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  • 1. 3Q09 Conference Call November 5, 2009
  • 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. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  • 4. 3Q09 Highlights MAIN INDICATORS • Total Gross Revenue + 34.7%, of which +40.3% in the domestic market; • Hering brand Sales +43.5%, PUC + 39.0% and dzarm. +12.6%; • EBITDA Margin +5.5 p.p., ending the quarter with 21.9%; • Hering Stores sales + 40.1% and same-store sales +20.9%. OTHER HIGHLIGHTS • Opening of 14 Hering Stores (1 owned) and 1 PUC Store (owned); • Marketing Campaign “eu uso Hering...” for Father´s Day and Jeanswear; • Execution of dzarm. brand repositioning plan. 4
  • 5. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  • 6. Gross Revenue (R$ million) By Market 589.2 12.4 37.5% 428.5 55.3% 27.8 Foreign Market 576.8 43.9% 34.7% 210.8 4.0 Domestic 400.7 156.5 56.4% Market 9.2 206.8 147.3 40.3% 3Q08 3Q09 9M08 9M09 Domestic market accounts for 98.1% of the total gross revenue, indicating a 40.3% growth. 6
  • 7. Gross Revenue – Domestic Market (R$ million) By Brand 576.8 43.9% 13.4 38.4 54.9 400.7 Others 8.9 40.3% 206.8 35.9 4.4 7.1% 14.6 dzarm. 42.1 12.6% 21.8 30.5% 147.3 PUC 470.1 3.0 13.0 39.0% 15.7 Hering 313.8 49.8% 166.0 43.5% 115.6 3Q08 3Q09 9M08 9M09 Hering brand stood out with 43.5% growth. dzarm. shows the first results of its repositioning plan, with a 12.6% increase in the quarter. 7
  • 8. Gross Revenue – Domestic Market (R$ million) By Distribution Channel 576.8 45.9% 400.7 313.6 Multi brand 206.8 214.9 147.3 40.2% 41.7% 117.9 Franchise/ Own Store 84.1 263.4 40.5% 185.8 88.9 63.2 3Q08 3Q09 9M08 9M09 In 9M09, the multibrand retail grew 45.9%, due to the 57.6% expansion for Hering and 34.8% for PUC in such channel. 8
  • 9. Gross Revenue – Foreign Market (R$ million) Private Label vs. Own Brands 27.8 55.3% 14.4 100.0% 12.4 56.4% Private 9.1 Label 7.6% 100.0% 4.1 13.4 12.4 4.0 Own 5.0 19.9% Brands 4.0 3Q08 3Q09 9M08 9M09 In the foreign market, the Company continues the strategy to focus in Latin American countries with its own brands. 9
  • 10. Gross Profit Gross Profit (R$ million) and Gross Margin (%) 0.8 p.p. 44.9% 2 5 0 0.6 2 5 0 0 .4 5 44.1% 0.5 5 0 .4 2 00 2.0 p.p. 0.5 2 00 47.5% 0 .3 5 0.4 5 1 5 0 45.5% 0.4 1 5 0 0 .3 0.3 5 43.0% 39.7% 217.0 0 .2 5 1 00 0.3 1 00 0.2 5 155.3 0 .2 5 0 0.2 5 0 83.4 58.3 0 .1 5 0.1 5 0 0.1 0 0 .1 3Q08 3Q09 9M08 9M09 Gross Profit Gross Margin Excluding the AVP (Current Value Adjustment), the gross margin in 9M09 would have been 45.5%. 10
  • 11. EBITDA EBITDA (R$ million) and EBITDA Margin (%) 0 .2 5 0 .2 19.0% 1 00 1 00 0 .1 8 21.9% 0 .2 0 .1 6 8 0 8 0 0 .1 4 15.3% 5.5 p.p. 0 .1 5 3.7 p.p. 0 .1 2 6 0 16.4% 6 0 0 .1 0 .1 91.8 0 .08 4 0 82.6% 4 0 70.6% 0 .06 53.8 0 .05 0 .04 2 0 38.5 2 0 21.0 0 .02 0 0 0 0 3Q08 3Q09 9M08 9M09 The improvement in operational performance, due to the increase in sales and dilution of fixed expenses reflected in a 82.6% EBITDA growth in 3Q09. 11
  • 12. Stores Distribution 15 stores were opened and the multibrand retail grew 7.0% in number of clients in the 3Q09. 12
  • 13. Distribution Network (Number of Stores) Evolution of the Distribution Network Goal:57 337 311 314 329 22 15 22 22 64 248 63 59 61 209 23 Goal:224 19 44 Goal:172 39 244 258 230 231 181 151 2006 2007 2008 1Q09 2Q09 3Q09 Hering PUC Abroad In the 9M09, 33 stores were opened (28 Hering Stores and 5 PUC). In the foreign market, the Company decided to discontinue the franchise stores in markets that are not its current target. 13
  • 14. Hering Store Expansion Expansion Plan 325 273 258 230 209 181 274 151 233 218 193 176 156 141 37 40 51 33 40 10 25 2006 2007 2008 2009* 2010* 3Q08 3Q09 Own Stores Franchise * estimated Out of the 258 stores, 169 are already remodeled to the new architectural project. The goal for 2009 went from 268 to 273 stores. 14
  • 15. Hering Store Indicators Hering Store Performance 3Q08 3Q09 Chg. 9M08 9M09 Chg. Number of Stores 209 258 23.4% 209 258 23.4% Franchise 176 218 23.9% 176 218 23.9% Own 33 40 21.2% 33 40 21.2% Sales (R$ thousand) 91,792 128,597 40.1% 269,816 388,043 43.8% (1) Same Store Sales growth 25.6% 20.9% -4.7 p.p. 34.4% 23.8% -10.6 p.p. Sales Area (m²) 27,588 33,233 20.5% 27,588 33,233 20.5% Sales (R$ per m²) 3,395 3,956 16.5% 10,481 12,497 19.2% Check-Outs 1,123,907 1,507,785 34.2% 3,184,937 4,389,165 37.8% Units 2,654,189 3,428,509 29.2% 7,461,892 9,926,066 33.0% Average Sales Ticket (R$) 81.70 85.29 4.4% 83.84 87.34 4.2% (1) Compared to the same period of the previous year Besides the expansion of 40.1% in the network sales, same-store sales growth of 20.9% and the average sales ticket increase of 4.4% were highlights of the quarter. 15
  • 16. Capex (R$ million) By Activity 7.1% 25.3 0.8 23.5 Others 0.8 4.9 30.6% 3.4 18.4% 12.2 IT 0.5 10.7 8.7 10.3 14.5% 1.3 18.6% 0.2 1.6 4.1 Stores 22.2% 5.2 19.4% 10.6 8.9 91.7% 6.3 Industry 3.3 3Q08 3Q09 9M08 9M09 Industry investment was the highlight of the quarter, 91.7% over the same period of 2008. 16
  • 17. Indebteness Indebtedness Evolution Short Term x Long Term Long Term 44% Short Term 56% Net Debt/EBITDA* Total Debt = R$ 95.1 million Net Debt (R$ million) * EBITDA of the last 12 months 17
  • 18. Financial Result R$ thousand 3Q08 3Q09 Chg. 9M09 9M08 Chg. Net Financial Revenue (Expenses) (2,802) (15,174) 441.5% (10,258) (13,249) 29.2% Net Financial Derivative Instruments Results - (193) - - 24,866 - Total Financial Revenue (Expenses) (2,802) (15,367) 448.4% (10,258) 11,617 - • Swap – On July 7, 2009, Cia. Hering renegociated the swap operation in the amount of R$ 30.0 million, eliminating four monthly verifications (Feb/2010 until June/2010) at a cost of R$ 2.06 million and; – On September 24, 2009, the Company terminated the swap operation, in an agreement with the counterpart, paying R$ 150 thousand reais for it. 18
  • 19. Shareholder´s remuneration Payment of Interest on Shareholder’s Equity The payment on 10/August/09 in the amount of R$ 15.2 million refers to: R$0,1411/share - related to the year ended on December 31 2008; R$0,1405/share - related to the first half of 2009; Date of Gross Value Value per Shareholders´ remuneration Year End Payment (R$ million) Share (R$) Payment of Interest on Equity 2007 02/22/08 4,853 0.09000 Payment of Interest on Equity 2008 09/17/08 4,853 0.09000 Dividends 2008 05/11/09 10,578 0.19616 Payment of Interest on Equity 2008 08/10/09 7,609 0.14110 Payment of Interest on Equity 2009 08/10/09 7,576 0.14050 19
  • 20. AGENDA: • Highlights • Operating Performance • Businees Strategy and Outlook 20
  • 21. Strategy & Outlook Hering Store • Continuity of the growth plan– 325 store by the end of 2010, with the upside of 5 stores for 2009, ending the year with 273 stores. • Marketing Campaign “eu uso Hering …” focused on the commemorative year-end dates • Hering Store Credit Card • Hering Web Store Opening of PUC stores in the new archictectural project and marketing campaign with more commercial appeal; Execution of the dzarm. repositioning plan with the launching of the High Summer Collection; Reestructure of the presence in the foreign market focusing on own brands´ sales to the Latin American countries. 21
  • 22. Investor Relations Fabio Hering – CEO and IR Director Frederico de Aguiar Oldani – CFO Karina Koerich – IR Manager Gracila Camargo Lopes – IR Analyst Tel.: +55 (47) 3321-3469 3321- E-mail: ri@heringnet.com.br 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