Wal-Mart de México Aktie

Good morning, everyone. I'm Salvador Villasenor, Head of Investor Relations. And I want to thank you once again for joining us in our live Q&A session following our second quarter earnings release, which was published yesterday evening. As usual, we will make every effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. [Operator Instructions] Joining me today is Cristian Barrientos Pozo, President and CEO; Javier Andrade, our CMO; Paulo Garcia, our CFO; and Camilo Canedo, our incoming CFO.

Before going to the first question, I will leave you with Cristian Barrientos for his initial remarks.

Thank you very much, Salvador. And I only would like to say thank you to Paulo for the last 5 years and all the contribution that he has done to Walmex, both Mexico and also Central America. And I would like to wish you all the best in this new chapter, Paulo. Thank you very much again, and you will have more time at the end to say thank you to all the communities. And I would like also to welcome Camilo to this -- for this new job and allow you to introduce yourself to all the community that are looking today.

Thank you, Cristian. I'm truly excited to be returning back to Mexico. I was born and raised here. So this is both professionally and personally very meaningful to me. And I'm really looking forward, Cristian, to work with you and the rest of the leadership team to create long-term value for our shareholders and our customers.

Thank you. Welcome.

Thank you.

Thank you, Cristian. Let's go to the first question please.

[Operator Instructions] The first question is from Mr. Ben Theurer from Barclays.

Can you guys hear me?

Yes, Ben.

Fantastic. Works this time. So first of all, thank you very much. Camilo, welcome on board and Paulo to you all the best on the way back to the -- your continent, enjoy over there. Maybe our paths cross, I would look forward to seeing you maybe sometime in the future. So that's on that.

Now my one question really is just about the performance in Mexico and very particular at Bodega, which clearly has continued to soften in the quarter. And I was just trying to understand, I would like to get some more details as to what are the short-term initiatives you are taking at Bodega in particular to drive a turnaround as it relates to the sales performance given the softness we had over the last 2 quarters now.

Yes. Thank you for the question, Ben. As you know, Bodega Aurrera is struggling because of less traffic and small baskets. Mainly the impact is in Bodega Aurrera's large format and basically in food and perishables. Most of the impact is in the Zona Centro and Bajio de Mexico, and we see customers leaving the basket in many retailers more than any previous time. We also see that this is an opportunity for us to double down on EDLP availability and on demand. So we are increasing the number of rollbacks to over 400 -- 4,000, sorry, rollbacks, 90-day rollbacks to really help the customers save money.

We're also reengineering the pricing investments that we used to have in the past, and we are focusing more in elastic items and more affordability and specific private label baskets for Bodega Aurrera with the Aurrera brand. This is going to help us reinforce affordability and value for the customers. And also, we already started the SKU rationalization in Bodega Aurrera formats to be more efficient, to help operators to really operate with less friction, and those savings are going to be reinvested in price again.

Finally, I would say that on-demand is crucial for us because convenience is one of the levers that is changing customer behavior. So having the opportunity to go directly to their homes is going to be important. And we already started tests and learned in Bodega Aurrera Express also with on-demand. So basically, we are going to be obsessed with the fundamentals of the business, but we are going to be reengineering the investments we're doing to be more accurate and more specific now for low income and affordability strategies in Bodega Aurrera.

If I may add to your question because it's super important, Ben, because of the -- how relevant is Bodega now in Mexico, adding to all the points that Javier mentioned, I would like to say that we are in the middle of the implementation of the mapping all the stores. We just finished the inventory located in all the stores in H1, almost 90% of the total stores with really good results. The inventory accuracy improved more than 80 basis points.

And also availability, as you know, allow us to have a better on-demand business. So we are seeing more than 400 basis points improve in perfect order. We're improving more than 300 basis points in on-shelf availability. And that is -- the customer is seeing that because we are -- we finished in June with the highest point 12 weeks in Net Promoter Score. So we are seeing good results in that, both in availability, pricing and also that reflect a better performance in the e-commerce business. So thank you for your question.

Our next question is from Mr. Alejandro Fuchs from Itau BBA.

So first of all, I wanted to say thank you to Paulo, of course, for all the great conversations these years and best of luck on the new journey here, and welcome to Camilo. Now my question to Cristian and maybe Javier would be also on topline dynamics in Mexico, right? We're seeing a tougher consumer environment in the country. But when we look at performance per format on same-store sales, it seems that the only format growing is Sam's Club, right? So these initiatives that you were referring to, when do you think we should start seeing them translating into top line growth? And how much of this maybe semester sales pressure is coming from economic activity relative to competition?

Thank you, Alejandro. Very well, very good question. And I would like to say that Bodega is the big business. We are -- as in the previous question, we are struggling with Bodega, both also in Supercenter with a soft same-store sales, but we are very confident that we are making the right decisions in the business, particularly in something that connect with our purpose to save people money. So we are very encouraged because this is going to be the third quarter with a huge improvement in price perception. More than as you saw in the webcast, we are finishing the Q2 with more than 310 basis points of price perception.

We are improving a lot in availability that is super important today, not only for our customer, but both for shopper and picker. And we are seeing impact in the OPD or on-demand business today. So we are confident on the actions that we are taking, but it's actions for, let me say, medium term, not particularly for long term -- sorry, for short term. So when you move a company to really become an EDLP, it's maybe taking a little bit longer, but we are seeing in the whole portfolio because we began this journey, let me say, 10 months ago, we are seeing, as you mentioned, good result in Sam's. If you let me say, maybe it's a smaller portfolio in terms of items, assortment, so we are seeing a good result there.

We have, in the other hand, something good in Central America with 4 countries performing very well. We are seeing a turnaround in Costa Rica in the last month. And particularly, we are spending more time in self-service here in Mexico, but it's something that it will come, but it's not short term, maybe more in the medium term. I don't know, Paulo, if you want to.

Let me just maybe say on 2 things, Alejandro. You did talk about macroeconomics. Maybe I'll just say 3 things on the macroeconomic there. And maybe just expand a little bit on some since you mentioned that I think that clearly, there are a couple of things that we're seeing and you're all seeing that clearly, the wage tailwind is starting to fade. We don't see that converting so much to incremental consumer spending. Definitely to the point that Javier mentioned before, the consumers are actively rebuilding their baskets. They're actually looking to cheaper products and smaller packs. It's about affordability, entry price points. So that's relevant. Private brands become more relevant as well. And you all know that value and proximity/convenience are ultimately the reasons that are defining the shopping trips, which very much goes in line with the priorities that we define.

If you think about EDLP, availability being an enabler and then ultimately, e-commerce, which is, of course, a way to drive convenience and also the proximity to the customers, we need to continue to double down on that. The results might not be immediate, of course, always. And I think I just wanted to have an opportunity to push to talk a little bit more about Sam's, given that you mentioned that. So you've seen the performance and I want to say that, that probably comes from 3 things. There is 1 around value proposition. We're investing on pricing. We actually increased expanded price investments in 370 items across nationally. And actually, for 60 stores, we actually are investing in pricing also an initial 200 items, and that is already bringing more units in traffic.

In Sam's, we're already seeing the traffic in units improving. We're still not delivering that to the point of Cristian's in the self-service. Membership remains the key advantage. We are significantly improving our membership, which also comes as a revenue and in other income and renewals have been improving more than 300 basis points versus last year.

And lastly, but importantly as well, we are pushing heavily on e-commerce and Sam's might have been the format that we have that has grown the most in e-commerce with a growth of nearly 30% with significant improvements in terms of the 2-hour delivery and same-day delivery, even more than what we're seeing in the other formats. So I think all that compounding, and that's what we think that we can be able and must do as well in the rest of the other formats.

Our next question is from Mr. Froy Mendez from JPMorgan.

You hear me well, right?

Yes.

Excellent. So the revised guidance implies a significant acceleration in second half of the year. When we look at the results in the second quarter, a lot of the performance seems to be somewhat cyclical related to the World Cup, given the outperformance in Sam's and Supercenter. What are you seeing or what are you counting on to go right in the core banner, Bodega in the second half for you to have confidence to reach the new guidance in top line?

So let me just clarify something on the guidance there, Fernando. And by the way, thank you for your question. We provided the guidance in -- it's in constant terms. So that's not always the discussion around is it reported currency or is it constant terms. If we put it that way, there's an acceleration, but not meaningful. So we're taking a conservative stance. From an economic standpoint, we do not expect a meaningful acceleration in the second half. And we decided, of course, to provide guidance to you and the rest of the market in order to provide transparent expectation from what we are seeing.

I would also like to say that we actually have not seen much from the World Cup, Froylan, in the quarter 2 and in particular, in June, July. There was, of course, an uptake in a few categories as we all would have expected, in particular in snacks and beverages, but probably more in other sectors and channels that necessarily with us. But as you know it and everyone knows it, ultimately, the impact of the World Cup was not for Mexico, but one that we were all expecting. So that's what I would say at this stage, Froylan.

Let me just follow up there. This on-demand initiative in Bodega, does that have to really take off in the second half for the pieces to be there to see a better second half, even it's not a significant acceleration, but is that key for Bodega to improve in the second half or that will take longer?

Yes. We are confident in our ability to deliver the guidance that we submitted to you. So let make me that clear to you. So we are confident in delivering the guidance. That assumes, of course, we need to improve to the point of Cristian had said it before, in the self-service, particularly in Bodega, but also in Walmart. And we believe there's also a lot of continuous acceleration that we can keep on with Sam's.

And then we are already seeing early signals that in Costa Rica, the things are improving. We are looking at July with the comp sales much better than what we've reported. June had already been better than the than the rest of the months. It's fair to say that we're also cycling a lower comparison in Costa Rica now given what we had last year. So we do see an improvement that going forward, and we feel confident that we can deliver the guidance that we submitted to yourselves.

Our next question is from Mr. Bob Ford from Bank of America.

Can you address your seller onboarding times and processes in comparison to Mercado Libre and maybe touch on the friction points as well as how we should think about the time line to remedy those?

Thank you, Bob, for your question. Yes, we are improving seller onboarding in the first quarter -- the second quarter, sorry. This is part of our seller value proposition we are working on that maybe I can separate and have a better proposal for them in Walmart fulfillment services that we are seeing a really good improving. We moved penetration in Walmart fulfillment service from 32% to 43%. We are seeing good results also in same-day and next-day penetration with more than 260 basis points. And as we mentioned, seller onboarding process for us is something crucial to improve our assortment proposition, but not only for having millions of items, but we call the in-demand items. We are working very hard to improve the in-demand items and the seller onboarding process, it's crucial.

So we saw in the Q2 important reduction from 35 days to 17 days. So that is something that is improving, and we are working for in the next quarter to reduce a little bit more close to 10 to 12 days this onboarding selling process. So with that, we are confident that we will have the correct assortment and the in-demand assortment that the customers are looking for.

If I can just build on Cristian, Bob, you are asking for what we are seeing overall as the points of friction. Cristian already alluded to some. So definitely, seller friction, seller onboarding is one. We've been acting upon on that one. The assortment to the point of Cristian is another one. It's both in terms of depth and breadth of assortment, but more important, what Cristian was reflected talking about in-demand items. So the items that the customers really want, we have that identified. We know that's 1.7 million SKUs. We have only a short part of that. So that's where we are putting all our effort because we need to put the assortment that the customer wants before we think about the tail.

And the third one, where we still have a friction when we compare with MELI and other competitors is around the tech stack around the search engine and personalization. We are working extremely hard on that. Just on a positive note is, as you know, global or probably some of you will know, not sure if you will know, Bob in particular, our marketplace team now reports to global, which is handy in a way to get the U.S. best practice a lot faster to the market. It's a priority across the globe, across the enterprise, the marketplace, and we believe that the things will expedite going forward in order to close the gaps that we have against some of our competitors.

Our next question is from Mr. Andrew Ruben from Morgan Stanley.

I'm curious if we think about the other part of the guidance on expenses. It seemed like specifically in Mexico, the operating expense control was a bright spot in the quarter, but you kept the high single-digit growth. So I'm curious as we think about the back half that bridge between run and grow expenses, any areas where you expect to lean in a bit more to the grow versus the balance of ongoing efficiencies in the business, that bridge would be helpful.

Yes. Thanks, Andrew. And indeed, we always said it that you know this that investments and expenses will not always be linear quarter-on-quarter. So we'll continue to do our investments in growth along the lines of the ones that we've been doing so far around stores, around, of course, the remodelings of the new stores, remodeling of the stores, the e-commerce, logistics. So I think you can expect a tiny bit more in the second half than what we've seen now in the quarter 2.

But you can expect us also from us to continue the financial discipline to control, pushing very hard on efficiencies, continue to drive automation that allows us to drive productivity, not only in the stores, but also in DCs and also in the staff. And as I said, and we also put it in the webcast to Andrew, we continue to expect our SG&A to be pretty much around the high single-digit growth in constant terms. So -- but count on us to continue to translate these efficiencies the best we can to the P&L with the discipline that we showed in the quarter 2.

Our next question is from Mr. Joe Thomas from HSBC.

Can you hear me okay?

Yes, sure, Joe.

I had a couple of questions, please. First one was on Bodega Aurrera. You talked about the weakness being in big box. I was just wondering if you could perhaps parse things apart and give us a sense about what's going on in small box Bodega Aurrera? And the second thing was you made some interesting comments about private label. And I'm just wondering what your intentions are and expectations are for private label business.

Thank you, Joe. I'll start with private label. That's a very crucial part of the strategy for us. So we're improving 90 basis points versus last year, and our target is to hit mid-20% share in the different businesses that we have. One of the things that we're doing now is strengthening our relationships with suppliers through global sourcing. So as Paulo said, with marketplace, we're also working closely with global sourcing to make sure that we have the best sourcing cost and availability process for our private label.

The other thing is we are seeing different behaviors from the customers, and we are understanding that there are some white spaces in smaller formats and entry price point items. So basically, we are reconfiguring the portfolios of private label as we speak. And also, I think that one of the things of private label that is going to be important for us is that we just started implementing in our modulars a different strategy, getting to up to 25% share in the modulars with our private labels, reviewing quality, price, value packaging.

And we are sure that this is going to bring stickiness to the business, particularly at the beginning in Bodega Aurrera with total formats, including Sam's that is doing a very good job in private label is going to be driven through value proposition, quality and leveraging with the U.S. I am confident that we're going to be accelerating fast and part of the reconfiguration of the portfolios and the modulars is going to be based on improving private label share in every category and every business.

And Joe, on the second question on buy Bodega Express, we continue to see they are performing well. They are performing well across all the regions of Mexico. And there, we have a performance relative with the competition that is doing well. We always look at the market share is doing good. So as Cristian and Javi said it before, where we're losing more is on the big Bodega because it's -- the customers are splitting their shopping. And of course, they tend to buy the smaller tickets and the smaller baskets in the other parts, sometimes also moving to the informal market. And that's why we need to double down on the 3 priorities on the EDLP, availability and e-commerce to continue to stay relevant on that particular format.

Our next question is from Ms. Renata Cabral from Citi.

Paulo, it has been a pleasure working with you. Thank you so much for being always approachable, thoughtful and open with us, analysts, wishing you all the best in your next chapter. And welcome, Camilo, looking forward to working together with you and wishing you all the best.

So my one question is on inventory and availability. The inventory optimization is one of the biggest positive highlights here that I see the reduction in days. So my question is that it's mentioned in the release is still big opportunities to further reduce days. Could you give some color on where do you see those opportunities, if it's possible to quantify or to have a horizon in time, for instance, 12, 24 months or so to understand the horizon of this possibility? And if it's reasonable to expect that with the inventory improvement, this working capital to become a more important contributor to cash flow over the next few years?

Thank you, Renata, for the question. I'll start sharing with you some things about days on hand. That's a top priority for us, and we want to do a structural change because as we said in the release, even though we're reducing days on hands, we're improving availability in every category and in every format. So basically, the structural change is rebuilding the portfolios for each of the banners and making sure that we have the right proposition for each of those banners. Now we see the opportunity going forward, specifically in Bodega Aurrera with the SKU reduction that we are planning to do for the future and trying to reduce the overlap that we have with Supercenter and making sure that we have the right assortment with the right items and covering the white spaces that we need to cover in Bodega Aurrera to be relevant for the customers in this new way of shopping that they're splitting their basket.

The other thing I would say is that we're working closely with suppliers to make sure that we have very good modulars that are going to be replenishable, and it's going to be everything pickable, and it's going to be easier for the operators and the shopper pickers to really find the products. So the other thing that will reduce days on hand is better discipline in the purchase, but also accelerating on-demand and accelerating sales through an easier and better experience for customers, shoppers and pickers.

So moving forward, we are expecting and the only one that we are sharing now is Bodega Aurrera Express, we're aiming to reduce like 30%, 40% of the assortment that we have now in the upcoming months. And then we will start the process with Bodega Aurrera and Mi Bodega. But basically, the idea is to make sure that we have better availability, better shopping experience for customers, for pickers and shoppers while we reduce days on hand selling more.

No, no, I wanted to say thank you, Renata, because days on hand is crucial for our retail business is crucial for a multi-format business that we have here in Mexico. But we think that is more to come because we are touching the correct priorities. For example, everything begin with assortment, as Javier mentioned, we are focused in trying to have the curated assortment in all our banners with a correct assortment. And as I mentioned before, with this mapping store that we are doing right now, beginning in the first half of the year that is showing very good result in terms of inventory accuracy, and we will be mapping and finish this rollout in the second half in GM and fresh allow us to have this visibility on inventory that is crucial to have a better days on hand.

And sooner, we will be open 2 big distribution center in Bajio and Tlaxcala that allow us to have a better combination between staple stock and cross-dock. So we will be offering to our stores less inventory. So they will become more efficient. And also, we will see some positive impact in the working capital issue. So this is the, let me say, in a summary, the flow that we are looking or planning for the future, but this is a great question and super important for us. Paulo?

Yes. I'd just say, I know, Renata, you'll be looking for a number. I think you're asking the question. And we talked about that in Walmex Day, but I can just reiterate that we do see an opportunity for a reduction up to 10 days in days on hand in the next 3 to 5 years. So actually, we still aim higher, but that's what we are committing and we are talking to the market and count on us to do that.

Our next question is from Ms. Irma Sgarz from Goldman Sachs.

I don't want to be repetitive, but just I think Renata said it so eloquently, just to echo exactly the same comments that she made. So thanks, Renata. And thanks, Paulo, and welcome, Camilo. I just wanted to follow up on a question on gross margin. Continued good progress, I think, very consistent with, Paulo, what you've explained to us over the years in terms of contribution from the new businesses. And I see they're right now being reinvested into obviously your value proposition, your price gap. How should we think about that for the sort of for the remainder of the year? Should we sort of -- do you see sort of a need for further price investments here? Or do you believe like sort of to have reached a good level? So more consistency of what we saw exactly in the second quarter or something different?

And then one other sort of moving away from the gross margin, but going back to the private label topic. I was just curious sort of if you can talk a little bit about the work you're doing with suppliers, not just sort of tapping into the global supply chain and global sourcing channels with Walmart, but even sort of locally when you think about sort of national brands, et cetera, at a time where you're also bringing in more private label? And just help us sort of understand how those conversations are going and any impact to the business that we should think about?

Thank you for the question, Irma. I'll start with private label. Even though I commented that we're going to work closely with global sourcing, we still have a lot of business here in Mexico with local suppliers. And what we're doing is we're approaching like a long-term agreement with them, and we want to build relationship based in trust and trying to find as much efficiencies as we can with them going through the total chain and the total process and design of the products to be very, very efficient. Honestly, there are a lot of great suppliers in Mexico, and we are working with them to accelerate our business.

Said that, the other thing is we are improving our price position in Mexico, as we said in the release, we increased at least 10% price gap versus national brands, and we're going to be very, very aggressive in that approach in specific items and baskets because now the customer wants more affordability, and we need to help them really save money and live better and making sure that we get the traffic from those investments that we're doing.

So the idea of global sourcing is going to be more to standardize processes and leverage cost as much as we can. But even we are working with suppliers in Mexico to give them access to other countries, so we can really have the best value possible for each of the private label items that we will design with them. And also, we are reviewing the core assortment that we have now. It's not going to be just new items. We are reviewing every item in every category with suppliers and global sourcing to make sure that we give them the opportunity to access other markets and also giving the opportunity to the customers for better cost, better prices and more value for them in private label.

And just on gross margin question, I think, Irma, you know our priorities, EDLP is one of them. I think you can expect us to continue to investing in pricing, but there are ways to invest in pricing. Javier talked about the reengineering that we are doing to put more the emphasis in terms of the pricing investments in more the price elastic items. So that means that you're investing better, you get -- you sweat your investments in a better way with more returns. So that sometimes might mean different things in terms of what's the gross margin output.

I think what I want to reiterate, you started by talking about that is we are different than the rest of our competitors. We do have our new business or what we call now new commerce solutions that can help us to drive the gross margin profitability and decide to invest that money in pricing if we wish. I think you can expect us to continue to do so, but doing in a smart way, also in collaboration with our suppliers.

Our next question is from Mr. Antonio Hernandez from Actinver.

Can you hear me?

Yes.

Perfect. Well, congrats, Paulo and Camilo, just don't want to be that repetitive, but congrats as well. Just a quick one regarding competition and maybe your progress on your growth plans. Are you seeing some regions as priority here in Mexico and maybe some others that perhaps because of competition or macro conditions are not as priority?

No, we -- Antonio, as you can expect, we want to win in every region. And if you're talking about, is there a particular region that is growing more or less, as you probably know, the Southeast is actually a little bit more impacted when in the past, there was a bit of tailwind, now it's a bit headwind, so to speak, and the North growing well.

Regarding competition, we see competition is strong across the country. You know the usual players, some are stronger in certain areas than others, like more in the South, have distribute more in the center and then you have H-E-B in the North. But I think ultimately, we're looking to the competition all equally and the 2 pockets of where the competition is attacking the most. We've discussed that a couple of times. You're seeing the pure players, mainly Amazon and others and then, of course, on the proximity front. We tend to talk about 3B, but it's a lot more than 3B. It's all that is opening around the proximity size.

Our next question is from Mr. Alvaro Garcia from BTG Pactual.

Paulo, all the best going forward. Welcome, Camilo. I have 2 questions. One on Central America, pretty significant sort of gross margin investment this quarter. And you did mention that sort of June got better, July was that much better. Is that a function of that gross margin investment in Costa Rica? And to what degree is that here to stay for the rest of the year? And my second question is on Bodega as well. You mentioned sort of SKU rationalization for the big boxes. If you could just walk us through a timeline of when you might expect to see that happen? And to what degree is SKU rationalization impacting sales today? I mean you're literally selling less stuff. That would be helpful to get context on.

Thank you, Alvaro. I will begin with Central America. As I mentioned before, we have seen a great result in 4 countries, except Costa Rica, as we talked in Q1. In Q1, we had some issues with the conversion on a perishable distribution center that we are seeing right now a huge improving in terms of availability this quarter, particularly at the end of the quarter, we are seeing a better result Q2 versus Q1, but particularly, as I mentioned before, June, and we're seeing a good recovery in July, coming mostly because of the availability process that we implemented.

We continue seeing a deflation in the market, but this affects all the competitors too. But we dropped a little bit our margin in terms of our plans and our guidance. We continue to invest in some areas to be more competitive against top competitors in Costa Rica. But more to come because we had deflation in some areas. We had deflation in eggs and in rice, and we are working to managing all the expectations for the customer and try to control, of course, the profit. But very confident on the action that the team is doing there. And we are seeing, as I mentioned before, a good recovery, particularly at the end of the quarter and beginning of the Q3. And in Bodega, we covered a lot of things about Bodega going through inventory that is good, on demand and particularly in assortment, I would like it to Javier to deep dive on that.

Yes. Thank you, Alvaro. One interesting thing is that we are not delisting items to sell less. Everything is to sell more. So basically, we are building the right assortment and the relevant assortment for the customers. So basically, we already started, and we will see progress in the upcoming 12, 18 months. We need to get rid of the inventory that we have of the delisted items that we are going to be taking off the modulars. But basically, the idea of this is to have more efficiencies in the stores while we sell more and less days on hand, so we can reinvest in price.

So everything regarding SKU rationalization in the 3 Bodega formats is going to be, to be efficient and so we can fund more price investment. The other thing is we're going to be covering white spaces that we currently have and basically reviewing all the market and the customers, understanding more convenience proximity and seeing with the data that customers are trading down in sizes, there are some opportunities for us to cover some white spaces. So everything we're going to do in assortment is going to be more, be more efficient and have the ability to invest more in price.

Maybe just 2 quick builds, Alvaro, on Central America. One, because I know a lot of people are asking a question around that. You may have seen the numbers on private brands and Central America in reduction. A lot of that is the mix is the Costa Rica. It's actually because Costa Rica is reducing, while the other countries are actually all going up. And in Costa Rica, to the point of Cristian, we have lots of commodities, eggs, rice and beans extremely big or relevant in Costa Rica. This all is sold private brands, so that the deflation tends to impact. I think just for you guys are not worried that that's anything structural in terms of what we're doing on private brands in Costa Rica.

To your point on the margin, yes, some of those investments are also translating already in improvements, but we also need to get our act together to the point of Cristian and managing better the price investments and to getting the returns and collaboration with suppliers.

I think we are done with all the questions. So let me take the opportunity to say to me, it's one, thank you, everyone, on the call. So first of all, thanks for all the flattering comments from all of you, analysts and for attending today the call, but I also wanted to thank everyone in the call, all the investor communities for all these 5 years. And I look forward to my next chapter, of course, but I very much believe that Walmex has a huge opportunity going forward, and I wish the best of success to my successor, Camilo, and I'm sure you'll do extremely well as well as the rest of the company. Thank you very much.

Good afternoon. I'm Salvador Villaseñor, in charge of Investor Relations at Walmex. Thank you for joining us again to review the results for the second quarter of 2026. Today with me is Cristian Barrientos Pozo, our President and Chief Executive Officer of Walmart de México y Centroamérica; Javier Andrade, our Chief Merchandising Officer; and Paulo Garcia, our Chief Financial Officer.

The date of this webcast is July 22, 2026. Today's webcast is being recorded and will be available at www.walmex.mx.

Before we start, let me remind you that the content of this webcast is property of Wal-Mart de México, S.A.B. de C.V. and is intended for the use of the company's shareholders and the investment community. It should not be reproduced in any way. This webcast may contain certain references concerning Wal-Mart de México, S.A.B. de C.V.'s future performance that should be considered as good faith estimates made by the company. These references only reflect management's expectations and are based upon currently available data. Actual results are always subject to future events, risks and uncertainties, which could materially impact the company's actual performance.

Now I'll turn the webcast over to Cristian. Please, Cristian.

Thank you, Salvador, and good afternoon, everyone, and thank you for joining us today. Let me start by thanking our associates across Mexico and Central America. Their commitment continues to make the difference every day. Consumer spending remains soft, and our performance is not yet where we want it to be. The slower-than-expected recovery in consumer demand is clearly impacting our top line performance.

At the same time, while we're making encouraging progress in our business priorities, we recognize there are a few areas where we must accelerate the pace of execution. We are seeing customers become more intentional with their spending as value becomes the primary purchase driver. We are also seeing customers compare more, plan their purchases more carefully and increasingly combine physical and digital channels to maximize value and convenience. These shifts reinforce that winning today is less about waiting for demand to recover and more about becoming increasingly relevant in every shopping mission.

Our response has been to strengthen the elements of our value proposition that matter most to customers today, consistent everyday value, reliable availability and a seamless omnichannel experience. This quarter, we continue to make progress across many of the leading indicators. Let me share some of the highlights.

At a consolidated level, total revenues grew 1.9% and 3.2% in constant currency for the quarter, with Mexico reporting a 3.1% total revenue growth, while Central America delivered a 3.6% increase in constant currency. In Central America, same-store sales grew 2.4% in constant currency. Performance remained impacted by Costa Rica. All other countries are seeing good growth. The business in Costa Rica remains affected by national deflation and with customers increasingly trading down and purchasing smaller baskets. While the actions we have taken so far have not yet delivered the improvement we expected, we have a clear recovery plan focused on strengthening execution, improving our price perception and accelerating our private brands proposition. We expect these initiatives to progressively improve performance over the second half of the year.

In Mexico, same-store sales grew 1.8% during the quarter, outperforming ANTAD's self-service same-store sales by 180 basis points this time. Regarding our non-negotiables, starting with EDLP, price perception improved 310 basis points versus last year, continuing the positive trend of recent quarters. This remains one of our most important leading indicators of customer trust in our value proposition and our ability to outperform competitors in the future. This was helped by the continued improvement in our price gap, the stabilization of prices and communications efforts.

On availability, we continue to make steady progress. Self-service total availability improved by more than 20 basis points versus the first quarter, building on the sequential improvement we have delivered over the past several quarters. Regarding e-commerce growth, net sales grew 16.2%, driven again by our resilient on-demand business, fueled by improved delivery promise, while GMV grew 11.5% versus last year, impacted by marketplace.

Marketplace continued to be affected by the seller-related issues we discussed last quarter, with sequential improvement as recovery actions continue to gain traction, although we are not yet where we want to be. Importantly, our focus goes beyond the near-term recovery. We have reduced seller onboarding time by more than half, making it significantly faster and easier for sellers to join our platform, crucial to accelerate the expansion of our assortment, as Javier will explain in more detail.

Additionally, the new automation capabilities at our Megapark Fulfillment Center are helping us improve speed, productivity and efficiency in our extended assortment operation while supporting the long-term growth of our e-commerce business. And this is just the first step as we continue expanding automation across our network with our Bajio and Tlaxcala DCs next in line in 2027.

Last but not least, regarding e-commerce, I'm very pleased that Karthicka Krishnasamy has joined Walmex to lead our e-commerce business, reporting directly to me. She brings deep omnichannel experience from Walmart U.S., and I'm confident she will help us move faster, leverage even more of Walmart's global capabilities and accelerate the next phase of our e-commerce growth. Bringing Karthicka to Walmex and having her report direct to me reflects how important this business is for the future growth of the company. Karthicka can help us improve reach, speed and assortment, leveraging her knowledge, replicating the best practices from Walmart Inc.

And of course, regarding our new businesses or commerce solutions, I would like to especially highlight our advertising business and Bait. Walmart Connect had another strong quarter with a 31% year-over-year growth, supported by the World Cup and the great effort of our retail media team, while Bait generated MXN 3.8 billion in revenues during the quarter, up 40% versus last year, and it's already delivering profitability levels comparable to rest of the retail businesses.

To wrap up, while our results are not yet where we wanted to be, we're focusing on what we can control, and I'm encouraged by the progress we are seeing in the business. We have seen our market share gains build progressively over the course of the year, which tells me customers are responding to the changes we are making. This is encouraging, giving us the confidence to consistently translate those improvements into stronger financial performance and emerge stronger when markets recover.

As we look to the rest of the year, our priorities remain unchanged. We will continue strengthening our value proposition and executing with discipline.

Before I hand it over to Javier, I would like to take a moment to thank Paulo for his partnership, leadership and many contributions to Walmex over the years. This will be his last quarterly webcast as our CFO. And on behalf of the entire team, I wish him every success in his next chapter.

At the same time, I would like to warmly welcome Camilo, who will be joining us as CFO and will be with you in our future quarterly updates.

Javier, over to you.

Thank you, Cristian, and good afternoon, everyone. It is great to be here with you again. Let me share with you key operational and commercial highlights for the quarter. Regarding same-store sales, Mexico reported a 1.8% growth, with ticket growing 2.9% and transactions declining 1.1%. While some categories benefited from the World Cup, we didn't observe the overall boost in consumption that we expected.

General merchandise categories grew above the rest, driven by Hot Sale and strong TV and seasonal sales for the World Cup. Regarding regions, the North continues to lead. Sam's led across formats. We delivered double-digit growth in member acquisition, improved renewal rates and saw more members upgrade to our Plus tier, reinforcing the strength of our value proposition.

These trends are building a larger, more engaged and higher-value membership base that gives us confidence in the long-term growth of the business. Walmart Supercenter is a good example of how we are strengthening our commercial execution. During the World Cup, we brought together a compelling assortment of more than 400 apparel items, exclusive licensed merchandise, themed Great Value products and football collectible, creating a differentiated customer proposition across multiple categories.

This was further supported by the strong performance of our ONN Private Brand in TVs, helping us capture incremental demand during one of the biggest seasonal events of the year. At Bodega Aurrera, our Morralla campaign delivered record double-digit growth and private brands continue to gain share. However, overall performance remains below our expectations, driven by lower customer traffic and smaller basket, particularly in larger stores in Central Mexico.

While we have significantly improved our price competitiveness and price perception, our focus is now on converting those gains into higher traffic and stronger basket growth. At Walmart Express, the rollout of digital shelf labels remains on track for completion by October. This technology is helping us improve price execution, simplify store operations and increase productivity while supporting our Every Day Low Prices strategy. The next step will be to begin the rollout at Walmart Supercenter.

Finally, after testing different operating models across our network and implementing different productivity initiatives, we are ready to implement the first reduction in working hours beginning in January 2027. Our focus will be to execute the transition in a disciplined manner while maintaining customer service levels and supporting our associates.

Now as in previous quarters, I will do a deep dive in our 3 nonnegotiable, starting with everyday low prices. Our private brands continue to gain momentum during the quarter, with penetration increasing 90 basis points versus last year. Growth was led by Sam's Club and the big box Bodega Aurrera. We continue to strengthen the fundamentals of our private brands business. We expanded the private brands price gap versus commercial brands by 10% and successfully launched our first flagship modular, increasing private brand shelf space to 25%. We expect to implement 10 flagship modulars across key categories by the year-end.

In self-service, we further strengthened our EDLP execution by extending rollbacks to 90 days. And improving price reductions and price stability more than 300 basis points versus last year. We are also encouraged by the early results of the transition away from Martes de Frescura, which is driving higher sales and customer traffic. Together with the expansion of the self-service price gap of 50 basis points versus last year, these actions improved price perception by 310 basis points versus last year, extending the positive momentum of recent quarter.

Now turning to availability. We continued making progress on the new store availability process we've been rolling out across the network. During the quarter, we completed the rollout of our new availability process across food and consumable. The new process is now creating more than 5 million replenishment tasks every week, giving our associates better tools to locate merchandise, replenish shelves faster and improve execution. As a result, self-service total availability improved by more than 20 basis points sequentially versus the previous quarter.

We are now expanding these capabilities into general merchandise during the second half of the year. Importantly, these improvements are being achieved while we continue optimizing inventory. During the quarter, days on hand in Mexico improved by approximately 1.8 days versus last year, reinforcing that better availability is coming from stronger execution rather than carrying more inventory. We continue to see big opportunities to further reduce days on hand.

Turning now to e-commerce in Mexico. In the second quarter, e-commerce GMV grew 11.5%, while net sales grew 16.2%. With this, e-commerce penetration reached 9.5% of total GMV during the quarter, up 70 basis points versus last year.

Let me start with on-demand, which delivered 21% growth during the quarter. We continue to strengthen the 2 capabilities that matter the most in this business, speed and reach. Nearly 70% of our orders were delivered the same day and almost 25% within 2 hours, while our coverage expanded to approximately 82% of households in Mexico.

Within Walmart Supercenter and Walmart Express format, our Quick Commerce proposition continued to gain traction with nearly 290,000 orders delivered within 60 minutes during the quarter, more than doubling versus Q1. We are also expanding these capabilities across formats through new 60-minute delivery pilots at Bodega Aurrera Express and Sam's Club, allowing us to offer even greater convenience to our customers.

Turning to Marketplace. GMV declined 6.6% versus last year as we continue to work through the remaining impact of the seller-related issues from last quarter. While the recovery is progressing, our focus remains on strengthening the structural capabilities of the platform. Our marketplace assortment expanded 26% year-over-year, helped by the continued growth of cross-border trade, which now represents approximately 9% of total marketplace, up 700 basis points versus last year.

We also reduced seller onboarding time by more than half, making it significantly easier for them to join our platform. Walmart Fulfillment Services continued to gain scale and now it's close to fulfill 45% of marketplace orders while reducing average delivery times to just over 3 days. Together, these capabilities are helping towards our ambition of reaching 250 million SKUs over the next 5 years, a fast fulfillment and a better experience for both customers and sellers to build a significantly stronger customer proposition.

Let me now turn to our new businesses or commerce solutions that enhance our core. Turning to Bait. During the quarter, we reached 26.8 million active users, up 25% versus last year, while revenue grew up 40% versus last year, reaching MXN 3.8 billion. Bait business is now converting in the bottom line as a retail business.

Walmart Connect delivered another outstanding quarter, with revenues growing 31% year-over-year, supported by strong advertiser demand around the World Cup. Beyond the quarter, we continue expanding the capabilities of the platform, including scaling our in-store audience measurement tools to help brands better understand customer behavior, optimize their campaigns and measure their impact more effectively.

Within financial services, our remittance business continued to outperform the market. Despite softer industry trends, we continue gaining share, reaching a new record market share up 50 basis points versus last year.

Finally, Walmart Beneficios has now reached a mature scale with a stable base of active contactable customers. Our focus is no longer on adding more users, but on increasing engagement, improving redemption and generating deeper customer insight. We have seen that customers that redeem benefits have a total spend 2.5x higher than a customer that doesn't. And redemption already represents 1/3 of monthly active users, 2.3x more than previous year.

Overall, I'm encouraged by the progress we're making quarter after quarter. We're strengthening the capabilities that matter the most to our customers and building an even stronger value proposition. While there's still plenty of opportunity ahead, I believe we are creating the right foundations for sustainable long-term growth.

With that, let me hand it over to Paulo, who will take you through our financial results. Paulo?

Thanks, Javier, and good afternoon, everyone. Let me share with you our consolidated financial results as well as the breakdown of Mexico and Central America.

Starting with consolidated results. During the second quarter, total revenues grew 1.9% on a reported basis and 3.2% in constant currency. For the first half of the year, total consolidated revenues have grown 1.8% on a reported basis and 3.6% in constant currency. I will comment more on consolidated results in a moment.

Turning to Mexico. Total revenues grew 3.1%, driven by 1.8% same-store sales growth. Gross margin had a 10-basis points expansion versus last year with higher price gap while SG&A represented 17.3% of sales, 20 basis points above last year. We will go through the gross margin and SG&A breakdowns in just a moment.

All this led to an EBITDA margin of 9.6%, flat versus the same quarter of last year. In Mexico, we once again outperformed ANTAD self-service and club same-store sales by 180 basis points, reflecting the competitiveness of our value proposition. While we still see meaningful opportunity to improve our own performance, we are encouraged by the market share gains we have seen as the year has progressed. This gives us the confidence that the investments we are making across the business are increasingly resonating with our customers.

Let me now expand on gross margin. We delivered a 10-basis points expansion versus last year, reaching 24.1% of total revenues, whilst improving price gap by 50 basis points, as previously mentioned. This gross margin improvement was primarily driven by the contribution from new businesses, mainly Walmart Connect, Bait and Financial Services.

Our ecosystem businesses continue to be an important competitive advantage. Their growing contribution gives us greater flexibility to invest in price and further strengthen our everyday low price proposition, allowing us to expand our price gap without compromising profitability.

Now let's review our SG&A. General expenses increased by 20 basis points year-over-year as a percentage of sales, closing the quarter at 17.3% of total revenues. Growth investments related to new stores, e-commerce and new businesses added 80 basis points, which were partly offset by run efficiencies.

Now let's review Central America results for quarter 2. Please consider that on this slide, I will refer to figures on a constant currency basis. Total revenues increased 3.6% versus last year with same-store sales of 2.4%. Results continue to be heavily impacted by Costa Rica performance. I will go deeper on that in a moment. Excluding Costa Rica, the rest of the countries are showing good and healthy growth.

Gross margin contracted by 110 basis points to 23.4%, mainly behind price investments and lower volumes. SG&A represented 17.9% of revenues, contracting 10 basis points versus last year behind efficiencies offsetting growth investments. The aforementioned resulted in an EBITDA margin of 8.4%, 80 basis points below previous year. Regarding same-store sales, as said, in Q2, Central America reported a 2.4% same-store sales growth. Excluding Costa Rica, this growth would have been 7.3%. In Costa Rica, consumer behavior continues to be challenging with customers trading down and reducing basket size, while our price investments have not yet translated into the improvements in price perception and volumes we were targeting.

As we look to the second half of the year, our recovery plan is focused on 3 priorities: first, strengthening execution by improving availability, notably in perishables; second, enhancing our price perception through more low-income consumables, pack sizes, broader implementation of 90-day rollbacks and greater price stability. And third, accelerating our private brand growth. While these initiatives will take time to fully materialize, we believe they address the key drivers of the business and position us to progressively improve performance.

Regarding e-commerce, Central America posted 23.7% growth versus last year. As mentioned previously, at a consolidated level, total revenue increased 1.9% in quarter 2, which was 3.2% in constant currency and with new stores contributing 1.6% to total growth. Gross margin contracted 10 basis points to 24% during the quarter, while SG&A expanded 20 basis points to 17.4% of sales. This is an increase of 4.2% in constant currency.

SG&A growth will vary quarter-over-quarter as we prioritize and make trade-offs on growth investments and land productivity savings. We still expect an SG&A growth for the full year of high single digit in constant terms. EBITDA contracted 10 basis points to a 9.4% margin, while net income margin contracted 20 basis points to 4.4%. Our top line performance this quarter was below our expectations, reflecting a consumer environment that remains softer than anticipated.

At the same time, we are encouraged by the progress we are seeing in the underlying fundamentals of the business. The improvements we have made to our value proposition and execution continue to translate into stronger competitive performance, giving us the confidence that we're moving in the right direction.

Now let me move to cash flow. During the last 12 months, we generated MXN 90.3 billion in cash from operations. We also had a net benefit from working capital of approximately MXN 4.9 billion, driven partially by inventory where we still see an opportunity for improvement during the next 3 to 5 years. Capital expenditures amounted to MXN 39.3 billion, in line with our growth strategy, and we returned MXN 38.6 billion to our shareholders through dividends and share repurchases. All this resulted in a cash position of MXN 30.1 billion at the end of the quarter.

Regarding new store openings, in the second quarter, we opened 23 stores across Mexico and Central America, 21 in Mexico, 1 in Costa Rica and 1 in Guatemala. In total, this represented close to 12,000 square meters of additional sales floor. Contribution of new stores of 1.6% continues to be in line with the guidance range we shared at Walmex Day 2026 of 1.5% to 1.7%.

To close, I will leave you with 3 key messages. First, while the consumer environment remains soft, we are encouraged by the progress we are seeing in our competitive position. The improvements we have made in our value proposition and execution are translating into market share gains, giving us the confidence that we are moving in the right direction.

Second, we continue investing behind the capabilities that will shape Walmex's long-term growth. From pricing and availability to automation, e-commerce and our ecosystem businesses, we are building a stronger company that will even be better positioned as demand improves.

And third, based on the consumer trends we have seen through the first half of the year, we are revising our full year outlook. While we continue to make good progress in strengthening the fundamentals of the business, the recovery in consumer demand has taken longer than we originally anticipated. As a result, we now expect full year sales growth to be between 3.5% and 4.5% in constant currency with an EBITDA margin slightly below last year's level.

The change in guidance reflects a slower consumer recovery than we anticipated. It does not change our confidence in the underlying business or the strategic priorities we have put in place. We believe we are positioned to emerge stronger when the macro backdrop improves.

As usual, we will see you tomorrow at 6:30 a.m. time of Mexico City for our live Q&A session. Please contact our IR team if you have any questions. Before we conclude, I would like to take a moment to say thank you. This is my last quarterly webcast as CFO of Walmex, and it has been a privilege to be part of this company and to work alongside such an outstanding team.

I would like to thank our associates, our investors and the analyst community for your trust and continued engagement over the years. I'm confident Walmex has a very bright future ahead, and I wish Camilo every success as he takes on this role. Thank you.

Good morning, everyone. I'm Salvador, Head of Investor Relations at Walmex. And I want to thank you for joining once again to our live Q&A session following our first quarter 2026 earnings release, which was published yesterday evening. We will make every effort to answer as many questions as we can in the 45 minutes we have scheduled for the call.

Joining me today is Cristian Barrientos Pozo, our President and CEO; Prathibha Rajashekhar, our Senior Vice President of Sam's Club; and Paulo Garcia, our Chief Financial Officer. We'll now go right away to the first question, please.

[Operator Instructions] The first question is from Mr. Alejandro Fuchs from Itau BBA.

I only have one quick one regarding Bodega. This quarter, we saw semester sales being a little below the market. And I know you're making a lot of changes at Bodega that you have mentioned in the past, right, to SKUs and so on. I wanted to see maybe if you could elaborate a little bit more when do you think that we should start seeing this going through the P&L with better top line dynamics? And maybe if there was any effect that is worth mentioning on the semester sales at Bodega this quarter that you could highlight?

Thank you, Alejandro, for the question. And for sure, we're not happy with the result of Bodega in the first quarter. We began the year with not a good position in terms of inventory and also in availability in the format, particularly in Bodega and was very painful at the beginning of the year because, as you know, it's part of our priority, but we didn't do a good job at the beginning of the year, let me say, January and half of February.

We saw a huge recovery at the end of the quarter. So that's one of the big reasons that we had in Bodega because of the size of -- how many stores do we have today. And the second one that impacted Bodega last year in the first quarter, and you know one of our priority today is to be really a EDLP company. And to do that, it required a lot of efforts, and it's taking some time to do or create some exit strategy because we were competing with a Q1 with a big high low, particularly in Bodega.

So that is why that are the 2 big explanations that we are seeing or that we saw in the format. In the other hand, we are very confident that we are on track in the evolution of the One Best way price gap, as you saw in the release. We are continue increasing our position in price gap. We are continuing increasing more than 300 basis points in price perception. We are doing, as Paul mentioned last quarter, a lot of effort in terms of mapping the store.

We are seeing a lot of benefits in terms of the customer and also with the picker shopper because they are more clear where the merchandising are. And we're seeing in the stores that we began with this test, very good results. So we're improving also the catchment areas in Bodega. We are increasing or increasing the test, let me say, in terms of productivity in Bodega also trying to reduce processes.

So good question. It wasn't a good quarter for Bodega, but we're confident that we are in the right track in terms of the customer value proposition that Bodega needs to offer to Mexican customer.

Our next question is from Mr. Froy Mendez from JPMorgan.

You hear me now? Can you hear me now?

Perfect, Perfect.

Sorry about that. Just wondering on how do you define and measure the price gap perception versus competitors? If you could elaborate on what specific metrics or methodologies you use to track this? And how does this improvement in price gap perception has translated into customer behavior and market share gains by format?

Gap perception is actually with the studies that we do with a good base of the customers. And then we ask lots of questions around the customers to that. And then they talked about different areas. They talk about value, talked about pricing. They talk about other indicators that they are doing. And within that, of course, we can extract what is that they are seeing at price perception or the value, our equation versus the rest of the competitors. It's a relative indicator for.

If you think about what are the criteria that drive price perception because that's probably the most important question people always want to understand I think though what's important to understand, it's not just about the price gap per se. Price gap is a very important one. If you think about Bodega, if you think about the 3 main criteria for price perception, pricing gap is one and then penetration of private brands is the second one. And then the third one and actually is the communication.

So the stable communication, clear communication to the customers. If you think, for instance, about a brand like format or banner like Walmart Supercenter, in terms of price perception, quality and freshness is one of the top criteria. When you think about pricing, the pricing of the key value items, so to speak, it's another criteria. So it's different things for different banners. At the end of the day, all encompasses the fact whatever we are doing on pricing, how we communicate with the customers around that. And why don't we talk and Christian always talks about that EDLP, it's more just than pricing. It's also private brands. Of course, it's also the assortment and the quality of our assortment.

If I may build on your point, Paolo, good question, Froy. Price gap is about item by item and price perception is about customer survey, if we can separate both, okay? And why do we see very closely price perception because it connects very well with EDLP because at the end, the perception connect with the total basket that we are looking for be the cheapest in the market, not necessarily item by item, but EDLP means the total basket in a long period of time that create trust to you, you will be the lowest in a total basket, not necessarily following high loads for the weekend.

So what drive price perception, as Paolo said, I will add the look and feel of the stores, the assortment that is part of the EDLP, private brands, as Paolo mentioned, and also marketing campaigns that need to be well correlated with your strategy about EDLP. So those are the metrics that we are following very close because at the end, perception is everything. You can see or you can define some price competitors against some products, competitors against some private brands. But at the end, the most important part and is broadly, let me say, is the perception.

Our next question is from Ms. Renata Cabral from Citi.

My question is also a follow-up on the Bodegas and related to a statement made on the Walmex Day on the rationalization of the SKUs. I would like to know if you can give some color on what has been the rollout of this rationalization, the rationale for that, the potential improvements in terms of free cash flow once probably we have a release of working capital related to that, but not only that, but related to what Christian has just mentioned in terms of competitiveness of the Bodega.

Renata, good question again. We began, as we mentioned in Walmex Day with maybe there was a test of Bodega Express to reduce 30%. But after a lot of conversation in the team, we defined that maybe it's not a test in particular because we did that in the past. I landed here in Mexico in 2012. And at the time, Bodega Express had some issues about the assortment, and we did that, and we moved Bodo Express from 2,500 SKUs to 1,800 to 1,900.

So -- and maybe you can see the historical number of Bodega Express that was the one that has been the highest comp sales in the company. And it's because of simplicity, it's because of allowing the customer and also our associates to be more productive. And at the end, the key for my opinion, in a small format is to provide availability. So that's the way that we are looking for improve this format because we did that in the past.

So we are in the middle of the rollout of this test, allowing the customer to find the products that they are looking for at the best price. So we're in the middle of the expansion of the test. We are very confident because we did in the past with very good results. You can see the numbers on 2013, 2014 and going on. So that's where we are in terms of the assortment reduction. And it's part of the Bodega DNA, okay? So you know that we need to operate for less to sell more because with that, we can translate to the customer best prices. So this is key for us in this format to respect our customer value proposition. Thank you, Renata, for remember us this commitment that we did in Walmex.

Our next question is from Mr. Ben Theurer from Barclays.

Ben, we see you already.

Can you hear us Ben? We cannot hear you.

[Technical Difficulty]

Our next question is from Hector Maya from Scotiabank.

We have been seeing for quite a while now that the contribution of new businesses to the gross margin has been consistently positive. But then growth investments offset this effect with an increasing contribution to SG&A. So I was wondering if you could share your thoughts on that dynamic. And if there is a strategy in place to reduce the impact in expenses from growth investments and also to gain a sense of how you are looking at increasing the price perception of consumers? And how long could this last for the remainder of the year?

Yes. Thanks, Hector, for your question. So let me say a few things. There were a few questions in your question, one around the contribution of the new business, one around the SG&A. And then I think you ended with the price perception we've discussed previously, but I can touch base on that one. So look, on the new contributions, we talked about our strategy, which is, by the way, a growth strategy. And these are new profit streams that we bring into the equation that we actually bring in order to decide in order to invest back in the customer in pricing to drive more growth.

If and at times, we decided to drive that to the bottom line, we can do it. But as you know, from our 3 priorities, one of them is to drive more price growth. and price expansion. So what we actually drive in terms of new profit streams, and it's good that they continue to accelerate, we invest back in pricing. In terms of the expenses, we've been talking about a lot about that. It's a growth strategy. We've been talking that we would expect that our gross investments to be in the north of that leads to SG&A growth in the high single digit. That's what we'll be planning. Of course, we do know that we need more sales in order to leverage those costs, and that's what we are completely focused based on our priorities that we've been talking about all the time. And I think on price perception, Christian talked in the second question from Froylan.

Actually, this is the second quarter in a row that we had an increase in price perception of quarter-on-quarter of more than 300 basis points, which reflects that what we were doing on the -- in terms of the pricing investments and expansion, what we are doing in terms of the private brand penetration, what we are doing in terms of the way we actually communicate in our stores, our pricing plus assortment is starting -- is paying off. So that's why because this is what will actually gain the trust of the customer and help us going forward to grow more.

Paolo, if I can add one thing, right? So the question was also about productivity. What we are doing in investing in automation and AI is to improve customer experience and simplify operations for our associates, which translates to productivity. For instance, we talked about digital shelf labels and expanding digital shelf to 100% of our stores in Walmart Express by Q3.

That drives productivity. That's just one example. But we are doing things like smart receiving using technology. We are improving our availability process by mapping stores, making it simple for our associates to execute, which improves customer experience but also drives productivity. So we are using technology, especially automation and AI in our DC and in our stores to drive productivity and simplify operations.

Our next question is from Mr. Andrew Ruben from Morgan Stanley.

I'd like to better understand some of the dynamics in e-commerce marketplace. We saw the decline and the message was around some large electronic sellers. So I'd like to get a better sense of the concentration of sellers within your marketplace. And as you open up for some of the Walmart cross-border sellers from the U.S., how impactful that could be both in terms of concentration and overall marketplace GMV mix.

Yes. Thank you, Andrew. And as we mentioned, clearly, we have a dependence in few sellers today that we are changing that with the help of the U.S. We're not moving our structure, let me say, to report direct to the U.S. because we are taking a new approach in the marketplace business, trying to -- or not trying -- we will become more a global company and marketplace will be one of them. So we are seeing a lot of cross-leveraging ideas between both markets that we are seeing in place in this month of April. So we will change the dependency. We will -- we are right now improving our cross-border business. And we define, let me say, some clear action that we can take on the market and some actions that we can leverage in all the company.

Let me share with you some ideas that we are improving very fast in the April month. We are reducing our onboarding seller dramatically with some issues that we saw in the platform today, and we are reducing last 15 days, we reduced 7 days the onboarding seller process. And we're looking to reduce 12 more days in the coming months. So that is super important because connect with the assortment piece. And the assortment, as always in brick and also in marketplace, it's key.

We are looking for have a huge assortment in marketplace, but curated also that allow and connect with my previous point about few seller dependency. You need to have a correct assortment big assortment, but correct. The second one that we are exploring and seeing a lot of good news, let me say, it's about the speed. We are not using very well our Walmart fulfillment services. And with -- again, with some trees that we have in April, we are looking for incredible improvement in the Walmart fulfillment services that at the end, impact in the speed of delivery, reducing, let me say, this month or it was this month, almost 2 days on speed because in e-commerce, everything is about speed. So this is some examples for you to know where we are. We are seeing a shift in terms of sales that allow us to see that we are finding good news within the team, local team and also with the support of the Walmart U.S.

Last week, there is a group of 10 people who came from the U.S. with a leader worldwide of marketplace and allowing us or helping us to really see where we are in terms of our platform, in terms of our sell experience and see all the journey for our seller and also for our customer. So not a good result in the quarter, very clear. But we're confident that we are in the right direction to recover the speed that we need in terms of sales.

Our next question is from Mr. Ulises Argote from Santander.

The one that I had was more on the regional details you provided there yesterday, obviously, those updated charts. The center and the South seem to be the ones that are decelerating the most, at least versus the trends we saw in the last quarter. So I wanted to get your thoughts on what was going on there in the specific markets. Is it competition? Is it a higher concentration of Bodega? Is it the informal? Just any extra color of what you're seeing there on the ground would be really helpful.

Yes. In the South, Ulises, I think you know that when you compare this versus the past, South has been an area that has been growing that was pushed a lot by the government, as you know, Ulises, and then starts slowing down. And I think you see that slowing down across not just our South, but across the rest of the competitors.

I think that's probably what you're seeing. That's what I'll call it. In the center, so to speak, we're not seeing a huge variation, so to speak. You can say there's a little bit more competitive pressure, so to speak, there. Other than that, I don't think I will call out anything different than what we're seeing in the rest of the region. The Southeast is the South is clearly one that the economy is not growing at the same pace that it used to be.

Our next question is from Ms. Irma Garz from Goldman Sachs.

Irma, we see you. You're on mute.

Not sure if you can actually hear me.

Yes. Now yes, perfect.

Like you can hear me. I can't hear the other side. But I'll just ask my question. Hopefully, it goes through. Just a quick follow-up on the e-commerce strategy. Just conceptually, how should we think about sort of when you think about growth and margin trajectory in the U.S., the e-commerce operation is already above breakeven or has reached breakeven and maybe a little bit above breakeven.

But I would assume -- or am I correct to think that the growth has to come first. And then over time, you'll leverage the expenses, drive more efficiency in your logistics network and overall cost structures and drive then improved profitability and perhaps that can sort of fuel then further growth or help the overall margin.

Just conceptually, like sort of I wanted to think through that a little bit. And perhaps linked to that is whether you think that there should be upfront investments as you're improving all those capabilities on your e-commerce platforms? Is it a question of build it and they'll come? Or do you think you have to put more money initially around the -- to back up the perception of your online property and drive more traffic to it in order to really capture that growth opportunity?

I think conceptually, Irma, you're right in all that you have said. It makes all sense. I think the only thing that I will add to that is that we've always been talking about there are 2 tails, so to speak, in e-commerce -- there's your business on demand or grocery demand, how we call it, in [indiscernible], which is a profitable business, and we leverage the full assets and of course, the scale we already have on that space, and we want to increase the reach.

We discussed that at length in Walmex Day. And then, of course, you do have the business of assortment, in particular, the marketplace, which is in a different stage of -- which is in a different stage and therefore, needs to grow. There's the scale is important. All the things that you have said it are important. So there's that investment as you grow, of course, the profitability keeps improving, which keeps, of course, creating this virtual circle of growth and the flywheel that allows you to continue to invest in, so to speak.

In terms of what regards major investments on e-commerce, one is capacity, but the capacity is omnichannel, as you know, mostly, Irma. And the second one, of course, with the high investments around technology, which are the global platforms these days are fully global platforms that we actually pay as a take rate, and we actually reflected that in our expenses, so to speak. It's not so much the CapEx. So I think these are the 3 important things to say of what you asked, Irma. But conceptually, you're right.

Okay. And maybe if I can add on one more question. On Beneficios, I saw the number of users or sort of loyal members sort of flattened out or stabilized here. Are you looking to still grow that? Or is there a specific reason behind that stabilizing? Is that sort of the natural ceiling?

I think you answered again the question. It's a natural ceiling, So to speak, Irma. -- you're talking about pretty much up to 50 million, right? We have 47 million now. I think the most important now and where we are putting all the efforts and all the focus is in driving the engagement with these customers, taking more of the -- actually of the data that we were getting, trying to find a way to connect more with the core to drive and increase the customer lifetime value of that customer with us in terms of how it drives the traffic, how it drives the increased ticket. That's what we are focused. We are not focused now in taking from 50 or 47 to 50 or 50 to 52.

If I may build on your answer, thank you for the question, Irma. As Paolo mentioned, we are tracking almost 70% of our transaction. That is a very good number. I came from Chile. In Chile, we deployed this program 25 years ago, and we're running 70% of total transaction. So this is a good number.

The secret here is what do you do with the data. And we are forcing and we are working very hard with the team more than connect more people. We need to deploy or develop something around the data. The same is in Bait. Bait was created to provide cheaper Internet, cheaper mobile access. So with that, we will allow the customer to go to the e-commerce and invite them to the digital economy.

So that's the focus that we have had -- that we are working today and also leveraging the markets because we can bring some products or some programs or projects that we have in other countries. For example, we have in Chile, this program that maybe you have heard about Cari Lista that predict what's going on with your out-of-stock items at your home.

So this is a huge program that we have there, but it came from Beneficios program, for example. So we are exploring to bring because we are almost in the same platform, and we are looking for -- do some tests maybe in Sam's because we have all the membership in Sam's or using that or using Beneficios. But the key or the secret here, Irma, -- what will you do with the data more than how many customers, okay?

Our next question is from Mr. Alvaro Garcia from BTG.

Can you hear me?

Yes.

Nice. Awesome. My question is on delivery and on your goal to reach 50% delivery on-demand in under 2 hours. How do you expect to push that? How do you expect to reach -- how are you thinking about reaching that goal? It seems pretty bold. I think this quarter, you're at 14%, but I'd be interested in how you expect to your marketing or your spend to get to that goal.

Alvaro, thank you for the question. Speed is really essential for our customers and members, and they have made it known. How we expect to reach there is to build density of shoppers city by city, right? So how we think about it is we have pickers in our stores and trucks and also shoppers that help us. So as we build density of shoppers within the city, we are able to offer 2-hour delivery service.

Within that, we can also build density of orders. So it's not if multiple members place the order, and we can -- we are building algorithms that allow us to like say, hey, customer A and member B place the order and it's in the same direction, and we can actually help the shoppers pick multiple orders and deliver that order within 2 hours. So it is with a combination of shopper density, city density as well as how we think of order density that will go in the same direction, so we can improve our cost to serve and improve our speed to our members and customers.

I may build in the point of Prathibha, Alvaro. The biggest advantage, of course, you know for Walmex is our footprint. Today, as I mentioned in Walmex Day, we wanted to serve 99.3% of total population with all our fleet. And with that, today, with the 14% that we actually have, we are not using all our fleet because we are not using the Bodega Express. We're not using very well the Walmart Express. That is a complement of Walmart Supercenter.

And today, in the world, we have the platforms that allow us to use all the stores because all the stores are closer to the customer, not only the big ones. So we are right now using more or less the big one, but the future -- the near future, let me say, the near months it's going to use small formats.

We are testing, for example, in the U.S., the concept of depots that is 1,000 square meter stores that are closer to the customer. So that allow us to reduce, let me say, 15 or 30 minutes in delivery. So we actually have in Mexico the opportunity to create more speed using all our fleet. I'm not saying that we will deliver specifically something in self-service. But in self-service, that is a huge amount of smaller stores, we have the capacity today to accelerate and be closer to the customer.

So that is going to be the way to create more speed and think that we will reach 50% plus the concept that Prathibha mentioned that we will move a little bit from pickers to take advantage of the crowd surge that we can deploy internally or use the third parties that we have today as a strategic partner with us.

Our next question is from Mr. Antonio Hernandez from Actinver.

Had some technical issues. Just regarding the general merchandise.

[Technical Difficulty]

We cannot hear what you say.

Ok. I'll dial back in.

Our next question is from Mr. Joe Thomas from HSBC.

You are on mute, Joe.

We cannot hear you.

Is it any better?

Yes.

Sorry about that. Technical problems, new systems. A quick question, please. A quick one on the 2 parts of the business that still look a little bit flat, Walmart Express and Central America. I realize that the issues in Central America have been around Costa Rica. But I'm just wondering what specifically you're seeing in those areas and what the plans are for a turnaround?

Thank you, Joe. And we are -- as you saw the numbers, we are having for a long time, a very success business in Costa Rica. And today, the quick answer for you could be that we implemented at the end of last year a new perishable distribution center that is completely new in terms of system for Costa Rica, and we saw impact in availability in all the fresh areas. And fresh is super important, as you can imagine, in Costa Rica because of the footprint that we have and also because of the quality that we offer every day in all our formats.

So we saw an impact there that you can imagine the perishable is so important for the traffic that create an halo effect that is impacting today in our performance in the country. It's -- let me say it's very clear diagnostic. It's a very clear assessment because it's the only one country that we have had some problems in the last quarter. If we can compare with the 5 countries, we have 4 very well performing and Costa Rica that is big for us.

It's not in the right place, but we are taking deep actions to recovering. We are seeing some recovery in availability in the month of April. So we are working very hard to turn around. It's, let me say, one effect because of the PDC that we opened last year. Thank you for the question.

And Walmart Express?

And Walmart Express -- we are in the middle of, let me say, transition because we changed the brand years ago. We did some changes in the last 3 years. But today, we are setting back the customer value proposition in Walmart Express. We are working in the correct assortment to be part of Walmart Supercenter. Our viewing Walmart Express to be a complement to Walmart Supercenter.

We are working on parity prices between Walmart and Walmart Express. So that allows us to use Walmart Express as a huge benefit for us because Walmart Express will need to play and will play a better job in the omni strategy because Walmart Express is closer to the customer. So that is why we need to create this complement from Walmart Supercenter, and that is why we are working on and see some results in the coming months.

Our next question is from Mr. Bob Ford from Bank of America.

Christian, I think you opened up 17 Baits in the quarter. And I was wondering if you could discuss the cadence for new openings over the course of this year the availability of suitable locations, particularly for Bait where you're competing with OXXO,[ Trespe, Para ] and others. And do you feel you have relative advantages in real estate? Or are you disadvantaged in some way and why?

Well, -- the question was at the beginning, I didn't hear you very well.

The phasing. Was it the phasing of we opened stores across the year, right?

Yes, how should we think about the cadence of openings, right? And then the suitability and the difficulty in finding those, particularly given how competitive the market is for those smaller box locations. And then do you feel you're advantaged? Is there a scale or competitive advantage that you think you have in real estate? Or do you feel disadvantaged for some reason? And I was curious as to why.

Okay. Let me try to answer your question. My view is we have a, let me say, a multi-format portfolio strategy to growth. We are not only growing with Bodega Express. We are working more about the square meter that will increase every year because we need to have a clear strategy or we have a strategy for Sam's, for Walmart Supercenter, for Bodega, all the business and of course, for Walmart Express. So I think we have an opportunity because of the team that we have today looking for different sizes all over the country. And particularly in Bait, I think we have a strong business there.

Bait has performing very well in the last, let me say, 15 years. And we are now looking for continue evolving the business with more efficiency. You saw in the Walmex Day, our idea to reduce or improve the assortment that we are offering to the customer. So I think it's not a disadvantage. For sure, we are competing with a very good 2 or 3 big players, let me say,3B FEMSA with OXXO, also NEO, they are very good competitors.

They are open stores. We do also open great stores because at the end, this is super important to have a sustainable growth, not only open stores. So that is why we are very -- we have a lot of discipline in the way that we approve different stores. We are evolving the speed that we used to have to open a Bodego Express. We are adapting more of the business to the locations that we are looking for. So we are evolving, let me say, the speed that we need to accelerate the business. I don't know, Paulo, if you add something.

Maybe just to add one thing, Bob, because your question is right and absolutely spot on. And I think one thing to say when we look at the quarter 1, it tends to be impacted by the fact that at the end of the year, and it's a market thing, and we are not different than that you tend always to open a lot of stores. We actually want to change that.

We make an internal decision that we want that not only just concentrate a lot of the openings at the year-end, this is the year that we want to start that because so that we don't have this huge volatility across the periods. We feel that we have the muscle to open. Other people out there also open the stores as well in real estate. But of course, we comply everything by the book, and we will continue to do so.

But we feel that we have the muscle to accelerate store openings as we promised and we committed at Walmex Day. But thanks for the question. Good one. I think we have time for one last question.

Our next question is from Mr. Ben Theurer from Barclays. Our next question is from Federico Galassi from Rohaytn Group.

A small -- maybe a follow-up on the previous question is related to -- we saw Sam's Club continue to grow same-store sales well above in this quarter, in particular, Bodega you mentioned was lower.

Do you see any change in the consumer behavior? Do you believe that it is more related with the competition, thinking what will happen and we have these issues in the month of February is something more related with -- again, with the change in the consumption in Mexico, if you see any view of that? -- thinking in the next of the year on the rest of the year.

I will start with consumption and hand over to Prathibha to talk about Sam's and the performance in the quarter. Fere, I don't -- well, by the way, thanks for your question. I don't think there is anything in particular that drives the different behavior of performance of our formats, Fed. Of course, there's a little bit of down trading that's we're seeing split of the shopping, but that is not what's driving necessarily the performance on our format.

Prathibha in a second, we'll talk about what drives the growth in Sam's. Christian already alluded to some of the issues that we've had with Bodega. If you ask us around what we see from the market going forward, we do expect, and I think everyone is expecting that a ramp-up of the consumption throughout the year.

There's lots of hopes, as you will know, Fed, around the period now May, June, July because that's -- we have the hot sale, we have the World Cup. And there's an expectation that things will go throughout improvement throughout the year. Of course, we also will have to see what happens after the World Cup in terms of the consumption, whether there is any hangover or not from that. But that's the expectation that we see at the moment, Fed. And I'll hand over now to Prathibha to talk about Sam's.

Thank you for your question. What we are seeing with Sam's Club is we are growing our membership double digit. Our renewals are increasing year-over-year, quarter-over-quarter. And one of the things that we are seeing is our traffic is also improving because of the membership growth.

As members are coming to Sam's Club, they are discovering the quality of our Member Smart brand, which is our private label and our penetration in private label is improving. We are also investing in prices, and I shared this at the Walmex Day that we are going to invest in 500 items in 60 stores. We have continued to roll that out, and we are seeing good traction, double-digit growth in units and member penetration because of the price investment. All of these are adding to like the growth of the Sam's revenue that we are seeing.

That was the last question. I will now hand over to Mr. Salvador Villasenor for final comments.

Thank you for joining, and thank you for your questions. Looking forward to talking to you in next quarter.

Walmex would like to thank you for participating in today's video conference. You may now disconnect.

Good afternoon. I'm Salvador Villasenor, in charge of Investor Relations at Walmex. Thank you for joining us again to review the results for the first quarter of 2026. Today with me is Cristian Barrientos Pozo, our President and Chief Executive Officer of Walmart de Mexico y Centroamerica; Prathibha Rajashekhar, our Senior Vice President of Sam's Club; and Paulo Garcia, our Chief Financial Officer. The date of this webcast is April 28, 2026. Today's webcast is being recorded and will be available at www.walmex.mx.

Before we start, let me remind you that the content of this webcast is property of Wal-Mart de Mexico, S.A.B. de C.V. and is intended for the use of the company's shareholders and the investment community. It should not be reproduced in any way. This webcast may contain certain references concerning Wal-Mart de Mexico, S.A.B. de C.V.'s future performance that should be considered as good faith estimates made by the company. These references only reflect management's expectations and are based upon currently available data. Actual results are always subject to future events, risks and uncertainties, which could materially impact the company's actual performance.

Now I'll turn over the webcast to Cristian. Please, Cristian.

Thank you, Salvador, and good afternoon, everyone, and thank you for joining us today. Let me start by recognizing our associates across Mexico and Central America. Their focus and adaptability continue to be critical as we navigate a demanding operating environment and stay close to our customers. We are executing well on our priorities, EDLP, availability and e-commerce acceleration.

It's improvements in these strategic areas that will position us for longer-term structural improvement in growth and margins and durable share gains. Macro conditions remain unsettled. This makes focusing in what we control even more critical. Over the past months, we have sharpened how we operate the business with a stronger emphasis on the day-to-day. You will see in our results that we are showing progress in availability, pricing and e-commerce operations. I am pleased with the direction of progress and how our customers and members are responding. Now I would like to see us go faster. We believe improved performance will be driven by the actions we are taking today as well as those implemented over the past quarters.

Let me now briefly walk you through the main highlights of the quarter before Prathibha and Paulo provide more detail on performance across the business. I'm committed to giving proof points of our progress every quarter. At a consolidated level, total revenues grew 1.7% and 4.1% in constant currency for the quarter, with Mexico reported a 4.4% total revenue growth, while Central America delivered a 2.5% increase in constant currency.

In Central America, same-store sales growth in constant currency was 0.9%. Performance remained impacted by Costa Rica from a combination of weakened market share performance and continued deflationary environment across key categories. All other countries are seeing good growth.

In Mexico, same-store sales grew 3.1% during the quarter. Importantly, for another quarter, we continue growing same-store sales well ahead of ANTAD by 170 basis points in the first quarter. While we continue to outperform our competitors, we still believe there is a huge opportunity to accelerate omnichannel share gains.

Regarding EDLP, we continue to improve price perception in Q1. with an increase of 340 basis points year-over-year. This is the highest increase since we started measuring it. This was helped by the continued improvement in our price gap, the stabilization of prices and communications efforts. We see a similar dynamic in availability. In Q1, we continued to make progress in this metric with total availability in self-service improving by 100 basis points quarter-over-quarter, reflecting the impact of the operational actions we have been implementing.

Regarding e-commerce growth, net sales grew 14.4% driven by on-demand, while GMV grew 9.1% versus last year, a disappointing figure impacted by marketplace. On-demand grew almost 20%, driven by improved reach and speed with delivery under 2 hours, up 700 basis points versus last year. On marketplace, we're building an aggressive plan to leapfrog performance in conjunction with Walmart Inc., team focused on building a winning customer value proposition, improving seller value proposition, while leveraging global marketplace footprint. E-commerce is our top priority for acceleration right now, and we are approaching it with a strong sense of urgency in full collaboration with Walmart Enterprise. We see this as a structural growth driver for the business, and we're fully committed to our goal of tripling our e-commerce business over the next 5 years.

Also, I would like to highlight Warner Connect. Revenues grew 33% year-over-year. We continue to see significant growth potential in this high-margin business as advertising increasingly shifts from traditional channel to retail media. Lastly, we are making significant investments to strengthen how we leverage data, technology and global capabilities across the business. Through initiatives like Scintilla and Beneficios Program, we're using advanced analytics and AI to better understand customer behavior and support more informed decision across pricing, assortment at a very granular level. At the same time, we're embracing a stronger global mindset, leveraging Walmart's platform, technology and expertise to accelerate execution at scale.

We're advancing with automation initiatives in our stores with digital shelf labels, RFID, bin location, complementing what we're doing in supply chain automation, including the development of fully automated distribution centers, which will enhance efficiency and support productivity improvements of up to 10% in the stores they serve. The scale of these investments and our ability to leverage Walmart's global capability including top-notch AI is something no other player in Mexico is doing today, and it reinforces our long-term competitive advantage.

As we move through the year, our focus is very clear: execute better, move faster and stay close to our customers. The actions we have put in place are starting to gain traction. And while progress will not be linear, we are seeing enough to reinforce that we're moving in the right direction. This is a year of building, building a stronger execution, building more consistent performance and building the foundations to fully leverage our competitive advantages. We are approaching the months ahead with intensity and discipline, focused on converting these efforts into tangible results across the business. We have the assets, the strategy and the team to do so. Now it's about delivering consistently.

I'll now leave you with Prathibha, who will walk you through our operational highlights in more detail. Thank you for your continued interest in Walmex. We look forward to speaking with you again tomorrow during our live Q&A.

Thank you, Cristian, and good afternoon, everyone. It's great to be speaking with you again following our Walmex Day last month. I'm excited to now also connect with you through our quarterly results. Having spent many years across different Walmart markets and with a strong focus on merchandising, customer behavior and technology, I'm happy to bring that perspective as we continue to strengthen execution and enhance our commercial proposition across formats.

Let me now walk you through some of the key operational and commercial highlights for the quarter. Regarding growth, Mexico reported a 3.1% same-store sales growth with ticket growing 4% and transactions declining 0.9%. With the significant recent improvement in EDLP and availability, we expect to see traffic picking up in the coming quarters. As you know, it takes discipline and time to regain trust from customers and members. Health and Wellness led among merchandise divisions, followed by Food and Consumables, while the North region continued to be the leading region in terms of growth for another quarter.

Sam's led across formats. Its omnichannel NPS remained stable throughout the quarter, while e-commerce NPS reached its highest level in March, signaling continued improvements in the digital experience and reinforcing member loyalty. Walmart Supercenter delivered a solid start to the year, closely following Sam's Club with double-digit growth in key seasonal events, such as Valentine's Day. Also, we continued to expand our licensed assortment in hand with trendy topics in the market such as Mario Brothers and the upcoming World Cup, enhancing our value proposition and driving incremental traffic through innovation and emotional connection with customers.

Bodega's performance this quarter was softer, mainly due to a transition phase towards price stabilization, focusing back on EDLP, operational improvements in availability taking longer than expected during the quarter and a reduction in small ticket transactions impacting sales of big box Bodega format.

In Walmart Express, we had initiated the rollout of electronic shelf labels, making it the first format where we fully deploy this capability across all stores. This is a key step in modernizing store operations, significantly improving speed and accuracy while simplifying execution at the shelf. Importantly, it also supports our everyday low-cost agenda by reducing manual processes and driving greater efficiency in store operations. We expect to complete the rollout across the format to 100% stores by quarter 3.

Now let me do a deep dive in our 3 nonnegotiables. First, everyday low prices. Our private brands penetration continues to increase with an improvement of 90 basis points year-over-year in the first quarter. Growth was primarily driven by Sam's Club and Bodega Aurrera Express. By category, food showed the strongest gains during the quarter, while general merchandise, particularly home and apparel continues to represent the highest penetration of our private brands. As a result of the price investments we've been making, we expanded our price gap by 100 basis points in self-service versus prior year, strengthening our price leadership and reinforcing our value proposition for customers.

We are also making progress on our pricing initiatives shared at Walmex Day, including extending the duration of rollbacks to 90 days and strengthening price stability, a key component of our Everyday Low Price strategy. All these, together with other levers, resulted in an all-time high improvement of price perception of 340 basis points versus last year. This is a key indicator we use to benchmark our performance against competitors, and it should translate into accelerated share gains in the coming quarters, especially in a consumer environment increasingly focused on value.

Now turning to availability. We continue to strengthen store execution through process improvements aimed at driving availability. During the quarter, in self-service, food and consumables, all stores completed zoning and aisle creation, along with bin location mapping, establishing a more structured and scalable operating model. This reduces friction for both customers, pickers and shoppers and strengthens at the same time, our customer experience and e-commerce execution.

At the same time, we advanced initiatives such as top-stock practices and new store routines supported by digital tools. Early pilots are delivering strong results with meaningful improvements in total availability and in full metrics, reinforcing our confidence as we scale these initiatives across the network. Self-service total availability improved close to 100 basis points versus the fourth quarter of 2025 on top of the previous 2 quarterly improvements.

We have continued to strengthen our inventory position with days on hand improving by approximately 3 days year-over-year in constant currency, reflecting better balance and discipline across our operations. We still see a significant opportunity in this metric within the next 18 months. We see it as both an important revenue driver on top of an optimization initiative.

Turning now to e-commerce in Mexico. In the first quarter, e-commerce GMV grew 9.1%, while net sales grew 14.4%. As a result, e-commerce penetration reached 7.7% of the total GMV in the first quarter, up 30 basis points versus last year. On-demand continued to lead growth, increasing 19.5% in the quarter. As we know, speed is critical to winning in on-demand e-commerce. We remain focused on expanding rapid delivery capabilities in line with targets shared at our Walmex Day of delivering 85% of on-demand orders same day and over 50% within 2 hours over the next 3 years. In Q1, we delivered 68% of orders in the same day and 14% within 2 hours, up 700 basis points versus prior year.

Operational execution is also key. In Supercenter and Walmart Express, perfect order improved 130 basis points over last year. In Bodega, execution gains translated into a 600 basis points improvement in perfect order and a 27% growth in repeat customers, reinforcing customer trust and long-term engagement.

For Sam's, digital sales delivered high double-digit growth with sequential improvement throughout the quarter. E-commerce penetration increased sequentially month-over-month, reflecting the sustained shift from members toward omnichannel behavior and reinforcing its role as the fastest-growing channel. Marketplace GMV decreased 14.4% in the quarter. This reduction was primarily driven by issues affecting key electronic sellers. We are actively addressing these challenges in full collaboration with Walmart, Inc., as alluded by Cristian.

Regarding reach, we continue to expand our coverage, now serving approximately 81% of the population in Mexico, making progress towards our goal of reaching 99% of households. As we look ahead to the next quarter, we are preparing for the Football World Cup and Hot Sale, one of the most important moments for our e-commerce business. We see these events as a key opportunity to drive traffic, capture incremental demand and continue strengthening our omnichannel proposition, supported by a compelling assortment, competitive pricing and improved execution.

Let me now turn to our commerce solutions, previously known as new businesses that enhance our core. Bait reached 26.6 million active users, generating revenues of MXP 3.4 billion, in the quarter, up 48% versus prior year. Walmart's Connect increased revenues by 33% year-over-year, reflecting the continued strength of retail media. As anticipated, advertising investment is beginning to recover in 2026, supported by strong demand ahead of key seasonal events such as summer World Cup.

During the quarter, we also launched Digital Landscapes, the third Scintilla module in Mexico, providing visibility into the full digital customer journey prior to purchase across app and web. This new capability enables a deeper understanding of the digital funnel, significantly strengthening our data offering to suppliers and our ability to partner with them to make better decisions for our customers and members. Within our Beneficios program, we reached 47.2 million active contactable customers, stable versus previous quarters, giving us clear visibility into what drives customer visits and spend, allowing us to fine-tune space allocation and pricing decisions to a granular level.

Before handing it over to Paulo, I would like to highlight the strong alignment we are seeing across the teams around our key priorities. There is a clear focus on execution with teams operating closer to the customer and with greater discipline in the fundamentals. From a merchant perspective, what gives me confidence is how we are strengthening our value proposition, improving assortment, availability and the overall shopping experience across channels.

With that, I'll now turn the call over to Paulo, who will walk you through our financial results. Thank you.

Thanks, Prathibha, and good afternoon, everyone. Let me share with you our consolidated financial results as well as the breakdowns of Mexico and Central America. Starting with consolidated results. During the first quarter, total revenues grew 1.7% on a reported basis and 4.1% in constant currency. Consolidated EBITDA margin was 10.2%, a 20 basis point contraction versus prior year. I will comment more on consolidated results in a moment.

Turning to Mexico. Total revenues grew 4.4%, driven by 3.1% same-store sales growth. Gross margin had a 40 basis points expansion versus last year with higher price cap while SG&A represented 16.8% of sales, 65 basis points above last year. We will go through the gross margin and the SG&A breakdowns in just a moment. All this led to the EBITDA margin of 10.4%, contracting 30 basis points versus the same quarter of last year.

With a 3.1% same-store sales growth, we outpaced ANTAD self-service and clubs same-store sales figures by 170 basis points, continuing the positive trend of the last years. We expect to continue accelerating share gains versus the market driven by the progress we are making in our strategic priorities. These remain the core levers to strengthen our competitiveness, and we are confident they will translate into improved performance going forward.

Let me now expand on gross margin. We delivered a 40 basis point expansion versus last year, reaching 24.4% of total revenues, whilst improving price gap by 100 basis points, as previously mentioned. This improvement was primarily driven by the contribution from new businesses such as Walmart Connect, Bait and Financial Services. This highlights the importance of our higher-margin new businesses, which provide additional income streams that allow us to invest in price. During the quarter, this enabled us to expand our price gap without compromising margins, reinforcing both our competitiveness and financial discipline.

Now let's review our SG&A. General expenses increased by 65 basis points year-over-year as a percentage of sales, closing the quarter at 16.8% of total revenues. Gross investments added 70 basis points, mainly related to new stores, digital capabilities and initiatives to strengthen the customer and associate value propositions. Additional sales are key to better leverage our investments.

Now let's review Central America results for quarter 1. Please consider that on this slide, I will refer to figures on a constant currency basis. Total revenues increased 2.5% versus last year with same-store sales of 0.9%. Results are heavily affected by Costa Rica's performance with deflationary and competitive pressures. Excluding Costa Rica, the region would have grown 6.7% with 5.6% same-store sales growth. Gross margin contracted by 40 basis points to 24.1%, with new business contribution not being enough to offset our price investments, notably in fresh.

SG&A represented 17.8% of revenues. contracting 10 basis points versus last year behind efficiencies offsetting growth investments. The aforementioned resulted in an EBITDA margin of 9.2%, 20 basis points below previous year. Regarding same-store sales, as said, in Q1, Central America reported a 0.9% same-store sales growth with Nicaragua and Honduras leading and Costa Rica performance weighing across the whole region.

Costa Rica is still being affected by deflation, especially in food and beverage sector and a soft consumer environment. Still, under that context, we know we can do better by sharpening our execution and increasing price investments to regain traffic and volume to turn around market share performance from the last 2 quarters. Regarding e-commerce, Central America posted 24% e-commerce GMV growth versus last year, driven by our on-demand business.

As mentioned previously, at consolidated level, total revenue increased 1.7% in Q1, which was 4.1% in constant currency and with new stores contributing 1.6% to total growth. Gross margin expanded 20 basis points to 24.3% during the quarter, while SG&A expanded 40 basis points to 16.9% of sales. This is an increase of 7% in constant currency. EBITDA contracted 20 basis points to a 10.2% margin, while net income grew broadly in line with sales, helped by lower tax rate, remaining flat at 5.1% of sales.

Our top line performance this quarter shows that we still have an opportunity to improve. While we know the consumer environment is not optimal and we continue outpacing the market, we also know that we must do better to increase traffic. Recent improved price perception and availability metrics should drive higher traffic in our stores. At the same time, we will continue to operate with strong financial discipline, ensuring we protect profitability while positioning the business to capture growth as demand improves. We expect stronger quarters to come following continuous improvement of our fundamentals.

Now let me move to cash flow. During the last 12 months, we generated MXN 89.5 billion in cash from operations. We also had a net benefit from working capital of approximately MXN 6.7 billion, driven mainly by inventory improvements. As stated in the past Walmex Day, we continue to see significant opportunity to improve inventory levels in the next 18 months. Capital expenditures amounted to MXN 38 billion, in line with our growth strategy, and we returned MXN 36 billion to our shareholders through dividends and share repurchases. All this resulted in a cash position of MXN 28.1 billion at the end of the quarter.

Regarding our expansion activity, in the first quarter, we opened 70 stores across Mexico and Central America, 14 in Mexico, all Bodega Aurrera Express, 2 in Costa Rica and 1 in Guatemala. Contribution of new stores was 1.6% and in line with the guidance range we shared at Walmex Day 2026 of 1.5% to 1.7%.

To close, I'll leave you with 3 key messages. First, we continued to outperform the market, delivering growth above ANTAD same-store sales for the 12th consecutive quarter, which reflects the strength of our value proposition and execution across formats in a softer consumer environment.

Second, we are seeing encouraging progress in key operational indicators, reinforcing our confidence that the actions we are taking today will translate into stronger performance and share gains in the periods ahead. This progress is increasingly supported by how we are leveraging technology, AI and Walmart's global capabilities. Still, we recognize that we need to accelerate in certain areas, particularly in e-commerce.

And third, we remain focused on maintaining strong financial discipline as we navigate this consumption environment, ensuring we balance investment for growth with profitability. As always, thank you for your continued interest in Walmex and for joining us today. We will see you tomorrow at 6:30 a.m. time of Mexico City for our live Q&A session.

Please contact our IR team if you have any questions. Thank you.

Good morning, everyone. I'm Salvador Villasenor, Head of Investor Relations at Walmex, and I want to thank you once again for joining our live Q&A session following our fourth quarter and full year 2025 earnings release, which was published yesterday. As always, we will make an effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. [Operator Instructions] Joining me today is Cristian Barrientos Pozo, President and CEO; Paul Lewellen, our Chief Omnichannel Operating Officer; and Paulo Garcia, our Chief Financial Officer. We'll now go right straight away to the first question.

[Operator Instructions] The first question is from Mr. Ben Theurer from Barclays.

Can you guys hear me, see me?

Yes.

So I wanted to get a little bit your sense as you look at the market in Mexico. And in the presentation yesterday, it was very clear there's a lot of differences between regions, but also within formats. So I wanted to understand what are your targets for 2026, how to potentially address these issues, be it on the regional side and/or on a format side? What are the things that you can do that are under your control to tackle what seems to be still a somewhat challenging environment?

So first of all, Ben, on the targets and guidance for the year, we are still elaborating on that and probably you'll hear more about that in terms of the Walmarts there. I think when you think about the environment, it's still relatively soft. We still expect the environment to be still probably relatively soft in the first half of the year. The good thing, as you know, we all know the data is the GDP growth expectation for the year is better than actually what we had in 2025. That's roughly 1.5%. I think 2 things that I'll say before I pass the button, whether Cristian or Paul want to add up on that. One is -- so what we're seeing in a banner like Bodega in these moments tends to shine further. We talked about the fact that Bodega increasing the penetration in the households of the lower income, and that is helping us.

But at the end of the day, you know the strength of our portfolio, it's the overall portfolio that we have. And you've seen that -- across all the last quarters, not very dissimilar performance if you think about Bodega, Sam's and Walmart. Maybe Walmart Express at times a little bit more volatile, but a very tiny part of our portfolio, as you know, roughly 2%. But maybe Paul or Cristian can elaborate a little bit more what we are doing with the banners in particular.

Ben, from my perspective, I think we are expecting a different year 2026 compared with 2025, as Paulo mentioned. We have seen in other markets how relevant is as you mentioned, what is in our control today to be prepared when the numbers came, let me say, in growth in the market, we will be very benefit. We have seen in other markets, as I told you, that we can accelerate 3, 4x above the market if we are very well prepared. So that is why the focus will continue in EDLP availability and, of course, the acceleration of e-commerce that's going to be prepared in the future, maybe near future because it will happen this year. So that's the focus of the total company.

Our next question is from Mr. Alejandro Fuchs from Itau BBA.

Let's go to the next question, and we come back to Alejandro.

Our next question is from Mr. Froy Mendez from JPMorgan.

I was -- I wanted to ask about private label within your EDLP strategy. What role does it play? What level of penetration should this reach in the midterm under this new enhanced EDLP strategy? And what could the impact on margins be from pushing further into the private label?

Thank you, Froy. And maybe you saw in the report that we are focused as a company in deliver EDLP, improve availability and accelerate e-commerce. And in EDLP, EDLP is not only about a price gap. It's a business strategy that differentiates us from the rest of the market. And included in EDLP, private brands play a very important role, the same as the assortment, supply chain, modulars, all this stuff.

So for us, private brands is really important, and we have seen in Q4 good evolution of the penetration inside of Walmart. And so particularly in Bodega, as you saw also in the numbers, Bodega was the highest accelerator in sales during Q4. And in Bodega, private brand plays a super important role. So we are seeing a room to improve, a room to grow. So we are leveraging in all the markets with a different brand that we have today in Mexico. But it's a clear differentiator for us today. So that's the information that we have today to share with you in terms of penetration, acceleration, all this stuff.

So -- and also, as I mentioned before, EDLP, there is a lot of metrics, but at the end, we are looking for increase our price perception and private brand plays a super important role there. And we have a very good quarter in terms of how we accelerate price perception and private brand was one of the key elements there. So I don't know if you...

Just maybe on numbers because there were 2 questions directly on numbers and margin of private brands, building on what Cristian said. I think on where we need to go, we said that a couple of times probably in the past, we want to be in the mid-20s penetration minimum, and that mostly focused in the Bodega. So there's a lot of room to improve, which things Cristian was saying that we need to do, but adding more products in categories, and we have lots of white spaces, entry price points.

To the second question, private brands margins, our margins today of private brands is higher than what we have in innate brands but tends to be also the portfolio. One of the things I want to let it clear because once there was adopt, we don't manage private brands for margin. We do manage private brands for the EDLP to help the customers save money and live better with the entry price points. Of course, there will be categories that we will be having better margins. So as you can imagine, in foods and consumables is roughly similar to what we have in innate branded. We do have higher margins, in particular, in the areas of seasonal entertainment in the commodities, as you can expect, because it's a commodity, we will have lower margins than a branded. So -- but of course, we will play with it, but we manage for what's relevant for the customer.

Our next question is from Mr. Ulises Argote from Santander.

So the question that I had was trying to get a bit more sense and a bit more detail on those 15 basis points gross margin improvement that we saw in Mexico coming from the other businesses. So just wanted to get your thoughts on how should we think about this kind of trending forward? Are this the initial levels and how much more runway is there left for this? And maybe if you can comment a little bit on which of the businesses actually are becoming more relevant and are contributing more here at the gross margin level.

On that one. So as you can see, our new business has been contributing steadily over quarter-on-quarter, roughly around 20 basis points, sometimes a little bit more than that. In this case, a little bit less as you've seen it Ulises. The big one, which is actually becoming more and more relevant is Walmart Connect, immediately followed, of course, by Byte. In this particular quarter, Ulises, as you've seen it from what we said it in the webcast, Walmart Connect was not the one that drove the most of this improvement, actually tended to be around in the space of the financial solutions as well as Byte. These were the ones that contributed. You've seen the size of Byte these days. So contributing both in terms of the revenues as well to the P&L on a stand-alone basis.

We always said 2 things about the business, right, Ulises. I will refresh that. One, of course, we do look at them on a stand-alone basis because it's good practice. We need to make sure that they did deliver. But of course, the sole reason why they are here is twofold: one, to deliver a pain point of the customer and how they actually helped overall the core of the business, either more frequency or more average ticket being higher. And that's what we are seeing with some of these businesses.

For instance, a customer that is in Byte, the average ticket is more than 2x what we see in a customer that's non-Byte. So that we are pushing. The other thing that we're doing at the same time, we're using these funds to continue progressing and investing in margins in more EDLP in order to fuel the growth. In this particular one, our margin was higher as you've seen it. It will always be volatile as we said it, but that's how we actually approach this area.

Our next question is from Mr. Felipe Rached from Goldman Sachs.

Can you hear me well?

Yes, Felipe. Now we don't. Let's move on to the next one.

Our next question is from Ms. Melissa Byun from Bank of America.

Melissa can you hear us?

Our next question is from Mr. Álvaro García from BTG Pactual.

Can you hear me?

Yes, sure.

Great. Awesome. I have a few questions. The first one on reducing the number of SKUs at Bodega Aurrera Express by 30%. I was wondering if you can give some more comments on that. And the second one for Paul. Paul, nice to meet you. I was wondering as part of your sort of onboarding on to Walmex into what Mexico and Central America look like as retail markets, if you could maybe share your sort of first take or your first impressions on how different Mexico is relative to the U.S. market and what that means from a playbook standpoint for Walmex.

Sure. Thank you for the question, Alvaro. I've been with Walmart for over 35 years, and I would say that we have more in common than we do different. And I would say the biggest similarity is around culture and our people are definitely an enabler of our success. And from a global leverage standpoint, I think the way that I would describe it is that Walmart has no boundaries. So when we're looking at either technology, AI, global leverage, we're able to take best practices from around the world and apply them globally. And that's exactly what we're doing this year in Walmart, Mexico.

Just a few examples of that, that I would give, is when you think about how there are no boundaries and we can enable the stores from an AI and technology standpoint, you could start at the front end with Coastal, which is a global platform, which allows our registers to run the same around the world. You can go to the sales floor where we have the same tools and same technology to speed up the way that we process freight from the back room to the sales floor, the accuracy of our on hands, the availability of our products, the availability of what we can pick and what is available inside of our catalogs for our customers to purchase regardless of where, when and how they want to shop.

And then I would lastly say from an inventory standpoint, whether it's our logistics system and the exciting technology that we're implementing there in Mexico and how that's going to enable us in the stores to be more efficient. I would say we're more like than we are different. Speed is critically important to us this year in Mexico, and I think you're going to see that, and it's going to come through loud and clear.

On the SKUs...

Yes. On the SKUs in BAE, I can tell you not only in BAE, but in Mi Bodega, the 30% reduction or SKU rationalization is a process that we are undergoing right now. Space is critically important and devoting the majority of our space to those items that drive the most sales and the most traffic inside of our stores, it's nothing new about that. We're constantly reevaluating our assortment across all of our banners. But these 2 are very, very important as it comes or relates to our purpose, which is saving people money so that they can live better, and that also drives our price and our price perception.

Our next question is from Mr. Antonio Hernandez from Actinver.

Just wanted to get a sense on Byte from a P&L perspective. I mean we all know that it's part of the ecosystem and it's not per se a P&L driver. But wanted to get a sense, I mean, you've already gained so much of a very large scale in a very short period of time. So if you can provide more light on that and maybe if there's any specific target, that would be very helpful.

Yes, Antonio, thanks. So I'll say what the things that we have mentioned this about in the past. So Byte, I said to you, it's in the past, guys, it's already a profitable business. We always said that was not sole driver at the beginning as we were building it because we wanted, of course, helping people getting access to affordable phones, so to speak in affordable prices and also help the overall business. But we also see as the business is evolving, it can also get better, it can also contribute more overall even on a stand-alone basis. We have the view that this business can easily go and actually have an operating margins in line to what we have in the rest of the business in the near term.

So that's actually where we actually are heading to. At the same time, as I said, and Cristian always talks about that, the role of this business is to help the core, right? That's why actually I mentioned that the frequency -- the ticket of the Byte customer is more than 2x the one that actually you see that's a non-Byte. That's actually what we're also trying to push as we fulfill our purpose.

Okay. And do you have any idea of the scope that maybe you could achieve in terms of the amount of users?

No, I'm not going to throw that number, but you can expect us to continue growing. I'm not going to put a number in the market that holds me accountable on that.

Our next question is from Mr. Alex Wright from Jefferies.

Our next question is from Ms. Melissa Byun from Bank of America.

Can you hear me this time?

Yes, Melissa.

Sorry about that. I had some technological difficulties, so I do apologize if this question has already been asked. But can you please provide some more context around the decision to reduce the Bodega Express assortment by more than 30%? How are consumers responding to cuts given the differentiation that's historically been provided by the broad assortment? And should we think about this maybe as a broader shift in your strategy moving toward a narrower and more private label-oriented mix in the concept?

Just say, Melissa, we actually answered this question just before. I'm not sure if you listen...

I did not but I can -- sorry.

Let's do one thing, Melissa, we'll try to elaborate a bit more on the question. So Paul, will add a few things to your benefit.

Yes. I would tell you, our strength comes from a very diversified format portfolio, especially with Bodega. And when I think about Bodega, I think about value and I think about how critically important price is to value. I think about the experience that our customers have inside of our store. The assortment, to your point, is critically important. In our 2 smaller formats, though, space is a premium, and we want to make sure that we are dedicating space to the items that are producing the greatest amount of sales and sales results for our customers. Also, they're tailored to our customers' needs. And these are things that our customers have actually told us that they want more space dedicated. We don't have a ton of backroom space in Bodegas as you know. Most of it is stored on the sales floor on our top steel. So space is a premium.

And I think the merchants and our commercial team have done a fantastic job in making sure that we have tailored the assortment and diversified the assortment to the customers that we serve. And the last thing I would say is that it's all about trust and our customers trust us, especially in Bodega to deliver price, that value, that experience and the assortment in a lot of cases for a one-stop shop. So SKU rationalization and the way that we rationalize SKUs by category, it honestly is nothing different or anything that we don't do on an annual basis across our commercial teams. So it is the right thing to do for these 2 formats. But again, the strength comes from the diversification of all 3.

If I may add, Melissa, in this point, maybe you know that I run this business a long time ago. And in a small format is so important availability. So the way to reach right numbers in availability came from our right assortment. So today, we're taking advantage of the program that we have here in Mexico shop. So it's an asset that we have today to run faster and have the right assortment for the customer. So we will improve availability. So immediately, sales came. So you can see numbers in the past in Bodega Aurrera Express what happened, and that's the idea to evolve every year.

Our next question is from Mr. Felipe Rached from Goldman Sachs.

Sorry for the tech issue before. I hope you can hear me well now?

Yes, perfect, Felipe.

Great. So I was wondering if you guys could share more details on what you expect to be the main drivers for the e-commerce acceleration going forward and whether you think any further investments will be necessary in that front. And still in this context, it would be very interesting to hear more on how the maturation process of the One Hallway initiative in Mexico so far compared to the one that you guys observed in the U.S. So anything you can share on that would be very interesting.

Okay. Maybe we'll try to answer the question and to...

So first of all, thank you, Felipe, for the question. As you saw in the report, we define -- really important element to focus on the fundamental and the acceleration of e-commerce is critical here in Mexico and all over the world, and we have a huge opportunity. We -- you saw the numbers. We are still depending in 1P in a few categories in the quarter that didn't perform so well. We are evolving on demand. And as you mentioned, we are in the learning curve in One Hallway. But for us, I think the huge opportunity that we have today is to take advantage of the footprint that we have in Mexico to accelerate and accelerate speed to the customer and also reach more customer because today, we are serving not all the households here in Mexico because of -- because we need to evolve our operational model to reach homes.

And we're right now evolving that last quarter. We extend our reach and we added in our fleet, let me say, Valle de Bravo, San Miguel de Allende, some cities that we didn't get because of the restriction that we had. And today, we are adding more cities. Next quarter, we're adding more than 20 cities to reach that. So in summary, speed, reach and assortment will be critical for us, and we have the footprint, we have the team looking forward to accelerate more both business, both that Paul shared in the idea that we have today. We're in a journey to unify our platform. So we will be ready to adapt or connect, let me say, as a global platform. So that allow us to receive the assortment from the U.S., the assortment from all over the world, in the Walmart world and in both sides. But the most important part is we will receive, but we can deliver or we will deliver to the customer with the speed. And that's the idea to increase assortment, reach and also accelerate the deliveries.

Cristian, can we also talk about total availability. I think I would say the journey that we're on from a store mapping, store location, modular integrity, on-hand accuracy and being able to fulfill the items on the shelf, the moment of truth in a very timely manner with precision and accuracy like we've never done before. This availability journey that we are on allows us to have real-time data down to an item level and where it is located across all stores, increasing our availability, improving our availability and our pickability of items for on-demand.

And helping customer, shoppers, pickers to be faster.

That's right.

Our next question is from Mr. Miguel Ulloa from BBVA.

Can you hear me?

Yes.

Perfect. A couple on my side would be regarding the slowdown in e-commerce. Could you provide a little more color on categories or what happened in the whole market and how you are reading going forward?

And Cristian to build on that well. We are still -- when you think about the extended assortment, particularly 1P, but also marketplace, we still very [Technical Difficulty] categories like TVs, particularly during the season, when Buen Fin and Fin Irresistible didn't perform so well. So therefore, that tends to impact us. And that's when you see the e-commerce numbers, you see that our on-demand business pretty much grew almost 20%, but our extended assortment grew much less mid-single digit, and that was impacted by 1P. So that's what an impact in the short term.

As you know as well, we're also going through the transition on One Hallway. And the goal of the One Hallway, of course, is to increase and broaden our assortment so that we can diversify the assortment. And today, we have roughly 20 million SKUs. In the future, we can go up to more than 1 million SKUs in the next couple of years. So that's the journey we are in. It's a gradual implementation. It's a gradual progress. We don't expect to happen from one quarter to the other. But gradually, we'll see improvements over and above the things that Cristian already talked about that we are 100% focused, which is speed and reach. So it's about speed, reach and assortment.

[Operator Instructions] Our next question is from Mr. Alejandro Fuchs from Itau BBA.

First of all, welcome, Paul, to Mexico and to Walmex, best of luck. I want to make 2 brief questions. The first one on same-store sales in Mexico. We saw a slight decrease in traffic and most of the growth coming from ticket. I wanted to see if you can maybe explain to us a little bit more color on how much of this is mix? How much of this is price? That will be the first one.

And the second one, maybe for Paulo on gross margins. The improvement on the commercial front from lower shrinkage and general merchandise, how sustainable is this improvement on commercial margin going forward? And if you could give us maybe a little bit more color on those 2 general merchandise and on the food side, that will be very helpful.

Thank you, Alejandro. And first of all, I will begin with the traffic, as you mentioned, was negative almost flat, but we always see the trend. So we began the year with a more negative traffic in the first quarter, and we're seeing a very good, let me say, response of the customer with the program that we're putting in place. Q3, Q4 was almost 0. And as you know, and as you saw in the reports, we have seen an evolution of the focus and that we're looking today in the fundamentals on the EDLP availability and e-com that those 3 are helping us to accelerate. And the idea in the coming months is to be very well prepared because we are waiting for the country to improve growth. You know very well that we ended 2025 with 0% growth in the market in -- as a total Mexico. We are expecting 1.5%.

And we have a lot of data in other markets when you are very well prepared and the economy turn, you receive all these benefits in the future. So that is why we will be continue to focus on these 3 pillars that is crucial for the business, crucial for brick and also crucial for e-com. Recently, Paul mentioned that we are working very hard to mapping all our stores, all our items in the sales floors, also in backroom, trying to connect with e-com business and create more speed, more reach and take advantage of the assortment that we have. So that's the idea to combine all together, and we will continue to focus on it, and we know we will be very well prepared when the economy turn a little bit. Okay? And the second one was?

It was around margin. Thanks, Alejandro. Yes. So let me talk about -- as you said, you've seen the improvement in the omnichannel margin was mostly from GM mix and shrink. Let me start from the second and then talk about the first. So the second one, yes, it's an area that we are attacking. It's an area because at the end of the day, it's waste. And it's ways that we better can elsewhere invested to invest in pricing for our customers. We're putting a lot of energy there across all the teams. It's an end-to-end process. It's merchants, it's operators, but everyone that is involved. And we are topping that up with AI tools and machine learning, whether that's in terms of to optimize the replenishment, but it's also improve the demand forecasting because we still have a little bit of manual process in the way we actually look at the perishables. So that is something that we are really attacking left and center.

On the general merchandise, Alejandro, goes a little bit what I also said to what on the e-commerce response or the extended assortment. So the categories that actually didn't perform so well tend to be, as you know, categories that don't enjoy the best margins as well. And as a result of that, of course, we tend to have a benefit on that. I think what you can expect from us going forward is the new business continue helping our margins, and we continue to invest behind the EDLP for our customers. And you, of course, might see volatility quarter-on-quarter as we always said it every single year.

That was the last question. I will now hand over to Mr. Salvador Villasenor for final comments.

Well, thank you very much for joining, and thank you for all your questions, and we hope to see you all at Walmex Day on March 25. Thanks again.

Thank you very much.

Thank you.

Walmex would like to thank you for participating in today's video conference. You may now disconnect.

Good afternoon. I'm Salvador Villasenor, in charge of Investor Relations at Walmex. Thank you for joining us to review the results of the fourth quarter 2025. Today with me is Cristian Barrientos, our President and Chief Executive Officer of Wal-Mart de Mexico y Centroamerica; Paul Lewellen, our new Chief Operating Officer; and Paulo Garcia, our Chief Financial Officer.

The date of this webcast is February 18, 2026. Today's webcast is being recorded and will be available at www.walmex.mx.

Before we start, let me remind you that the content of this webcast is property of Wal-Mart de Mexico S.A.B de C.V., and is intended for the use of the company's shareholders and the investment community. It should not be reproduced in any way. This webcast may contain certain references concerning Wal-Mart de Mexico S.A.B de C.V.'s future performance that should be considered as good faith estimates made by the company. These references only reflect management's expectations and are based upon currently available data. Actual results are always subject to future events, risks and uncertainties, which could materially impact the company's actual performance.

Now I'll turn the webcast over to Cristian. Please, Cristian.

Thank you, Salvador. Good afternoon, everyone, and thank you for joining us today. As we close the fourth quarter and the year, I want to begin, as I always do, by thanking our associates across Mexico and Central America. Their commitment, discipline and focus on execution are what allow us to serve our customers every day, how they want, and when they want. We are operating in a macro environment that remains complex with pressure on consumption and cost. In these moments, we focus on what is within our control and execute the fundamentals well. That discipline is what has allowed Walmex to consistently emerge stronger from past cycles, and we believe the same will be true this time. That said, let me be clear. We are not satisfied with these results. They are not good enough. We know we can and must perform better, and that conviction is what is driving the actions we are taking today. We believe that what matters most is execution of our business fundamentals. And as we close the year, we are fully focused on three non-negotiable priorities that guide every decisions we make across the organization: EDLP, product availability and e-commerce acceleration.

At the end of the day, our three non-negotiables reflect our purpose in action. When we get everyday low prices right, keep products available and make shopping more convenient through e-commerce, we are directly helping customers save money and live better. We have aligned the teams around these three priorities, and we have already started to see encouraging signs of improvement. We are not waiting for the market to recover. We are acting now with urgency.

Let me briefly share some of the execution improvements we are making to our strategy behind each of these priorities. Starting with EDLP, we are refining our pricing strategy to further strengthen our everyday low price philosophy. This means moving toward a more consistent and predictable pricing architecture such as extending the duration of rollbacks and improving price stability across key categories. The objective is to reinforce trust, simplify the shopping experience and ensure customers clearly recognize Walmart as the place where they can rely on low prices every day. EDLP is not only about price at the item level. It is also about price stability and importantly, also about building a better and bigger basket. When customers trust our prices, they consolidate more of their shopping with us. These changes are already being reflected on the price perception improvement of 260 basis points versus last year during the quarter, positioning us to continue delivering strong share gain versus the market.

Second, product availability. By connecting store mapping, real-time inventory visibility and on-hand management, we are enabling our team to execute with far greater precision and productivity. We are leveraging Paul's experience from Walmart U.S. by scaling proven automation and operating disciplines. These capabilities add up to our local context, are helping us drive more consistent execution and higher productivity across stores. These efforts, along with better operational execution and tighter coordination across teams are part of the levers behind the 130 basis point improvement in total availability versus last quarter. Importantly, total availability measures whether the product is actually on the shelves when the customer is there, not just somewhere in the store or in the back room. This raises the bar in how we manage and execute availability. Sharp pricing and strong product availability are not independent levers. When prices are right and products are on the shelves, we power both our stores and our digital business, accelerating traffic, conversion and basket size across channels, which takes us to our third non-negotiable, e-commerce acceleration.

We have been refining mainly three areas: improving speed by increasing the penetration of same-day deliveries, improving in full by strengthening, execution and expanding reach. Regarding the latter, we are expanding the home delivery coverage of each store, allowing us to reach more households not only by opening new stores, but more importantly, increasing catchment area of our existing store network. To give you an example, during Q4, we already reached San Miguel de Allende and Bahia de Banderas, among other cities with no need of opening new stores there. We look forward to sharing more details on these refinements at our upcoming Walmex Day.

Now let me touch briefly in our overall performance, highlighting a few additional results. Paul and Paulo will go deeper into detail afterwards. In Mexico, same-store sales grew 3.3% during the quarter. Importantly, we continued growing same-store sales well ahead of ANTAD by 190 basis points in the fourth quarter, same as for the full year, making it the 12th consecutive year with a positive gap, reflecting the strength of our value proposition. At a consolidated level, total revenues grew 5.5% for the full year and 4.6% in constant currency. While these results came below our initial expectation at the beginning of the year, the underlying performance of the business remains solid as seen in the relative performance versus the market. Despite having grown well above our competitors, we believe we can do even better as we advance on our priorities. Therefore, we expect growth to accelerate in 2026.

Physical expansion also continued to support growth. During the year, we opened 186 stores across Mexico and Central America, representing an acceleration versus last year and a record year since 2013. In square meters, this represented an additional 212,000 square meters of sales floor, which is equivalent to approximately 1,000 stores of proximity formats. In the full year 2025, e-commerce GMV grew 17%. While this represents continued progress, we know that this is not yet the level of growth we aspire to over the long term. We are in a transition phase, but the focus now is on accelerating execution and deploying initiatives with short-term and measurable impacts to close the gap in the near term. Initiatives like One Hallway represent a structural change to how customers experience our digital platform. In the U.S., they went through a similar transition where benefits became visible only after an initial adjustment period. From here, we expect gradual improvement in conversion, assortment visibility and customer experience.

Our ecosystem continues to reinforce the core retail business. On one hand, Bait reached over 26 million active users. We have seen that these users spend on average 2.5x more than a non-Bait customer, reinforcing our belief that when we deliver clear and relevant value such as affordable connectivity, customers respond with greater engagement, loyalty and trust. As with all the new businesses beyond the numbers, what matters most is how it strengthen the core. Data generated through our beneficiaries program is already being used to enhance pricing design and optimize assortment productivity at item and store level by leveraging advanced analytics and AI-enabled tools such as Scintilla. We're improving the quality of our decisions and delivering better outcomes for our customers.

Stepping back, when I look at the year as a whole, what gives me strong confidence is how the organization is responding internally. I'm really satisfied with the way our teams are adapting, sharpening execution and embracing this renewed phase of focus on fundamentals. I feel confident on how we are leveraging proven best practices and automation from other Walmart markets, adapting them to our local context to strengthen execution in our three non-negotiables and raise productivity across the business.

Looking ahead, the economic growth should pick up, and we are now confident in the path forward. What gives me confidence is that we know what we have to do. We have clear priorities, but we need to accelerate the speed at which we are moving. This leadership team has a very clear focus, and we are executing with urgency on the levers we know create value.

Before I hand it over, I would also like to invite you to join us at our Walmex Day on March 25th. We look forward to seeing many of you there. We will be sharing more details on our growth strategy and introducing the new members of our management team. We are excited to show the significant growth potential that we have ahead of us.

With that, I will now leave you with Paul, who will walk you through our operational highlights in more detail. Thank you again for your interest in Walmex, and see you tomorrow at our live Q&A.

Thank you, Cristian, and good afternoon, everyone. I'm honored to step into the role of Chief Operating Officer. I started my Walmart career over 35 years ago as a store associate in the U.S. And throughout my career, I've spent most of my time in operations, leading stores, markets, regions and large-scale retail networks. Today, I'm excited to be working alongside our teams, focused on executing with discipline across more than 3,300 stores in Mexico and on strengthening the fundamentals that serve millions of customers every day.

So let's review some of our operational and commercial highlights of the quarter. Regarding growth, Mexico reported a 3.3% same-store sales growth with ticket growing 3.9% and transactions declining 0.5%, similar to the previous quarter. Health and wellness led among Merchandise divisions, followed by food and consumables, while the Northern region continued to be the leading region in terms of growth for another quarter. In Bodega, which was the leading format in growth, our customer value proposition shines brighter in this economic backdrop. We saw household penetration in lower income segments increased more than 300 basis points. At Sam's Club, our teams made important progress improving availability and member experience. In-stock levels improved driven by better safety stock automation, improved forecasting and stronger execution in fresh and perishables. Member experience also improved meaningfully with NPS increasing 1,100 basis points as teams simplified the omnichannel journey and reduced renewal friction.

In Walmart Supercenter, we made progress in upgrading the in-store experience. The first phase of the Supercenter image refresh was executed in line with our annual plan. And in parallel, we expanded the rollout of our Store of the Future concept. Store of the Future focuses on optimizing space such as expanding sales floor of some of the fastest-growing categories like pets, integrating new concepts and improving store flow to increase traffic, productivity per square meter and customer engagement. While still in the pilot phase, early results reinforced our confidence that Store of the Future can strengthen Walmart Supercenter competitiveness in grocery and support profitable long-term growth.

Let me also share that we returned to Buen Fin campaign after 6 years. While the event came in below our initial expectations, customer engagement remains strong. We delivered more than 76 million transactions across stores and clubs and over 180 million visits in e-commerce. And November 17 marked the highest sales day in Walmex's history. These results give us clear learnings as we continue refining our execution and assortment for future events.

Now let me go through our three non-negotiables to see how we are advancing in each of them. First, everyday low prices. In addition to what Cristian already shared with you related to strengthening our everyday low price philosophy, we are refining our assortment to strengthen our customer value proposition, leveraging Scintilla and deep customer insights. Initial progress includes rationalization of assortment in formats such as Mi Bodega and Bodega Aurrera Express. In the latter, we are reducing the number of SKUs by more than 30%. In parallel, we are enhancing modular and assortment processes and best practices from Walmart U.S. and Canada. The international leverage allows us to scale proven capabilities, increase consistencies across formats and accelerate learning by adopting what already works well in other markets.

Regarding private brands, penetration continues increasing. During the fourth quarter, we launched and relaunched more than 200 items across categories, combining value-driven innovation, seasonal relevance and global leverage to strengthen our overall proposition. These initiatives, together with clear communication and the discipline of our teams are behind the price perception increase of 260 basis points versus last year. This was the biggest improvement in many quarters, and it is a critical indicator of how customers experience our value proposition. Additionally, delivering everyday low prices is only sustainable if it is supported by everyday low-cost execution across the business. We are transforming our cost structures through strategic productivity initiatives, enabled by technology like digital shelf labels, smart receiving, which is receiving process reengineering and automation of administrative activities like cash management and store back office.

Now turning to availability. We are moving from isolated improvements to a much more integrated execution model, leveraging Walmart U.S. best practices. We are strengthening execution by connecting three critical elements into one simplified process. First, store mapping to clearly define how space is used in each store, so inventory can be placed, moved and replenished efficiently. Second, real-time inventory visibility to know exactly where product is whether it's on the sales floor or in the back room. And third, on-hand management, so data is translated into clear actionable tasks for our associates to keep shelves stocked and inventory accurate. Associates now have clearer direction on what to replenish and when aisles are better stocked across the store and inventory accuracy continues to improve. This is already having direct benefits in our days on hand, which improved 1.7 days versus previous year, while improving overall availability.

This also directly benefits our omnichannel operations as pickers and last mile partners can locate products more easily and follow automated routes, reducing friction and improving service levels. This model is already delivering results in our flagship stores. It will be fully deployed in food and consumables by the end of the first half of the year and will begin rolling out to hardlines in the second half. These kinds of efforts as well as general improved execution of the teams are behind total availability improvement of 130 basis points versus the third quarter on top of the improvement we had already delivered versus the second quarter.

Total availability is an internal metric we are using that is more rigorous than the traditional in-stock or OSCA measurements that we've used in the past, which we believe raises the bar on product availability tracking as it measures whether the product is actually on the shelf when the customer is there.

Now turning to e-commerce. In the fourth quarter, e-commerce GMV grew 13.3% and for the full year, GMV grew 17.1%. On-demand continued to lead growth, increasing 19.1% in the quarter and 22.1% for the full year, while marketplace GMV grew 15.3% in the quarter and 12.7% for the year. As a result, e-commerce penetration reached 9.1% of total GMV in the fourth quarter and 8.3% for the full year. We advanced the integration of our digital platforms through One Hallway. At the same time, we continue to scale our store-based fulfillment model, improving delivery speed as well as service levels with important improvements in on time, in full and NPS across all formats. The expansion of our crowdsourcing model is supporting greater adoption of same-day and rapid delivery options, where 10% of orders in Sam's were already delivered in less than 90 minutes. While in Supercenter and Express, we delivered 20% of the orders in less than 90 minutes and more than 60% of the orders in the same day. This represents an improvement of more than 500 basis points versus prior year. Also Sam's Club delivered solid growth, driven primarily by higher engagement from individual members with orders increasing close to 25% versus last year.

Regarding our reach, we are actively extending our delivery radius of each store, allowing us to serve more households without necessarily opening new physical locations. This is how we are better leveraging our existing store network, improving asset productivity and expanding convenience for our customers. We look forward to sharing more detail on these strategic refinements at our upcoming Walmex Day. At the same time, we are building a healthier marketplace. This means expanding into more categories and sellers with stronger margin profiles and leveraging cross-border opportunities that meet our return thresholds.

E-commerce growth this quarter was below our long-term ambition. As we move through this global platform implementation, we are seeing a natural learning curve as customers go through an adaptation process. While some short-term friction is expected in any transformation of this scale, we are encouraged by early stability and expect performance to improve gradually as customer behavior normalizes, familiarity with the platform increases and a marketplace scale becomes more relevant.

Let me now turn to our ecosystem new businesses. Bait generated revenues of MXN 3.5 billion in the fourth quarter, while active users reached 26.4 million, up 44% year-over-year. Importantly, Bait's integration with our stores continued to deepen with more than 2.2 million customers receiving free mobile data through purchases in Walmart stores through December alone, helping increase overall average ticket. For the full year, Bait generated MXN 11.5 billion in revenue, growing 60% year-over-year. Walmart Connect increased revenues by 5% in the quarter and reached 17% growth for the full year, reaching MXN 4.4 billion in Mexico, significantly ahead of advertising growth in the market, reflecting the strength of retail media advertising.

We have seen some pressure on advertising budgets from suppliers in the last two quarters, given the current macro environment, which has moderated growth in the short term. That said, we expect advertising investment to recover as conditions improve, supporting long-term growth in 2026. Beneficios has become a powerful tool to strengthen execution across business. As we connect with 49.6 million active users by the end of the fourth quarter, we are now able to identify more than 70% of our omnichannel sales, fundamentally shifting from anonymous transactions to more personalized and deeper relationships with our customers and members. Those insights support better decisions across merchandising, supply chain and store operations, allowing us to respond faster to shifts in customer needs and operate with greater discipline.

Before handing it over to Paulo, I want to share a personal reflection. Having recently arrived in Mexico, I've spent time in stores, clubs and operations, working closely with our teams. What stands out to me is the commitment, pride and speed with which associates are responding to a more challenging environment. There is a strong sense of ownership and a clear focus on fundamentals that gives me a lot of confidence. I've been truly impressed by the talent and resilience of our teams, and I'm excited about what we can continue building together while leveraging global platforms and best practices from other Walmart markets.

With that, I'll turn the call over to Paulo, who will walk you through our financial results. Thank you once again for joining us today.

Thanks, Paul, and good afternoon, everyone. Let me share with you our consolidated financial results as well as the breakdown of Mexico and Central America separately. Starting with the consolidated results. During the fourth quarter, total revenues grew 3% on a reported basis and 4.5% in constant currency. For the full year, consolidated revenues increased 5.5% reported and 4.6% excluding FX. While we are not satisfied with the results, the underlying performance of the business remained solid, supported by continued share gains and disciplined execution across the core. At the same time, softer-than-expected consumption impacted on overall growth. I will comment more on consolidated results in a moment.

Turning to Mexico. Total revenues grew 4.9%, driven by 3.3% same-store sales growth. Gross margin had a 40 basis point expansion versus last year, while SG&A remained flat at 15.6% of sales and growing in line with revenues. We'll see the gross margin and SG&A breakdowns in just a moment. All this led to an EBITDA margin of 10.7%, expanding 50 basis points versus the same quarter of last year. As mentioned by Cristian before, with a 3.3% same-store sales growth, we outpaced ANTAD self-service and clubs same-store sales figures by 190 basis points, leading to a positive gap for the full year of 190 basis points for the 12th consecutive year. Growing ahead of ANTAD remains an important indicator of our ability to gain share, reinforce the long-term relevance of our formats and our ability to serve our customers when they need us the most.

Let me now expand on gross margin. We delivered a 40 basis points expansion versus last year, reaching 24.0% of total revenues. This improvement was primarily driven by two factors. First, we saw a 25 basis points benefit from omnichannel commercial margin, reflecting margin benefits, mainly in general merchandise as well as waste reduction in Fresh. Second, new businesses contributed an additional 15 basis points, supported by the growing scale and profitability of these higher-margin streams. Importantly, this margin expansion was achieved while maintaining our price leadership and continue to invest in value for customers, expanding price perception as well as improving inventory levels for another quarter, demonstrating the increasing ability of our ecosystem to support profitability.

Now let's review our SG&A. Expenses remained flat year-over-year as a percentage of sales, closing the quarter at 15.6% of total revenues, reflecting a disciplined balance between efficiency and gross investments. On the one hand, run efficiencies contributing 25 basis points benefit driven by productivity initiatives and tighter cost control across the operation. On the other hand, gross investments added 55 basis points, mainly related to new stores, digital capabilities and initiatives to strengthen the customer and associate value propositions. In addition, the quarter included a benefit from a previous year one-off cost in the base which brought SG&A back to flat versus last year. The benefit from this previous year one-off is a non-recurrent, and you can expect a return to high single-digit growth in SG&A versus previous year for the next quarters.

Now let's review Central America results for Q4. Please consider that on this slide, I will refer to figures on a constant currency basis. Total revenues increased 2.4% versus last year, again, mainly impacted by Costa Rica. We managed to deliver market share gains for the full year in Central America. However, we lost momentum in the second half of the year. Gross margin expanded 10 basis points compared to last year to 24%. Investments in customer value proposition were more than offset by supply chain benefits and Walmart Connect contribution. SG&A represented 17.6% of revenues, expanding 20 basis points versus last year behind the efficiencies that were not enough to compensate growth and run investments. The aforementioned result in EBITDA margin of 9%, 30 basis points above previous year.

Now let's review in more detail sales and operational highlights. In Q4, Central America reported a 0.6% same-store sales growth with Honduras and El Salvador growing the most. Growth was impacted by Costa Rica, which is going through deflation on the food and beverage sector, a weaker household consumption and increased competitive intensity. We are increasing price investments and sharpening our in-store execution to increase traffic and basket size. E-commerce grew 34%, while increasing sales penetration by 40 basis points versus last year. This quarter, we launched crowdsourcing in all urban supermarkets in Costa Rica and Guatemala. Walmart Connect in the region showed good momentum, increasing revenues 27% versus last year, driven primarily by the digital segment, which more than tripled performance from a small base. As mentioned previously, at consolidated level, total revenue increased 3% in Q4, which was 4.5% in constant currency with new stores contributing 1.7% to total growth.

Gross margin expanded 30 basis points to 24% during the quarter, while SG&A remained flat at 15.9% of revenues, increasing 3% versus last year and in line with revenues. EBITDA increased 50 basis points, growing ahead of sales to a 10.5% margin. Net income declined 3.9%, impacted by a higher effective tax rate driven by a true-up done at year-end to reflect inflation impact on our net balance sheet position. Effective tax rate is always subject to changes in law and regulations, but we forecast ETR to be between 25% and 26% for 2026. As we review the full year results, we finished 2025 with revenue growth of 5.5% or 4.6% in constant currency, below our sales guidance, reflecting a softer consumption environment than anticipated at the beginning of the year.

Gross margin expanded 10 basis points to 24.2% of sales and SG&A grew 7.7% or 6.6% in constant currency, representing 16.6% of sales. All this resulted in an EBITDA margin of 10.2%. This demonstrates that even as top line growth came under pressure, we focus on the things within our control, preserving the flexibility to continue investing in price, growth and the long-term strength of the business.

Now let me move to cash flow. During the year, we generated MXN 89.2 billion in cash from operations, reflecting the strength of the core business. Working capital represented a net benefit of approximately MXN 2.4 billion, driven by inventory improvements. We continue to see opportunity to improve inventory levels in next years, driven by increased automation of processes. Capital expenditures amounted to MXN 39 billion, focusing on high-return projects, including store openings, supply chain, technology and digital capabilities. We stayed a bit short on capital expenditure compared to what we shared on Walmex Day, mainly due to phasing in store investments and some delays in savings on certain tech projects. We returned MXN 37.7 billion to our shareholders through dividends and share repurchases. We closed the year with a cash position of MXN 28.6 billion, maintaining a strong and flexible balance sheet that supports both growth and returns to shareholders.

I want to share that we are currently working on our capital return proposal of dividends and share buyback for 2026 with the objective to find the best way of returning value to shareholders in a disciplined and sustainable manner. We plan to share full details during our upcoming Walmex Day. I also want to highlight our expansion activity, which continues to be an important component of our growth strategy. In the fourth quarter, we opened 115 stores across Mexico and Central America, 102 in Mexico and 13 in Central America, adding nearly 128,000 square meters of sales floor. For the full year, we opened 186 stores, 162 in Mexico and 24 in Central America, which sum to almost 212,000 square meters of additional sales area.

The primary vehicle of this expansion was Bodega Aurrera Express, where we opened more than 100 new stores during the year. New stores contributed 1.7% for the full year, which is at the high end of the guidance range we shared at Walmex Day 2025.

To close, as I usually do, I would like to leave you with three key messages. First, we know what to do. We need to accelerate the execution of our three non-negotiable priorities, leveraging technology and U.S. best practices, while maintaining financial discipline. Second, we are focused on the things we can control. We continue to outperform the market as we grew same-store sales ahead of ANTAD, once again, marking our 12th consecutive year doing so. This consistent relative performance underscore the strength of our value proposition and our ability to gain share over time even in more challenging economic cycles. And third, as we look ahead to 2026, it is paramount to accelerate the speed of execution of our priorities. We believe this will position Walmex well to deliver consistent growth and value creation over the medium term.

Thank you for your continued interest in Walmex and for joining us today. We'll see you tomorrow at 7:00 a.m. time of Mexico City for our live Q&A session. Also we look forward to seeing you at our upcoming Walmex Day on the 25th of March, where we'll share more detail on our strategy and priorities. Please contact our IR team to register for these two events.

Good morning, everyone. I'm Salvador Villasenor, Head of Investor Relations at Walmex. And I want to thank you for joining once again to our live Q&A session following our third quarter results, which were published yesterday evening. As always, we will make every effort to answer as many questions as we can in the 45 minutes we have scheduled for this call. [Operator Instructions]

I will now hand over to our recently appointed CEO and President of Walmart de Mexico y Centroamerica, Cristian Barrientos, who will present the team and give his initial remarks before going into the first question. Please, Cristian, go ahead.

Thank you, Savor, and good morning, everyone, and thank you for joining us today. We're hosting this live Q&A from Costa Rica right after our Board meeting yesterday. I am here with Paulo Garcia, our CFO; with Javier Andrade, our recently appointed CMO for Mexico; and Cristina Ronski, our CEO for Walmart Central America.

Before we begin, I would like to share a few reflections from my first 90 days since rejoining Walmex now as the CEO. Over the past 3 months, I have spent time visiting many of our stores and distribution centers across both Mexico and Central America, and I have seen at firsthand how we are delivering our purpose. It's been energizing to see the evolution of the business since I left the region almost 3 years ago. Even more exciting are the opportunities that I see going forward. I'm convinced that with our renewed focus on the execution of our fundamentals, the strength of our people and the newly appointed leadership team, we are very well positioned to take Walmex to the next level. So now we are open to your questions.

The first question is from Mr. Alejandro Fuchs from Itau BBA.

My question would be for Cristian, maybe on Bodega, I wanted to discuss a little bit some of the performance of this quarter, looking at same store sales per format, right? It seems that it's falling a little bit behind Sam's and supercenter in the context of kind of easy comps, right? So I wanted to get your thoughts on these first ones that you just discussed in Mexico. Coming back, having had a lot of experience with the brand for so many years.

What are some of the strategies that you're thinking for Bodega maybe to grow a little bit faster its semester sales. And maybe you can share a little bit of the early strategy, maybe early findings that you're seeing at Bodega and how do you see it performing for the future?

No, Thank you very much. And as we mentioned, Bodega performed in the quarter, a little bit behind Sam's. But we are seeing a really strong business in the 3 formats. We are seeing in this quarter evolution in terms of the relative performance against different banners, and we are seeing more than 20 weeks gaining share in Bodega. So we're confident that with the value proposition that we had in place are performing well. We have been improving. And as I mentioned in the webcast, we are very focused in things that we can control, means EDLP, availability and the evolution on demand. We see a ton of opportunities in all our business and particularly in Bodega, trying to create access to low-income customers to the -- to the prices that we can deliver for them. So we can accomplish our purpose to save them money and live better. So we're very confident with the future of Bodega and with our 3 banners that we have. I don't know if you have more to add there, Paulo.

No, I think it's okay. As you said, Cristian, I think it's -- we talk extensively about that, it's pushing the 3 priorities. Alejandro, it's about the pricing, the new investments. It's about actually availability, making the product available to the customer and accelerating e-commerce. And with that, I think we will continue gaining the trust and the preference from our customers.

Our next question is from Mr. Ben Theurer from Barclays.

I wanted to follow up a little bit on kind of like Alejandro's question, but more broader in terms of like the traffic versus ticket performance. And then at the same time, we've obviously seen a little bit of a weaker opening versus a year ago and particularly in Mexico. And I wanted to understand how you're thinking about the need or the opportunities to open stores if at the existing, you have like traffic pressure to a certain degree. I remember we got the announcement earlier this year during your Capital Markets Day about the commitment to open a lot of new stores over the next coming, I think it was 5 years or until the end of the decade. So as we think about it, the need to open stores, while at the same time, we're seeing at the existing stores traffic decline.

With what you've seen over the last 90 days, and it might be early on, but do you think there's a need to potentially revisit what's out there in terms of like openings just to avoid cannibalization? And how should we think about the pace of openings throughout the fourth quarter and ultimately, those stores coming online that might be already under construction?

Yes, Ben, a very good question that you're putting on the table. So at the moment, we don't see a need, Ben, to review our ambition in terms of store openings. I think we talked about 1,500 stores in the next 5 years. So we still stick to that. Yes, you already alluded to the fact that we didn't open probably as much as we were expecting in Q3, and there was a little bit of slowdown in that openings, but we have a pipeline, a huge pipeline now for the Q4, a little bit like we tend to do it at the end of the year.

But to go directly to your question, at the moment, we don't see necessarily a need to review the store openings in light of potential cannibalization. As to what relates to traffic and ticket, what we are seeing at the moment, maybe I'll hand over to Javier to just give you a little bit more details in terms of how we're seeing traffic and ticket and a little bit the evolution of some of the categories.

Yes. Basically, Ben, regarding traffic, what we see is a reflection mainly of the customer backdrop that we're seeing in the retail, but we see a positive trend in the last quarters, and we feel very optimistic about Q4 and what's coming for us for seasonal. We've seen a lot of engagement of the consumers regarding seasonalities and everything that's about to come in on Buen Fin and Fin Irresistible. And the other thing, even though we see inflation in some categories. We're also investing in price, we can give access to the consumer even though we see inflation in some categories, we're also investing in price so we can give access to the consumers to better prices and help them save money and live better. So we want to grow even faster instead of just following inflation. And as I said, we're optimistic about what's coming for Q4.

Our next question is from Mr. Froylan Mendez from JPMorgan.

Can you hear me. Well, I guess I'll take the question, but I cannot hear your answer. I don't know why. We had some improvement this quarter, but this is something that you mentioned that there is room to further increase. I would like to know what are the steps being taken? And what was...

I think we need to move to the next one. Let's move to the next one. Sorry. Froylan, we are moving to the next one. If you come back and you can hear us, we'll come back to you.

Our next question is from Ms. Irma Sgarz from Goldman Sachs.

Welcome to the new appointments on the leadership team. I was excited to see the positions filled and good luck with your new responsibilities. Just 2 quick questions on the gross margin. I understand that the pressure that you posted in the third quarter came specifically also related to the inventory reductions that you are aiming for. So I was wondering if you could just point out if that was concentrated in specific categories or specific formats if that was perhaps more sort of general merchandise related rather than sort of the consumables side and perhaps concentrated in certain formats and how you see that need to adjust your inventories going forward? Or if that's sort of more concentrated and behind you from what your comments on the guidance for the fourth quarter, it sounds like it sounds like it's behind you.

And then the second question is just on the private label. I'm curious, just Cristian and Javier, maybe to hear your thoughts about where you feel sort of when you take an assessment of where you're doing well so far and what you still need to be doing on the private label side, especially given that, if I may say, it feels like consumer attitudes are changing towards private label in Mexico and they have been changing over the last couple of years. And where do you feel -- you did call out general merchandise. I think you had in some categories, higher penetration. But on the consumables side, I'm curious like sort of how you're thinking about the strategy there.

Thanks, Irma. Thanks for your question. As usual, spot on, by the way, on the first question and what you just said is spot on, on all you said. So as you know, we've been talking about that we wanted to address our inventories. You probably have seen the improvements that we've done in inventories of almost 3.5 days, days on hand, and we still see an opportunity going forward. In terms of what it relates to investments to If you say, expedite some of this more and healthy inventory that we have, I think it's probably most of it behind us.

And as you said, it's mostly in general merchandise and because the general merchandise tends to impact a little bit more a banner like Walmart, but at the end of the day, it tends to grow across all the banners. I'll now pass on the second question to Javier on the private brands and Cristian can also build.

Yes. Okay. So thank you for your question, Irma. As you said, I see a huge opportunity in private label now. Even though we're performing good and we increased 100 basis points this quarter in penetration. I see a big opportunity in terms of surety of supply that we're working with the global sourcing team, and we're also trying to leverage as much we can from other markets. In groceries, consumables and even fresh, we are improving our capacity to bring in products for the customers and give access to them to better qualities and best prices. And for us, private label is going to be important because it's a huge component of the EDLP approach that we have for the future in the company. So you will see more to come in terms of private label. But basically, we're going to make sure that we have the best assortment possible for each of our business formats and making sure that we cover all the needs that every customer has in our different businesses and also in our different channels.

So we're focusing on improving as much as we can all our processes, and we will leverage as much we can with global sourcing and other operations in Mexico. We're also working here with suppliers, specifically to drive efficiencies that we can translate those efficiencies into better costs and better price for the customer with local suppliers. So overall, private label is going to be important, and we're going to be speeding to develop our private brand to the maximum potential that we can.

If I may add, Irma, the private label points. As you saw in the webcast, we just hiring [ Prativa ] from international to lead Sam's U.S. -- Sam's Mexico, sorry. And Prativa has a ton of experience before managing private labels in the U.S. So we are seeing a tremendous opportunity to work together between China and the U.S. trying to improve our penetration in Member's Mark in Sam's also. So it's a complement that Javier mentioned before in self-service. So we are taking advantage of the global brand that we are and bringing talent to Mexico to help us or to work together in terms of the business of Sam's some and also with some knowledge about private brands. So we're very confident for the future and the opportunity that we have to improve more our private brands program.

Our next question is from Mr. Ulises Argote from Santander.

Congrats, Cristian and the recently appointed leadership team. Actually, we had 2. So the first one for Cristian. Maybe I wanted to get your sense. Obviously, you were a long-term participant here in the Mexico market, then you went to Chile and now coming back. So I wanted to get your thoughts there. What are your kind of recent impressions on the current state of the market. Any relevant change that you're seeing there in competitive dynamics. Any relevant opportunities that might be worth tackling kind of on an initial basis.

And then the second one for Paulo. Maybe if we could just get a little bit more details on the one-off that you mentioned yesterday impacting the net income. Any color that you could add there would be really helpful.

Thank you very much for your question. And as you mentioned, I moved in these 7 countries in the last 14 -- 13, 14 years. And my first reaction, if I can compare both countries, it's incredible how similar the situation that we are looking today in Mexico were with the situation that I founded in 2023 when I landed in Chile because both countries were growing 0%. And we saw in Chile and also here in Mexico, the huge opportunity that we have to focus on the fundamentals with the idea when the -- let me say, the economy will recover, we will take advantage of -- we will be better prepared to capitalize all the sales that we're looking for.

And that's happened in Chile. We moved from 0% and the retail -- the economy grew to 2% and the business there took advantage of that. So we are looking something similar here in Mexico, focusing on the things that we can control, and that is why we set very clear our priorities to go back, let's say, to these fundamentals as EDLP, availability and of course, the e-com acceleration that we have a huge opportunities, both in Mexico and Central America. So we're very optimistic for the future, and we are focused on these 3 priorities to take advantage in the coming -- in the next year.

Just on the second question, Ulises. So I already alluded to the fact that it's a nonrecurring item. So in a business of this size, once in a while, some of these topics pop up. I think I also wanted to give a little bit more reassurance to the market in terms of what we expect going forward. Obviously always the change in laws and regulations that we cannot control the tax effective rate. But actually, we see that hovering more around the 25%. And I think that's probably what is meaningful at this stage for you guys.

Our next question is from Mr. Bob Ford from Bank of America.

Bob, are you there?

Our next question is from Alvaro Garcia from BTG Pactual.

Congrats, Cristian, on the new role. I noticed in the release that used that you mentioned SG&A should sort of gravitate back to high single-digit growth in line with sales, and I found that a slight change relative to sort of the comments at Walmex, which were you should expect SG&A to continue to grow above sales. So I was wondering if maybe you could expand on that comment. Was that specific to this coming fourth quarter or for the full year or medium term? Any color on that would be helpful.

Yes. Thanks for the question, Alvaro. So I think what we said is twofold. One is, as we said it in the beginning of the year in terms of the guidance, we do expect to have for this year, high single-digit growth in terms of SG&A, which is much different than what we have said in the past. And for that means we continue to invest behind in the business. We always shed clarity on that token, but also driving efficiencies. And actually, these days also more midterm efficiencies also fueled by AI. I think in terms of also what we said it was that we do expect that SG&A to grow more closer to sales. That's our expectation there, Alvaro. So that's also what we want to see going forward.

Great. And then just one. Maybe for you Paulo, could be for Cristian on gross margin. This Is a business that over the last 10 years has seen a 300 basis point increase in gross margin, which by Walmart standards, I think, is pretty darn high. So in the context of really doubling down on EDLP and really being true to that purpose, how do you feel about gross margin investment over the medium term?

Yes. I'll say and then Cristian can immediately jump and chip on that. You clearly see that -- so we have been investing behind pricing behind and we find our customers to help them save money better, as we said it. We do want to continue to invest more. We want always to invest, have the lowest prices in the market. As part of that investment, private brands penetration increase is also a part of that and a more EDLP approach, Javier can allude to the fact that we can do that in a better way than we've done in the past. I think we want to have the right P&L shape, Alvaro. So of course, we want to invest behind our customers. It's also important to know, and you know it very well and a few others as well, the shaping of P&L is also somewhat changing as we have the new contributions from the new businesses. That is helping our gross margin.

We have easily around always 20 to 30 basis points in our gross margin as a positive effect that we want to invest behind our customers. And to do that, we need to, of course, continue to work on SG&A efficiencies to get it closer to sales, certainly keep it high single digit. I think if we do that and we sweat more the investments we do in terms of gross margin, we will be putting more money in the pocket of our customers.

And also, if I may add, Paulo, around ecosystem, ecosystem is helping us to improve our profit, where we separate internally gross profit through commercial margin. And we have seen a more stable commercial margin. And also, we are working on managing the approach in our Tier 1, Tier 2, Tier 3 connect with the EDLP approach. And we have seen, as Paulo mentioned, opportunities or better participation on margin in private brands and also managing -- better managing our Tier 3 to improve maybe our mix in the total box, and that is why we are seeing a more stable margin. But we -- as I mentioned before, we strongly believe in the EDLP, and we will be focused on EDLP, trying to maintain as stable as we can our flow of merchandising and connect with our purpose.

Our next question is from Mr. Antonio Hernandez from Actinver.

Congrats on your results and the new appointments. Just wanted to follow up on Ulises' previous question regarding more than the macro environment, are you seeing anything more specifically on how consumer environment or the consumer's mindset has shifted or changed from your previous stage here in Mexico and Central America or more specifically in Mexico. Are you seeing any type of difference from back there to right now. And maybe also on the competitive environment competition.

Well, to be very honest, only 90 days. And my first reaction is I had the privilege to travel in these 3 years that I landed in Chile to Mexico. And I see a more advanced or a more advanced market in terms of the -- how open we are to take, let me say, some technologies and connect with the e-commerce side. And that is why we put the e-com acceleration as a key priority. We are taking advantage of the brand that we are and bringing, as you saw in our webcast, single hallway to provide to our customer a less friction experience, connecting on-demand with 1P, with 3P, and we are seeing a very good adoption for customer.

So if I may say something, it's going to be around technology. I've seen in my first 90 days, customer more open to receive these kind of technologies, open to give us, let me say, their cell phones and allow us to build this beneficial program. And with that, we can use data and be more precise in terms of selecting the assortment, in terms of price elasticity. So I'm seeing a more advanced customer, let me say, and very open to receive this kind of new technologies and reduce friction for them?

Our next question is from Mr. Renata Cabral from Citi.

Congrats Cristian for the new position. My question is about the One Hallway that the company delivered this quarter. So if you can give some color for us on the main milestones that you are seeing now in terms of store coverage or plug in more vendors from the U.S., for instance, in terms of overall opportunities. Of course, we always look at what Walmart U.S. did, but we understand that there are some differences in terms of the market, maybe other opportunities as well. So if you can give us some color of what you see ahead for this One Hallway would be really helpful.

Yes. Thank you, Renata, for your question. I'm very excited about sharing some ideas and thoughts about One Hallway. Let me start by saying that we are focusing very strongly in on-demand first just to make sure that we are protecting our core with groceries, consumables and fresh. And with One Hallway, we have now the opportunity to simplify the access and the experience for the customer where they will see all the opportunities in items and experiences in just one place in our digital platforms. And as you said, similarities between U.S. and Mexico are bigger than what we expected at the beginning.

And basically, when we started the shift to One Hallway, we leverage all the technology from the U.S., the search engine and the technology. And what we're seeing now is interesting because we were expecting kind of a downside of the business during the transition. And with all the learnings that we have from the U.S., we were able to have a better transition in Mexico. We're seeing more loyal customers to our platforms. We're seeing more bigger baskets, if I may say, the customers are now purchasing groceries, consumables and GM, not necessarily just from on-demand, also from extended assortment, and we're working. And we recently shared inside the company that one of the core strategy is going to be cross-border.

So marketplace is going to have a huge acceleration in the upcoming weeks and months. So what I can say is that we feel very confident that we're going to be leading the omnichannel experience for the customer, for every customer in Mexico, and we will give them access to the digital economy also through the ecosystem. So we are closing the loop, and we're going to be expecting growth and sustainable growth for the future with One Hallway.

Super good. Just a quick follow-up. For us, it's clear the potential for top line growth for 2026. In terms of margins, do you think that in 2026, that will be also accretive or that will take some time?

I think do you refer to the margins here in e-commerce in the marketplace, Renata?

Yes.

So I've always alluded to the fact you guys know if that if you think about our on-demand business, it's a profitable business already. We always said that our extended assortment business of 1P and 3P in a different stage, it's pretty much a business of critical mass. So critical mass here is important. So we are in that journey. So we actually see a lot of value creation can be created in the future as we go through that journey in improving the volumes that we pass through the 1P and in particular, marketplace.

Our next question is from Mr. Andrew Ruben from Morgan Stanley.

Just one quick follow-up on the e-commerce side. For Marketplace, we saw [ celebrace ] grew 30%, but there was a 30% decrease in SKUs. So just trying to understand the strategy and what drove the divergence. And then just a second item, there was a quick mention of tariffs within the release or the conference call. So I just wanted to clarify, is that more of a general statement on macro uncertainty? Or are there specific ways that the tariff backdrop has been impacting business.

Yes. If I can just start on the second one. I think it's more just a general statement, Andrew, the way you put it. I think we're just seeing that was a little bit the uncertainty around tariffs, but also a little bit the uncertainty around the TMEC agreement. What it does at the moment is just it's hampering a little bit the investment in Mexico or the big investments. So that ultimately, hampering the investment leads to less job creation that you used to do it in the past. I think that creates a bit of uncertainty and therefore, impacts the consumption. I think that's the statement. I think if you think about tariffs as such and direct impact to our business, we're not seeing necessarily a meaningful impact of tariffs in our business. To the first question.

Yes. And basically, to your question about SKUs and sellers, it was temporary because of the transition we were doing in technology, but we expect to recover very fast in terms of SKUs and sellers. And we're working closely with the U.S. to expedite this. So we know that it's important for us to have the right value proposition in every category. So it was just temporary.

Our next question is from Mr. Froylan Mendez from JPMorgan.

I want to ask -- I'm sorry, if they already asked, I couldn't hear most of the call, but on working capital, we saw an improvement in this specific quarter. Can you give us some color on what changed? And what are your expectations in the mid and long term on your working capital cycle. I guess, it's for an additional improvement, but more color on how sustainable is this quarterly improvement? If it had more to do with your pricing strategy or just the temporary and the type of SKUs that were sold during the quarter, what are different from the previous ones? More color on that would be highly appreciated.

Thank you for the question. So we've alluded in the past quarters that we were actually attacking our working capital. We are not necessarily entirely happy with the performance that we had on inventory days. You have that quarter 2 was already a better performance than the previous quarters. And this quarter, in particular, a reduction -- a significant reduction 3.5 days versus where we were a year ago. I think you can expect us continue to tackle inventory, continue to improve. I think ultimately, if we have less inventory in the store, it leads to more productivity. If it leads to more productivity, leads to money that we have at hand to be able to invest behind prices and therefore, put the spinning wheel to work and for to get more growth, you should expect that to continue to happen consistently in the coming months and not just necessarily a one-off.

You do also -- there were concerns also in the past, Froylan, about our DPO and the fact that was increasing. That has to do, of course, we had to reduce purchases in the past to address inventory, now gets to a more stable level. If you remember, I said that in the prior quarter, and I think that's what you can expect going forward.

Excellent. And if I may, just on your comments on what to expect into the fourth quarter, you said that between the second and third quarter, does that mean you are reiterating your top line guidance into the year? And when you say that SG&A should grow in the same level as top line. Should, we not expect then EBITDA margin expansion, but let's say, a stable gross margin for this year?

I said 3 things for the quarter, Froylan, and just to allude to the things we said. One, we did said one thing on guidance for the Q4 on growth indeed, and we expect growth to be along the lines of what we saw in Q2 and Q3. And if that's true, then you can do the math versus what we previously had said overall for the full year. I think we are focusing on what we can control and what we have the line of sight. We have line of sight. The good -- as Javier was alluding to for the peak season, and we expect along the lines of what we did in Q2 and Q3.

On SG&A, as you've seen in this quarter, we grew only around 5%. As you know, there will be phasing. Sometimes you invest more, sometimes you invest less, so you create more efficiencies, but we stick to our objective to continue delivering the high single-digit growth. And then -- and when you think more in the mid and long term, we definitely want to see SG&A more in line with sales in order to deliver the near-term stabilization of the margins that we promised. That's the second.

And the third one that we said for the -- I said it for this particular quarter, Q4, is that we expect a sequential improvement in terms of profit delivery. We always said that Q3 was going to be better than H1, and it was. And we expect a Q4 that will be better than Q3.

Our next question is from Mr. Bob Ford from Bank of America.

Congratulations on the new role, Cristian. Just curious how you're thinking about evolving trends in small box retail in Mexico, maybe historically why Walmex has not really leaned into proximity in the past and how we should think about Express or other proximity formats moving forward? And then also in the footnotes of the results for the last couple of quarters, there's been a note about transfer pricing and tax risk. And I was just hoping you could expand upon that, particularly in the context of this little hiccup on tax expense.

Yes. So first, if you -- on the proximity.

Yes. So let me start with the second question, and Cristian can talk a little bit more about how he thinks about proximity risks, and I can build on that. So Bob, so this is what we saw in the quarter. It's just a one-off that we saw it. It doesn't relate with the footnotes that you're alluding to in terms of the transfer price risk or any anything that will be linked to that, Bob.

And in terms of proximity, if I may answer your question, we changed brands in 3 or 4 years ago. And we -- personally, I truly believe that we have a huge opportunity to continue to expand our business in -- Supermarket business. We have a ton of experience here in Central America. We have more than 100 stores here. We have almost 100 stores in Mexico also, but with a different size. So in the middle class that is very big in Mexico, we are seeing a lot of white spaces. That is why we changed the brand. We have a strong -- or, let me say, a better presence in Mexico City, but we have a huge opportunity to grow this supermarket business in regions in Mexico.

We recently opened 2 stores with very good performance, and we have planned to continue to open this one because we have seen a lot of white spaces in the region. So we're very confident with these kind of stores or business because of the experience that we have in Walmart.

That was the last question. I will now hand over to Mr. Salvador Villasenor for final comments.

Thank you very much. We would just like to thank everyone for joining us once again and looking forward for our fourth quarter results and talking to you soon.

Walmex would like to thank you for participating in today's video conference. You may now disconnect.

Good afternoon. I'm Salvador Villasenor, in charge of Investor Relations at Walmex. Thank you for joining us again to review the results for the third quarter of 2025.

Today with me is Cristian Barrientos, our recently appointed President and Chief Executive Officer of Walmart de Mexico y Centroamerica; Javier Andrade, our new Chief Merchandising Officer; and Paulo Garcia, our Chief Financial Officer. The date of this webcast is October 28, 2025. Today's webcast is being recorded and will be available at www.walmex.mx.

Before we start, let me remind you that the content of this webcast is property of Wal-Mart de México, S.A.B de C.V. and is intended for the use of the company's shareholders and its investment community. It should not be reproduced in any way. This webcast may contain certain references concerning Wal-Mart de México, S.A.B de C.V.’'s future performance that should be considered as good faith estimates made by the company. These references only reflect management's expectations and are based upon currently available data. Actual results are always subject to future events, risks and uncertainties, which could materially impact the company's actual performance.

Now I'll turn the webcast over to Cristian. Please Cristian, go ahead.

Thanks, Salvador. Hi, everyone, and thank you all for joining us today. I feel deeply honored to return to Mexico and Central America, 2 regions that have influenced much of my 26-year career at Walmart. After more than 13 years working across both regions, I have full confidence that we have the right foundation, the right talent and the right purpose to continue strengthening what we have built over the years.

My experience in 7 different Walmart markets, 6 of these in Mexico and Central America has showed me that our greatest advantage lies in understanding and serving our customers and empowering our associates to do so every day. I'm excited to work alongside this team to keep evolving our business, expanding opportunities and delivering the value our customers expect from Walmart. While leadership transitions naturally draw attention, we remain fully committed to the direction we have set as a company and to delivering strong performance, long-term value creation and above all, to help people save money and live better.

That said, while our strategy continues, there are still plenty of opportunities we can untap to increase our growth and accelerate share gains. I want to share with you the special focus on 3 key things that I want everyone in the organization to have at the top of their mind and at the center of every day decision we make. First, pricing and our promise of Every Day Low Prices, this is nonnegotiable. It's what our customers expect that makes us unique and we will make sure we offer them the lowest price they can afford.

Second, availability, both in store and online. If products are not on the shelf or ready to ship, we're not meeting our premise. And third, eCommerce acceleration, both grocery eCommerce, extended assortment and our marketplace, offering the convenience, assortment and experience our customers expect from us. With this renewed execution focus and priorities, I truly believe we will energize our 240,000 associates provide the clarity they need and continue building on our solid foundation to reach our full potential.

Before going into the quarterly results, I want to thank all our associates for the amazing job they do. I always like to operate with an inverted pyramid mindset with all of us working for our associates in the store, making their lives easier so they can focus on serving our customers even better.

Now let me talk about the quarter. Given the ongoing uncertainty around tariffs, the coming USMCA renegotiation and volatile consumption, we're encouraged by our team's ability to execute the priorities we have defined. That said, our focus remains on what we can control and deliver accelerated share gains as per our Q3 results in Mexico. We continue with our investment plans for sustainable long-term growth.

So the key points that I would like you to take away are: first, our core businesses, including eCommerce is built on solid foundations, and we're putting additional renewed execution emphasis on it so we can unlock the growth opportunities we see.

Second, we are navigating this dynamic economic backdrop, keeping our prices low to help our customers save money and live better. And third, growth in our higher-margin businesses and additional productivity initiatives are providing financial flexibility to invest in our long-term future. Giving you a little more color on our performance before Javier and Paulo expand later, let me highlight some of our main results and proof points of strategy progress.

We reported consolidated revenue growth of 4.9% with Mexico growing 5.6% and Central America 2.5% in constant currency. Also, with a 3.9% same-store sales growth in Mexico, I am glad to share that this quarter, we grew ahead of untapped self-service by 280 basis points, the biggest gap since mid-2021. Our fundamentals play a key role in these results.

Price perception improved 10 basis points versus previous year, benefiting from price investments, a more EDLP approach and increasing our private brands penetration. We have been investing in pricing over the years, partnering up with our supplier base. However, I believe our price gap should be even higher, as a way to fulfill our purpose.

We reduced inventory levels, while total availability improved by 80 basis points compared to the previous quarter, thanks to the effort of cross functional teams. eCommerce, which remains a key priority for us, grew 20%, mainly driven by on-demand. I'm glad to share that we have rolled out One Hallway ahead of the peak season, gradually increasing eCommerce conversion and penetration.

All this gets reinforced by the new businesses, which strengthen our core by attracting more customers, building a stronger connection with them and generating new margin streams that enable us to reinvest in price leadership. That's what makes our ecosystem so powerful.

Our “Beneficios” Program continues to step up the number of active customers. I have seen firsthand in Chile, the power of having and using the data collected from these type of programs. For instance, we were able to use the data to have a curated assortment for customer needs. I'm convinced that with the great work the team is doing here, there is still a lot of potential to untap to generate even more value for our core and customers.

To finalize and before leaving you with Javier, I'm glad to share that we have welcomed several new members to our executive team. The recent additions are Paul Lewellen as COO; Javier Andrade as CMO; Pratibha Rajashekhar, as CEO of Sam's Club; and Michelle Benavides as our Chief Legal Officer. Going forward, we are prepared for the most critical and exciting time of the year for our business. I'm confident that each one of our associates will do their best to deliver a great holiday season for our customers.

We moved quickly and with the termination to establish a high-performing executive team. They bring deep experience within Walmart and the retail industry as well as a proven track record that will help us accelerate our strategy and strengthen our capabilities across the business. Their arrival reinforces the depth of our leadership bench and the level of global integration with Walmart.

Let me close by saying that despite ongoing external challenges, I see even greater opportunities ahead. I'm confident that with our renewed focus on execution and the strength of our talent, we will leverage those opportunities by delivering on our promise of Every Day Low Prices, ensuring product availability, both in store and online as well as accelerating eCommerce, we are well positioned to help people save money and live better and continue expanding our market share. We must aim for full potential.

Now I will leave you with Javier, and after him, Paulo will go through the financials. Thanks a lot for your interest in our company, and see you tomorrow on our live Q&A.

Thank you, Cristian, and good afternoon, everyone. It's a pleasure to be here with you as newly appointed CMO of Mexico. I have built a career of over 20 years at Walmart Mexico, holding various leadership roles across self-service and Sam's Club, empowering high-performing teams, building long-lasting relationships with our suppliers, always with the customer at the center.

This quarter, our commercial and operational teams delivered strong execution across all formats, reinforcing our position as the destination for value and convenience. Our focus remains clear, Every Day Low Prices, strengthening our private brands and innovating to serve customers better every day.

Regarding merchandising divisions, Health and Wellness led growth, followed by general merchandise. For the fourth quarter, we expected strong demand for durable goods during El Fin Irresistible/Buen Fin, similar to what we saw in our Hot Sale event. During the quarter, we strengthened our position as the price leader in the market to fulfill our promise to our customers.

Our price perception improved versus previous quarters and 10 basis points over the previous year, supported by delivered price investments from previous quarters, better communication, improved EDLP approach and the continued success of private brand strategy, among other things. Bodega Aurrerá once again proved to be the preferred choice for value-seeking families with Morralla campaign, again, growing double digits, reinforcing our role in helping customers save money and live better.

Our private brands continue to be one of the key levers to strengthen price perception and loyalty as customers recognize that quality and affordability can go hand in hand. Penetration increased more than 100 basis points versus last year with apparel and home being categories with the highest penetration and with Sam's Club and Bodega Express as the strongest contributors.

We launched our Spark Moments campaign for Supercenter with a new look and feel in both our Media Comms and store image, leveraging on the updated brand image from the U.S. and centered around communicating our value proposition of one-stop shop omnichannel and at the center, Every Day Low Prices. Our Back-to-School and Healthy Lunch campaigns connected strongly with families looking for quality and nutrition at an affordable price, helping us gain share during that time.

EDLC, Every Day Low Cost and EDLP Every Day Low Price are 2 sides of the same coin to continue delivering affordable prices to our customers and fuel long-term growth we need to continue launching saving initiatives. We have recently launched 2 AI-driven initiatives, proven technology from Walmart U.S. Enterprise inventory empowering stores to unlock their full e-commerce potential and accelerating inventory updates from every 79 minutes to every 7 minutes, enabling real-time accuracy.

Merch One, our next-generation AI-powered purchasing platform empower merchants to ensure the right product at the right price in the right channel through intelligent, automation and data-driven insights. We continue modernizing our existing logistics facilities, which helps to lower our cost to serve in our distribution center in Mexicali, we just installed a new sorter, which helped boost productivity by over 20%.

Our focus on service and execution continues to be valued by our customers with an NPS increasing 120 basis points versus last year. These results and proof points confirm our strategic progresses, and that we continue building a strong, more efficient and more connected Walmex for our customers.

Let's now review our eCommerce performance. During the quarter, eCommerce GMV grew 20% and represented 7.7% of total GMV in Mexico, driven by a 24% on-demand growth across formats Bodega and Sam's Club particularly through its individual members led growth. We kept expanding our omnichannel capabilities to ensure customers can shop whenever and however they choose. This quarter, we increased our grocery e-comm deliveries under 2 hours to 22% of total home deliveries, growing more than 600 basis points versus prior year and our same day deliveries to 60%.

In Bodega Aurrerá, we launched our first omnichannel hubs in Jalisco, Mexico City and Puebla, adding more than 2,000 square meters dedicated to on-demand operations, each with capacity for 20,000 orders per month, improving service levels and cost efficiencies while in both Walmart formats we reached record slot availabilities for our customers.

On the extended assortment side, marketplace grew 11.2% with a seller growth of 29% versus last year, impacted by a slowdown in electronics. We have already launched and rolled out One Hallway to 100% of Walmart Supercenter and Walmart Express customers. We're aiming to have it before the holiday season and El Fin Irresistible/Buen Fin, and we delivered on time.

To remind you, One Hallway merges on demand, which is shipped directly from stores an extended assortment, which is delivered from fulfillment centers and sellers into a single digital experience giving customers the full catalog in one place with a single checkout, better search experience and faster deliveries.

It also allows us to optimize logistics, lower costs, this means higher convenience for customers and greater conversion and recurrence for us. We are excited about the growth potential in eCommerce, and we expect gradual acceleration of our growth, leveraging additional growth capacities and One Hallway go-live.

Now let me move to our new businesses. Let me emphasize that our new businesses address customer pain points, offering products and services at affordable prices, and their main role is to strengthen our core, by driving incremental traffic, enhancing stickiness with our customers and build higher-margin businesses, providing flexibility to invest in price leadership. This is how the ecosystem reinforces our Every Day Low Price DNA and position us for sustainable growth.

Bait reached 23.5 million active users. And this quarter, it reported MXN 3 billion in sales to a total of around MXN 8 billion in the year so far. Regarding our financial solutions. This quarter, we fully launched Cashi Banking for all of our customers. As a second step of this solution in Q4, we will launch digital remittances through Cashi, allowing our customers to receive their remittances directly in Cashi accounts.

Moving to Walmart Connect, this quarter, its revenues increased by 16% versus Q3 2024. Walmart Connect is improving its value proposition for supplier as it leverages the data generated by our Beneficios program to enhance targeting capabilities and co-create better strategies with suppliers, providing them with more differentiated insights.

These achievements reflect the power of our strategy in action, combining price leadership, strong private brands, digital innovation and operational excellence to deliver more value to our customers. We are entering the holiday season with confidence and focus to seize the opportunity that lie ahead in this volatile consumption environment.

I will now ask Paulo to step in to comment on our financial results. Thank you once again for joining us today.

Thanks, Javier, and good afternoon, everyone. I'll begin with the consolidated results and then move to Mexico's and Central America results.

Regarding revenue growth during the quarter, consolidated total revenue grew 4.9%. This time, reported results were slightly affected by Mexican peso appreciation. Excluding this, consolidated revenue growth would have been 5%. Year-to-date, we reported a consolidated revenue growth of 6.6% and 4.7% in constant currency. This growth continues to be underpinned by strong eCommerce growth. We are increasing our delivery slots capacity, our speed of last mile delivery and leverage the implementation of One Hallway as a catalyst for future eCommerce acceleration.

Now let's see Mexico results. Total revenues grew 5.6%, driven by 3.9% same-store sales growth with similar same-store sales growth across Walmart Supercenter, Sam's Club and Bodega. Gross margin contracted 20 basis points versus last year to 24.8% while SG&A had a 10 basis points contraction, representing 16.7% of total sales. We will see the gross margin and SG&A breakdowns in just a moment.

All this led to an EBITDA margin of 10.7%, with EBITDA increasing 3.8% versus the same quarter of last year. Same-store sales grew 3.9% with all our formats growing ahead of ANTAD and with ticket growing 4.5% and transactions declining 0.6%. The latter showing slight improvement when compared to the last quarters.

As mentioned by Cristian, this quarter, we grew 280 basis points ahead of ANTAD's self-service and clubs same-store sales ANTAD figures for the 10th quarter in a row. This is the biggest gap versus ANTAD since mid-2021 and reflects the efforts we have been making to improve our customer value proposition through best value, assortment and experience.

We are happy with our relative performance as we are seeing encouraging progress across our 3 priorities: pricing leadership, product availability, and eCommerce acceleration. These early wins confirm that the changes we are driving are resonating with the customers and strengthening the foundation for sustainable growth.

Let me now expand on gross margin. During the quarter, we had a benefit of 20 basis points from the contribution of new businesses, almost compensating investments to improve our inventory levels, which ended the quarter 3.4 days on hand lower than last year. There is also a 50 basis point impact from a one-off related to an accounting adjustment from prior year. This resulted in a gross profit margin of 24.8%, contracting 20 basis points versus last year.

Excluding the aforementioned one-off, gross margin would have been flattish, showing the resilience of our business model, fueled by higher-margin revenue streams. For the fourth quarter, we expect slight margin expansion despite continuing investments to help our customers save money and live better and thereby deliver accelerated market share gains.

Now let's review our SG&A. We had a benefit of 45 basis points from run expenses, mainly due to operational efficiencies, phasing of expenses and utility cost reduction, while gross investments added 55 basis points behind investments mainly in new stores, tech and our associate value proposition. Additionally, this quarter, we had a benefit of 20 basis points from a one-off regarding a labor provision release from previous exercises. All this led to an SG&A increase of 4.8% versus prior year below sales, representing 16.7% of revenues.

The benefit from this one-off is nonrecurrent. And you can expect us to continue accelerating the implementation of productivity initiatives, including AI-driven initiatives, which will provide increased savings in the midterm, to cap SG&A growth at high single digit and more in line with sales growth.

Now let's review Central America results for quarter 3. Please consider that on this slide, I will refer to the figures on a constant currency basis. Total revenues increased 2.5% versus last year, mainly impacted by Costa Rica. We continue to deliver strong market share gains year-to-date in Central America in a tougher macroeconomic backdrop.

Gross margin contracted 10 basis points compared to last year to 24.7%. Investments in customer value proposition, especially in Guatemala and Costa Rica were partially offset by contribution from Walmart Connect. SG&A represented 18.4% of revenues, expanding 20 basis points versus last year behind gross investments, partially compensated by efficiencies. The above mentioned resulted in EBITDA margin of 9.2%, deleveraging 20 basis points versus prior year.

Now let's review in more detail, sales and operational highlights. In Q3, in constant currency, Central America reported 0.6% same-store sales growth compared to the same period in 2024, impacted by softer performance in Costa Rica. Our eCommerce business grew 38%, increasing omni sales penetration by 40 basis points. This is a result of the successful execution of our commercial activities as well as the app rollout, which now contributes 26% of eCommerce sales.

Additionally, our new businesses such as Walmart Connect continue to develop, which increased its revenue by 55% during the quarter versus last year and generates income to reinvest in our growth agenda. As mentioned previously, at consolidated level, total revenue increased 4.9% with new stores contributing 1.8% to total growth ahead of our guidance provided at our last Walmex Investor Day.

Gross margin contracted 20 basis points to 24.7% during the quarter, while SG&A remained flat at 17% of revenues, increasing 4.5% versus last year. Throughout the first 9 months of the year, we maintained stable gross margins despite continuing investment to enhance our inventory position and reinforce our price leadership, helping our customers save money and live better. This performance underscores the strength, discipline and resilience of our business amid a more challenging macroeconomic backdrop.

EBITDA increased 3.3% with a 10.5% margin almost in line with prior year. Net income declined 9.2%, impacted by a nonrecurring item in the quarter. Going forward, we expect effective tax rate hovering around 25%. Nevertheless, it's important to mention that we are always exposed to changes in laws and regulations that may impact our effective tax rate in the future.

While sales growth in the second half is expected to be more moderate than we anticipated, reflecting a softer consumer backdrop, we remain confident in the strength and resilience of our business as reflected by our accelerated share gains. For the fourth quarter, we are expecting performance in line with what we delivered both in second quarter and the third quarter with similar top line growth levels and accelerated market share gains.

Additionally, as previously mentioned, we expect sequential profit improvement in Q4. Our fundamentals remain solid. We are gaining market share, driving productivity through innovation and executing with financial rigor. With a strong core business and clear strategic priorities, we are well positioned to navigate this economic environment and continue delivering sustainable growth ahead of the market.

Moving to the cash flow. In the last 12 months, we improved our working capital, mainly from inventories improvement through price investments, coupled with adjusted safety stocks, open-to-buy controls and focusing on implementation of new and automated tools. Also, we returned MXN 45 billion to our shareholders through dividends and share repurchases. We have already executed more than 85% of our MXN 8.8 billion share buyback program.

During the third quarter, we opened 26 new stores summing up 71 new stores in the first 3 quarters of the year. Mexico opened 23 new stores, while in Central America, we opened 3 new units, 2 in Guatemala and 1 in Costa Rica. These 26 new stores represented more than 35,000 square meters of additional sales floor, reaching 84,000 square meters of additional sales floor during the year so far. As in previous years, we will see a significant acceleration in store openings during the fourth quarter.

To finalize, as I always do, I would like to leave you with 3 key messages. One, we continue to grow ahead of ANTAD, delivering the widest gap versus the market in several years. This demonstrates the strength of our value proposition and our increased focus on the core fundamentals. We will continue working to sustain this momentum going forward.

Two, as we move forward, we'll stay fully aligned with the 3 priorities Cristian commented, pricing, product availability and eCommerce acceleration. This renewed execution focus will help us navigate the current macro environment and unlock additional growth opportunities to continue accelerating market share gains.

And three, focus on what we can control. We remain confident that our strategy, focus on the core, price leadership and investments will allow us to keep growing ahead of the market and position ourselves for a stronger 2026.

We will come out stronger of this mixed economic and consumption environment. As always, thank you for your interest in our company. I hope to see you tomorrow at 6:30 a.m. Mexico City time along with Cristian and Javier on our quarterly live Q&A to answer any questions you may have. You can contact our IR team if you have any questions.