2. Disclaimer
The information contained here may include forward-looking information and reflects the executive office’s
current perception and prospects for the macroeconomic environment, the industry situation, the Company's
performance and financial results. Any statements, expectations, capacities, plans and projections
contained here which do not describe historical facts, such as information about the dividend payment
statement, the future course of operations, the introduction of relevant financial strategies, the investment
program and the factors or trends affecting the financial condition, liquidity or the operating results are
considered forward-looking information as defined by the “U.S. Securities Litigation Reform Act” of 1995 and
involve a number of risks and uncertainties. These results are not guaranteed to materialize. These
statements are based on several factors and expectations, including the economic and market conditions,
level of competition in the industry and operating factors. Any changes in these expectations and factors
may lead to real results materially different from the current expectations.
The consolidated financial information of Arezzo Indústria e Comércio S/A – Arezzo&Co presented here
complies with the International Financial Reporting Standards – IFRS, issued by the International
Accounting Standards Board – IASB, based on audited financial information. The non-financial information,
as well as other operating information, was not audited by the independent auditors
2
4. 1
Platform of brands of reference
Arezzo&Co is the leading company in the footwear and
accessories sector through its platform of Top of Mind brands
4
5. 1
.1 Company overview¹
Arezzo&Co is the reference in the Brazilian retail sector and has
a unique positioning combining growth with high cash
generation
Leading company in Controlling Development of Asset light: high Strong cash
the footwear and shareholders are the collections with operational efficiency generation and high
accessories sector reference in the sector efficient supply chain growth
with presence in all
Brazilian states
6.9 million pairs of shoes(1) Net revenues CAGR: 34%
~11,500 models created 84% outsourced (07- 2Q11(1))
38 years of experience in per year production
459 thousand handbags(1)
the sector
Net income CAGR: 45%
Lead time of 40 days ROIC of 48% in 2Q11 (07- 2Q11(1))
c.1,900 points of sale
Wide recognition
7 to 9 launches per year 1,755 employees Increased operating
11.1% market share(2)
leverage
Notes:
1. As of June 2011
2. Refers to the Brazilian women footwear market (source: Euromonitor, IBGE and Company estimates) . Estimated for 2010. 5
6. 1
.2 Successful track record of
entrepreneurship
The right changes at the right time accelerated the Company's
development
Foundation and structuring Industrial Era Retail Era Corporate Era Industry Reference
70’s 80’s 90’s 00’s 2011…
Founded in 1972 Consolidation of Focus on retail Specific brands for each
Focused on brand and industrial business model R&D and production segment
product located in Minas Gerais outsourcing on Vale dos Sinos - Expansion of distribution
1.5 mm pairs per year RS channels
and 2,000 employees Franchises expansion Efficient supply chain
Launch of new
IPO
brands
Opening of the first Opening of the flagship
shoe factory store at Oscar Freire
+ Merger
First store
R$196.0 mn in
Schutz launch
primary offering
Launch of the first Commercial operations
design with centralized in São Paulo
national success
Fast Fashion Strategic Partnership
concept (November 2007)
7. .3 Shareholder structure1
1
Post-offering
Birman family Management Others
53.6% 11.8% 0.4% 34.3%
(1) Arezzo&Co capital stock is composed of 88,542,410 common shares, all nominative, book-entry shares with no par value.
Shareholder structure as of August, 2011.
7
8. 1
.4 Culture & Management:
Arezzo towards 2154
Meritocratic culture based on best practices makes Arezzo a
company prepared to reach 2154
Code of Ethics
“Our behavior is a positive example for all activities and internal or external interactions; and we treat everyone with respect, equality and cooperation”
“We properly protect the confidentiality of our information, documents, trademarks, intellectual property and cherish the proper use of our assets”
“The Arezzo Group’s interests prevail over personal or third party interests and guide any decision-making in the company”
“We act with fairness in our relationships with suppliers, franchisees and customers, eliminating any situation that may generate expectations of bias in
the context of receipt of gifts and invitations”
“Our suppliers are evaluated and contracted based on clear criteria and in line with our ethical standards and conduct”
“We are committed to ensure a responsible environmental stewardship by ensuring and establishing high standards for the purposes of protecting the
environment and conserving its resources”
“We have a socially responsible conduct and do not use any resources for unethical or illegal purposes, or that violates local or international laws”
“It is our duty to report any breach of the Code of Ethics irrespective of the public involved”
2010
2154
8
9. 1
.5 Strong platform of brands
Strong platform of brands, aimed at specific target markets, enables the
Company to capture growth from different income segments
Foundation 1972 1995 2008 2009
Trendy Fashion Pop Design
Brands New Up to date Flat shoes Exclusivity
profile Easy to wear Bold Affordable Identity
Eclectic Provocative Colorful Seduction
Female
target 16 - 60 years old 18 - 40 years old 12 - 60 years old 20 - 45 years old
market
O F MB EX O F MB EX O MB O MB EX
Distribution
POS 1
channel1
14 268 775 - 10 1 1,124 - 6 499 1 18 -
%
gross 13% 74% 12% 1% 22% 1% 70% 8% 100% 13% 21% 66%
rev.2
Retail price
R$ 170.00/pair R$ 270.00/pair R$ 99.00/pair R$ 900.00/pair
point
Sales R$ 10 million
R$ 525 million R$ 194 million R$ 7.5 million
Volume3
% Gross 1.3%
66.9% 24.8% 1.0%
Revenues4
Notes:
1. Points of sales (2Q11); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports
2. % gross revenues (2010)
3. Last twelve months (2Q11) gross revenues, does not include other revenues and exports (not generated by the 4 brands) except for Alexandre Birman brand, which sales volume indicated above
already includes the exports of this brand.
1. % total gross revenues (last twelve months -2Q11) 9
10. 1
.6 Multiple distribution channels
Flexible platform through three distribution channels with
differentiated strategies, maximizing the Company's profitability
Gross Revenues per Channel
269 franchises in More than 940 31 owned stores Broad distribution
more than 140 cities and 1,612 being 5 Flagship in every Brazilian
cities multi-brands stores state
Gross Revenue Breakdown (R$ mn)¹
50% 27% 16% 7% 100%
54²
125
213
785
394
Franchises Multi-brands Owned stores Others Total
Notes:
1. Last twelve months (2Q11) gross revenues
2. Considers external market and other revenues in the domestic market 10
12. 2
Unique business model in Brazil
Customer focus: we are at the forefront of
Brazilian women fashion and design
1
ABILITY TO
2
SOLID MARKETING
3
EFFICIENT
4
NATIONWIDE
5
SEASONED
MANAGEMENT
DISTRIBUTION
INNOVATE AND SUPPLY CHAIN TEAM WITH
STRATEGY
COMMUNICATION PERFORMANCE
PROGRAM BASED INCENTIVES
Communication &
R&D Sourcing & Logistics Multi-channel Management
Marketing
BRANDS OF REFERENCE
12
13. 2
.1 Ability to Innovate
We produce 7 to 9 collections per year
I. Research II. Development III. Sourcing IV. Delivery
Creation: 11,500
SKUs / year
Available for selection:
4,600 SKUs / year
Stores: 3,100 SKUs / year
Activities JAN FEV MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Creation
Launch
Orders
Production
Delivery
Normal sale
Discount sale
Winter I Winter II Winter III Summer I Summer II Summer III Summer IV
Arezzo&Co fulfills the various aspirations of women, delivering on average 5 new
models per day, allowing for consistent desire-driven purchases 13
14. 2
.2 Communication & marketing reflected
in every aspect of the store…
Stores constantly modified to incorporate the concept of each new
collection, creating desire-driven purchases
POS materials (catalogs, packaging, among others)
Store layout & visual merchandising Flagship stores
All visual communication at stores is monitored and updated simultaneously throughout Brazil
for each new collection 14
15. 2
.2 ...allied with a broad media plan
Arezzo&Co promotes its brands through unique and widespread
campaigns in different media outlets
Presenting electronic media and television Strong presence in printed media
343 showings on TV and 620 in cinemas 117 insertions in printed media on 225 pages
Digital communication Continuous insertions in fashion editorials
423k visits / month to Arezzo website and 96k to Schutz website 206 exhibitions in fashion editorials
15
16. 2
.3 Flexible production process
Production speed, flexibility and scalability are able to ensure
Arezzo&Co’s expected growth
Flexible supply model Gains of scale
Owned factory with capacity to produce 1.2 million pairs
Arezzo’s size allows for large scale purchases from each
annually and strong relationship with Vale dos Sinos
supplier
production cluster
Certification and auditing of suppliers Joint purchases
In-house certification and auditing ensure quality and
Negotiation of raw material jointly with local suppliers
punctuality (ISO 9001 certification in 2008)
Supply Profile Simultaneous consolidation and distribution in national scale
Owned plant
1 Reception: 60,000 units / day
16% 2 Storage: 60,000 units / day
3 Separation: 100,000 units / day
Outsourced
production 84% 4 Invoicing and labeling: 150,000 units / day
5 Distribution: 200,000 units / day
16
17. 2
.4 ...leveraged by owned stores…
Multiple distribution model allows for capturing the value in the
chain while widening distribution capillarity and brands’ visibility
Owned stores strategy
GREATER BRAND AWARENESS AND VISIBILITY
COUPLED WITH OPERATIONAL EFFICIENCIES
Allows direct contact with consumer
Main consumption centers (mainly SP and
RJ)
Anacapri Schutz Arezzo Alexandre Birman High profitability with great operational
efficiency
Total sales area (m²)
Benchmark for franchisees
2,967
2,067
1,044 1,369 Flagship stores ensure greater visibility
2007 2008 2009 2010
and reinforce brand image
Average sales area / store (m²)
78
74
69 68
2007 2008 2009 2010
17
18. 2
.4 …with efficient management of the
franchise network...
Model allows rapid expansion with little invested capital by
Arezzo&Co and high profitability to franchisees
Successful Partnership: “Win – Win” Franchise Concentration per Operator
Intense retail training (# of Franchisees by # of Franchises)
Ongoing support: average of 10 stores/ consultant and
average of 22 visits per store/ year
Strong relationship with and ongoing support to
4 or more
franchisee franchises
13% 1 franchise
3 franchises
Best Franchise in Brazil (2005) and in the sector for 7 14%
years since 2004 41%
Excellency in Franchising Award in the last 8 years
32%
(ABF)
2 franchises
96% satisfaction of franchisees1
100% of on-time payments
Notes: FY2010 data
1. 96% of the current franchisees indicated they would be interested in opening a
Average payback of 39 months2 franchise if they did not already have one
2. Annual sales of R$ 2,330 thousand + average initial investment of R$ 433 thousand
+ working capital of R$ 414 thousand
18
19. 2
.4 ...and of the multi-brand stores
Multi-brand stores widen the distribution capillarity and the brands’
visibility, resulting in a strong retail footprint
Multi-brand stores’ Gross Revenue¹ (R$ mn) IMPROVED DISTRIBUTION AND BRAND VISIBILITY
1,646
1,612 1,573 Greater brand capillarity
1,364
Rapid expansion at low investment and risk
188 Important sales channel for smaller cities
134
108
84 Presence in over 940 cities
1H10 1H11 2009 2010
Gross Revenue1 (R$ milhão) # Store
Multi-brand stores
Notes:
1. Domestic market only 19
20. 2
.4 Large capillarity and scale of store
chain…
Store chain with high capillarity, reaching more than 140 cities and
well-positioned among the retail companies
Points of sale (1Q11)
Size and average sales per exclusive stores - 2010
Brand
Average size Net Revenue/ m2 Total 268 franchises +
(m2) (R$ 000s) Stores 1,2
11 owned stores +
5 50 324 289 3 outlets +
130 154 347 775 multi-brand clients
2,050 9 134
1,067 7 277
1 franchise +
2,557 8 123
10 owned stores +
316 20 57 1124 multi-brand clients
Geographic distribution vs. GDP
6 owned stores
Region Arezzo&Co1 GDP3 499 multi-brand clients
N 4% 5%
NE 20% 13%
1 owned store +
MW 7% 9%
18 multi-brand clients
SE 54% 56%
TOTAL
S 15% 17%
269 franchises +
Source: IBGE, Companies’ Reports; number of stores according to latest data provided by the Companies 28 owned stores +
Notes:
1. Considers only owned stores (Arezzo and Schutz) and Arezzo franchises; 3 outlets +
2. For Hering, considers only Hering Store chain stores;
3. 2008 data; 1,612 multi-brand clients
4. Net Revenue (assuming that sales taxes and deduction = 30% of gross revenues);
5. Considers Arezzo + Schutz, except for outlets, handbags’ stores and Schutz franchise; = 1,912 points of sales
20
21. 2
.5 Seasoned and professional
management team
Anderson Birman
Internal Auditing
Marco Coelho
Schutz and Alexandre
Arezzo and Ana Capri Industrial Supply Chain Strategy and IT Financial HR
Birman
Anderson Birman
Alexandre Birman Cisso Klaus Marcio Jung Kurt Richter Thiago Borges Raquel Carneiro
Claudia Narciso
Highly qualified management team
Name Years of Years
Title experience at Arezzo
Anderson Birman Stock option plan for key executives
38 38
CEO
Alexandre Birman
COO
15 15 Performance based compensation package for all
Thiago Borges
employees
11 3
CFO and Investor Relations Officer
Cisso Klaus
45 7
Independent business units for each brand but unified
Director – Industrial officers (Industrial, Logistics, Financial and HR) for the
Claudia Narciso
22 12
whole company
Director – R&D
Kurt Ritchter 30 9
Director – Strategy and IT
Marcio Jung
26 6
Director – Supply Chain
Marco Coelho
39 28
Director – Internal Auditing
Raquel Carneiro
11 1
Director – HR 21
22. 2
.5 Corporate governance
After the offering, the Board is composed by 8 members being 2
appointed by Tarpon, 4 by the controlling shareholders and 2
independent members
Name Experience
Title
Anderson Birman
Arezzo’s CEO since its foundation, with over 38 years of experience in the industry
Chairman of the Board
Alexandre Birman
Arezzo’s COO and founder of Schutz, with 15 years of experience in the industry
Vice-Chairman of the Board
Pedro Faria Tarpon’s partner since 2003, member of the Board of Directors of Direcional Engenharia, Omega
Board Member Energia Renovável, Cremer and Comgás
Eduardo Mufarej Tarpon’s partner since 2004, member of the Board of Directors of Tarpon, Omega Energia Renovável
Board Member and Coteminas
José Murilo Carvalho President of the Attorney’s Association of Minas Gerais
Board Member Board Member of the Brazilian Bar Association
José Bolonha Founder and CEO of “Ethos Desenvolvimento Humano e Organizacional"
Board Member Board member of the Inter-American Economic and Social Council (UN, WHO)
Guilherme A. Ferreira CEO of Bahema Participações, board member of Pão de Açúcar, Banco Signatura Lazard, Eternit,
Independent Board Member Tavex and Rio Bravo Investimentos
Artur N. Grynbaum CEO of Grupo Boticário (largest franchise company in Brazil) and Vice-President at Abihpec
Independent Board Member (Brazilian Association of Industries in the field of Personal Hygiene, Perfumes, and Cosmetics ) 22
24. 3
.1 Social upward mobility driving internal
consumption
Income growth and job creation lead to rapid social upward mobility and
increasing internal consumption
Brazil experiences an accelerated process of social upward migration...
(Millions of people)
Class A/B 13 (8%) 20 (11%) 31 (16%) +18 mi
(2003-14E)
Class C 66 (37%)
93 (49%) +47 mi
113 (56%) (2003-14E)
Class D 47 (27%)
46 (24%)
40 (20%)
Class E 49 (28%)
30 (16%) 16 (8%)
2003 2008 2014E
Classes A/B: monthly income above R$4,808 | Class C: monthly income between R$1,115 and R$4,408 | Class D: monthly income between R$768 and R$1,115 | Class E: monthly income below R$768
...Resulting in a significant rise of consumer goods consumption, including Footwear and Apparel
(Consumption growth as a result of the upward mobility in social classes; indexed 100 = class D/E)
Food, Drinks and
1.0x 1.7x 3.3x 5.4x
Cigarettes
Electronics
1.0x Class 1.9x Class 4.4x Class 10.1x Class
and Furniture Footwear and
D/E C B A apparel have
Footwear and
1.0x 2.3x 5.4x 12.6x the largest
Apparel
growth
Prescription/OTC drugs 1.0x 1.9x 4.3x 9.3x potential
Hygiene and
1.0x 2.3x 5.3x 11.2x
Personal Care
24
Source: IBGE, FGV, LCA, Bain & Co., BCG, Roland Berger
25. 3
.2 Brazilian footwear market overview
Arezzo&Co has a significant stake of the the women footwear market
and has consistently increased its market share
Footwear consumption Arezzo&Co’s market share1
+3% +11% 11.1%
4.1
3.6 3.7
8.6%
8.1%
+9%
+4% 4.7%
779.6
689.5 717.4 2007 2008 2009 2010
2008 2009 2010 Footwear market (R$ bn)
+8%
+4% +6%
Apparent consumption - # pairs (million)
Per capita consumption - # pairs
Kids Class A 35.4
13% 17% 32.9
Class D/E 31.0
Men 6% 29.7
17%
Woman
Income
2009 Footwear
Class
2009 10.3
37% Class C 9.0 9.5
Class B 8.6
33%
Sports 44%
37% 2007 2008 2009 2010
Total footwear Women footwear
Source: IBOPE Inteligência (Pyxis), Satra, World Bank, ABICALÇADOS, IEMI, MTE, MDIC, / SECEX, IBGE
Note: 1. Based on Euromonitor research and IBOPE Inteligência (Pyxis). Estimated market share, which includes both Arezzo and Schutz 25
26. 3
.3 Brazilian footwear industry Overview
Brazilian Footwear Production
31%
-8% 12,340
10,233 Leather Footwear Production
9,455 Other
Sports (# pairs – million)
7%
10%
252.7
814 +10% 894 +6%
816 0%
Leather +3%
2010 28% 238.2
Rubber
55% 232.3
2008 2009 2010 2010 2009 2008
# Pairs (million) Value (US$ million)
Arezzo&Co’s outsourced production is mainly located at Vale dos Sinos region, a Brazilian footwear cluster in Rio Grande do Sul State:
Vale dos Sinos – Main Characteristics
Production - # pairs (million) 302
Exports - # pairs (million) 32
Exports (US$ million) 733
Employees (‘000) 130
Producers (‘000) 3.4
Source: ABICALÇADOS, IEMI, MTE, MDIC, / SECEX, IBGE 26
27. 3
.4 Growth fundamentals
Key value drivers Net income (R$ mn) and net margin (%)
12% 12%
11%
Capitalize on strong growth fundamentals in Brazil 9%
7%
7%
6%
Expand distribution footprint
CAGR 05-2Q11: 44% 76
Improve store productivity
65
49
Increase operational efficiencies and margins 22
17
9 10
2005 2006 2007 2008 2009 2010 2Q11(1)
Inventory management
Net income (R$ mm) Net margin (%)
(1) 2Q11 (Last twelve months)
27
31. 4
.2 Operational and financial highlights
Key highlights
1S11 Net Revenues increased by 22.2% year-over-year (38.7% 2010/ 2009)
The first half 2011 ended with 300 store chain and Sales area expansion of 13.6% year-over-year
Strong growth for the main brands in first half of the year
Net Revenues (R$ mn) Number of Stores (R$ mn) and Total Area (m² - ‘000)
CAGR 07-10: 43.4%
571.5 Area CAGR 07-10: 14.4%
13.6% 18.0 17.7%
412.1 12.5% 17.6
15.8 13.2%
367.1 38.7% 13.3 14.9
290.8 11.7
12.3% 300 296
237.9 273 +27 263 +33
193.8 237 +26 29
89.4% 25 31 214 +23 21
6 10
22.2%
248 269 227 242 267
208
1H10 1H11 2007 2008 2009 2010 1H10 1H11 2007 2008 2009 2010
Owned Stores Franchises Sales Area
31
32. 4
.3 Operational and financial highlights
Gross Profit (R$ mn) and Gross Margin (%) EBITDA (R$ mn) and EBITDA Margin (%)
42.0% 17.0% 16.9% 16.7%
42.2%
40.5% 40.5% 14.7%
37.7%
11.5% 95
232
61
167 49
122 138 40 42
100
1H10 1H11 2008 2009 2010 1H10 1H11 2008 2009 2010
Net Income (R$ mn) and Net Margin (%)
13.3%
11.4% 11.8%
11.3%
65
6.1% 49
39
27
22
1H10 1H11 2008 2009 2010 Notes:
1. Adjusted for interest on shareholders’ equity and goodwill amortization
32
33. 4
.4 Operational and financial highlights
Cash Conversion Cycle (R$ thousand) Capex (R$ million)
1H10¹ 1H11¹ Change Summary of Growth or Growth or
Cash Conversion Cycle 2Q10 2Q11 1H10 1H11
(in days) Investments (R$'m) Spread (%) Spread (%)
#days R$ '000 #days R$ '000
CAPEX - total 4.0 3.6 -10.0% 6.5 7.3 12.3%
Stores – expansion 2.1 2.1 0.0% 3.8 4.3 13.2%
70 92,934 81 139,003 11
Corporate 1.0 1.2 20.0% 1.7 2.5 47.1%
Inventory 29 38,395 40 67,699 11 Others 0.9 0.2 -77.8% 1.0 0.5 -50.0%
Accounts Receivable 61 81,548 63 108,576 2
(-)Accounts Payable 20 27,009 22 37,272 2
Cash Flows From Operating Activities (R$ thousand)
Growth or Growth or
Cash flows from operating activities 2Q10 2Q11 1H10 1H11
Spread (%) Spread (%)
Income before income taxes 22,200 30,345 8,145 37,907 51,666 13,759
Depreciation and amortization 559 961 402 1,167 1,840 673
Other (45) (4,395) (4,350) 49 (6,263) (6,312)
Decrease (increase) in current assets / liabilities 11,848 22,814 10,966 (6,579) 10,747 17,326
Trade accounts receivable 41,805 42,262 457 21,742 23,896 2,154
Inventories (7,920) (3,114) 4,806 (17,190) (18,837) (1,647)
Suppliers (20,170) (13,629) 6,541 (2,065) 8,528 10,593
Change in other current assets and liabilities (1,867) (2,705) (838) (9,066) (2,840) 6,226
Change in other non current assets and liabilities (718) (907) (189) 1,880 (1,171) (3,051)
Tax and contributions (1,224) (5,974) (4,750) (2,080) (8,340) (6,260)
Net cash generated by operating activities 32,620 42,844 10,224 32,344 48,479 16,135
33
34. 4
.4 Operational and financial highlights
Indebtedness (R$ ‘000)
Cash Position and Indebtness 2Q10 1Q11 2Q11
Indebtedness totaled R$32.3 million in 2Q11 versus
R$33.6 million in 1Q11 Cash and cash equivalents 48,957 187,293 199,339
Total Debt 42,677 33,586 32,276
Short Term Debt 21,998 12,813 12,547
Long-term debt relevance stood at 61.1% in 2Q11 versus As % of Total Debt 51.5% 38.1% 38.9%
61.9% in 1Q11
Long Term Debt 20,679 20,773 19,729
As % of Total Debt 48.5% 61.9% 61.1%
Net Debt (6,280) (153,707) (167,063)
Indebtedness policy remained conservative, with low
weighted-average cost of Company's total debt EBITDA LTM 79,178 98,930 104,200
Net Debt / EBITDA LTM -0.08x -1.55x -1.60x
34
