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Slide presentation 1 q09

  1. 1. 1
  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. 2
  3. 3. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  4. 4. 1Q09 Highlights CIA. HERING ENDS UP 1Q09 WITH GROWTH • Gross revenue in domestic market increased 42.6% • Hering brand sales rose 48.3% • Same-store sales growth of 19.0% in the Hering Stores • EBITDA Margin of 15.2% CONTINUED GROWTH PLAN • 1 Hering Store opened in the 1Q09 • Marketing campaign “eu uso Hering desde sempre” with new celebrities • Actions focused on store operating performance optimization • 2 PUC stores opened in the new architectural project SUSTAINABLE GROWTH • Capex of R$ 6.5 million 4
  5. 5. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  6. 6. Gross Revenue (R$ million) By Market 169.2 4.9 125.2 35.2% Foreign Market 10.0 50.5% 42.6% 164.3 Domestic Market 115.2 1Q08 1Q09 Domestic Market represented 97.1% of the total gross revenue in the 1Q09. 6
  7. 7. Gross Revenue – Domestic Market (R$ million) By Brand By Distribution Channel Others 42.6% 164.3 dzarm 164.3 PUC 42.6% 4.3 11.2 Multi- 16.3 115.2 Brand 115.2 80.0 4.3% Hering 33.6% 2.6 29.9% 10.7 59.9 12.6 132.5 Franchise/ 48.3% 52.4% Own Store 84.3 89.3 55.3 1Q08 1Q09 1Q08 1Q09 Relevant franchise and owned stores growth in the domestic market. 7
  8. 8. Gross Revenue – Foreign Market (R$ million) Private Label vs. Own Brands By Destination 10.0 50.5% 10.0 Private 3.0 5.1 Label North 4.9 4.9 America Own 4.7 Mercosul Brands Europe 1.8% 3.3 4.9 4.9 Latin 1.0 1.1 America 1.0 Others 0.3 0.4 1Q08 1Q09 1Q08 1Q09 Own brands are the focus on exports, specially for Latin America. 8
  9. 9. Gross Profit and EBITDA (R$ million) Gross Profit (R$ million) and Gross Margin (%) EBITDA (R$ million) and EBITDA Margin (%) 1 2 0 -0.5p.p 0 .4 5 1 2 0 0 .1 6 0.9 p.p 0 .4 15.2% 0 .1 4 1 00 42.2% 41.6% 1 00 0 .3 5 14.3% 0 .1 2 8 0 0 .3 8 0 0 .1 0 .2 5 6 0 0 .0 8 6 0 0 .2 0 .0 6 4 0 4 0 0 .1 5 31.0% 41.2% 57.2 0 .0 4 0 .1 2 0 43.6 2 0 0 .0 2 0 .0 5 14.8 20.8 0 0 0 0 1Q08 1Q09 1Q08 1Q09 Excluding the AVP, the gross margin would reach 42.4% in the 1Q09. The higher EBITDA margin is due to the increase of the domestic market revenue and the dilution of the operational expenses. 9
  10. 10. Stores Distribution 1 franchise Hering Store and 2 PUC Stores were opened in the quarter and we have 122 Hering Stores and 8 PUC Stores in the respective new archictetural project. 10
  11. 11. Hering Store Expansion Expansion Plan 325 268 230 231 181 274 182 151 226 193 194 156 157 141 37 42 51 37 10 25 25 2006 2007 2008 2009* 2010* 1Q08 1Q09 Owned Stores Franchises * estimated The remodeling of the owned stores is the priority for 2009. The goal of 325 stores is kept for 2010. 11
  12. 12. Distribution Network (number of stores) Distribution Network Evolution 423 357 23 Goal:57 75 311 22 22 67 248 59 209 23 Goal:224 Goal:172 19 44 39 325 268 230 151 181 2006 2007 2008 2009* 2010* Hering PUC Abroad Goal of 38 Hering Stores and 8 PUC stores opening for 2009. 12
  13. 13. Expansion Plan 2009 – Franchise Period State City Location Status Status 1Q09 SP São Paulo Rua São Bento Opened 2Q09 SP Bauru Bauru Shopping Forecasted 1Q09 2Q09 AM Manaus Shopping Manauara U.C. Forecasted 1 Franchise opened 2Q09 CE Fortaleza Shopping Via Sul Forecasted 2Q09 DF Taguatinga Shopping Taguatinga Forecasted 2Q09 2Q09 RS Caxias Do Sul Shopping Iguatemi Forecasted 11 Franchises forecasted 2Q09 RS Pelotas Galeria Malcom Forecasted 2Q09 SP São Paulo Rua Damasceno Vieira Forecasted 2Q09 SP Diadema Shopping Praça Da Moça U.C. Forecasted 2Q09 SP São B.do Campo Rua Joao Pessoa Forecasted 2Q09 SP Itatiba Rua Rui Barbosa Forecasted 2Q09 SP Araraquara Centro Forecasted 13
  14. 14. Expansion Plan 2009 – Franchise Period State City Location Status Status 3Q09 PB Petrolina Shopping River / Rua Forecasted 3Q09 PR Maringa Shopping Catuaí U.C. Forecasted 3Q09 SC Lages Rua Forecasted 3Q09 3Q09 SP Spaulo / Ribeirão Preto Novo Shopping Ribeirão Forecasted 10 Franchises forecasted 3Q09 SP São Paulo Rua Cardoso De Almeida Forecasted 3Q09 MG Varginha Rua Forecasted 3Q09 RJ Cabo Frio Rua Forecasted 4Q09 3Q09 SP Sorocaba Shopping Villagio Forecasted 3Q09 SP São Paulo Tatuapé (Rua) Forecasted 11 Franchises forecasted 4Q09 BA Salvador Shopping Paralela Forecasted 4Q09 DF Brasilia Shopping Iguatemi Forecasted 4Q09 PA Belem Doca Boulevard Forecasted 4Q09 RS Canoas Shopping Canoas Forecasted 4Q09 SP Bertioga Centro Forecasted 4Q09 SP São Paulo Av. Cantareira Forecasted 4Q09 SP Sto Andre Rua Das Figueiras Forecasted 4Q09 SP Guarulhos Centro (Rua) Forecasted 4Q09 RJ Rio De Janeiro Shopping Botafogo Forecasted 4Q09 SP Jundiai Centro (R Barao De Jundiai) Forecasted 4Q09 SP Campinas Rua Cel. Quirino Forecasted 4Q09 PE Recife Centro, Rua Nova Forecasted 14
  15. 15. Expansion Plan 2009 – Own Stores Period State City Location Status Status 2Q09 SP Itupeva Premium Outlet São Paulo Forecasted 2Q09 SP Osasco Shopping União Osasco Forecasted 2Q09 2Q09 SP São Paulo Avenida Paulista Forecasted 3 Stores forecasted 3Q09 RJ Niteroi Rua Moreira Cesar Forecasted 4Q09 SP São Paulo Metro Tucuruvi Forecasted 3Q09 1 Store forecasted 4Q09 1 Store forecasted 15
  16. 16. Hering Store Indicators Hering Store Performance 1Q08 1Q09 Var. Number of Stores 182 231 26.9% Franchise 157 194 23.6% Own 25 37 48.0% Sales (R$ thousand) 68,652 96,457 40.5% Same Store Sales growth 39.9% 19.0% -20.9 p.p. Sales Area (m²) 24,399 29,893 22.5% Sales (R$ per m²) 2,826 3,240 14.6% Check-Outs 915,577 1,274,257 39.2% Units 2,150,542 2,899,517 34.8% Average Sales Ticket (R$) 75.00 75.70 0.9% Same store sale growth of 19.0% 16
  17. 17. Capex (R$ million) By activity 29.3% 6.5 Other 5.0 0.1 0.8 IT 0.3 50.0% 1.6 3.2 Industry 190.9% 1.1 Stores 15.0% 2.3 2.0 1Q08 1Q09 Investments in the industry with the ampliation and update of the units, including the new one in Parnamirim - RN 17
  18. 18. Indebteness Indebtedness Evolution Short Term x Long Term 201.3 184.6 Short Term 55% 4.6 Long 3.5 Term 45% 11.0 -0.2 -0.7 0.1 2005 2006 2007 2008 1Q09 -33.4 -17.3 Net Debt/EBITDA* Total Debt in 03/31/09 = R$ 116.2 million Net Debt (R$ million) * Last 12 months EBITDA 18
  19. 19. Financial Result R$ thousand 1Q08 1Q09 Var. Net Financial Revenues (Expenses) (1,222) (1,098) -10.1% Net Financial Derivative Instruments Results - 22,038 - Total Financial Revenues (Expenses) (1,222) 20,940 -1813.6% • Positive Financial Result - On 03/31/09, Cia. Hering registered a revenue of R$ 22.4 million due to the reversal of part of the expense accrued at the end of 2008, referring to the fair value of derivatives. • Swap with 19 dollar verifications (April/09 to Oct/10) – April/09 and May/09 verifications: exchange rate lower than R$/USD 2.80 – On 05/04/09, Cia. Hering renegotiated the contract, eliminating nine monthly verifications, from June/09 up to Feb/10 (included), at a R$ 3.1 million cost. • The Company will remain searching alternatives to minimize and/or to eliminate the exchange risk of the remaining derivatives operations. 19
  20. 20. Payment to Shareholders Dividends The payment of dividends amounting to R$ 10.6 million (R$ 0.19616/share), related to the year ended on December 31, 2008, was proposed and approved at the General Shareholders’ Meeting held on April 28, 2009. 20
  21. 21. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  22. 22. Strategy & Outlook Hering Store chain Continue expansion plan – 325 stores by the end of 2010 Maximize operation performance – Store space allocation review and optimization – Automatic replenishment for basic items – Fast response for best sellers and continuous promotional sales for slow movers Promote the Hering Store credit card Marketing campaign “eu uso Hering porque” Opening of PUC Stores in the new architectural project Implementation of dzarm. relaunching plan 22
  23. 23. Investor Relations Fabio Hering – President and IR Director Frederico de Aguiar Oldani – Financial Director Karina Koerich – IR Manager Gracila Camargo Lopes – IR Analyst Tel.: +55 (47) 3321-3469 3321- E-mail: ri@heringnet.com.br mail: Website: Website: www.ciahering.com.br/ir Investor Relations Consulting Firm FIRB – Financial Investor Relations Brasil Ligia Montagnani – IR Consultant Tel: +55 (11) 3897-6857 E-mail: ligia.montagnani@firb.com 23

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