É NEGÓCIO | Stéphane Maquaire - CEO do Carrefour Brasil - 26/05/2024

First of all, I would like to directly express my solidarity with the population that is experiencing a very difficult situation. We are doing our best to support as much as possible, with proximity to the authorities and also to the NGOs that are trying to act to make life easier. Speaking of inflation, the first measure we took was to freeze all our prices on all products in all stores and all banners within the state of Rio Grande do Sul, to provide as much tranquility as possible on our side throughout the entire month of May, before the start of this situation. And rice, obviously, in this state included. Speaking now more about the country, I think the supply of rice is quite controlled. We have to be careful not to generate, ourselves, all the actors—the states, the federal government—a feeling that it will run out. Do not generate a panic sentiment. Exactly. So we are asking our customers, please, to limit additional purchases of rice to avoid this feeling of shortage and panic. By doing this, we are taking care not to have a very strong inflation of rice. Rice, among commodities, has a price that goes down and up depending on the harvests. Fortunately, the harvest in Rio Grande do Sul had already been collected before the start of these floods. So I think it is still controlled. So you don't see a risk? Careful, careful, not a prediction. So what can generate inflation is unbridled consumption—people going to the supermarket and buying a lot of bags of rice unnecessarily. This, as in all countries I have worked in, this panic sentiment spreads very quickly. Something happens here, in Rio Grande do Sul, and we are all already buying a little more water. In this case, in other situations it could be sugar. In France, for example, I don't know why the French buy a lot of sugar when there is a feeling that something will run out.

Yes, of course. As I said, we froze prices. We will not increase any product in any of our stores. That was important for our customers and for the entire population. In our stores, there will be no increase. Today we are committed to this for the entire month of May. We are donating 500 tons of food, beverages, and hygiene products to support the NGOs and civil defense to help the population in this very complicated situation that does not have access to food products. 500 tons. Many pallets. They are food. What type? Products for daily needs, products for daily use. So the entire range of products that we have in our stores. An important point: we donated these 500 tons with supply from outside the state because we did not want to deplete or risk depleting our stores. So we are already on the way to providing food products through the usual channel of our suppliers. These 500 tons come from Santa Catarina, Paraná, and São Paulo.

Yes, yes, true. But we have a whole organization. We have operations, centers, and distribution. All were affected with closed roads and distribution centers. So we are organizing the logistics. Obviously, with so many tons, 500 tons per day, we are organizing. We made our stores available for various actions. First, they receive donations from our customers for people in need. As logistics centers, mini logistics centers, we also made them available to receive donations. Also, we have a whole store that became a support point. In São Leopoldo, how many pets are there today? More than 700 pets are sheltered there in Rio Grande do Sul. So it is a number of actions that we organize given the size we have, and also a strong feeling from all of us within the Carrefour Brazil group to have a responsibility as the largest retailer in the country. So we are all aligned within the group to do the maximum we can to support this terrible situation.

I think we internally said that since August, September of last year, so let's say nine months of very intense work to complete this integration phase. We finished the conversion of all stores to the Big format, to Sam's Club, and 129 converted stores. The integration work is done at this moment. We are organizing. We already had many employees, we received 40,000 from the Big group, so a giant of 130,000 employees. All this work was done until September, October of last year, and we entered a new phase of simplification of our organization, which is obviously a consequence of having integrated two giants. But it's not just the integration process; in parallel, the consumer is changing. The consumer is changing due to purchasing power, still high interest rates, the Brazilian consumer is changing. We change in parallel. The consumer changes, we change. And this change to respond to what the consumer needs is a change of simplification. That's why we communicated that we converted even more stores to the formats that best respond to what the consumer needs: Atacadão and Sam's Club, which is the 'atacarejo' (cash-and-carry) format.

Exactly, exactly. The 'atacarejo' is the response to the situation the consumer is facing. In 'atacarejo', we have to remember that there are two customers: the merchant and the consumer. And more and more Brazilian consumers are going to 'atacarejo'. It has been in the country for 60 years and is the perfect response for consumers who need the lowest price every day. On the other hand, the consumer, in the change I mentioned, is a much broader change. They also need proximity. We have the Carrefour Express banner, 176 stores, to respond to what this consumer needs when going to work.

Well, very seriously, obviously in my career, I will choose something outside of the Big group integration, which touches a bit on the personal and professional side. I thought for years and years that I could not work outside my country, totally normal. I am French, working in French, and imagining that I could work with other people, another culture, another language? No. My wife wanted to make this effort for 20 years. I answered her: never, it will never happen, I will not leave the country, it is not for me, I will not like it. Totally wrong. I went to Argentina, then to Brazil. Portuguese, cultures, difficult situations, 20 years. I arrived, had experiences, and finally learned a lot from seeing other perspectives, another way of working, another way of being.

We have a focus on indebtedness. Since we recently bought the Big group, it is somewhat common to have a slightly higher debt. Not too high, I have to say. We have a debt around two times, a little more than two times our EBITDA, which is our result before interest and taxes. So this debt is sustainable. We have to manage it, but we want to lower it because interest rates are still high in the country, and to be lighter with this debt situation. And always the same thing: less debt, you can invest a little more in stores, in the digitalization process, have more stores, open more Atacadão, Sam's Club, Carrefour Express stores, as I mentioned. In the stores we closed, we are selling these points. We also have an opportunity with all the real estate we own. We are owners of many of our stores. We launched a project to sell a part of these properties, not 100% of the building, in a partnership with an investor to bring us even more liquidity to reduce the debt level we have. And obviously, always more sales, more profit, more EBITDA to have a more balanced level between debt and the cash flow we are generating. And the process is going very well, I have to say. The financial area we have is very committed to this, the company.

70% of our revenue comes from Atacadão. We still have 24-23% from the Carrefour formats, the classic retail, and 6-7% from the Sam's Club format. The Sam's Club format is the newest for us. It is a format we received in the purchase of the Big group, very specific, a membership club with members. We announced that we went from 2.1 million members we received in the purchase to 3 million members a month ago, a 40% increase in the number of members, and also better activated members. So for us, it is a format that works very well, and we have a lot of room to grow in this format. We will open this year 8 additional Sam's Club stores to reach 60 stores, when we received 42, 42, 18 months ago.

We are in a pilot phase for our Carrefour Express banner. It's a very small proximity supermarket, 100 square meters, for access in express format. We have taken some time to develop the Carrefour Express franchise format. We are doing a pilot to see how it works, how to manage it, how to make it profitable.

It has announced that it will invest this year between 2.3 and 2.5 billion reais in the country, not only to open more stores but also to strengthen our digital channel, our e-commerce, which is growing a lot, with growth over 50%. We are putting a lot of force into this arm because it is the right response for the consumer and also a response that gives more loyalty to our customers, because they can buy how they want, but also a customer who buys through this entire ecosystem is a multi-channel customer, a customer who goes to our physical or digital points of sale and buys a larger basket. So, great.

Very interesting question. It is a challenge for us giants. I think what is important is to keep an eye on this agility, this ability to follow changes and organize changes. He talked about routines. I would say few routines, please, little organization. Obviously, a company needs routines and organization, but don't over-organize. Maintain the agility that surely with 32 people he has. We, with 130,000, it is a constant struggle to maintain it, and it is not so easy. That's why I talked about simplifying our organization, because growing, growing, growing, you end up having product lines, business units, CEOs that are functioning separately, and then you create another transversal organization to take care, look, and control. A startup spirit is a spirit of being very agile, not having many controls, test and learn a lot. That's what we are trying to maintain in our company. So I would say that.