in Chile and now in five countries, with membership up more than 40% year-over-year. You can see it in the renewal of Puntos Cencosud into a single loyalty platform for all our formats in Chile. You can see it, for example, in Mr. Toc, our new private label category launched simultaneously in Chile, Colombia, and Argentina. Behind this are the capabilities we have been building: unified customer data, advanced analytics, and artificial intelligence. In Chile supermarket, that means AI-powered personalized carts, the first assisted shopping with AI at Jumbo, first in the market, and always having the customer at the center.
Rodrigo Larraín: Consolidated online sales grew 17.4%, up from 3.6% in Q1, at double-digit rates in all six countries. Retail media revenue grew 39%. Third, we are focused. In Chile, the recovery reflects adjustments to our commercial proposition. Don Salva already has 11 stores. Jumbo Apoquindo opened as a new urban format, and e-commerce keeps gaining share. Outside Chile, Argentina, Peru, and Colombia together already account for 38% of our EBITDA and grew almost 30%, with margins of 6.4%, 12.3%, the highest in the group, and 5.5%, double a year ago. Cenco Malls grew EBITDA almost 20%, adding 170,000 square meters of leasable area. We are definitely not yet where we want to be on profitability, but in a steady improvement trend. Consolidated adjusted EBITDA declined 9%, or 3.7% excluding a non-recurring item in Brazil last year, mainly because of personnel, logistics, and marketing costs in Chile.
Rodrigo Larraín: Our priority is to translate this commercial momentum into margins through our productivity plan and expense discipline. Andrés will talk you through the numbers in detail. We are moving from building capability to scaling their impact. We are focused, we are clear on what we have to do, and we believe Cencosud is on the right path, with the customer at the center of every decision. I would like to thank you all for your attention to our calls and our meetings, and also to the team at Cencosud for their commitment and hard work. Thank you, and Andrés, over to you.
Andrés Neely: omnichannel strategy. Let me begin with four highlights. First, four of our six markets delivered positive supermarket same-store sales. Chile returned to growth, an important development in our largest market. Second, online sales grew at double-digit rates across all six countries, while our omnichannel customer base expanded 13.6% year over year. Third, shopping centers continued to deliver strong results, with adjusted EBITDA increasing 19.8%. Total gross leasable area reached approximately 2.5 million square meters, with 170,000 square meters added over the past year. Finally, Argentina, Peru, and Colombia delivered combined adjusted EBITDA growth of 29.5%, with a particularly strong contribution from Argentina's supermarket business. Our priority is to continue executing our strategy with a clear focus on improving profitability. Turning to our omnichannel strategy, the focus is on building shared capabilities that we can scale across countries and formats with tangible results.
Andrés Neely: In technology, data, and AI, our shared mobile app now operates across four countries and five formats. We have also introduced AI-powered shopping tools and Lead Shopper Chat, while Easy Marketplace has expanded its assortment fivefold. In loyalty and personalization, Prime is now available in five countries, with membership growing nearly 40% year over year. In Chile, we relaunched Puntos Cencosud, bringing all of our retail formats together under the country's largest multi-format rewards program. The enhanced program doubles the points earned on each purchase, lowers the minimum points required for redemption, and expands redemption options. We are also expanding our growth and monetization opportunities. Private label penetration reached 18.4%, while retail media revenue grew 39%. With more than 31 million active loyalty customers, our opportunity is to use this scale more effectively to improve the shopping experience, deepen customer relationships, and develop additional profitable revenue streams.
Andrés Neely: The next slide illustrates how our omnichannel initiatives are translating into faster online sales growth and increased Prime membership. Prime membership followed a similar trend across the group. Membership growth accelerated from 13.3% in Q2 to 39.6% in Q3. In Chile and Peru, growth reached 45% and 48%, respectively. Together, these indicators reflect continued adoption of our digital channels and loyalty programs, supporting the development of our omnichannel ecosystem. Turning to our financial results, unless otherwise indicated, the revenue and adjusted EBITDA figures I will discuss exclude the impact of Argentina's hyperinflation accounting under IAS 29. Consolidated revenue reached CLP 4.1 trillion, increasing 2.3% year-over-year. Excluding foreign exchange movements and portfolio effects, underlying revenue growth was 4.5%. Supermarket revenue increased 2.8%, supported by positive same-store sales in four of our six markets, including Chile's return to growth.
Andrés Neely: Shopping center revenue increased 16.5%, reflecting higher traffic, solid operating performance, and portfolio expansion. As discussed, online sales grew 17.4%, with double-digit growth in every country. Online penetration reached 11.3%, up 141 basis points year-over-year. Two factors partially offset this commercial performance. First, currency movements reduced revenue by CLP 57 billion, mainly due to the depreciation of the Argentine peso and the US dollar against the Chilean peso. Second, portfolio actions and temporary store disruptions reduced revenue by a further CLP 31 billion. This included the exit from Bretas Minas Gerais, the transfers of service stations in Colombia, and store conversions and renovations. The underlying commercial growth was stronger than the consolidated headline figure suggests. Moving to profitability, we delivered strong improvements in Argentina, Peru, Colombia, and shopping centers, although these gains were offset by cost pressures in Chile and a challenging comparison base in Brazil.
Andrés Neely: The quarter reflected two contrasting trends: strong improvements across several markets and shopping centers, offset by cost pressures in Chile and Brazil. In local currency, adjusted EBITDA increased 15.8% in Argentina, 9.5% in Peru, and 97.5% in Colombia, supported by improved commercial performance and operating efficiency. Argentina's supermarket business was a standout, more than doubling adjusted EBITDA through improved supplier terms, operating efficiencies, and Makro synergies. Shopping centers also contributed positively, supported by Chile and Peru, together with the additional contribution from Plaza Central in Colombia. In Chile, however, higher personnel, logistics, security, and marketing expenses, along with increased credit risk provisions in financial services, more than offset these gains. The comparison also includes CLP 18.3 billion non-recurring gain recorded in Brazil in Q3 of last year. Excluding that gain, consolidated adjusted EBITDA declined 3.7%.
Andrés Neely: Our focus is clear: converting the recovery in sales into stronger margins through productivity improvements, disciplined spending, and more efficient execution. Turning to net income, we reported CLP 50.2 billion for the quarter, up 477.9% year-over-year, supported by higher operating income and asset revaluation gains. This improvement was partially offset by SG&A pressure, UF indexation, and financial services performance, resulting in distributable net income of -CLP 46.8 billion. Finally, turning to our balance sheet, we closed the quarter with $632 million in cash and financial assets, providing liquidity to support our operations, transformation, and growth initiatives. Net leverage stood at 3.8 times, or 3.7 times excluding the hyperinflation accounting, mainly reflecting non-cash UF indexation and a lower last 12 months EBITDA base. Our debt maturity profile remains well-balanced, with no material maturities until 2029, following the bond issuances completed early this year.
Andrés Neely: Our debt structure also helps manage financial risk. Although 51.5% of financial debt is denominated in US dollars, hedging, including the natural hedge from our US operations, reduces unhedged dollar exposure to 7.2% of total debt. In summary, liquidity and maturity profile provide flexibility to execute our priorities, while our focus remains on improving profitability and maintaining balance sheet discipline. With that, I will hand it over to Irina to discuss our performance by country. Irina.
Irina Axenova: Thanks, Andrés. Good morning, everyone. Let me begin with Chile. I think both Rodrigo and Andrés already mentioned the good news. Supermarkets Chile returned to positive same-store sales growth, alongside accelerated growth in our digital channels and continued strong performance of our shopping center business. Consolidated revenues in Chile increased 1.4%, with Supermarkets revenues growing 2% and online sales advancing 17.6%, reaching a record penetration of 16.6%. We also continued to strengthen our commercial proposition through the expansion of our new hard discount format, Don Salva, and the opening of a new urban format of Jumbo in Santiago. Shopping centers delivered 8.2% revenue growth, supported by additional GLA, higher office occupancy, and increased traffic. Home improvement revenues grew 1.2%, while Department Stores remain affected by softer discretionary spending and temporary renovation disruptions. On profitability, Shopping Centers adjusted EBITDA increased 10.3%, with margin expanding 184 basis points to 81.7%.
Irina Axenova: However, performance was offset by higher operating expenses across retail business and increased provisions in financial services. As both Rodrigo and Andrés already mentioned, our focus remains on converting the recovery in commercial activity into stronger profitability through productivity initiatives, cost discipline, and more efficient execution. Turning to Argentina, we delivered a significant improvement in profitability, driven primarily by Supermarkets and Shopping Centers. Supermarket revenue grew 26% in local currency, with online sales increasing 67.7% and private label penetration reaching 20.6%. Shopping centers maintained strong momentum, with revenues up 32.4%. Most importantly, Argentina's consolidated adjusted EBITDA increased 29.1% in Chilean pesos, with margin expanding to 6.4%. Supermarkets led this improvement, more than doubling adjusted EBITDA in local currency, supported by stronger commercial execution, operating efficiencies, and Makro synergies. Shopping centers also delivered solid growth, with adjusted EBITDA increasing 29.5%.
Irina Axenova: In the United States, The Fresh Market maintained resilient operating performance, supported by digital growth and disciplined cost management. Revenues increased 1.4% in US dollars, benefiting from new store contribution and 17.8% growth in online sales, with digital penetration reaching almost 10%. This was partially offset by softer store traffic and the temporary impact of Cyclospora-related concerns on fresh produce sales. The Fresh Market was also recognized as America's best supermarket for the fifth consecutive year, reinforcing the strength of its differentiated customer proposition. Congratulations to The Fresh Market team. Operational efficiencies and expense discipline helped preserve profitability despite higher promotional product and supply chain costs. Adjusted EBITDA declined just 0.5% in US dollars, with margin remaining broadly stable at 7.4%. In Peru, we delivered broad-based growth and further margin expansion, supported by solid execution in both Supermarkets and Shopping Centers.
Irina Axenova: Supermarket revenue grew 6.8% in local currency, driven by positive performance across Wong and Metro. Online sales increased 20.1%, while Wong Prime membership expanded more than 48%, reflecting the value of our loyalty program and strength of Wong Prime in Peru. Shopping centers revenues increased 8.6%, supported by the progressive ramp-up of Cenco La Molina, which reached over 85% occupancy. Consolidated adjusted EBITDA grew 11.2% in Chilean pesos, with margin reaching 12.3%, the highest across our markets. Supermarket adjusted EBITDA increased 3.8% in local currency, supported by gross margin improvements, which were partially offset by preventive expenses related to potential El Niño impact. Shopping centers delivered particularly strong performance, with adjusted EBITDA growth of 32.8%. Moving to Brazil. In Brazil, we continue advancing our portfolio transformation with a focus on strengthening our commercial proposition and improving the underlying efficiency of the business.
Irina Axenova: During the quarter, we reopened 14 renovated stores, including four of Bretas locations in Goiás converted to Prezunic, and opened a new Giga store in São Paulo. Online sales also maintained positive momentum, growing over 10%. These initiatives helped partially offset softer consumer demand, temporary renovation disruption, and the impact of our exit from Bretas Minas Gerais last year. As a result, revenues declined 11.5% in local currency. On profitability, the year-over-year comparison was affected by the CLP 18.3 billion non-recurring gain recorded in Q1 2025. Excluding this effect, adjusted EBITDA declined 13.2% in Chilean pesos, and it is partially of the benefits related to transformation initiatives, which offset partially lower sales. We remain focused on completing the portfolio transformation and progressively capturing the operational benefits of this initiative.
Irina Axenova: In Colombia, the country delivered a substantial improvement in profitability alongside continued progress in optimizing its retail portfolio and expanding the shopping center business. Underlying supermarket performance remained positive, with same-store sales increasing 2.5% and online sales growing 15.6%. Home improvement revenues advanced 5.6% in local currency, while shopping center revenues increased 163%, largely reflecting the consolidation of Plaza Central. While the transfer of service stations affected reported supermarket revenues, it resulted in a more focused portfolio and improved profitability. Consolidated adjusted EBITDA increased 141% in Chilean pesos, with margins doubling to 5.5%. Supermarket adjusted EBITDA grew 7.2% in local currency, while shopping centers delivered particularly strong growth of almost 250%, supported by the contribution from Plaza Central. Before we conclude, I would also like to highlight continued progress in our sustainability commitments, particularly in transparency, environmental management, and community development.
Irina Axenova: During the quarter, we published our 2025 ESG data book, and we invite you to browse it on our website. That further strengthens the transparency and consistency of our non-financial disclosures. On the environmental front, 94% of our shopping centers across Chile, Peru, and Colombia now operate on renewable energy, and we joined TRAEE in Chile to support responsible electronic waste recycling. We also continued expanding our social impact initiatives. Cencosud became a founding partner of Más Mujeres, Más Futuro 2026, supporting more than 1,200 students, while our supplier school engaged over 60 micro and small businesses, helping strengthen local supply capabilities. These efforts were complemented by improved corporate reputation and talent rankings across several of our markets, reflecting the progress of our broader sustainability agenda. With that, we complete our opening remarks and will now open the lines for Q&A. Daniela, please go ahead.
Operator: Thank you. We will now begin the question-and-answer session. If you are joining via phone and would like to ask a question, please press star 2 on your telephone keypad and wait for your name to be announced. If you are connected via the webcast, you can also request to ask a voice question or send your questions as a text. Our first question comes from Hector Maya from Scotiabank. Your line is open. Please go ahead.
Héctor Maya: Hi, Rodrigo, Andrés, Irina. Thank you for the space for questions. Could you please share some details of how much of the Chile cost pressure comes from fulfillment and last-mile delivery, and what was the Chile sensitive sales excluding online? Also, how much of the margin decline in Chile supermarkets would you consider structural versus investments that you can reverse, and when do you expect the margin to bottom out? Thank you.
Andrés Neely: Hector, good morning. Thanks for your question. I would say first, regarding the cost pressure in Chile, an important part of that comes from the oil price increases that we have seen during the year. That cost pressure is not only affecting logistics, it gets reflected then on other parts of our SG&A. I would say we also have increased our expense in marketing, coupled with all the changes and improvements we have done to our loyalty programs and to our omnichannel ecosystems in Chile. I would say that is the most part of the SG&A. In general, an important part of the improvement we are seeing in this quarter comes from online sales. Online sales, as we have shown, is growing double digits in all the markets. Chile is not an exception. Our focus is on omnichannel consumers.
Andrés Neely: We are seeing that omnichannel clients are also growing. They grew 13% this quarter. Our strategy and what we are focusing is giving the right results. I would say, I am missing a part of your question, Hector.
Irina Axenova: Structural-
Andrés Neely: I see. I would say we have a lot of initiatives underway, and our expectation is to improve profitability as we move forward. We are not comfortable and we are not seeing these margins and profitability levels are structural. What we are seeing is, and what we are working on is on improving profitability and improving margins as we move forward.
Héctor Maya: Thank you. Thank you very much. Thank you. Very clear.
Operator: Thank you very much. Our next question comes from Gabriela Lemi from Goldman Sachs. Your line is open. Please go ahead.
Gabriela Leme: My question, I would like to get some early color on your hard discount format in Chile. To what extent are you doing this format out of the existing supermarket infrastructure versus keeping it separate to further develop a low-cost, high-discount mindset? How should we think about the expansion of this format going forward, including extension and potential consolidation from your existing banners? My second question on Brazil, I would like to just explore a little bit more the interest rate dynamics this quarter and the performance from your new renovated stores. What are you seeing for the stores that are reopened, and when do you expect interest rate instability to normalize? Thank you.
Andrés Neely: Gabriela, we had some trouble listening to your question. The audio was not very clear, so maybe there is a connection problem. Please, if you could post the question in a written form so we can read it, that may be easier, because we were not able to understand your question here.
Irina Axenova: Go ahead. Just send an email to me or post it here on the chat, and then we will read it at the next question, because we could not really hear you clearly.
Operator: Thank you so much. Our next question comes from Giovanni Filho from JP Morgan. Your line is open. Please go ahead.
Giovanni Filho: Okay. Good morning, team. First, I have two questions on our side. First, I would like to understand what you guys see from Chilean supermarkets going in October, November. If you had any color on that, it would be great. In terms of promotional activity as well. That would be the first one on Chile. On the second one, we have some questions on Brazil. If you can share some data on how much would be the uplift on sales with the remodeling of the stores. On top of that, if you can have any updates on the Sam's Club, if there are any updates on this matter. Thank you.
Andrés Neely: Okay. Hi, Giovanni. Thanks for your question. What we are seeing in Chile is that the competitive intensity has no relevant changes. As opposed to that, we see that the strategy we are following, focused on our loyalty programs, on improving our value proposition, is providing good results. We are seeing a positive trend for Q4. As you know, Q4 is an important quarter for supermarkets and for the retail business as a whole. With no changes in the landscape that we see, we are optimistic with all the changes and all the initiatives we are launching as we move forward. Regarding Brazil, this quarter, we renovated or we have renovations underway in 22 stores. 14 of them reopened. It is early to provide figures, but for sure we see material double-digit sales increases in those stores.
Andrés Neely: Especially, I would put the focus on the state of Goiás, where we had the Bretas banner, and we are reconverting some of those stores to the Prezunic banner with very positive results. As we move forward, we will provide probably better figures, but it is early to provide a clear figure for all those renovations that we have just opened. We provided some colors in the recent management meeting we did over that. Regarding Sam's Club, Sam's Club was approved by the antitrust authority in Brazil some months ago. Now we have pending some other conditions that were included in the transaction to fulfill. We expect that transaction to close by Q1 2027 with the information we currently have.
Rodrigo Larraín: Andrés, if I can add on that, on Brazil. The figures that we see in terms of decline in sales and margins compared to Q4 2025 has a lot of noise and one-off, and many of things that are part of what we have been doing in this business transformation. In terms of remodeling stores, as Andrés mentioned, a large portion of remodeled stores are now open in the last few weeks, so we will see that impact in Q4, the positive impact. We have been upgrading mix pricing. We have been cutting low margin B2B volume, which also shows a decline in sales, but it had a very thin or negative margin, so we are out of that too. We have been, in this quarter, cleaning aging inventory and also closing some non-profitable stores.
Rodrigo Larraín: We have seen a lot of noise in the numbers, as I mentioned, as a short-term impact. In terms of a cleaner comparison basis, we would be much more see clear results and progress in profitability in the next few quarters with all these impacts behind, I would say.
Giovanni Filho: Perfect. Thank you all.
Operator: Thank you very much. Now we are moving on to the text questions. Our first question comes from Florencia Palacios from JP Morgan. "Can you please give me color on Argentina's performance? Do you think this is sustainable? How should we think about Argentina's profitability in 2027?
Andrés Neely: Okay, I'll take. Hi, Florencia. We are very optimistic about the performance we are seeing in Argentina. We have several things going on in that market. Remember that we are advancing on the integration of Makro, and we have seen an important part of the profitability in the recent quarters from the results of that integration. At the same time, our supermarket business is also performing much better. Our value proposition and our commercial performance is improving, and that is displayed on the EBITDA margins we are posting in Argentina. Home improvement remains challenged, and at the same time, the challenges we saw on financial services during the H1 of the year, we think are staying behind. As we move forward, we should also see a positive contribution from that business. With all these, shopping centers is also showing a very positive trend.
Andrés Neely: We have a lot of international brands entering the Argentina market, and we are capitalizing on that. We are seeing a lot of interest and a lot of brands coming to our shopping centers. We are remodeling and increasing the GLA of Unicenter, our flagship shopping center in Argentina. We are also doing an important renovation in Portal Rosario, which also contribute to a positive trend in margins as we move forward. We are optimistic about Argentina. This is still a long path as we move forward, but we are seeing positive results, and we expect more positive results as we move forward.
Operator: Thank you very much. Our next question is from Alonso Aramburú from BTG Pactual. Your line is open. Please go ahead.
Alonso Aramburú: Hi. Good morning. Thank you for the call. I wanted to ask about the US and the growth plans in the US. It seemed like at the beginning of the year, you were potentially looking to open seven or eight stores this year, and I think it is only one so far this year on a net basis. Can you comment on your growth plans, whether those have changed materially, or you will continue with this expansion in the US? Related to that, how are you seeing the consumption environment, and how are you seeing the performance of your newer stores in the US? Thank you.
Rodrigo Larraín: Hi. How are you? No, we continue with our plan on expanding in the US. We continue with a pipeline of six to seven stores per year. We have closed a couple of non-performing stores as a discipline capital allocation and decision on potential recovery of those stores. That is maybe one-time decision that we made in the US. But we continue working and building up our pipeline of stores. We have been very active. There is, of course, a delay once you secure the land, the store is built, and when we open. We will provide more color on the midterm path of growth of stores in all the markets, but we continue to build up that pipeline and continue to grow in the US organically. In terms of consumption has been a bit more slow, as we have seen.
Rodrigo Larraín: There was also this effect by this plague that we see in produce that had some effect in this quarter, but that is also resolved. We continue to work on growth, organic growth, and also with a lot of improvements in terms of SG&A and our operations.
Alonso Aramburú: Great. Thank you. If I can follow up with one question in Chile. You commented a little bit on the trends post the quarter. I am just wondering if the competitive environment, the level of promotional activity has changed at all, or if it remains very promotional.
Rodrigo Larraín: I think we have not seen a change in that sense. I think it is a matter of how we are adjusting our tactical decisions and how we are much more accurate in terms of our pricing strategy, revising mix, negotiation with suppliers, and how we improve our performance. The context, I think, remains very similar. Although we are putting much more effort in growth in e-commerce, in retail media, we launched our marketplace in Paris, in Easy. We have a lot of room, I would say, to accelerate sales regardless of the context. I think this quarter we are seeing this attraction and follows through the Q4.
Alonso Aramburú: Great. Thank you.
Operator: Thank you very much. Our next question comes from Sofía Issler from Banchile. "How should we think about the leverage evolving over the next few years, given the company's investment pipeline and capital allocation priorities? Could you indicate the target leverage level, considering it currently stands at 3.8 times?
Andrés Neely: Yeah. Hi, Sofía. Thanks for the question. We have as a target the 3x net leverage as we move forward. For this quarter, we posted the 3.8x net leverage, but when we exclude the hyperinflation adjustment, that would be 3.7. Most of the increase, or the increase comes mostly from two factors. First, the indexation units in our debt, and second, the pressure we have seen on adjusted EBITDA at the consolidated level. As we move forward, first, the projects or the transactions we have announced should be net positive contributors to our adjusted EBITDA with lower net leverage that we have today at the consolidated level. That's one thing. On the other hand, we have a lot of initiatives.
Andrés Neely: We have the Makro integration underway and all the omnichannel initiatives that we are seeing. We expect to contribute to a positive EBITDA as we move forward. We keep this commitment to the 3x net leverage as we move forward, and we have a path to reach there in the short to medium term.
Operator: Thank you very much. Our next question is a follow-up question from Hector Maya from Scotiabank. "Given the strong performance of shopping centers and the consolidated leverage at 3.7x, how are you thinking about the trade-off between continuing to invest in new GLA versus monetizing or recycling mature real estate assets to accelerate deleveraging?
Andrés Neely: Hi, Hector. As you well point out, Cencosud has a very relevant shopping center and real estate base, and that supports, in an important part, our net leverage. As we move forward, we are not considering monetizing that. We don't see it will be necessary. Of course, it's always an option if it would be required, but our focus is in our transformation plan and executing our strategy that we are continuing to deliver the adjusted EBITDA required to bring down net leverage and continue growing as we have done in the past.
Operator: Thank you very much. Our next question comes from Giovanni Filho from JP Morgan. If possible, could you further explore your strategic rationale of Peru in 2027? Could it be the main focus of expansion in the near term?
Rodrigo Larraín: Sorry, I was on mute. Yes, I can take that. Well, Peru is very interesting in terms of growth, steady growth, and profitability. We are seeing the greatest profitability increases in Peru. We have been, I would say, after a few years of stable trend in terms of the size of our portfolio, we have been relaunching our organic growth through new stores. We have been opening stores again. We have been developing new shopping centers at Cenco La Molina, and we have
Rodrigo Larraín: I would say an accelerated pipeline. We expect to grow more rapidly in Peru and put more focus in Peru in terms of our capital allocation and growth strategy. We have a very strong outlook for Peru in the coming years as well.
Operator: Thank you very much. Our next question comes from Rodrigo Rojas from Toesca. How long do you expect revenue growth to remain below inflation, particularly in Chile, and how does this compare with the pace of expense growth?
Andrés Neely: Hi, Rodrigo. Good morning. As we have seen, so far, our consolidated sales have been growing slower than our expenses. The situation is different in each country, and in particular, in Chile, we have seen that pressure. All the initiatives that we are deploying, the strength of our omnichannel value proposition, the strength of our loyalty programs, we expect to deliver the increase in sales to outpace inflation in Chile as we move forward. With that, several initiatives in productivity and efficiency will start also providing for the savings that we need to compensate or to at least match those two rates.
Operator: Perfect. Thank you, Andrés.
Irina Axenova: I will just read the questions from Gabriela Lena from Goldman Sachs. I do apologize that I couldn't really hear on that call. The first question is, "If we could get some early color on your hard discount format in Chile, to what extent are you building this format out of the existing supermarket infrastructure versus keeping it separate to preserve the low-cost hard discount mindset? How are you thinking about the potential for the format, including expansion or maybe even cannibalization of your existing banners?
Andrés Neely: Sure, I can take that. We have defined a team of executives and a management specific to that format and to grow that format and work on its particularities in terms of the value proposition, the mix of products, the pricing strategy. So, we leverage our private labels and all the capabilities and scale of the supermarket division in Chile, but with its specified team and value proposition, because it's a format, of course, different of how a supermarket chain is run. So we've been learning. We've been, I would say, so far very successful in the development of this format, and we see room and synergies and opportunities for us to continue expanding.
Irina Axenova: The next question from Gabriela was about Brazil and improvement in the renovated stores, but I believe we already covered that question. Daniela, we can move back to the Q&A queue.
Operator: Thank you very much. Our next question comes from Sofía Issler from Banchile. "How much time and investment do you expect to be required to convert the space currently occupied by Ripley at Parque Arauco into the expanded Paris store following Ripley's departure in February 2027? What impact do you expect this transformation to have on the department store's EBITDA, considering that this quarter's results were affected by ongoing store remodeling and transformation projects?
Andrés Neely: Yes. Thank you, Sofía. Well, we do not disclose specific investments on particular projects, but what I can say is, on one hand, we have seen, and it is part of the pain of remodeling stores and shopping centers, that we see some effect in the stores while we are during the project phase. Fortunately, many of these effects in the stores are starting to get behind. In the case of Parque Arauco stores, we are planning a new evolved value proposition and very appealing store in Parque Arauco, as we have been developing in the remodeling of Paris Alto Las Condes. I would expect that during the second part of 2027, we will be in construction and the project phase to open probably the H1 or the Q1 of 2028.
Andrés Neely: The impact is, as we have seen, without giving figures, an important increase in traffic, sales, and a much more efficient store in terms of margins.
Operator: Thank you very much. I am not seeing any more questions, and this concludes the Q&A session. I will now turn the call back to the Cencosud team for the closing remarks.
Irina Axenova: Thank you, Daniela, and thank you, everybody, for joining today. We look forward to having you on our next call. As always, if you have any questions, any follow-up, please feel free to reach out to the investor relations team. We will be happy to help you. Thank you, and have a great day.
Andrés Neely: Thank you. Take care.
Operator: This concludes the call for today. We are now closing all the lines. Thank you, and have a nice day.
