Lojas Renner is a Brazilian fashion retailer with over 500 stores across Brazil. It operates several brands including Renner, Camicado, Youcom, and Ashua that target different customer demographics and lifestyles. The company has achieved strong growth and financial performance due to its consistent positioning targeting women, solid corporate culture emphasizing simplicity and customer focus, and competitive advantages like its multi-brand portfolio and lifestyle approach. Lojas Renner has become the largest fashion retailer in Brazil through decades of expansion, with plans to continue growing its store count in the coming years.
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Institucional 4 t18_eng
1. December 2018 Lojas Renner S.A. 1
Lojas Renner
February 2019
B3: LREN3; USOTC:LRENY
Institutional Presentation
2. December 2018 Lojas Renner S.A.
WHO WE ARE
• Company Background
• Company Overview
• Our Businesses
• Geographical Distribution
• Store Evolution
• Corporate Governance
• Share Performance
4. December 2018 Lojas Renner S.A.
COMPANY OVERVIEW
4
R$ 11.4 billion of Total Gross Revenue in 2018
556 stores in operation (351 Renner, 3 Ashua, 108 Camicado and 94 Youcom)
4 distribution centers (SC and RJ fully automated)
21.4 thousand employees
30.6 MM of private label cards issued
20 proprietary brands
+ 600 thousand customers visit our stores daily
+ 210 MM users visited our e-commerce channel in 2018
+ 4,200% of share appreciation since 2005
Market capitalization of R$ 30.5 billion
Baseline date Dec/18
WHOWEARE
5. December 2018 Lojas Renner S.A.
OUR BUSINESSES
5
Listed since 1967
Largest fashion retailer in Brazil
Target customers: 18 to 39 age
group, in the A-, B and C+ social
classes
351 stores *
Acquired in 2011
Leader in home and decor
Target customers: 18 to 39 age
group, in the A-, B and C+ social
classes
108 stores*
Launched in 2013
Specialized in youth lifestyle
Target customers: 18 to 35 age
group, in the A-, B and C+ social
classes
94 stores*
*As at Dec/18
RENNER YOUCOMCAMICADO
WHOWEARE
6. December 2018 Lojas Renner S.A.
OUR BUSINESSES
6
Since 2010
Complete mix of Renner,
Camicado, Youcom and Ashua
Possibility of pick up exchanges
and return in stores
Launched in 2016
Curve & plus size format
3 omnistores*
Since 1973
30.6 MM cards
(Private Label + Co-branded)
Approximately 50% of sales
E-COMMERCE REALIZEASHUA
WHOWEARE
*data as at Dec/18
7. December 2018 Lojas Renner S.A.
URUGUAY
7 Renner
NORTHEAST
50 Renner
21 Camicado
1 Youcom
MIDWEST
28 Renner
10 Camicado
7 Youcom
NORTH
22 Renner
4 Camicado
1 Youcom
SOUTH
73 Renner
18 Camicado
31 Youcom
1 Ashua
SOUTHEAST
171 Renner
55 Camicado
54 Youcom
2 Ashua
7
31 de dezembro de 2018
351
108
94
03
DC Renner
DC Camicado
DC Youcom
7
URU
MT
MS
DF
RS
SC
PR
SP RJ
ES
MG
PE
CE
BA
SE
RN
PB
PITO
MA
PA
APRR
AM
AC
RO
AL
5
6
10
33
3
12
2
8
5
12
9
9
4
18
35
5
4
1
1
41
26
6
3
101
3
1
17
44
13
7
9
9
GO
4
38
1
3
2
2
9
2
10
2
4
2
12
2
6
2
2
4
1
2
2
2
1
2
1
2
1
1
1
WHOWEARE
GEOGRAPHICAL DISTRIBUTION
Expansion of Selling Area
CAGR (2014 – 2018) = 9.3%
9. December 2018 Lojas Renner S.A. 9
CORPORATE GOVERNANCE
100% free float
Listed on B3 Novo Mercado
100% common shares
100% tag along
Majority of independent members
on the Board of Directors (88%)
Different executives occupying the
Chairman and the CEO positions
Permanent Fiscal Council
Committees directly linked to the Board of Directors
Own Internal Charters
(Board of Directors, Fiscal Council & Committees)
Stock Option Plan aligns interests of
executives to shareholders
Board of Directors Portal
Secretaries to the Board and Committees
Formal Appraisal of the Board of Directors and
Executive Officers
Corporate Governance Secretary
WHOWEARE
Board of Directors
CEO
Fiscal Council
Independent Auditors
Internal Auditors
Compliance
.
Shareholder’s
Meeting
Chairman
Osvaldo
Schirmer
Vice
Chairman
Carlos
Souto
Member
José
Galló
Member
Fabio
Pinheiro
Member
Heinz-Peter
Elstrodt
Member
Juliana
Rozenbaum
Member
Thomas
Herrmann
People
Committee
Sustainability
Committee
Strategic
Committee
Audit and Risk
management Committee
CEO
José
Galló
Loss
Prevention
Member
Christiane
Edington
CFO &
IRO
Laurence
Gomes
HR
Clarice
Costa
Executive Officer
IT & Mgmt.
Emerson
Kuze
Procureme
nt Fabio
Faccio
Operations
Fabiana
Taccola
Executive Group
10. December 2018 Lojas Renner S.A. 10
LREN3
+4,200%
IBOV
+347%
TOTAL SHAREHOLDER RETURN
LREN3 traded at B3, capital listed since 1967
Listed on B3 Novo Mercado since July, 2005
ADR Program level 1 since February 2017, under LRENY (OTC) ticker1
Market Cap2 = R$ 30.5 billions
Average Daily Trading Volume LTM = R$ 118.3 millions
Part of the following B3 indexes: IBOVESPA, IBRX100, IBRX50, IBRA, ICO2,
ICON, IGC, IGCT, IGNM, ISE, ITAG, IVBX and MLCX
1 - Additional information regarding the ADR Program is available at the Company’s website.
2 – Data from December 28th, 2018
WHOWEARE
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Apr-18
Jul-18
Oct-18
11. December 2018 Lojas Renner S.A. 11
WHAT BROUGHT US HERE
• Corporate Culture
• Consistent Positioning
• Competitive Advantages
• Business Model
• Updating Operations
12. December 2018 Lojas Renner S.A. 12
ENCHANT … to surpass customer expectations.
OUR WAY …to do things in a simple and agile manner with great energy and passion.
PEOPLE … to hire, develop and retain the best people.
OWNERS OF THE BUSINESS … to think and act like owners of our business unit.
OBSTINATE FOR RESULTS … to seek results and not good ideas only.
QUALITY … our products and services have the highest level of quality.
SUSTAINABILITY … businesses and attitudes based on the principles of sustainability.
SOLID CORPORATE CULTURE
Corporate Values
WHATBROUGHTUSTOWHEREWEARETODAY
13. December 2018 Lojas Renner S.A.
Brazil Retail 2017 (77%)
Lojas Renner 2018 (87%)
Global Fashion 2018: 65%
94% adherence in 2018
(14.511 respondent employees)
Survey run between: February to March, 2018
Zona de Indiferença
0%
Critical
Zone
High
Performance Zone 100%
50%
71%
Neutral
Zone
13
Source: Aon Hewitt
Lojas Renner 2017 (88%)
SPEAK WELL ABOUT THE COMPANY
PROUDNESS OF BEING PART OF IT
ALWAYS GO THE EXTRA MILE
In a high performance zone since 2011
SOLID CORPORATE CULTURE
Committed People
WHATBROUGHTUSTOWHEREWEARETODAY
15. December 2018 Lojas Renner S.A.
PRACTICE THE LAWS OF SIMPLICITY
1. Trust more,
control less.
2. Before acting,
ask: for what?
3. Brutal
simplification
with focus on the
business and the
customer
4. Eradicate the
over-fastidious,
enemies of
simplicity.
5. Always
remove all that
the customer does
not want to pay.
15
“Simple is harder
than complex”
And simplicity
WHATBROUGHTUSTOWHEREWEARETODAY
SOLID CORPORATE CULTURE
IT’S SIMPLE
TO BE RENNER
16. December 2018 Lojas Renner S.A.
“Focus is not what
not what you é o
you have to do, it is
what you have to
stop doing.”
16
Always maintaining focus...
WHATBROUGHTUSTOWHEREWEARETODAY
SOLID CORPORATE CULTURE
17. December 2018 Lojas Renner S.A.
There is always room
for improvement!
We love challenges: not
knowing that it is
impossible, we just go
ahead and do it!
17
Dissatisfaction with the status quo
WHATBROUGHTUSTOWHEREWEARETODAY
SOLID CORPORATE CULTURE
18. December 2018 Lojas Renner S.A.
“To be the brand which
stands by the modern
woman, offering a range of
styles of high quality fashion
at competitive prices and
excellence in services.
Enchanting and innovating,
in a sustainable way.”
18
CONSISTENT MARKET POSITIONING
Clear Value Proposition...
WHATBROUGHTUSTOWHEREWEARETODAY
19. December 2018 Lojas Renner S.A.
45%
90’s 2010’s
60%
Increased presence of women in
the labor market
• Buy for the whole family
• Represent 80% of Renner’s customers
• Are responsible for 83% of the decisions on
apparel purchases
• Have achieved a growth of 82% in
purchasing power over the last decade
22%
80’s
19
Source: Valor Econômico newspaper 2014
In Brazil, women...
CONSISTENT MARKET POSITIONING
With a focus on the Woman
WHATBROUGHTUSTOWHEREWEARETODAY
20. December 2018 Lojas Renner S.A.
A
B
C
+
-
+
-
Renner
SocialClasses
+
-
20
Source: Ibope Inteligência 2015 and IstoÉ Dinheiro Magazine – Family Budget Survey (POF) – IBGE
R$ 20,273.00
R$ 1,910.00
R$ 5,351.00
Average
Monthly
Household
Income
CONSISTENT MARKET POSITIONING
By Social Class
24% of households
47% of total wage bill
38% of consumption
3% of households
24% of total wage bill
16% of consumption
52% of households
27% of total wage bill
39% of consumption
WHATBROUGHTUSTOWHEREWEARETODAY
22. December 2018 Lojas Renner S.A. 22
Engaged
people
enchant
customers
Enchanted
customers are
loyal customers
Loyal
customers
generate
consistent and
sustainable
results
Cycle of Enchantment
Enchantment – Surpassing Customer Expectations
Watch Lojas Renner’s
Culture and Enchantment
Video
24 MM opinions
collected in 2018
95.0%
Very satisfied or
satisfied
Real-life stories in which
customers are surprised
by outstanding initiatives
on the of the
employees
WHATBROUGHTUSTOWHEREWEARETODAY
COMPETITIVE ADVANTAGES
,STORIES OF
ENCHANTMENT
WRITTEN
EVERY DAY IS
DAY TO
ENCHANT
SINCE1996 THERE ARE ALREADY
23. December 2018 Lojas Renner S.A. 23
Lifestyle: You have your style, Renner has all of them.
Each brand represents the lifestyle of a customer group based on their attitudes, interests,
values and personalities.
WHATBROUGHTUSTOWHEREWEARETODAY
COMPETITIVE ADVANTAGES
24. December 2018 Lojas Renner S.A. 24
Best use of shopping time
One-stop-shop for the whole family
Reduces need for markdowns
Increases opportunities for cross-selling
WHATBROUGHTUSTOWHEREWEARETODAY
Lifestyle: You have your style, Renner has all of them.
COMPETITIVE ADVANTAGES
25. December 2018 Lojas Renner S.A. 25
Source: Deloitte – Global Powers of Retailing 2007 and 2017
1. Federated Dpt Stores U$ 22.4
2. JC Penney U$ 18.8
3. TJX U$ 16.1
4. Gap U$ 16.0
5. KarstadtQuelle U$ 14.3
6. Khol’s U$ 13.4
7. Otto Group U$ 11.5
8. Limited Brands U$ 9.7
9. Millenium Retailing U$ 8.6
10. H&M U$ 8.4
1. TJX U$ 30.9
2. Macy’s U$ 27.1
3. Sears U$ 25.1
4. Inditex U$ 23.1
5. H&M U$ 21.7
6. Gap U$ 15.8
7. Fast Retailing U$ 14.2
8. Nordstrom U$ 14.1
9. El Corte Ingles U$ 13.1
10. JC Penney U$ 12.6
2005 2015
Largest retailers in the world market
(Net Revenue in billions)
BUSINESS MODEL ALIGNED WITH GLOBAL BENCHMARKS
WHATBROUGHTUSTOWHEREWEARETODAY
26. December 2018 Lojas Renner S.A. 26
Source: Company Annual Reports
WHATBROUGHTUSTOWHEREWEARETODAY
BUSINESS MODEL ALIGNED WITH GLOBAL BENCHMARKS
-0.2%
276.8%
254.5%
168.5%155.3%
16.5%
-32.3%
9.2%
TRADITIONAL RETAIL FASHION RETAILERS
% growth in net revenues from 2008 to 2017
27. December 2018 Lojas Renner S.A. 27
Source: Company Annual Reports
CAGR 2013 - 2017
WHATBROUGHTUSTOWHEREWEARETODAY
BUSINESS MODEL ALIGNED WITH GLOBAL BENCHMARKS
NA
28. December 2018 Lojas Renner S.A. 28
Operation focused on proprietary brands
Frequent collection launches
High degree of fashion appeal
Competitive prices
Products organized around life styles
Operations focused on apparel and accessories
One-stop-shop for the whole family
Multi-channel model
Supply chain proximity to accelerate the time-to-market
WHATBROUGHTUSTOWHEREWEARETODAY
BUSINESS MODEL ALIGNED WITH GLOBAL BENCHMARKS
29. December 2018 Lojas Renner S.A. 29
FASHION
REACTIVITY
2012
2013
2015
2018
Single Customer
View
Data Driven for
Products
Omni
Transformation
DIGITAL
FROM 2019
Improvements on the Business Model
BUSINESS MODEL ALIGNED WITH GLOBAL BENCHMARKS
WHATBROUGHTUSTOWHEREWEARETODAY
STORE
SIMPLICITY
Store at the center of
everything
New supply logistics
Revision of Processes
CSC releasing time for
the store manager
Capture of fashion trends
Specialization of the
businesses
Communication between
stores and purchases
Strengthening of the
chain
Quality
30. December 2018 Lojas Renner S.A.
WHERE WE ARE GOING TO
• Market Consolidation
• Increased Market Share
• Expansion of Stores
• Other Concepts
• Operation Abroad
• Integration of the Channels
30
31. December 2018 Lojas Renner S.A.
TOP 5 RANKING
1 Renner
2° C&A
3° Riachuelo
4° Pernambucanas
5° Marisa
16%
Market
concentration of
other sectors in Brazil
31
12%
Fragmented apparel market with opportunities for consolidation
Source: Jornal DCI, IBOPE, Euromonitor, IBGE, Bank of America Merril Lynch and Lojas Renner estimates.
Note: Data for C&A and Pernambucanas are estimated.
20% of existing
stores closed
between 2014
and 2017
Electroelectronics
top 5 = 50%
Supermarkets
top 5 = 50%
Drugstores
top 3 = 24%
WHEREWEAREGOINGTO
MARKET CONSOLIDATION
Other
Retailers
Other
Retailers
+
Informality
32. December 2018 Lojas Renner S.A.
26%
18%
17%
14%
11%
9%
6% 5% 6% 4%
Sul Sudeste Centro-Oeste Nordeste Norte
Share Cartão Share Venda
32
INCREASED MARKET SHARE
Note: Card Share: % of clients (target A-, B, C+) with Renner card in relation to the total of the public target of the region
Revenue Share: % of Renner revenue (R$) in relation to the qualified demand (R$) of the region
Source: IBOPE 2017 and Renner database
5
8
6
8
12
10 MM 39 MM 6 MM 11 MM 5 MM
Target Population
Average store
age by region
(in years)
South Southeast Midwest Northeast North
Share of cards Share of sales
WHEREWEAREGOINGTO
Potential gains of share on existing selling areas
33. December 2018 Lojas Renner S.A. 33
PMC: government statistics office’s(IBGE) Monthly Retailing Survey index
INCREASED MARKET SHARE
WHEREWEAREGOINGTO
34. December 2018 Lojas Renner S.A. 34
Target of 450 Renner stores by 2021
EXPANSION OF STORES
CURRENT CHAIN OF 351 STORES
91% shopping centers / 9% stand-alone
39% in maturation
Presence in +/- 50% of all Brazilian shopping
centers
Existing Shopping
Centers
New Shopping
Centers
Street Side Stores
Cities with
Renner stores
Cities without
Renner stores
Central areas
Smallers cities
Micro regions
PRODUCTIVITY OF EXISTING STORE CHAIN
Re-dimensioning of store meterage
Optimization of sales areas by absorption
Updating of store layout
Adaptation of visual merchandising
Store modernization
Better shopping experience
WHEREWEAREGOINGTO
35. December 2018 Lojas Renner S.A. 35
Nationwide coverage
Brand consolidation
Potential of 300 stores
Adjustments to product mix
(imported items)
Omni and marketplace
Target of 125 in 2021
Breakdown of Net Revenue 2018
Target of Camicado and Youcom potential stores in 2021
Launched in 2013
Acquired in 2011
91%
7%
2%
OTHER CONCEPTS
WHEREWEAREGOINGTO
E-commerce + 3 stores
5 inaugurations expected for 2019
36. December 2018 Lojas Renner S.A. 36
First step abroad through the debut in the Uruguayan market
in 2017
7 stores operating in Uruguay
Opening of up to 3 stores in Argentina in 2019
Studies of the Latin American market
Model replicable for other countries
Same positioning as Renner in Brazil
OPERATION ABROAD
WHEREWEAREGOINGTO
37. December 2018 Lojas Renner S.A. 37
DIGITAL CYCLE
WHEREWEAREGOINGTO
Consumer Behaviour
Shopping Process by Generation (US)
Source: Merrill Lynch – Gen Z is changing the landscape again 04.16.2018
Sample of 39,554 respondents
41% 38% 37%
44% 48%
22%
22% 22%
19% 17%
13% 14% 15%
13% 12%
24% 26% 27% 23% 23%
18-21 22-30 31-38 39-53 54+
Buy in Store Search Online, Buy in Store Search in Store, Buy Online Buy Online
38. December 2018 Lojas Renner S.A. 38
TECHNOLOGY
PRODUCTS,
SERVICES &
PROCESSES
ENCHANT-
MENT
PEOPLE
“TO ENCHANT CUSTOMERS
IS OUR MAISN GOAL”
Being digital is more about
people than technology
The use of technology is
aimed to accomplish and
reinforce our value
proposition.
Technology is na enabler to
transform the customer experience,
operating processes and business
model, generating more revenues
and operational efficiency.
DIGITAL CYCLE
What digital means for Renner
39. December 2018 Lojas Renner S.A. 39
Structural Projects
Single Customer View
Data Driven Decision to the
Whole Product Lifecycle
Omni Transformation
• Big data
• Identification of unknown
customers
• Personalized communication
• Personalized shopping experience
• Artificial Intelligence
• Algorithms
• Prediction
• Assertiveness
• Agility on decisions
• Lower inventories
• Orchestrated inventory
• Equalization of sales channels
• Convenience, mobility and flexibility
• Fluid and enchanting sales
experience
PARAONDEVAMOS
DIGITAL CYCLE
CUSTOMER
Transforming data in
actions
PRODUCT
Apply tecnology in
collections
CHANNELS INTEGRATION
Create a single
shopping experience
40. December 2018 Lojas Renner S.A.
ATTACHMENTS
• Macroeconomic Influences
• Main Figures
40
41. December 2018 Lojas Renner S.A. 41
11.6%
93.8
Unemployment Rate
1105.1
Credit Evolution to Individuals as a % of GDPHousehold Indebtedness
R$ 779.8 bi
24.1%
19.8%
42.5%
MACROECONOMIC INFLUENCES – CONSUMPTION AND CREDIT
ATTACHMENTS
Source: IDV, Ministério da Fazenda, IBGE/PME , Brazilian Central Bank(new methodology since March/11).
Total Savings (Balance)
Household Indebtedness/ Income Mass (12 months)
Household Indebtedness(Ex. mortgage)/ Income Mass (12 months)
Income Commitment with Debt Service (Interest + Amortization)
Trend Line
Delinquency Rate for Individuals (average)
Credit to Individuals/GDP (year end period)
Consumer Confidence Level Consumer Confidence Leve in Retail Restrict TradeUnemployment Rate (% of Economic Active Population)
Consumer Confidence Level and Retailing Business