Non deal road show – ny & mid atlantic

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Non deal road show – ny & mid atlantic Non deal road show – ny & mid atlantic Presentation Transcript

  • Non Deal Road Show – NY and Mid-AtlanticOctober, 2012
  •  Highlights of Magazine Luiza and Brazilian Market – 1H12 Institutional Presentation • Overview of the Brazilian Market • Magazine Luiza 2
  • 1 Highlights – Brazilian Market Brazilian GDP has grown 11% annual rate over the last 9 years The country has reached the full employment for the 1st time recently The real income growth makes us a powerful consumer nation, driven by the mid class, which already stood for 49.3% of the total residences in 2011 Consumer credit has been considered the turbine of growth, with stable compromised monthly income with debt services, despite the constant increase of family indebtedness The drop of the income rate has begun to effect the credit takers, maintaining the confidence of Brazilian consumers In order to reach a satisfactory housing shortage level, it is expected that 23.5 million new houses be built from 2010 to 2022 More houses and credit availability are an opportunity to increase sales of durable goods and also to increase the penetration of these products in “C class”, still considered low Through products financing, the retail market is usually responsible for the “C class” access to financial services 3
  • 1 Highlights – Retail in Brazil Retail growth above GDP (more than 8 years) Retail Participation of GDP (2011) Retail GDP Sellout Retail / GDP Value Added Retail/ GDP 4
  • 1 Highlights – Retail in Brazil Major private employer (2011 and 2010) Still major private employer till July 2012 Number of employees per sector (thousands) Number of employees per sector (thousands) 22.43% of total 22% of total 5
  • 1 Highlights – Retail in Brazil Retail – Regional Performance Retail growth = income, employment and wages Wages (%) Unemployement (%) Income (%) North Northeast Mid-west Southeast South 6
  • 1 Highlights – Retail in Brazil Consumption became the growth motor Durable goods growth above the average Rretail creates value GDP Retail Consumption GDP per capita Linear (retail) Durable goods Retail 7
  • 2 Magazine Luiza: drivers of value Strong corporate culture, focus on valuing people and customers Multiple opportunities Corporate governance, of growth since its foundation Excellent relationship First social e-commerce in Brazil Magazine Luiza management (CRM tools) Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 8
  • 3 Highlights – Magazine Luiza Retail Operations Sales Competitive Environment Same store sales growth – 3Q12  Physical stores • Low teens – lower than 2Q12, strong comparison base • Tough competitive environment – there was no major with 3Q11 (same store sales growth of around 20%) change in the last few months o Physical stores: impact of integration process of o Pressure for competitive prices Lojas Maia (sales force training, new systems) o Interest free sales: some players with aggressive o E-commerce: maintenance of growth level strategies, sometimes irrational ones o Magazine Luiza maintain is financial discipline of Same store sales growth – 4Q12 limiting interest free sales to 15% of total sales • Low teens, better comparison base with 4Q11 (same • Magazine Luiza drivers of value: store sales of 10%) o Multi-channel approach o Expectations of economy recovery o Focus on service quality and client o End of integration process of Lojas Maia o Competitive prices (not every day low price) Total sales growth – 2012 o Client relationship management (CRM) and best • Mid teens company to work for (focus on people) o Opening of 25 stores o Financial products and services o Maturation process of Lojas Maia and Baú  E-commerce Expectations for 2013 • Competitive environment – entrance of new pure • Same store sales growth – low teens internet players, though bricks and mortar players with o Higher GDP growth internet are performing better o Maturation process of nearly 1/3 of the stores • Aggressive prices and installment plans (still not mature) • Magazine is gaining market share every quarter o Investments in logistics and IT o Product mix (long tail) o Multi-channel approach 9
  • 3 Integration Process – Lojas do Baú 3Q11 4Q11 1Q12 2Q12Lojas do Baú integration process (7 months)Acquisition of 121¹ stores from Lojas do Baú July 29, 2011 - R$80,3 millionDocumentation to start operating Most of the closed stores were closed during this periodVirtual Stores Virtual stores opening 35 stores (Paraná) Stores renovation Complete stores renovation Systemic and corporate integration End of dec/2011Conventional Stores Conventional stores opening 69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais) Stores renovation Uniforms and storefront changes Systemic integration End of feb/2012Integration benefits (synergy)1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store 10
  • 3 Integration Process – Lojas Maia 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13Lojas Maia integration processBrand change – Magazine Luiza Metropolitan area of Recife 14 stores (Oct) Metropolitan area of Maceió 9 stores (Dec) Metropolitan area of Fortaleza 15 stores (Dec) Other RegionsCorporate integration Apr/2012Stores systemic integration Conclusion Oct/2012Integration benefits (synergy)1) The front end integration had been carried in 2010, which considers: sales force training, product range mix, financial services and small stores renovation 11
  • 3 Highlights – Magazine Luiza Retail Operations Integration Process Margins and Expansion Integration Process – Lojas do Baú  Gross Margin • Ended on February 2012 • From 2013, gains from Maia’s gross margin, slightly • Beginning of the maturation process (2012 first year of offset by increased share of e-commerce (which has operations) lower margins) Integration Process – Lojas Maia  EBITDA • Last phase of the integration process – systemic • SG&A synergies: integration – end in mid-October o SG&A reduction at Lojas Maia • Cost synergies from 4Q12 and mainly in 2013 o Dilution of expenses due to stores maturation o Gross Margin – there is a 400bps gap between process (marketing and logistics) Maia and ML. This margin should be converged o Rationalization of costs and expenses project of with more efficient inventory and price all offices, stores and DCs management o Improvement in stores productivity (sales and o Expenses (G&A) – costs and expenses reduction back-office services) opportunities because only a focal point will be needed in the NE, thus decreasing expenses  Expansion 2013 between 100 to 200bps • Keeping conservative growth pace, with 25 new stores • Synergy sales – synergies from the beginning of the integration and SSS growth above the company average  Expansion 2014 • Due to the improvement in profitability, the company may return to a faster pace of growth (50 stores per year through organic growth or acquisitions) 12
  • 4 Highlights – Consumer Finance Operations Macroeconomic Changes Luizacred’s Profitability Reduction in basic interest rates  Financing products: • Increase in Luizacred spread, due to ML keeping CDC • Credit card: more selective in offering to customers. and credit card interest rates in short and medium term Targeted at more active customers inside and outside ML stores. Operating costs can be offset by higher use. Reduction in interest rates of financial products Reduction in share (20-25% total sales) • The government is pressuring banks to lower credit • CDC: focus on clients who only want to finance the card interest rates , mainly revolving rates. However ML purchase, instead of applying for 5-year-credit. Low will maintain the current rates operating costs and higher interest rates. Increased o ML has competitive rates compared to other share (20-25% total sales) banks and retailers • Third-party credit card: higher share due to Itaú o Study to reduce revolving rate (16% currently) – conservativeness in Luizacred and increased e- less impact to ML, because their revolving is a commerce share side business, unlike banks. In this product, most customers are delinquent  Profitability Sales without interest • Approval rate stable (around 20%) • ML discourages interest-free sales in Luiza card and • Improved delay indicators third-party credit card. Limited to 15% on Luiza credit • Proportional PDD reduction from 4Q12 card • Continuing cost and expense reduction • Low expectations of changes in Brazil, because this • Improving profitability, quarter by quarter could be an unpopular government measure and due to • Profitability should return to 10-15% EBITDA level in lower SELIC (cheaper discounted receivables); however 2013 ML believes in a more rational scenario 13
  •  Highlights of Magazine Luiza and Brazilian Market – 1H12 Institutional Presentation • Overview of the Brazilian Market • Magazine Luiza 14
  •  Highlights of Magazine Luiza and Brazilian Market – 1H12 Institutional Presentation • Overview of the Brazilian Market • Magazine Luiza 15
  • Brazilian GDP has grown 11% annual rate over the last 9 years... GDP (R$ Billion) 7,5% 5,7% 6,1% 5,2% 4,0% 3,2% 2,7% 1,1% 1,5% -0,3% 4,447 4,143 3,770 3,032 3,239 2,661 2,369 1,941 2,147 1,700 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012 Nominal GDP (R$) Real Growth(%)Source: LCA, IBGE 2009, Estimativas 2012 LCA 16
  • ... and the country has reached the full employment for the 1st time recentlyNumber of jobs % working-agecreated (MM) population 3 2,9 14 2,5 13 2,5 12 2 1,9 1,9 1,9 11 1,8 1,8 1,8 10 1,5 9 1,0 1 0,9 8 7 0,5 6 0 5 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012 New formal jobs creation Unemployment rate Source: MTE (Ministério do Trabalho e Emprego), IBGE 17
  • The real income growth makes us a powerful consumer nation... Minimum Wage (R$) 622 Growth: 211% 545 510 465 415 380 350 300 240 260 200 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Middle Class Total Wage (R$ Bn) Growth: 64% 63,8 60,3 58,1 54,2 51,2 47,7 45,1 38,9 39,0 40,7 37,9 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012ESource: DIEESE (Depto. Intersindical de Estatísticas e Estudos Socioeconômicos), BACEN 18
  • ... driven by the mid class, which already stood for 49.3% of the total residences in 2011 Social classes composition - % of total residences 4.5 A Class 4.1 17.5 B Class 30.7 30.9 C Class 49.3 33.8 D Class 15.1 13.2 E Class 0.8 1998 2011Source: IPC TARGET 19
  • Consumer credit has been considered the turbine of growth ... Credit Operations Balance (R$ Bn) 26% 25% 26% 28% 31% 35% 40% 44% 45% 49% 51% ² 2.168 2.030 1.706 1.414 1.227 936 733 607 499 384 418 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012 Total Operations % GDP11) Total credit operations over GDP2) Data referred to June/12 20
  • ... with stable compromised monthly income with debt services, despite the constant increase of family indebtedness Debt Burden¹ 45 42.5% 43.4% 40 39.5% 35.8% 35 32.2% 29.6% 30 24.9% 25 22.0% 20 18.4% 22.2% 21.9% 19.7% 19.7% 18.0% 18.6% 15 17.6% 17.7% 15.5% 10 5 0 jan/05 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12 mai/12 Debt Burden Household Indebtedness1) Debt burden in % of disposable incomeSource: BACEN 21
  • The drop of the income rate has begun to effect the credit takers, maintaining the confidence of Brazilian consumers Average Debt Interests x SELIC Indebtedness average term (months) 100 (% per year) 25 90 80 20 70 60 15 50 40 10 30 20 5 10 0 0 Natural Person Interest SELIC Goods acquisitions except vehicles Total Brazilian’s Consumer Confidence 190 170 150 130 110 90 jan/02 jan/03 jan/04 jan/05 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12Source: BCB, Fecomércio 22
  • In order to reach a satisfactory housing shortage level, it is expected that 23.5 million new houses be built from 2010 to 2022 CEF’s Housing Credit (R$ Bn) 76 70 80 47 56 23 33 11 14 12 21 18 4 6 7 9 2004 2005 2006 2007 2008 2009 2010 2011 Disbursed Contracted Housing Projection (R$ MM) and Housing Shortage (%) 100 11,3% 12,00% 80 79.5 10,00% 69.0 74.3 63.3 8,00% 60 8,2% 6,00% 40 4,00% 5,0% 20 1,5% 2,00% 0 0,00% 2010 2014E 2018E 2022E Unsuitable Cohabitants Suitable Housing ShortageSource: LCA: (Construbusiness 2010 - FGV); Caixa Econômica Federal1) Includes estimative of new families – 1.326 million per year; 2) % of families in the housing shortage 23
  • More houses and credit availability are an opportunity to increase sales of durable goods… Household appliances (MM units)1 Electronics (MM units)2 25,6 22,8 22,0 22,0 21,0 19,8 19,9 19,8 16,3 13,3 13,0 9,8 2007 2008 2009 2010 2011 1S2012 2007 2008 2009 2010 2011 1S2012 Computers (MM units) Mobiles (MM units) 57,2 9,6 47,8 42,9 41,4 6,2 6,3 7,1 5,4 5,1 30,8 27,3 2007 2008 2009 2010 2011 1S2012 2007 2008 2009 2010 2011 1S20121) Includes: refrigerator, wash machine, stove, microwave, air conditioner and freezer; 2) LCD, LED, Plasma, 3D, DVD, Home Theater, Mini-system, and auto sound systemSource: GFK Retail 24
  • ... and also to increase the penetration of these products in “C class”, still considered very low Percentage (%) Total population “C class” 2 Door Refrigerator 93 37 Computer 50 39 Wash Machine 68 61 Smartphone 1 35 19 Thin TV Screen 13 7 Air Conditioner 12 6Source: PNAD 2009 (Pesquisa Nacional por amostra de domicílios), IBGE,1) Nielsen - Consumidor Móvel 2011 25
  • Through products financing, the retail market is usually responsible for the “C class” access to financial services Access to current account Number of store cards (MM)1 CAGR: 16,9% per year 247 225 39% 196 63% 173 85% 147 118 97 86 61% 71 37% 15% AB Classes C Class DE Classes 2003 2004 2005 2006 2007 2008 2009 2010 2011 With Access Without Access1) Number of store cards – total of the populationSource: CETELEM (PesquisaObservador 2012, December 2011 – IPSOS) , ABECS (Associação Brasileira das Empresas de Cartão de Crédito e Serviços) 26
  •  Highlights of Magazine Luiza and Brazilian Market – 1H12 Institutional Presentation • Overview of the Brazilian Market • Magazine Luiza 27
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 28
  • Besides the retail segment, Magazine Luiza has two JV’s – partners on financial and insurance sectors – and the Luiza Consortium Controllers Free Float 67.9% 32.1% • Retail chain with focus on durable goods, only one brand (Lojas do Baú and Lojas Maia - corporate integration concluded 50% 50% 100%• Joint Venture with Itaú Unibanco • Joint Venture with Cardif• Financial institution established established in 2005 • Established in 1992 in 2001 • Products: • Household appliances, furniture,• Products: o Extended warranty services and vehicle consortium o Co-branded card (Mastercard) (The other insurances belong to the operational agreement • 55 thousand actives clients o Direct Credit(CDC) o Consigned loan between Magazine Luiza and • 220 thousand goods delivered o Personal loan Cardif) 29
  • Currently, 32% of the company’s stocks are in the free float, the remaining belong directly to the family and to the LTD holding Pre – IPO After– IPO 12.4% 32.1% 75,4% 87.9% 87.6% 150,000,000 stocks 186,494,467 stocksControllers ControllersCapital Int’l Inc. (Private Equity Fund) Free Float (includes Capital Int’l Inc.) 30
  • Experienced executives with strong corporate governance Executives with a wide experience in the Brazilian retail industry Corporate Governance Years with the Experience Name / Post Company (years) Luiza Helena Trajano >40 >40 President  Controlling shareholders with more than 50 years in the Marcelo Silva 3 34 industry CEO Roberto Bellissimo  Board of Directors with independent members since 2005 >10 >10 CFO  Audit Committee led by an independent member Fabrício Garcia >10 >10 Chief Commercial Officer  Financial statements audited for the past 10 years by a “Big Frederico Trajano Four” firm >10 >10 Chief Sales and Marketing Officer Isabel Bonfim  Senior Management: retention plan (stock options) Chief Managemente and Control >30 >30 Officer  Fiscal council established in 2012 Marcelo Barp (1) 4 9 Luizacred Luis Felipe (1) 6 >20 LuizasegNote 1. Years of experience in the financial services industry 31
  • Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios18 90016 728 731 70014 604 Madol, Killar12 444 455 500 Rede Wanel 39110 Lojas Líder 351 346 Baú: +104 stores 253 300 Nordeste: 8 174 +136 stores 7,1 111 127 São Paulo (Capital): 6 Santa Catarina: +46 stores 5,3 100 Rio Grande Sul +100 stores 3,9 Campinas: 3,8 4 Interior de SP: +20 stores +51 stores 3,2 +5 stores 2,2 2,6 -100 1,9 2 1,4 0,6 0,7 0,9 0 -300 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12 Gross Revenue – Retail Operation (R$ Billion) Number of Stores 32
  • Broad geographic footprint including in the Northeast of Brazil Geographic Footprint Gross Revenue evolution – Northeast R$ MM 731 stores 84% 597 Cabedelo Simões Filho 490,7 501,4 Ribeirão Preto Contagem 31% Ibiporã Loureira Navegantes % of stores per region (1H2012) 323,8 328 Caxias South 30% 24% Southeast 48% 20% 2% Northeast Mid-West 1H10 2H10 1H11 2H11 1H12States with stores Distribuition Center(8) 33
  • Ranked the 23th most valuable brand in Brazil Ranking published by Istoé Dinheiro Magazine – May 2012 1. Petrobras First 5 2. Bradesco 3. Itaú most valuable 4. SKOL 5. Banco do Brasil 6. Natura 11. Vivo 16. OI 7. Brahma 12. Perdigão 17. Casas Bahia 6 – 20 most valuable 8. Vale 13. Lojas Americanas 18. Totvs 9. Sadia 14. Bohemia 19. TAM 10. Antartica 15. Ipiranga 20. Cielo 21. Multiplus 26. Net 31. Iguatemi 22. Porto Seguro 27. Extra 32. Odontoprev 21 – 35 most valuable 23. Magazine Luiza 28. BM&F 33. Pão de Açúcar 24. GOL 29. Banrisul 34. União 25. Redecard 30. Hering 35. Embratel 36. Anhanguera 41. Durafloor 46. Havaianas 37. Amil 42. Arezzo 47. Deca 38. Lojas Renner 48. PDG 36 – 50 most valuable brands 39. MRV 43. Gerdau 44. Drogasil 49. Localiza 40. Marisa 45. Swift 50. Riachuelo Magazine Luiza brands values USD 479 MM1) Source: Istoé Dinheiro, Milward Brown/Brandanalytics 34
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 35
  • Strong corporate culture assisted by a sales model that is supported by enthusiastic teams High influence of service and credit on 15 years among the Best Place to Work purchasing decision Offered Brands Others Punctuality of 7.1% Delivery 4.5%Product Variety 3.2% 8.4% Price 39.8%  Luiza Consortium: for the last 2 years among the best companies to work (small and medium sized companies)  Communication: Luiza TV, Radio Luiza, Town Halls 37.0%  Transparency: availability of management information and frequently alignment Service/Credit  Empowerment: sales staff and managers have flexibility to negotiate sales conditions within a range  Compensation: based on gross profit, financial margin and sales 36
  • Supported by robust CRM tools, the exceptional relationship management drives customers loyalty • Base: 30 million clients – 30% actives CRM Tool Golden Client  CRM available to all stores: telemarketing tool based  Unique program in the sector: recognition and in propensity to buy benefits to the most loyal clients  Boomerang: telemarketing incentive campaign  Over 1 million clients: 5% of total, 20% of total income  Telemarketing during sales downtime – average of 500  Golden clients usually spend 50% more than regular thousand calls/month¹ ones  Return average: 5%  Golden day: stores opened exclusively for program clients with memorable experiences and purchasing  Telemarketing represents 30% of total income in some differentials stores  Buyback and loyalty increase1) Data referrers to 2012 37
  • Magazine Luiza clients are mainly from “C, D and E classes” Millions of clients – South, Southeast and Mid-West1 22.2 10% +20% 18.9 10% 16.0 14% 13.2 10.8 14% 86% 90% 90% 14% 86% 86% 2007 2008 2009 2010 2011 AB Classes CDE Classes CAGR1) Do not include Lojas do Baú and Lojas Maia database 38
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 39
  • Magazine Luiza is the only truly multi-channel retailer in Brazil  Free-standing stores or in malls  Small or mid-sized cities  Physical showroom and in-store  Direct delivery stock  No physical showroom or stock  Size:  Size: 150 m2 • Free-standing 700m²  Sales per m2 is double • Shopping 1.000m² conventional store624 stores in 16 states 106 stores in 4 states  Same product mix as the Internet  30,000 total SKU s  Dedicates sales team  More than 8 million unique visitors  Constant growth Trained Teams 82 million page views 40
  • Gross revenue growth for conventional and virtual stores was 29% annual rate over the last 4 years ...Gross Revenue (R$ Bn) 6.3 0.3 +29% 4.8 0.2 3.5 3,4 0.2 0.2 3.0 0.2 6.0 4.5 3.3 3.2 2.8 2008 2009 2010 2011 1H2012 Virtual Stores Convencional Stores CAGR 41
  • ... and the e-commerce is growing above market average, influenced by the increase of products mix on the websiteGross Revenue (R$ MM) 821.1 +51% 568.7 512.0 324.9 239.5 157.6 2007 2008 2009 2010 2011 1H2012 CAGR 42
  • Magazine Luiza’s growth was significantly greater than the market growth in general, turning into relevant market-share gains CAGR 2002-2011 Market x Magazine Luiza 28% 19% 12% 14% 4% GDP Retail Furniture & Home Appliance Furniture & Home Appliance NE Magazine Luiza ¹ Same-store Sales Magazine Luiza vs. IPCA 35,0 3,0 2,4 30,0 2,2 2,5 2,1 25,0 2,0 20,0 1,4 1,5 1,1 1,2 1,1 1,5 15,0 33,0 31,1 30,0 24,3 25,6 1,0 10,0 1,0 20,0 14,4 15,9 13,0 0,5 5,0 0,5 10,1 0,0 0,0 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Same-store sales Inflation1) Gross Revenue CAGR of retail operations, do not include Luizacred, Luizaseg and Consortium revenues 43
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 44
  • Pioneer in the financial services through Luizacred ... Comments50% of sales are made through Luizacred • Financial institution established in 2001, resulted from the partnership between Magazine Luiza and Unibanco (nowadays, 25% 22% 22% 25% Itaú-Unibanco) 27% 30% • Consumer finance operations available in every Magazine Luiza store 25% 27% 26% • Luizacred finances approximately 50% of 24% 30% 1% 31% Magazine Luiza’s total sales • Credit card base: 4.2 million (2Q12) 19% 34% • Products: co-branded card (Mastercard), 39% 34% 23% direct credit(CDC), loans and other 49% financial services 30% 17% • Another important tool to enhance 13% 11% 16% customer loyalty • Itaú-Unibanco: responsible for credit- 2007 2008 2009 2010 2011 1H2012 scoring and funding CDC Luiza Card Third-party Card Cash Sales / Down Payment 45
  • … and Luizaseg Joint Ventures Comments Products • Joint venture with Cardif since 2005; operates in the massif insurance segment and features on the extended warranty distribution • Luizaseg has a complete structure toward client support, with staff in stores, customer service department, exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances • Over 3 thousand accredited workplaces distributed all over the country • Featured among the best retail’s insurers • In 2011, 4.8 million new issued insurances. Equivalent to R$ 220 million in prizes; 15% growth over the year before • R$ 5.3 million distributed in prizes • Over 2 million extended warranty insurances • Operation with high cash flow generation and low damage Luizaseg: significant growth in insurance product sales 46
  • … and Luiza Consortium Products Comments • Through the letter of credit system, consortium is based on the union between natural or artificial person, aiming to participate in a common activity or to pool their resources for achieving a common goal • Luiza Consortium distributes furniture, household appliance, vehicle and service consortium • Available in every Magazine Luiza’s store • Over 85 thousand active clients • More than 60 authorized commercial representatives • Over 220 thousand goods delivered 47
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 48
  • Focus on the best product mix...Mix% of sales, 1H2012 Others 10% 31% Household Furniture & Kitchen Appliances 15% appliance 20% Tecnology 24% Sound & Image 49
  • ... to support changes in consumer behavior (1/4) Television Television South, Southeast and Mid-west Northeast Units sold (%) Units sold (%) 7% 5% 67% 91% 93% 95% 33% 9% 2007 2011 2007 2011 R$ 783 R$ 1,406 R$ 636 R$ 1,007 Flat TV 1 CRT Weighed average ticket1) LCD, Plasma, LED, 3D 50
  • ... to support changes in consumer behavior (2/4) Computer Computer South, Southeast and Mid-west NortheastUnits sold (%) Units sold (%) 30% 47% 84% 88% 70% 53% 16% 12% 2007 2011 2007 2011 R$ 1,364 R$ 1,124 R$ 909 R$ 818 Desktop Notebook Weighed average ticket 51
  • ... to support changes in consumer behavior (3/4) Washing Machine Washing Machine South, Southeast and Mid-west NortheastUnits sold (%) Units sold (%) 43% 48% 52% 73% 57% 52% 48% 27% 2007 2011 2007 2011 R$ 701 R$ 884 R$ 581 R$ 586 Washing Machine “Tanquinho” Weighed average ticket 52
  • ... to support changes in consumer behavior (4/4) Refrigerator Refrigerator South, Southeast and Mid-west NortheastUnits sold (%) Units sold (%) 20% 40% 35% 64% 80% 60% 65% 36% 2007 2011 2007 2011 R$ 1,323 R$ 1,501 R$ 1,139 R$ 1,142 Without freezer With freezer Weighed average ticket 53
  • Evolution of plans and interest rates have also supported those changes 2007 2011 Interest Rate 5.50% 2.99% Main changes • Interest rates became more attractive Form 0+15 through Luiza Card financing Minimum Wage (R$) 380.00 545.00 • Purchase power increased while risk decreased Class C Minimum Wage (R$) 1,140 1,635 TV LCD 32" Notebook Washing Machine Year 2007 2011 2007 2011 2007 2011 Price (R$) 2,947 1,187 2,002 1,246 1,159 1,046 Installments (R$) 293.00 99.36 199.45 104.30 115.47 87.56 Installment/Class C 25.7% 6.1% 17.5% 6.4% 10.1% 5.4% Minimum Wage1) Analysis: March to June 2007; April 2011Source: Flyer Magazine Luiza 54
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 55
  • Magazine Você: leading our multi-channel strategy to the highest degree Direct Sales E-commerce in Brazil Social Networks•Brazil: fourth-largest market • 23 million buyers • 85% claim to be in a social – Revenue (2010): R$ 26 bn • 46.5% from “C class" network•2.74 million direct sellers • Revenue (2011): R$ 20 bn – Facebook: 30 MM users –Orkut : 29MM users•The user creates its own store with up to 60 products from Magazine Luiza website (magazineluiza.com.br) andshare the products with its friendsthrough Facebook and Orkut• Comission goes from 2.5% to 4.5% per product sold in the store• No initial investment is required•Magazine Luiza is responsible for logistics and paymentSource: Ibope, Ebit, Forrester research, Magazine Luiza 56
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple opportunities Company of growth Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 57
  • Excellent organic growth potential North 30  Multi-channel model with broad geographic reach gives Magazine Luiza Northeast advantage to spot new stores opportunities 56  Around 240 priority cities for new Magazine Luiza Mid-West stores 18  240 priority cities for new Magazine Luiza stores − 30% will be opened Southeast with the Virtual Store Concept 109 South 28Source: IBGE, Company 58
  • … and multiples opportunities to grow all over the country Relevant Growth of Virtual Channels • Amount of virtual store and internet sales above market Increase Share of Financial growth Products • Over 4 million clients have a Luiza credit card – fidelity potential • Penetration of Luizacred in Lojas Maia sales Industry ConsolidationOrganic Growth • M&A potential with high• Increase presence where industry fragmentation – currently operating, more than 50% of the especially the northeast industry is in the hands of and Greater São Paulo small companies• 33% of the stores have not reached their maturity• Remodel to increase same store sales 59
  • Growing for more than 50 years in the Brazilian Retail Market Financial Information – 2Q12 Multiple growth Company opportunities Strong corporate culture,First social e-commerce in Brazil Magazine Luiza focus on valuing people and customers Focus on the best Multi-channel model product mix under the same brand Pioneer in the retail financial service 60
  •  Key Financial Indicators - Historical Evolution Integration Process – Lojas do Baú and Lojas Maia Latest release – 2Q12 61
  • Net Income Evolution (R$ million) 1,928 18 1,805 1,802 161 18 21 1,596 1,603 158 167 16 1,473 18 108 1,416 17 135 1,197 16 116 117 1,073 15 14 100 941 95 14 93 1.780 1.659 1.643 1.501 1.477 1.309 1.368 1.105 987 8491Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Retail LuizaCred LuizaSeg Consortium Eliminations Inter-Company 62
  • Gross Profit Evolution (R$ million) 36.0% 34.3% 34.5% 32.6% 33.2% 32.8% 32.7% 34.7% 31.8% 33.5% 668 17 603 574 135 19 521 524 17 15 470 483 17 146 132 88 15 15 413 108 94 94 368 14 339 13 84 13 81 81 549 451 457 469 403 430 388 339 297 261 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Retail LuizaCred LuizaSeg Consortium Eliminations Inter-Company Gross Margin 63
  • Adjusted EBITDA Evolution (R$ million) 6.4% 6.6% 7.9% 5.9% 5.6% 4.5% 5.9% 5.5% 2.4% 4,1% 107 95 94 2 2 94 2 2 2 9 79 26 74 70 27 2 67 9 2 61 3 2 5 13 9 43 2 10 2 111 92 71 77 76 73 62 64 60 54 (5) (8) (6) (8) (9) (8) (8) (9) (12) (8) (8) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Retail LuizaCred LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin 64
  • Adjusted Net Profit Evolution (R$ million) 1.0% 1.5% 1.9% 1.3% 0.6% 0.1% 1.2% 1.4% -0.6% 0.5% 33.8 2,1 27.7 2,0 23.1 13,5 1,6 20.5 15.9 1,7 14.9 14.8 1,6 5,2 16,3 1,5 26,7 9.3 2,5 7,9 4,6 8.8 1,9 1,3 19,0 1,8 13,2 5,9 8,7 6,2 9,5 6,0 5,2 2,2 1,0 2,6 (1,6) (10,3) (8,3) -15.4 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12Retail LuizaCred LuizaSeg Consortium Eliminations Inter-Company Net Margin 65
  •  Key Financial Indicator - Historical Evolution Integration Process – Lojas do Baú and Lojas Maia Latest Release – 2Q12 66
  • Integration Process – Lojas do Baú 3Q11 4Q11 1Q12 2Q12Lojas do Baú integration process (7 months)Acquisition of 121¹ stores from Lojas do Baú July 29, 2011 - R$80,3 millionDocumentation to start operating Most of the closed stores were closed during this periodVirtual Stores Virtual stores opening 35 stores (Paraná) Stores renovation Complete stores renovation Systemic and corporate integration End of dec/2011Conventional Stores Conventional stores opening 69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais) Stores renovation Uniforms and storefront changes Systemic integration End of feb/2012Integration benefits (synergy)1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store 67
  • Integration Process – Lojas Maia 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13Lojas Maia integration processBrand change – Magazine Luiza Metropolitan area of Recife 14 stores (Oct) Metropolitan area of Maceió 9 stores (Dec) Metropolitan area of Fortaleza 15 stores (Dec) Other RegionsCorporate integration Apr/2012Stores systemic integration Conclusion Oct/2012Integration benefits (synergy)1) The front end integration had been carried in 2010, which considers: sales force training, product range mix, financial services and small stores renovation 68
  •  Key Financial Indicator - Historical Evolution Integration Process – Lojas do Baú and Lojas Maia Latest Release – 2Q12 69
  •  2T12 Highlights Financial Performance Operational Performance Expectations for the Next Quarters 70
  • Highlights of 2Q12 Initiatives and Achievements Impacts on Financial Results Significant sales growth versus 2Q11  Investments in infrastructure and expansion • Total sales growth of 21.6% • Total investments: R$35.1 million • Same store sales growth of 13.0% o 1 new conventional store inaugurated in the o E-commerce growth of 45.0% Northeast o Physical stores sales growth of 9.0% o Stores remodeling o Investments in IT and Logistics (concluded the Sustainable growth expansion of Louveira distribution center) • Consolidated gross margin evolution – 33.5% over net revenues  Extraordinary expenses - integration: o Increased by 0.7pp over 2Q11 • Totaled only R$3.3 million (as expected) o Increased by 1.7pp over 1Q12  Luizacred results • Financial discipline ( limited sales with no interest) • Improved overdue indicators • Conservative credit approval rate • Maintenance of conservative approach Continuation of Lojas Maia integration process o Reduction of credit approval rate • Corporate merger – April, 30th o Substantial provisions for loan losses • Systems integration – began in 2Q12 • Participation in the rationalization of costs and expenses program Reduction and Rationalization of Costs and Expenses • Rationalization of costs and expenses program –  Magazine Luiza results Company’s main focus in 2012 • Results in line with budget, despite the slowdown in • 0.6pp reduction on SG&A expenses of retail segment the economy activity o 24.7% of net revenues versus 25.3% in 2Q11 o Sustainable growth o Program of rationalization of costs and expenses • Positive results – retail and consolidated business 71
  •  2Q12 Highlights Financial Performance Operational Performance Expectations for the Next Quarters 72
  • Gross Revenues (R$ billion) Retail Comments 25.0% 19.7% 22.3% • 19.7% growth in the retail segment versus 2Q11 and 13.0% same store sales growth, driven by: — Stores maturation 2.0 — Increased productivity in renovated stores 1.6 — Accelerated growth in the Northeast 3.9 3.2 (R$301 million – 15.4% of total retail sales)1.6 2.0 • 22.3% growth in the retail segment versus 1H111Q11 2Q11 1H11 1Q12 2Q12 1H12 • 21.6% growth in the consolidated gross revenues versus 2Q11: Consolidated — 44.5% growth in revenues from the consumer financing segment (chiefly 25.7% 21.6% 23.6% influenced by the increase in service revenues, direct credit to consumer and 2.1 personal loans at Luizacred) 1.7 4.3 • Increase in store count – from 613 in the end of 3.4 2Q11 to 731 stores in the end of 2Q121.7 2.11,11Q11 2Q11 1H11 1Q12 2Q12 1H12% of growth over the same quarter of 2011 % of growth over the same half of 2011 73
  • Gross Revenues – Internet (R$ million) Internet Comments 42.8% 45.0% 43.9% • Internet sales climbed 45.0% in 2Q12 versus 2Q11 and 43.9% versus 1H11 influenced by: — Increase in product mix — Innovations in content 263.5 — Multi-channel approach: infrastructure shared with other channels 181.7 512.0 355.7 248.5174.01Q11 2Q11 1H11 1Q12 2Q12 1H12 % of growth over the same quarter of 2011 % of growth over the same half of 2011 74
  • Net Revenues and Gross Profit (R$ billion)Net Revenues - Consolidated Comments 27.5% 22.3% 24.9% • Strong growth due to advancement of gross revenues (retail segment and consumer finance) 1.8 1.5 • Net revenues growth outpaced gross revenues 3.6 2.9 growth – higher volume of products subject to 1.8 tax substitution (booked under COGS)1.41Q11 2Q11 1H11 1Q12 2Q12 1H12 Gross Profit - Consolidated Comments 22.4% 25.0% 23.7% • Improve of 0.7% of gross margin in 2Q12 versus 2Q11 and 1.7% versus 1Q12 due to: — Increase in gross margin from the consumer finance (Luizacred) 0.6 0.5 1.2 — Slight decrease in retail segment margin 1.0 (higher share of Internet sales, integration of0.5 0.6 Lojas Maia and AVP adjustments)1Q11 2Q11 1H11 1Q12 2Q12 1H12 • Gross margin in the Northeast: from 21.2% in33.2% 32.8% 33.0% 31.8% 33.5% 32.7% 1Q12 to 25.0% in 2Q12% of growth over the same quarter of 2011 % of growth over the same half of 2011 Gross Margin (%) 75
  • Operating Expenses – Consolidated (R$ million) Operating Expenses (R$ MM) Comments • Reduction of 0.5% on Sales, General and-26.0% -3.6% 1.7% -27.9% -25.5% -4.9% 0.9% -29.5% Administrative Expenses versus 2Q11: — Adjustments made to stores’ 88.4 16.1 531.3 expenses in order to increase productivity 459.0 — Result of the integration of the 52.7 24.3 offices of Baú stores and of 410.7382.4 rationalization of expenses • Provisions for Loan Losses: — Substantial provisions (Luizacred conservative approach) • Other Operating Expenses (Revenues): — See next slideSG&A Provisions Other Total SG&A Provisions Other Total Oper. Oper. Expenses Expenses (Revenues) (Revenues) 2Q11 2Q12 % Net Revenue 76
  • Other Operating Expenses (Revenues) – Consolidated Other Operating Expenses (Revenues) (R$ MM) Comments • Other Operating Expenses (Revenues) : — Deferred revenues: 5,5 24,3 17,5 o Reduction in the booking of 12,4 deferred revenues (straight-line method) o In 2Q12, other deferred revenues of R$18.0 million (R$10.5 millionBooking of Integration Personal Introduction Others Total from the retail segment and R$7.5 Deferred Expenses Loans of chips in million from Luizacred) – renewalRevenues Luiza Cards of the Agreement with Cardif — Non-recurring expenses with the 23,8 integration of the store chains of 3.3 4.1 5.4 R$3.3 million 3.2 16,1 — Change in the booking of personal loans, which are now recognized under financial intermediation result, thereby reducing revenues from profit sharing from R$17.5Booking of Integration Personal Introduction Others Total million to R$4.1 million Deferred Expenses Loans of chips inRevenues Luiza Cards — Expenses with the introduction of chips in Luiza cards totaled R$5.4 2Q11 2Q12 million in 2Q12 77
  • EBITDA and Adjusted EBITDA (R$ million) EBITDA Comments • EBITDA impacted by: 71.9 — Sales and gross profit growth 155.9 — Non-recurring costs, revenues and expenses84.0 71.9 81.2 — Higher provisions for loan losses 9.31Q11 2Q11 1H11 1Q12 2Q12 1H125.9% 4.9% 5.4% 0.5% 4.0% 2.3% Adjusted EBITDA 2Q11 2Q12 4.9% 4.5% 4.0% 4.1% 71,9 66,5 0.0 0.0 5.4 71,9 7.5 3.3 8.8 74,0Current Extraord. Extraord. Deferred Adjusted Current Extraord. Extraord. Deferred Adjusted Costs Expenses Revenues EBITDA Costs Expenses Revenues EBITDA Margin EBITDA (%) 78
  • Financial Expenses – Consolidated (R$ million) Financial Expenses (R$ MM) Comments • Financial Results: -2.9% -2.5% — Decline from 2.9% of net revenue in 2Q11 to 2.5% in 2Q12: 45.4 o Positively impacted by the 42.4 reduction in CDI rate o Partially offset by the increase in working capital requirements o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations o Change in the appropriation of the costs of prepayment of receivables on third-party cards, which is now recognized on the date of the discount operation 2Q11 2Q12 Financial Expenses % Net Revenue 79
  • Net Income and Adjusted Net Income (R$ million) Net Income Comments 4.6 21.9 • Net Income impacted by: 12.3 16.9 — Non-recurring costs, revenues and 18.8 expenses — Change in the appropriation of the costs of 40.7 prepayment of receivables — Changes in accounting practices in the financial result 1Q11 2Q11 1H11 1Q12 2Q12 1H12 — Non-recurring tax credits 0.9% 0.3% 0.6% -2.3% 1.2% -0.5% Adjusted Net Income 0.3% 2Q11 0.1% 1.2% 2Q12 0.5% 4,6 4.3 20,7 2,1 10.6 21,9 5.4 1,0 0.0 9,5 0.0 1.8Net Income Extraord. Extraord. Extraord. Tax Credits Adjusted Net Extraord. Extraord. Extraord. Tax Credits Adjusted Ops. Fin. Taxes Income Income Ops. Fin. Taxes Income Results Results Results Results Net Margin (%) 80
  • Working Capital (R$ millions) 1.006,8 889,9 748,3 6,4% 690,9 536,8 5,8% 467,7 559,7 344,9 4,8% 441,0 5,8% 4,7% 318,6 422,2 470,0 5,6% 346,0 307,3 241,1 3,6% 4,8% 4,0% 5,3% Jun-11 Sep- Dec-11 Mar-12 Jun-12 6.751,3 11 7.228,8 7.601,3 8.036,6 8.413,3Accounts receivable Working CapitalGross Revenue of last 12 months (R$ MM) % over Gross Revenue of last 12 months 81
  • Investments (R$ millions) Investments Comments 97.6 • Stores remodeling • New stores (inaugurated and to be) – 1 25,1 new conventional store inaugurated in the Northeast • Other investments include the 50.2 37,8 conclusion of expansion of the Louveira 7,5 43.2 distribution center and other40.0 investments in logistics, which totaled 6,5 35.17,5 R$9.6 million in 2Q12 19,3 5.8 11,0 5,115,1 8,1 7.3 3,9 11.8 28,915.4 18,4 18,0 11,51.92Q11 3Q11 4Q11 1Q12 2Q12New Stores Store Refit Infrastructure Others 82
  • Net Debt (R$ millions) 705,5 609,4 20% 12% 420,0 385,1 18% 19% 88% 80% 129,1 81% 82% 40% 60% Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 0,4x 1,1x 1,2x 2,0x 2,2xNet Debt – Short Term Net Debt / adjusted EBITDANet Debt – Long Term 83
  •  2Q12 Highlights Financial Performance Operational Performance Expectations for the Next Quarters 84
  • Operational Performance – Stores Number of Stores (unit) Same Store Sales Growth (%) 39.4% + 118 stores 730 731 14.4% 19.7% 728 11.3% 684 1 1 1 9.0% 13.0% 1 103 106 106613 69 1 2Q11 2Q12 69 Same Stores Sale Growth - Physical Stores Same Store Sales Growth (includes e-commerce) Total Retail Growth 614 624 623 624543 Average Age – Stores Up to 1 year 114 158 1 to 2 years 4532Q11 3Q11 4Q11 1Q12 2Q12 More than 3 years 6Virtual Stores Conventional Stores 2 to 3 years 85
  • Operational Performance – Luizacred Financed Mix Sales (%) Luizacred’s Revenues (R$ MM) 21.5% 2,085 100% 100% 45 1,716 293 23% 28% 71 150 30% 32% 1.297 923 11% 18% 37% 22% 572 450 2Q11 2Q12 2Q11 2Q12Cash Sales/Down Payment CDC Personal Loan Luiza Card - Outside Luiza StoresThird Party Credit Card Luiza Card CDC Luiza Card - Inside Luiza Stores 86
  • Operational Performance – Portfolio’s compositionLuiza Card – Total Credit Card Base (MM) Portfolio (R$ MM) +29% 3,442 126 4,4 4,3 4,2 4,2 4,0 661 2,668 376 2,655 2,2922Q11 3Q11 4Q11 1Q12 2Q12 2Q11 2Q12 Personal Loans CDC Credit card 87
  • Luizacred Portfolio (% of portfolio) Portfolio Overdue Comments20% 19.2% • Differently from the market in general, 17.7% 17.4% the portfolio’s overdue indicators 16.8% 15.9% continue to improve both in relation to the previous year and the previous 13.6% quarter, due to: 12.5% 12.4% 12.7% 11.6% — Conservative approach in the10% credit approval rate — Constant control of delinquency 6.7% per store 4.4% 4.7% 4.3% 4.1% • Coverage index increased in 2Q12 • Provisions should be proportionally lower in 2H12 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 112% 111% 114% 111% 117% Overdue 15-90 days Overdue above 90 days Total overdue Coverage Ratio(%) 88
  • ML’s versus Brazil’s Default Rate Magazine Luiza’s Default Rates 26 24,5% 23 22,5% 22,0% 20,9% 21,7% 19,2% 20 17,7% 16,8% 17,4% 17 15,9% 14 13,3% 12,8% 12,9% 12,5% 13,6% 12,4% 12,7% 12,5% 12,3% 11,6% 11,2% 11 9,7% 9,4% 9,1% 8,4% 8 6,7% 5 4,1% 4,4% 4,7% 4,3% 2 jan/10 apr/10 jul/10 oct/10 jan/11 apr/11 jul/11 oct/11 jan/12 apr/12 Magazine Luiza’s x Brazil’s Default Rates: 15 to 90 days 11,2% 11 9,7% 9,4% 9,1% 8,4% 8 6,7% 6,7% 6,8% 6,4% 6,0% 6,4% 5,9% 5,5% 5,3% 5,3% 6,3% 5 4,7% 4,3% 4,1% 4,4% 2 jan/10 apr/10 jul/10 oct/10 jan/11 apr/11 jul/11 oct/11 jan/12 apr/12 ML total ML above 90 days Brazil 15 to 90 days¹ ML 15 to 90 daysFonte: BCB 89
  •  2Q12 Highlights Financial Performance Operational Performance Expectations for the Next Quarters 90
  • Expectations for the next quarters1 3 Sales Growth Investments Consistent sales growth:  Investments in technology, logistics and store • Maturation of new stores remodeling, which includes changing the Lojas Maia • Northeast stores growth brand to Magazine Luiza • Internet  The Company plans the organic opening of 17 more • Better performance by the Brazilian economy, stores in 2H12, 10 of them in the Northeast especially in 4Q122 4 Lojas Maia Integration Process Results Integration of Lojas Maia’s systems – conclusion:  Continuality of cost and expense reduction and oct/12 rationalization program Fully integrated management – 2013  Capture of synergies from the integration of Lojas do • Dilution of administrative and logistics Baú and Lojas Maia expenses  Better productivity indicators and positive results in • Benefits to working capital and price 2012 management – increasing the gross margin 91
  • Investor Relations ri@magazineluiza.com.br www.magazineluiza.com.br/irLegal DisclaimerAny statement made in this presentation referring to the Company’s business outlook. projections and financial and operating goals representbeliefs. expectations about the future of the business. as well as assumptions of Magazine Luiza’s management and are solely based oninformation currently available to the Company. Future considerations are not a guarantee of performance. These involve risks. uncertainties andassumptions since they refer to forward-looking events and. therefore depend on circumstances that may not occur. These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects. market conditions. and performance of theBrazilian economy. the sector and international markets and hence are subject to change without prior notice. Thus. it is important to understandthat such changes in conditions. as well as other operating factors may affect the Company’s future results and lead to outcomes that may bematerially different from those expressed in such future considerations. This presentation also includes accounting data and non-accounting datasuch as operating. pro forma financial data and projections based on the Management’s expectations. Non-accounting data has not beenreviewed by the Company’s independent auditors. 92
  • Non Deal Road Show – NY and Mid-AtlanticOctober, 2012 93