1Q13 ResultsConference CallApril 23, 2013
DISCLAIMERThis presentation contains forward-looking statements regarding theprospects of the business, estimates for oper...
AGENDAOperating Performance1Q13 ResultsOutlook
41Q13 OVERVIEWGross Revenues (R$ million)EBITDA (R$ million and %)Distribution NetworkR$ 288.8R$ 31.3R$ 22.0R$ 335.8R$ 34....
51Q13 HERING CAMPAINGSAutumnVacation / Sale Weak SSS in January and February Low product offering on promotional season...
AGENDAOperating Performance1Q13 ResultsOutlook
7SALES PERFORMANCEIn 1Q13, Gross Revenues reached R$ 454.3 million (+16.0%) with growthacceleration in both franchises and...
8GROSS PROFIT AND EBITDA1.7 p.p. gross margin contraction as a function of: reduction of the fiscal incentivesover imports...
9NET INCOME AND CAPEX-1.2% decrease in Net Income, as a result of operating performance reflected inEBITDA, lower financia...
10CASH FLOWLoss of R$ 13.6 million in free cash flow in 1Q13, mainly due to EBITDA growthand higher necessity of investmen...
AGENDAOperating Performance1Q13 ResultsOutlook
12OUTLOOK Positive signs of growth Sales acceleration in 1Q13, favorable climate and good performance of the winter show...
INVESTOR RELATIONS TEAMFabio Hering – CEOFrederico Oldani – CFO and IROPatrícia Salem – IR ManagerDaniel Popovich – IR Ana...
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1Q13 Conference Call Presentation

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1Q13 Conference Call Presentation

  1. 1. 1Q13 ResultsConference CallApril 23, 2013
  2. 2. DISCLAIMERThis presentation contains forward-looking statements regarding theprospects of the business, estimates for operating and financial results, andthose regarding Cia. Herings growth prospects. These are merely projectionsand, as such, are based exclusively on the expectations of Cia. Heringmanagement concerning the future of the business and its continued accessto capital to fund the Company’s business Plan. Such forward-lookingstatements depend, substantially, on changes in market conditions,government regulations, competitive pressures, the performance of theBrazilian economy and the industry, among other factors and risks disclosedin Cia. Hering’s filed disclosure documents and are, therefore, subject tochange without prior notice.
  3. 3. AGENDAOperating Performance1Q13 ResultsOutlook
  4. 4. 41Q13 OVERVIEWGross Revenues (R$ million)EBITDA (R$ million and %)Distribution NetworkR$ 288.8R$ 31.3R$ 22.0R$ 335.8R$ 34.9R$ 22.8+16.3%R$ 35.9 R$ 43.7+21.7%+11.6%+3.8%1Q12 1Q13ForeignMarket R$ 5.5 R$ 7.5+35.2%R$ 391.7 R$ 454.3+16.0%Hering Store Network (Sell Out R$ million)Channel 1Q12 1Q13% DomesticMarket 1Q13Multi-brandRetail16,577clients17,353clients49.1%Franchises 459 stores 557 stores 40.0%Webstore 3 stores 3 stores 1.3%Own Stores 60 stores 65 stores 9.6%244.2273.4+78 Stores -0.8%1Q12 Expansion SSS 1Q13+12.0%90.0102.227.5%26.9%13.6%1Q12 1Q13EBITDA EBITDA Margin
  5. 5. 51Q13 HERING CAMPAINGSAutumnVacation / Sale Weak SSS in January and February Low product offering on promotional season Low inventory in the stores SSS acceleration in March Increase in average price Good performance of women’s fashion category
  6. 6. AGENDAOperating Performance1Q13 ResultsOutlook
  7. 7. 7SALES PERFORMANCEIn 1Q13, Gross Revenues reached R$ 454.3 million (+16.0%) with growthacceleration in both franchises and multi-brand retail channels.Gross Revenues per Brand (R$ million) Gross Revenes per Channel (R$ million)288.8335.835.943.731.334.922.022.81Q12 1Q13Hering Hering Kids PUC dzarm.11.6%3.8%16.3%21.7%195.4 214.8136.9174.73.65.542.042.21Q12 1Q13Retail Franchise Webstore Owned Stores51.5%0.4%9.9%27.7%
  8. 8. 8GROSS PROFIT AND EBITDA1.7 p.p. gross margin contraction as a function of: reduction of the fiscal incentivesover imports, (ii) higher cost pressure, (iii) reduction in the mix of own stores in theComapany´s sales and (iv) accounting of the INSS under the “Brasil Maior Law”.151.9170.112.0%46.5%44.8%47.8%45.9%1Q13 1Q13Gross Profit Gross Margin Cash Gross Margin90.0102.227.5% 26.9%13.6%1Q12 1Q13EBITDA EBITDA MarginGross Profit and Gross Margin EBITDA and EBITDA Margin
  9. 9. 9NET INCOME AND CAPEX-1.2% decrease in Net Income, as a result of operating performance reflected inEBITDA, lower financial result, and higher income tax and social contributioncharges due to lower fiscal grants.Net Income (R$ million) Capex (R$ million)70.2 69.421.5%18.3%-1.2%1Q13 1Q13Net Income Net Margin2.31.43.8 5.60.60.20.71.37.48.515.0%1Q12 1Q13Industry IT Other Stores
  10. 10. 10CASH FLOWLoss of R$ 13.6 million in free cash flow in 1Q13, mainly due to EBITDA growthand higher necessity of investments and working capital.* Dividend distribution: R$ 119.9 million have been destined to a proposed account to be distributed upon General Shareholders’Meeting approval, on 04/25/2013..Cash Flow - Consolidated (R$ thousand) 1Q12 1Q13 Chg.EBITDA 89,975 102,211 12,236Non cash items 946 1,038 92Current Income tax and Social Contribution (19,220) (30,417) (11,197)Working Capital Investment (14,643) (28,297) (13,654)Decrease in trade accounts receivable 44,090 21,890 (22,200)Decrease (increase) in inventories (24,618) (30,323) (5,705)Increase (decrease) in accounts payable to suppliers 4,857 (2,309) (7,166)Increase (decrease) in taxes payable (33,681) (19,512) 14,169Others (5,291) 1,957 7,248CapEx (7,373) (8,478) (1,105)Free Cash Flow 49,685 36,057 (13,628)
  11. 11. AGENDAOperating Performance1Q13 ResultsOutlook
  12. 12. 12OUTLOOK Positive signs of growth Sales acceleration in 1Q13, favorable climate and good performance of the winter showroom. Hering and Hering Kids as the main growth avenue Guidance of 77 new Hering Stores e 30 Hering Kids in the year Resumption of normalized SSS as of March. Average price increase mainly through product mix improvement Gain of share in the multi-brand retail channel through qualification strategy Continuation of campaings and improvements in further exploring the webstores’ potential EBITDA Margin maintenance due to reduction in the fiscal incentives over imports andnormalization of the Profit Sharing Program
  13. 13. INVESTOR RELATIONS TEAMFabio Hering – CEOFrederico Oldani – CFO and IROPatrícia Salem – IR ManagerDaniel Popovich – IR AnalystTel. +55 (11) 3371-4867E-mail: ri@hering.com.brWebsite: www.ciahering.com.br/ri

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