FY2015 Results 1 February 2015 to 31 January CONFERENCE CALL TRANSCRIPT 9 March 2016

Transcription

1 FY2015 Results 1 February 2015 to 31 January 2016 CONFERENCE CALL TRANSCRIPT 9 March 2016 Important notice: Although we try to accurately reflect the speech delivered, the actual speech that was delivered may deviate from this transcript.

2 I n d i t e x P a r t i c i p a n t s Pablo Isla - Chairman & CEO Ignacio Fernández - CFO Marcos López - Capital Markets Director James O Shaughnessy - Investor Relations C o n f e r e n c e C a l l P a r t i c i p a n t s Anne Critchlow Societe General Analyst Richard Edwards Goldman Sachs Analyst Jamie Merriman Standford C. Bernstein Analyst Rebecca McClellan Santander Analyst Simon Irwin Credit Suisse- Analyst James Griznic Jeffrey Analyst Richard Chamberlain Bank of America-Merrill Lynch Analyst Fraser Ramzan Nomura Analyst Andreas Inderst Macquarie Analyst P r e s e n t a t i o n Operator Good Morning Ladies and Gentlemen. Welcome to the presentation of Inditex Results for Fiscal The presentation will be chaired by Mr. Pablo Isla, Chairman and CEO. This presentation will be followed by a Q&A session comprising two parts: The first part will be dedicated to questions received on the telephone, followed by those questions received through the webcast platform. Mr. Isla you have the floor. Pablo Isla Inditex Chairman & CEO Slide 3 Good morning to all the participants in this webcast conference call regarding INDITEX Results for Fiscal I am Pablo Isla and here with me today are Ignacio Fernández, our CFO and Marcos López, Capital Markets Director. Slide 4: 2015 Overview 2015 has been a year of very strong execution for Inditex globally. 2

3 Slide 5: 2015 Overview We operate a global sales platform that fully integrates stores and online and offers huge growth potential. Our business model combines stores and digital seamlessly, and we are ready for the opportunities that this brings with current and new customers. In 2015 Inditex has had a strong performance. We have achieved very satisfactory sales growth. The year has been marked by a tight control of operating expenses and significant investments in the expansion of our business. We have also generated strong cash flow. We have finished 2015 with operations on 5 continents, through 8 concepts, 7,013 stores globally and online sales in the most relevant markets. We start 2016 with a unique platform that can access growth opportunities globally. Slide 6: FY 2016 Overview I would like to highlight some key lines of these results. In 2015 Inditex continued expanding its operations in a very strong way. Sales grew 15.4%. LFL sales increased markedly at +8.5% over a demanding comparable of +5%. We have achieved positive LFL s across all geographies and all concepts in New space in prime locations and online launches are on track. We are operating an online platform in 29 markets, with a wide geographical coverage and rapid growth. Cash flow generation was also very strong. Funds from operations grew +16.4%. Based on the performance of our business over the year the Board of Directors is proposing a 15.4% increase in the dividend to be paid in relation to these results has been marked by very strong activity on many fronts. I would like to cover a number of initiatives carried out by Inditex. Slide 7: Global fully integrated Store & Online sales platform We are in a unique position as we enjoy a global sales platform that fully integrates stores and online as the best way to respond to the demands of our customers. Slide 8: Differentiated Business Model Our sales platform runs on a highly differentiated business model, with a central inventory position, distribution to all our stores globally at least twice a week and orders received by our customers between 2 and 48 hours. Slide 9: Highly prominent and differentiated flagships Over Fiscal 2015 we have reinforced significantly the differentiation of our key global flagships with very visible store openings and enlargements. 3

4 A key example is the Zara flagship store in New York at 222 Broadway. The store comprises 3,000 square metres in a landmark location by Saint Paul s Chapel between the Financial District and the Fulton Transit Center. Slide 10: Highly prominent and differentiated flaships Last April we opened a global flagship for Zara at 61 Oxford Street in London of 4,500 square metres. Slide 11: Highly prominent and differentiated flaships The Zara flagship at Toison d Or in Brussels has very strong architectural features. Slide 12: Highly prominent and differentiated flaships Zara has opened a flagship store of 3,000 square metres in Brisbane s city centre at Queen Street Mall. Slide 13: With very prominent openings over 2016 New space in prime locations is set to grow over 2016 with highly prominent stores. As an example last week we opened a global flagship of 4,400 square metres for Zara at Broadway in New York s SoHo. This is a unique store in a key global fashion destination. We invite you to visit it if you have not done so already. Slide 14: With very prominent openings over 2016 We are also opening a Zara flagship of 4,200 square metres in Cologne, Germany. Over the year we are also enlarging key global flagships like Paris Opera, Tokyo Shinjuku and Dubai Mall of Emirates. Slide 15: Global online sales This factor works perfectly in conjunction with our global online sales presence. We believe that Inditex is in an excellent position to take advantage of global growth opportunities. We have a strong potential to continue expanding profitably in the coming years. Slide 16: Financial Summary Let me now hand over to Ignacio who will present some of the key aspects of our financial performance and I will join you later for the Outlook section. Slide 17: FY 2015 Thank you. In Fiscal 2015 Inditex had a very strong operating performance. 4

5 Net sales reached 20.9 billion Euros, EBIT 3.7 billion Euros and Net Income 2.9 billion Euros. Slide 18: Sales Starting with sales I would like to tell you that Inditex s performance in the period has been very satisfactory with growth of 15.4%. Slide 19: Sales growth breakdown Breaking down the different components of sales, like-for-likes grew strongly at 8.5% in 2015 over a demanding comparable of 5% in the previous year. Space contribution was 6.5%. The translation of sales in currencies different to the Euro added half of a percent to the reported figure. Slide 20: New Space in prime locations globally grew 8% Over 2015 Inditex s new space in prime locations grew 8% to 4.1 million square metres. We have invested strongly in the optimisation of our stores through the introduction of new images, refurbishments and enlargements. Slide 21: Global sales platform The ongoing expansion of our Group has resulted in a global sales platform, with a presence in 88 markets on 5 continents, both in the northern and southern hemispheres. Slide 22: Gross Profit Regarding the Gross Margin we can say that we are satisfied with the evolution in Gross profit has increased 14.4% to 12.1 billion Euros, resulting in a 57.8% gross margin on sales. We have sustained our commercial policies over the period. Slide 23: Tight control of operating expenses Operating expenses are under control. They have grown 14% reflecting the strong LFL sales performance, the significant addition of retail space and the employee participation plan. This line includes all the start-up costs for new space, refurbishments and the rollout of online sales. Slide 24: Flexible business model Operating working capital remains negative as a result of the business model. The working capital evolution is in line with the performance of the business. Slide 25: Cash flow A key part of our results is the strong evolution of cash flow. In 2015 Funds from Operations reached 3.9 billion Euros, 16% higher. 5

6 Capital expenditure was 1.5 billion Euros. Free cash flow generation increased markedly over the year. Dividends paid last year were 1.6 billion Euros. Inditex continues to enjoy a strong financial position. Net cash and short term financial investments were 5.3 billion Euros. Slide 26: Concepts I will now hand over to Marcos who will elaborate on the performance of the Inditex concepts. Slide 27: Sales by concept In terms of space addition and online launches, we are on track. Continuing with our global expansion we have opened stores in 56 markets over the period. Global online launches have continued at a very rapid pace. Regarding the performance by concept in 2015 Zara continues to represent approximately 2/3rds of group sales, the younger concepts around 1/3rd. Slide 28: Concepts I would like to highlight the strong operating performance of the Group over Let me point out that in this period all Inditex concepts have achieved positive LFL sales growth and an EBIT margin on sales of 15% or higher. Slide 29: Conceps The younger concepts grouped together have also performed very well. I would like to highlight that Zara Home, Bershka and Stradivarius have performed very strongly. All concepts continue their ongoing online rollout. Slide 30: Oulook I will now hand over to Pablo for the Outlook section. Slide 31: Global growth opportunities In the coming years we will continue to invest in the expansion of our business across a number of markets, all of which offer attractive long term returns through our sales platform that fully integrates stores and online. Inditex is present on five continents and in all the key markets demonstrating the Group s global reach. We manage a diversified sales platform in 88 markets. The current base offers huge growth potential for the coming years. Slide 32: Global growth opportunities: Europe 6

7 In Europe, we continue to see huge growth opportunities in both Western and Eastern Europe. It is an area of growth for all our formats and we have an online sales presence in 21 markets. We see great potential to continue expanding profitably in Europe. Slide 33: Global growth opportunities: Asia In Asia our priority is to leverage the strong presence we have established over recent years. Asia accounts today for 23% of Inditex s sales. We enjoy a very strong position in all the key markets of the region. Over 2016 Zara will launch in Vietnam and Massimo Dutti will launch in India. We are following a multi-concept expansion strategy in Asia and we have an online presence in China, Japan and South Korea. We see strong long-term potential for Inditex in Asian markets. Slide 34: Global growth opportunities: Americas We also see strong growth opportunities in the Americas, with a number of attractive growth markets. We are following a multi-concept and an online sales strategy in the Americas. We have a significant online presence in the United States, Canada and Mexico. Slide 35: Global growth opportunities: Australia and South Africa We have continued expanding Zara in Australia and South Africa over 2015, confirming the global reach of our business model. Zara Home also launched in Australia last December. We will continue to add very significant new stores in both markets over the current year. In 2016 Zara will also launch in New Zealand and Zara Home in South Africa. Slide 36: Global online sales Inditex s online operations have seen very rapid growth in recent years. Our business model allows a swift expansion of our online sales globally. Zara has built an online sales presence in 21 European markets, The United States, China, The Russian Federation, Japan, South Korea, Mexico and Canada, the world s main economies. The concepts also have an established online sales presence in Europe. Additionally, some of the concepts are present in the United States. We will continue to roll out online sales progressively in all the markets in which we are present with stores. Slide 37: 2016: All concepts oline in Eastern Europe & Turkey A step in this direction will be the rollout of online sales for the concepts in Eastern Europe and Turkey in Slide 38: Strong growth opportunities 7

8 For the coming years we continue to see strong growth opportunities driven by our global fully integrated Store and Online sales platform. Slide 39: Strong differentiation of retail base Over recent years we have worked intensively on the optimisation of our retail base. We have opened more than 2,000 prime stores. We have also refurbished 1,500 stores with the new image and enlarged 572 global flagships, while absorbing 540 small units into neighbouring stores. Over this period, around two thirds of total retail space has been subject to optimisation initiatives. Slide 40: Outlook We will continue reinforcing the differentiation of our global flagships with very visible store openings and enlargements in prime locations. We expect a lower capital expenditure requirement for expansion. We see capital Expenditure growing below space growth. In the coming years we expect 6 to 8 percent growth in new space in prime locations annually in conjunction with an increasing contribution from organic growth and online sales. Our growth profile remains the same with slightly different components and lower capital intensity. Slide 41: FY2016 Outlook 2016 will be another year of strong expansion for Inditex. We plan to open between 400 and 460 stores and to absorb 100 to 120 small units into neighbouring stores. We expect 280,000 square metres of new space in prime locations in conjunction with our global online sales rollout. We see Capital Expenditure for 2016 at around 1.5 billion euros. Slide 42: 15.4% increase in dividend Regarding shareholder remuneration the Board of Directors will propose at the General Shareholders Meeting a 15.4% increase in the dividend for Fiscal 2015 to 0.60 euros per share. This means the dividend per share has increased 150% since The total dividend payment will come to 1.9 billion Euros. Slide 43: FY2016 Outlook Finally, let me tell you that Store & Online sales in local currencies, adjusted for the calendar effect of an extra trading day in February due to the leap year, have increased by 15% from 1 February to 7 March

9 As you all know, the Spring/Summer season is influenced by the performance over the Easter period due to its significant sales volumes. And this is all from us. We will be pleased to answer any questions you may have. Q u e s t i o n s & A n s w e r s Operator Ladies and gentlemen, the telephone Q and A session starts now. We remind you that online questions will follow. If you would like to ask a question, please press 01 on your telephone keypad. We request that you kindly limit yourselves to only one question per turn. If possible, we recommend that you do not use your mobile or answer free phone. There will be a short silence while the questions are being registered. Thank you. The first question comes from Anne Critchlow from Societe General. Please go ahead, madam. Anne Critchlow Societe General - Analyst I'd like to know what the reason is for the reduction in space guidance and whether a online make up the difference, and whether you are happy with this? Or have you been frustrated in your search for prime locations. If this is the case, in which countries is it most difficult to find prime locations? Thank you. The first thing I would like to tell you is that the space growth is going to continue being very relevant. We believe very much in this fully integrated approach between prime locations and online. This year we will open around 280,000 square metres, and what we are seeing more and more is that we are focusing more on more in the quality of the new openings. We see many opportunities all across the world. We're in 88 different markets. Last year we opened stores in 56 markets, and as we were saying in the presentation, in the last few years, 2/3 of our total space has been subject to optimization strategy, and we believe very much in this type of approach. The quality for us in term of its new openings is very relevant. What we are seeing is that we are not changing at all the growth profile of the company. The conversion rates are increasing, as you can see also in the year 2015 because of the quality of the new space added. And this is the type of approach that we believe is the right approach, this combination, this totally integrated approach between stores and online, so we will continue opening very relevant stores, enlarging the existing stores, and refurbishing existing stores. Globally we ll see a significant rate of space growth next year, at around 280,000 squares metres which is very much in line with last year. We will also be absorbing small units close to existing stores. We think it's the right approach. We think it's the right strategy. Anne Critchlow Societe General - Analyst If the amount of very good quality space increased, would you be tempted to accelerate physical space expansion, or do you actually prefer now to focus online with an eye to the future? 9

10 We are focused very much on this combined approach, this fully integrated approach. So space growth in prime locations and online. This fully integrated approach, which to us is the right approach. Richard Edwards Goldman Sachs - Analyst This is a quick question on the cash flow. In the last few years we ve seen outflows and in 2015 we saw significant inflows, is there something specific within that that you can point out? Marcos Lopez - Inditex Capital Markets Director Regarding the cash flow, as we mentioned in the presentation, funds from operations have grown very strongly. What you have seen in the working capital inflow is very much the result of the very strong execution of the business model over the year as reflected in the 8.5% LFL. Richard Edwards Goldman Sachs - Analyst Anything to do with tax payments? Marcos Lopez - Inditex - Capital Markets Director It s just a minor factor. This is down to a slight change in the tax regulations in Spain. But this is not the main reason behind the evolution of funds from operations. The evolution is marked by the strong performance in LFL of 8.5%. Jamie Merriman - Stanford Bernstein - Analyst Given your guidance in terms of reducing your space growth target, I was wondering, at what point might you consider breaking out online as a percentage of sales or breaking out online growth? I understand that you haven't done that in the past, but with space growth falling, and online becoming arguably an increasing driver and increasingly important in achieving your growth target, how should we be thinking about this? We believe very much in this fully integrated approach. That's why we think that the best way is to include online sales growth in the like for like sales growth figure because it has very much to do with the global execution of the business. Just to give you some data, we continue having more than 1/3 of total deliveries in-store, because our customers prefer this. 2/3 of the returns are in-store returns because our customers prefer to go to the stores. In many cases this is an online return but also a store sale because the customer is going to the store and exchanging the product due to it being the incorrect size. The business is so, so integrated from every point of view it s better to include online sales growth into the like for like sales growth figure. Our online business would not be what it is without the stores. We also see that online is contributing also to the store sales because we have more than 6 million people seeing our products every day on our web pages and online pages. Some of them are buying online, some are going to the stores to buy the product. We also offer the possibility of buying online from the stores. So it s so integrated with the stores that we find the best way is to include it in the like for like sales figure. Jamie Merriman - Stanford Bernstein - Analyst If we think about the growth we should expect going forward, in terms of your expectations, can 10

11 we expect that incremental growth from online will offset any reduction in space growth that you're planning? Yes, this is what we are saying. The growth profile of the company is not changing. And then what we will see is a higher conversion rate and higher like for like sales growth. Rebecca McClellan Santander - Analyst In terms of the conversion ratio itself, you're suggesting basically that the improvement that we've seen in FY 2015 is sustainable out into future years? Broadly it s sustainable, yes, that is what we were saying. Rebecca McClellan Santander - Analyst At the 80% level? Yes. Rebecca McClellan Santander - Analyst The second question is, to the like for like, in the fourth quarter, I think it was close to mid-teens sources, perhaps closer to 10% going into the first quarter of What were the drivers of this acceleration? Was it largely online, or were there a number of other influences? It's the global execution of the global business model. First of all, you know that we do not like to elaborate very much on a short period of time. It s only an update covering the month of February and the first week of March. So we prefer always to wait until we are at least the middle of the season or the whole season before commenting. However, it was a strong start to the year and it was down to the global execution of the business model. It was a good performance, across all the different geographies and across the different brands. So it is not related with this or that particular thing. It is a combination of everything, the collections, operation of the stores, of course online, the evolution of different markets. It has to do with everything. Simon Irwin Credit Suisse Analyst Good morning, could you just talk about cost leverage as to the modest levels of cost leverage during we saw in 2015 despite the LFL performance. And if your future is going to be much more driven by online, should we expect any cost leverage with this higher level of LFL, or is it simply the nature of online that you have higher variable? In the medium term with strong like for like growth you should expect cost leverage. This year costs are growing below sales growth, so there is some leverage. It would have been even more had it not been for the employee participation scheme driven by the increase in profitability of the company. 11

12 But the normal trend of the business, of course, is that with a strong like for like, there should be some cost leverage. It s not pure mathematics because in operating the company you have to bear many elements in mind. Having said that, with a strong like for like sales growth, we should see cost leverage in the profit and loss account. Simon Irwin Credit Suisse Analyst Can I ask a follow up on gross margins in terms of the kind of drivers of the gross margin weakness in the second half? How much of that is driven by FX; the stronger dollar; mix; and perhaps down to more a robust approach on pricing within Europe? The first comment I would make is that the gross margin for the year was indeed stable. We always say that stable is plus or minus 50 basis points. For the full year the gross margin was stable. We can say the gross margin is the results of many different things. It has to do with like for like sales growth, fashion trends, mix, mark ups, and mark downs, and of course, currencies. So what I can tell you, is that without the currency effect, the gross margin could have increased in the second half. Simon Irwin Credit Suisse Analyst The second half would have actually been up year on year Yes, yes, of course. James Griznic Jefferies Analyst Can you perhaps comment on gross margin in the year ahead, Pablo? Thank you. We work for the stability of the gross margin. If you ask me now at the beginning of the year, what I would say is we expect a stable gross margin in local currencies. Of course, at the beginning of this year, we saw a lot of currency volatility. If we had to estimate the likely impact on full year gross margin with this level of volatility, we would be revising our guidance every month. We see broadly a stable gross margin in local currencies. That is our expectation. Then, of course, depending on the evolution of currency, you could have this or that type of impact. So I think what is most important is the stable gross margin in local currencies. Richard Chamberlain RBC Analyst Could you just give an update on RFID used in stores. How many stores is it used in now, and how many will it be in by the end of this year, please? It is now in 1,600 stores, in more than 60 countries. At the end of the year it will be in 99% of the Zara stores. I can t say 100% of the stores because there could always be one store without the implementation. The technology implemented has been very positive for us from a number of angles. 12

13 The most important factor has to do with customer service, the replenishment of the store, but it also has to do with inventory management, it also has to do with deliveries, it has to do with many, many different things. It is a very important project that we have developed within the company. This is a technology that we have implementing ourselves which didn t exist in the market previously. It has been very positive for the company and it is something we feel very proud of. It is unique to our company. Richard Chamberlain RBC Analyst How is the Madrid click and collect trial going? I was wondering if you could give some comments on your click and collect plans and how it's going so far, please. We have click and collect across the world. What you are talking about relates to a single trial which is different. This is a specific trial on instant delivery. It is one of many trials. All of these initiatives are very positive for us. At the end of the year you simply decide whether to expand some of these ideas into further stores or not. This is all part of the normal management of the business. Globally, click and collect is across the whole world. Even with free delivery in practically all the countries in the world, 1/3 of our customers decide to have delivery in the store, which is incredible. This is something extremely useful and strong for us because they come to the stores. They take the online product back, but at the same time, of course, the customer gets to take a look at the whole collection. They may also decide to buy something else in the store. What is more relevant, with regards to the fully integrated approach, is that 2/3 of the returns take place inside the stores. This is something I think is very unique. The main reason for returns is the size. That they were buying in one size and it s not their size. So the customer comes to the store, and when the customer comes to the store to make a return, most probably this customer is going to buy something because if they see something that they like from the collection. This is very powerful. So globally, we believe very much in this fully integrated approach. And then there would be this initial initiative, but I think what is more relative is the global fully integrate the approach between online and the stores. Fraser Ramzan Nomura - Analyst Good morning. A couple questions for me. Firstly, on the cash flow. Obviously you had a very strong position in terms of net cash and financial investments at the end of the year. I'm wondering at what point you might consider that there is surplus cash for distribution. Obviously you did have a fairly large total payout, but was there a consideration on whether or not to distribute surplus cash, and how might we think about that going forward, please? As we were saying during the presentation, this year has been very strong in terms of cash flow generation. The first priority for us in terms of the use of the cash flow that we generate is to invest in the long-term profitable growth of the company. This cash flow generation is allowing us to combine this with what we consider an attractive and predictable shareholders remuneration policy. We saw in the chart in the presentation that since the year 2009 we have increased the dividend 150%. Our stated policy is 50% payout ratio, plus the possibility of extraordinary dividends. We had a 65% payout ratio this year, increasing the dividend by 15.4%, distributing 1.9 billion euros. We think it s very much in line with what we call this attractive and predictable shareholders remuneration policy. Every year the board of directors, having in mind the cash flow generation during the year, the net cash position at the end of the year, decides what dividend to propose to the shareholders meeting. Always in line with this policy, we prefer much more increasing regularly and progressively the dividends 13

14 than big jumps or big extraordinary dividends. Fraser Ramzan Nomura - Analyst Given the strength of the U.S. dollar over the past six months, could the gross margin in local currency will be negative? Marcos Lopez - Inditex Capital Markets Director Based on what we have mentioned on stable gross margin in local currencies for 2016, it wouldn't be unreasonable to assume that you're going to see a reverse pattern versus 2015 with a higher impact in the first half and lower over the second half. But within this framework of this stable gross margin in local currencies. Andreas Inderst Macquarie - Analyst I have a question on your rapid expansion of e-commerce. What has been your key learning with online so far and the biggest surprises from expanding online over the last two years? Also, some comments on what has worked so far or what is not working well, if anything at all? From the very beginning we believe very much in this concept of an integrated approach. For us it was always key to be fully integrated with our stores from very first moment and also to offer the possibility of in store delivery and store return. This is a very relevant, strong part of the proposition. Given that basket values as we mentioned before are between 80 euros and 100 euros the average price of online items bought is higher than the threshold for free delivery which generally is around 50 dollars, pounds, euros depending on the geography. The average price of products bought online is higher than in store. This is something we were expecting. Globally, this is linked to th very strong execution of this fully integrated approach between the stores and online. Andreas Inderst Macquarie - Analyst A question on Massimo Dutti. H1 sales were up 9%. On my estimates, sales in H2 were up roughly 4%. Can you elaborate on this? What's your growth expectation going forward? When it comes to the non-zara concepts, every year, we must bear in mind the comparable, the calendar of openings during the year, and many other factors. Every year there is always one brand or two brands outperforming, and one or two brands performing slightly below the average of the group. What is very important for us is that Massimo Dutti s margin is 18% and all the brands have positive like for like. We continue believing very much in Massimo Dutti and its potential for global growth and expansion into many geographies. Operator We are now finishing the telephone Q&A session to address the questions received through the webcast platform. Thank you. 14

15 Unknown: Would you be able to comment on current trading in Russia at the moment? What I can say about Russia is that our business in Russia continues developing in a very normal, positive way in local currencies. We continue seeing strong like for like sales growth and we continue developing our business there. We have opened stores during this year and we will continue opening stores in We have lots of customers in our stores, so what I would say is that the business in local currencies is operating in a healthy way. Unknown: On the topic of geographies could you add a few comments on trading conditions in the Spanish market? In Spain for the year 2015, sales growth was 8%. This is very strong and is very much in line with the sales growth on the group. Spanish sales growth is all like for like because we are not increasing our space in the Spanish market. In the year 2014 we saw 5% sales growth. In 2015 we saw 8% sales growth. We continue being very active in the Spanish market. We have any different operations taking place in Spain right now in cities like Madrid and Barcelona, and San Sebastian and Valencia, Bilbao and La Coruña. We have a lot of things going on in a lot of different cities in terms of refurbishments, new openings and enlargements. In Paseo de Borne, which is a very, very relevant store from every point of view from the architectural point of view, but also because Palma de Mallorca, as you know is a very, very important city from the point of view of (inaudible). So globally being very active in the Spanish market, and with positive evolution of sales. Unknown: There have been a number of questions regarding the markets of Iran. Is there an intent to open in Iran in any time? It could be the case. No specific plans in the near feature, but it's potentially an attractive market for us. Unknown: The next subject would be mainly focused on cash flow. We've seen very strong cash flow generation over the year. What is driving the growth? 15

16 I think Marcos has covered during the Q&A session. It has mainly to do with the strong execution of the business model and the global sales growth, the like for like sales growth, so it's mainly related to the strong execution of the business model. Unknown: And finally, you made a couple of comments during the presentation and the Q&A regarding online. We were just wondering if there is anything else you would like to add regarding online? I think we have covered during the presentation. I would say that I said several times in the presentation the idea of the fully integrated approach between, between the stores and online. Thank you for joining us today. And, of course, we are ready to continue on to answer your questions today, tomorrow, and in the coming days. Thank you for joining us during this conference call. Thank you. 16