Cia Hering 1Q14 Earnings resentation

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Cia Hering 1Q14 Earnings resentation

  1. 1. 1Q14 Results Conference Call April 25, 2014
  2. 2. DISCLAIMER This presentation contains forward-looking statements regarding the prospects of the business, estimates for operating and financial results, and those regarding Cia. Hering's growth prospects. These are merely projections and, as such, are based exclusively on the expectations of Cia. Hering management concerning the future of the business and its continued access to capital to fund the Company’s business Plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Cia. Hering’s filed disclosure documents and are, therefore, subject to change without prior notice.
  3. 3. AGENDA 1Q14 Results Outlook Q&A
  4. 4. 4 1Q14 OVERVIEW Gross Revenues (R$ million) R$ 335.8 R$ 34.9 R$ 22.8 R$ 342.7 R$ 34.5 R$ 21.9 +2.0% R$ 43.7 R$ 51.9 +18,8% -1,3% -4.1% 1Q13 1Q14 Foreign Market R$ 7.5 R$ 8.0+7.5% R$ 454.3 R$ 466.7+2.7% 214.8 226.1 174.7 179.5 5.5 5.1 42.2 40.3 1Q13 1Q14 Multibrand Retail Franchise Webstore Own Stores 16.8 2.6% 11.6 -7.1% -4.5% 5.3% 2.7% Gross Revenues per Channel (R$ million) Gross revenues of R$ 466.7 million (+2.7%), mainly due to a growth below the expected in the franchise channel.
  5. 5. 5 1Q14 OVERVIEW Hering Store network (Sell Out R$ million) 273.4 273.4 273.4 284.6 79 stores -4.1% - 1Q13 Expansion SSS 1Q14 +4.1  SSS volatility throughout the quarter  Vacation and fall collections + End of year RAPA (promotional season).  Redeeming period for the Bonus Card. Hering Store network growth mainly due to store openings.
  6. 6. 6 GROSS PROFIT AND EBITDA EBITDA generation impacted by lower sales level associated with expenses growth due to the new organizational structure. Gross Profit and Gross Margin EBITDA and EBITDA Margin 170.1 174.9 2.8% 44.8% 44.3% 45.9% 45.6% 1Q13 1Q14 Gross Profit Gross Margin Cash Gross Margin 102.2 94.5 26.9% 24.0% -7.5% 1Q13 1Q14 EBITDA EBITDA Margin
  7. 7. 7 NET INCOME AND CAPEX Decrease of 6.9% in Net Income in the quarter, in line with EBITDA. CAPEX in-line with Company’s annual budget. Net Income (R$ million) Capex (R$ million) 69.4 64.6 18.3% 16.4% -6.9% 1Q13 1Q14 Net Income Net Margin 1.4 0.6 5.6 7.2 0.2 1.5 1.3 2.3 8.5 11.6 36.5% 1Q13 1Q14 Industry IT Others Stores
  8. 8. 8 CASH FLOW Free Cash Flow of R$ 27.5 million, a R$ 8.6 million reduction in comparison to 1Q13, due to lower EBITDA. Cash Flow - Consolidated 1Q13 1Q14 Chg. EBITDA 102,211 94,497 (7,714) No cash items 2,427 2,477 50 Current Income tax and Social Contribution (30,417) (28,818) 1,599 Working Capital Capex (29,686) (29,103) 583 Decrease in trade accounts receivable 20,501 38,665 18,164 (Increase) in inventories (30,323) (21,146) 9,177 (Decrease) in accounts payable to suppliers (2,309) (16,230) (13,921) (Decrease) in taxes payable (19,512) (30,185) (10,673) Others 1,957 (207) (2,164) CapEx (8,478) (11,556) (3,078) Free Cash Flow 36,057 27,497 (8,560) * Dividends: approved by the General Shareholders’ Meeting held on Apr 23rd 2014 the distribution of additional dividends in the amount of R$ 50.0 million (R$ 0.3037 per share) to current shareholders on the date, correspondent to the utilization of the retained earnings reserves. Dividends shall be paid by May 28th 2014.
  9. 9. AGENDA 1Q14 Results Outlook Q&A
  10. 10. 10 OUTLOOK  Challenging scenario remains in 2Q14  Associated with the macroeconomic scenario and the World Cup.  Sales and margin growth should be negatively impacted.  Initiatives to be implemented mid-year on  Launch of 1st Hering For You store;  Hering Store: improvements in product assortment and the re-launching of the basics starting in the summer collection;  dzarm.: new business plan;  Sustaining both expansion plan and growth in the multi-brand retail;  Webstores’ platform substitution.
  11. 11. AGENDA 1Q14 Results Outlook Q&A
  12. 12. INVESTOR RELATIONS TEAM Fabio Hering – CEO Frederico Oldani – CFO and IRO Bruno Salem Brasil – IR Manager Daniel Popovich – IR Analyst Tel. +55 (11) 3371-4867 E-mail: ri@hering.com.br Website: www.ciahering.com.br/ri
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