Sendas Distribuidora (ASAI) 30 Jul 222022 Q2 Earnings call transcript

Good morning, everyone, and thank you for waiting. Welcome to our earnings call for the disclosure of our results in the second quarter of 2022. I want to highlight that if you need translation, we have this tool available on our platform. We can select the button interpretation through the Globe icon at the bottom part of your screen and type the language you prefer English or Portuguese. We'd like to let you know that this earnings call is being recorded and will be provided on our IR website and the company access ri.assai.com.br where you can also find the earnings released.

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risks, and All of the of information that's the management performance. possible perspectives, for information guarantee statements Future Investors regarding and available. and conditions, call those currently uncertainties rely just could the might in they forecasts during company's results that that in as operational Assai are this other future assumptions made are circumstances may affect materially differ well to targets not the a that understand to operationally completed and presentation future events factors They Assai the must performance as be as business statements and refer future and that statements. involve conditions earnings and assumptions beliefs of in not lead that occur. on from market economic

pass I'll Assai. Investor on at Now the Director word our to Helú, Relations Gabrielle

for thank to want in quarter again second call once I XXXX earnings everyone. you at for morning, Good the Hello. the of participation Assai. your

have dos our Daniela our Wlamir Sabbag, with are Anjos, We CEO; presenting VP. Logistics CFO; here Belmiro de our we Gomes, those Commercial and

Belmiro word I'd on presentation, remarks. this pass begin the we initial and to the floor his to for Before like

this we're quarter. Good I Ladies today in for second your moment the Gabi. beneficial and the you to hope thank and in in you results the gentlemen, we everyone. be could shared company our participation. demonstrate morning, information Thank

a Assai growth, high second The our rates historical expectations in with combining and sales healthy evolution and volume of is line the combination pathway with of above quarter of of in results.

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and Good you, morning Thank ladies Belmiro. gentlemen. everyone,

high It's talk months, at to us have that in consistency and about normality. We we sales when in commercial I that June. this and want really the a with we think had April, quarter. to lows. extraordinary have comes I significant May that this dynamics. peaks for to was sales to a quarter was This contribute discussion our three characteristic strategy and this call is repeated Assai this what don't last or the We it

in and have the lot evolution [transistency] month-by-month. We a this monitoring of

advantages advantage an our And in and competitive made year macroeconomic but question of a well as have us intensification the We market from itself important scenario, with even grow have our to also sales this overall. there quarter. the the we by considering XX% which is competitive able balance been over

and we new seen are opened additional that categories most well. already added you've stores As services of the some in as

expenses on we dilution But XX have in bps. stronger it's this impact contrary this commercial this could of that Many and services. concern this and an this reduction comes was expenses from about had [indiscernible] different is expenses dilution third-party dynamic coming with expenses. the we So whether expenses. a initiatives to of and coming Part actually, in this XX% more to a aggressive. different maybe is this from in trip, important which due our that's reduction in is in areas focused a really XX% in company reduction

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everyone. you, Good morning, Wlamir. Thank

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floor pass I'll about expansion. Belmiro of status the So the talk our back to to on

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which average the the company quick. drop very very really going XXXX. December And till XX XX to have quarter hypermarkets we take made cash as the conversions we we or third So of in business XX in [indiscernible] the stores in and reach is is have conversion. stores should generation the curve place history launched. are significant conversions now the So a of model

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We'll first to Instructions] question, on sell-side [Operator our move Danniela, analyst XP. our from

I actually points. two have

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purchase the lower about today even experience So a in we've And to quarter. this costs attractive. made lot that's reach a this, more course, you margin is with operational these of makes keep that X%

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Just before on move I this Luiz, is clear?

clear. very it's Yes,

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important in just retail. So importance an the point X% of of food

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noticed interpretation. quarters of quarter. the fourth third level be have It you have activity will in and than of we the maybe So second a what Everyone also quarter good competition Because, the less could right the channel. a that had looking in the very result a second kind that of operators of in this are the also course, amount strong. of that was market

a this also. [indiscernible] lead greater period. a we're there in having concern point should actually, going very to prices. significant and So in still And carefulness inflation high drop in another very is How

customers correct don't your inventory their because businesses of bit small you a these the have is very elasticity lose sales buy for maybe big. prices you If of the and can capacity to

see practice scenario at this second the quarter to third the regard margins stable a first If wellness year. fourth quarter, in for now we you look and in and

We question. we And biggest our price excellent for have now supplier. here. we challenging, Thank with about in take a have ever at inflation when course And a of do makes that And concern we're negotiations since really period partners. little this Thiago, will we the look you adjustments. the the XXXX. continue I this is relationship this process more think the

customers ones our So the give bad we're price news to to about increase. not first the

to some is process moment. a lead decentralized. opportunities little procurement in more So in a we inflation this structure do are purchase And a opportunities way that intensely. have done have for we But areas negotiation

urban take we've opportunities not to have offices regional We upper spread what have of And [indiscernible] commercial big in facilitate centers. head advantage planning. and be to able strong this around Brazil to is of the all to done only support

product lack were most March, chains supply of so considering our or be in manner. almost and to of they that expansion and we those significant maintain some could suppliers so scenario that in that all competitive we have about So inventories reunited healthy our about able our plan be prepared this can with position industries to talk a that

in we're close your as other periods pressure inflation to more considering answered about it's very It So this under in seen is a I is have quite little Brazil this. relationship questions. already and comfortable control. but intense we've the hope

the So sell-side Felipe, next moving to it's question HSBC. at on analyst about

already question been about answered. margins pricing My is

and platform So I'm would Larry on is really the going and it to discounts aspect. there go this be some the that digital in on seems prices. mentioned that features focused new to strategy

you being could a and bit more about compared want an us give the digital? I it for So to idea understand the strategy of digital. for the competitors the aggressive in pricing strategy to about Is

an converted et as that besides But Is area really the you introduction these so these about the area. space consumers? I have e-commerce better network sales dedicated And for of areas area cetera. that's considering understand service mentioned creating stores with services stores the room a is limited new there [indiscernible] store for for well bigger. for the

any this there's if understand to like sense. would I in So strategy

would that make we when with Felipe, before sense GPA were back Assai question. just that we getting had in point you, to Well, Thank for this on the digital we with this highlighted But mile with last had we're this going work already [indiscernible] digital to the new operators. But front. to figital. app with what call now on initial compete process we it

You to keep things course, of prices, interest for appeal and customers in product And there's industry be discounts, it's stores can interest in. well. that important an provide itself important experiences in digital physical as an But segmentation. but an the you the launches going the has

even bring and what in to to the store. has be with towards pilot schedule throughout project. experiences going there's the world seen details the digital services going interesting we're a itself on. market be So something the lot a third in should quarter but stuff on to We the physical in Uniting working this more maybe able more

interesting going been have top. are that there things some and innovations in the some on So

not this the a or region the work were in For other of to with conditions the features purchase to the explore converted stores, have size higher Do stores room maybe located. some store these considering current where demand even location yes, stores, store on the pickup have didn’t these that and to network [indiscernible] their you see regions these power. from we that have

trend So of digital this to yes, the stores customer But services adapting be this course. on to this universe, reopening the focused the there considering other yes, this connected is for is model. very with objective there what's of to traditional

analyst So from moving our João from sell-side on the next Soares, is Citi. question

on Two side. quick questions our

more first services. competitive services of more about and is where you've one about offer The advantages the greater Could a talk perspective you the and bit say from regional had specificity assortment and a to more expansion a dynamic. and in

Just perform to understand from adjustments. to a regional perspective more where you have

geared which course, step, is from be going understand fund second I higher to the wanted the the hear to estate wanted that to the any more I you're receiving. question, underway. real about The more Dani. leverage money investments projects seen to these of considering construction we've with XX

A So look any how will bit of in this? there's end to of year. changes expectations the the if for the regards the leverage like

thank Well, João. you

the or the For region connected regions specific to more located. but the where cities capital Brazil are stores point not within in a it's services locations maybe

you're assortments expanding the as course, amount of in trend and as scenario a we higher also purchase So in businesses with a have of [indiscernible]region power bigger well. in

of all Brazil adding wines have that the slicing So the cold don't cities such and cuts, of cuts services in have services. been these offer and services a so in where of services, battery cold are high for maybe you extra done regions

[indiscernible] like need. big in cities but shopping monthly the For the as not have example to a this objective is but well. in continues capital The

or they For monthly shopping. they be a to slice when come battery for supplied cuts services need that the for have their can example, big cold

cost of So additional an other increase expenses have with that of naturally in place very already place result this the this take expenses may these and the the expenses services. of are most most has incurred of of because marginal been with take in the you rent but fixed stores

that compared put over they changes Brazil. in the in with the XXX went all regions gain of of had in a quality that us Also of for search competitive are public cash-and-carry. to a about and batteries. There's batteries population the also more profile a the So to continue we advantage to that the the some actually allowed number of beef little in we also neighborhood comes

in North region both specific Northeast. see this we model. like the to the the natural more to there's not more [indiscernible] a and But So

the variation. very here All little of the regions similar are of of the off of And end a very the from be the onwards level start receiving year XXXX Xx. services. below have so And about is deleverage as these new this until we store can company to with leverage volume where that in We'll significant it semester mentioned second we launches. already X.X%

next question is Strano. from from As we UBS. analyst continue Vinicius sell-side He our is

scale evolution of importance the have Services. Could hypermarkets maybe here the seen second also about volumes for the the main Financial what scenario? to now up if point features plan of opening gain and converted. you how with Assai comes when in this with talk And that Could should current you card? the about And about more you've the been you talk to a the it offer it

an as prices we the in food. you When question, flow. volume. of I Thank not sales for for increase total volumes still have evolution had positive the down materialized in This because We've our comes with it to has a gained we mentioned trade [indiscernible] Vinicius. that

categories or handle of increase food. downs to So to or even the trade for performed products population still able in of product the a brand price the be has

measured evolution inflation we the there's by kilo volume greater you sales. at like So of update an [indiscernible] that's when on volume the look than the

been and and in carefully to hope positive it been Dani, I clear it's the ratio services. effect capture was you very So also increase trade customer sales financial the the exists this answer? do we long as looking as we've considering want want in this volume. at down But about entirely this flow. to

should the do. acceleration about issued. which over base we growth level let store cards we over amount And XXX,XXX will are grow the a Assai and naturally card in credit estimating be with and the well. card of an as foreseeing conversion Yes, talking of we're Certainly, me openings, accelerate XX% for growth the

a XX%. course, real But anyway, was with there was this important And in of we this estimate. So above that have was a growth revenue very big and quarter. our

very growth card really the significant. this is help So process. would acceleration this And

sell-side is JPMorgan. Joseph So Giordano. now question from the He next analyst we'll from continue with the

the explore that a added competitors we platform see more. platform wanted I to to exploring a this we've with We Belmiro and go back also digital to being see that a topic because starting wanted to based options a I app some still on growing a And growth good seen here. mentioned bit of lot. you're bit to this service have accelerate the

So with opportunity this remove how digital this to the and this the initiative company where I seen connect understand wholesale orders. a this wanted more in how be something with table you've to accelerate distribution could considering and capture to that funnel you that's

from there's if comes inflation how this understand to you've any wanted about perspective what and today? also a that been? I to to shift when I know costs seeing wanted CapEx So the you're of noticed it has

Thank Joseph. the is you, a Well, have. still that we possibility distribution wholesale

focus And with underexplored its actual conversion these stores. is continue market. so our to still of an there's But

is not of part So always as digital considers the what also digital. market

operation So that it's XX years the ago. happened same

of online some a is happening placed We or but are already then with like digital something. backup kind

customers already and be this in at event for course, this but strategy to a we is have made of the a we are carefully. a structuring it’s with capacity to prep. in explore this that well. as should There's digital the the posted good work as there But of going there's moment stores actual wholesale is, a it's be to and We the distribution should of conversions orders as this course this focus but and today. digital when with are in this the for looking new stores you have with of implemented a well at digital and amount proceed course, experience provide So more possibility the that an important to technologies

answer this been And considering this I'll the think construction also point. impacted Yes, I has by the inflation. so materials

should course, of cost this stores. the of the reflect on so And

the able of construction hand, other to have reduce bit this we've scale a of to On been the gains and amount with projects cost.

are so companies place. taking that four And there or three have some conversions two,

was significant of increase some impacted So products. prices important But And the sort of now in this stabilized. in course, seems the fuel we to and gains an low added increase of an led the an like have growth of saw you by course, strong. that's fuel when steel. very costs of value this, so have negotiations they with and increase it's it And

nothing course, a Of base. vision at to a is project established that and planned. and our major lead overall this impact high what really will in in But the we

quick just a Perfect. Okay. follow-up on the And wholesale. distribution

the As pretty at really investment or six you store distribution this for wholesale XX we've because of and is we stores at passed expansion How of look increase revenue gone turnover. look the from you years already the [ROIC] the considering your to the high potential actually do for considering base year. per asset five share this the

commodity big with like wholesale distribution goods of the don't products. work a part with or them products So perishable [indiscernible]

some it of reduced. modified sold So products stabilization. now Possibly the are amount and start will that are having

oil from wholesale. wholesale buys for transportation distribution cost of also obtained a the not are all customer margins. because distribution would will like or from buy And cash-and-carry that of deliver so or to rice going operation eliminate the same they flour the But

buying selling guy wholesale operation have This shift. distribution tomorrow focused If market the customer a the really you years lower a price. is same then customer a another in will cash-and-carry with is quickly but on product for XX So at price.

he'll much just there's buying the start So and from guy. loyalty not cheaper

saw window strategy is we what this in our basically, of opportunity. So

years we ago first the to be a or want considering a was the And shift. So and or location ago about in ago, have four not one customers. place, have much commercial a point of year three years loyalty the there good

at for strategy map place the the the first structure the in a Brazil, so units create you company was possibility of territory you once adopted all this. and And national have the in looking

you priorities going to is this now would it's as took happen estimate look But the we products, when And sometimes at this "Oh, when But it's movement. the difficult products share very But especially extra could non-perishable not it specific project could categories of that total look the this represent in you be you say, So share. high-added some this value what for obvious significant. with at to worked reasons. significant. our on on

messes added. important. XX% this even growth it players with or but XX% sales the at your operation It's have an placed XX% or that the that of lever If terms there’s cash depending have payment uptick not volume course, amount very been market dynamics. in when you of a by So in are we've distribution. explored and [indiscernible] you important of about it's because saying. assets can a that's operate high you But good grants seen on ROIC an the

As we question from Goldman continue Sgarz, analyst our next sell-side our is Irma from Sachs.

conversions. very a of have just these I quick question waves here about two

for I But characteristics at But different with could from stores be place XX quarter wanted this the that more And stores you're schedule? if other wave? separate anything step. stores this. the but one know And of looking on in second or people no that mistaken if construction within the question these all materials and store for some regards if the be coming had comments. you first course, around that started imagined happened of factor looking you from some huge is there's really concern this this what project, first to that I first what wanted that store be now bigger XXXX. confirm third in government? stores? congratulations to like of I maybe about is some already to how previous some with a need in the considering XX focus the with the to per to you month? you've you're have? the a schedule deliverables to And be the hire, wave conversions, to confirm will just the to clock or the second authorization as need situation delivering way common not maybe you're at issue will beginning municipal in the sure of if little Do have And openings? this with it's also volumes is other is The of considering think the else What's the I able I’m And take now?

Thank licenses you, Irma, for that your with not stores balance best obtaining ramp-up. imagine question. and Well, best normally, possible also the sales first wave, the after of the process. That's execution you'd the the and the

underground where have have stores of depending But and But most the construction process There after completion process. construction neighborhood. which documentation. the even the if documents beginning you and also amount depending the course, or the construction for can that are that longer different projects this we the other are you the the these licenses determining schedules of have stores parking some So legal were to And for on during of work. on region the the you there where already the most time then is the worked construction the have for operational the on. is you case of of have what's work, construction are

characteristics like the second revenue first of then of or aspects more that's considering results, a things. other like and of From different between some very it's the perspective there's sales So engineering, wave. and profile not a

region other restriction regards there’s in to also Brazil. in no So the

of these in are openings avoid region So all same because where presence the stores an to concentration us regions an the important outside the all conversions the bottleneck located in we started of to of to in and team. even or some a already have state having operation from an leading

work this be that bases XX on and many a conversion the the to have moment Brazil helps regional trend. different to able lot around fact at offices we So us

waves performances we what So very and see should is of the profile similar.

in projects that for obtain and to a [indiscernible] adjustments we objective, going where Some and stores are already of these have stores. In licenses these that regions be we to left some legal wave. to second are completed. have high projects expectation have unfortunately, course, the processes The improve the

in we'll complete and this of patch to for that of hope start first answered I objective with questions. quarter the have all we the is so XXXX. focus this should finished of opening project stores first the And inaugurated. have the completely round your And this the

our analyst He's continuing Vinicius. of So sell-side next our from America. question from Bank

here categories seen assortment. convert? a just that So you've added? of comes it sense the question provide category returns that Could so for details more of And considering on initiative has our the impact percentage about to the conversion? way this you are that this for investments initiatives you And on the would being flow when And Assai? follow-up makes should second what's sales some and you're in impacted for if the that structure? is And margins cost pharmacies some how

do Wlamir, answer to you this? want

Thank you because we this concern question, of hypermarket the [indiscernible] transform to that with costs. we issue for because is a assortment an Vinicius. The with don't want are have issue to operational

is groceries rule to in some for general this stores. But opportunities it have we're We're not sales adding especially where hygiene, not expand valid for for So cleaning all when for also to have level. that developing and these our go in careful this We a the work and hypermarket where a sectors. comes expand personal that comes categories beverages can a we we our of area exposure conversions. that's with bigger assortment. more don't network already or we've But our this very been already over this store for capacity we exist in area so from store stores that

X,XXX So opening SKUs. we And up were about about XX,XXX operate with these SKUs currently. stores with

extra merchandise about between services. and or X,XXX products SKUs So

beef So to the not different purchase they're as Assai to go or Normally, well mission way going the buy something. our customers. to the of to all ambition

go directing Assai to they be services, their before offer But we retailer monthly would to this So then purchase. they supply. buy to to the factory neighborhood of perform

we services comes BXB. this. the there's experience has a consumer. to purchase can when And mission. a And led also And it capture bit combination better a to of this to we So with different work for

not so stores restaurants up adapted. that from end we're opportunities. assortment. have the going this with our fair have slicing pricing improving we But with and quality lot here products you cold is offer us we're to battery phenomenon up buying valid hypermarket the for some There's of So because all the open of a And in and especially cuts we stores. for different services

store. is want over costs So this initially, to we XX,XXX see compromising our increase of in we region SKUs this. bit if assortment, profile there's in a at we'll moment store. we'll potential to operational do that this each a that And growing in understand open over up without there And capacity a the time,

I Vinicius. that's objective. your question, far So to the hope have answered

in Yes, to customer kind due flow these far? I of think if you the any could so new increase have categories just noticed you maybe on add

example, Actually, the go going a customer because, like not Customers category tires. for our store to to growth to in flow are car tires. buy

example, of between for the take bigger basket trade a attracting customer customers. categories for the or you customer some But So and you others, the assortment offer down flow existing channels advantage and the increasing size. migration for

but to also categories have already you the the you have customer due increase addition increase are flow new an in of that from customers the purchases of store. an So in

the combination factors. So of flow. these it's increase But you do customer a two yes,

the that a category makes is this last pharmacies. was point just add? to And If sense about Okay.

a I sense stores to this. make seen we've And Now add conversions it at guy. the moment, for IN doesn't lots us. maybe store with of this can

So we better to the then rent get pharmacy this out to into another to sector.

interest no have in you very we So much. Thank this.

we continue question is from from our Andrew next Morgan Ruben, Stanley. analyst So sell-side

back stores. for And sense a versus room any recovery? you You pre-pandemic also Do still you where is of mentioned levels? out post-pandemic call there's you see customers other types have a segment to where foodservice sales the that customers coming if of

Yes.

So Andrew, thank you.

from because period to back them we've not customers levels foodservice this closed. of back still coming service for but during food seen So it's pre-pandemic

of people lot a a restaurants during down nowadays are of really lot worked that in of that a we that restaurants restaurants pandemic. see but So closed the the there's lot full

for in still a in there's possibility So we volumes food service recovery believe segment. the

the of the in also that prices increase know impacts also We out. cost eating

level. at in So a I higher for not if this inflation be food the services could it high maybe think was

there's some haven't still that factors totally. gone So up

we schools Lot uncertainty We of possibility with seen long-lasting part done activities in gradual connected this this Also bit sectors room issue and we've still other recovery But sector an and if is even [indiscernible] something it pandemic have connected going some to still. post if that have maybe it profile meetings progress still and that's little that are things of mentioned to or impacted. a parties with there's a where recovery. be where cantinas restaurants recreational really for and the that to a like a that's were the educational the school scenario. for There's the activities for growth or activities temporary. and

still stability recovery scenario in the with ahead So up we of potential as a for possibility there's pandemic a recovery. a for see

is the to the would Q&A [indiscernible]. and on I session his officially like So to And Belmiro final word ended. for now remarks pass

is The afternoon. So thank you all a for Have additionally. any available if your IR department participation. you. other you Thank good questions have

Wlamir final other any remarks? dos,

and third until all see the of the want you you for to in quarter. you for the for And thank Bye, very thank end you much. Q&A. participating just the take presentation care. Thank all disclosure I the we'll

Department for call excellent for available The future comments. Assai the earnings of you day. an The Relations is and Have questions second is of at quarter much answer Investor to completed. XXXX Thank so participating.