2. DISCLAIMER
This presentation contains
forward-looking statements
regarding the prospects of
the business, estimates for
operating and financial
results, and those regarding
Company’s business plan.
Such forward-looking
statements depend,
substantially, on changes in
market conditions,
government regulations,
2
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
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.
4. MAIN INDICATORSMAIN INDICATORSMAIN INDICATORSMAIN INDICATORS
GrossGrossGrossGross RevenueRevenueRevenueRevenue grew 36.3%36.3%36.3%36.3%, totaling R$ 287.3R$ 287.3R$ 287.3R$ 287.3 millionmillionmillionmillion
TwoTwoTwoTwo digitsdigitsdigitsdigits SalesSalesSalesSales growthgrowthgrowthgrowth inininin allallallall brandsbrandsbrandsbrands
33.6%33.6%33.6%33.6% ofofofof samesamesamesame----storestorestorestore salessalessalessales inininin thethethethe Hering Store chain
ReviewReviewReviewReview ofofofof thethethethe HSHSHSHS ExpansionExpansionExpansionExpansion planplanplanplan for 2010for 2010for 2010for 2010: from 325 to 337 stores (+12)
3Q103Q103Q103Q10 HighlightsHighlightsHighlightsHighlights
HS Expansion plan for 2012 (405 stores) antecipated for 2011.
EBITDAEBITDAEBITDAEBITDA MarginMarginMarginMargin of 24,5%24,5%24,5%24,5% and EBITDAEBITDAEBITDAEBITDA of R$ 57.7R$ 57.7R$ 57.7R$ 57.7 millionmillionmillionmillion (50.0% compared to 3Q09)
OTHER HIGHLIGHTSOTHER HIGHLIGHTSOTHER HIGHLIGHTSOTHER HIGHLIGHTS
SameSameSameSame Store SalesStore SalesStore SalesStore Sales ofofofof 13.8%13.8%13.8%13.8% in the PUC StorePUC StorePUC StorePUC Store chain
Results over the study of the Hering StoreHering StoreHering StoreHering Store chainchainchainchain PotentialPotentialPotentialPotential
Extraordinary General MeetingExtraordinary General MeetingExtraordinary General MeetingExtraordinary General Meeting to vote in the proposal of a stock splitproposal of a stock splitproposal of a stock splitproposal of a stock split, in the
proportion of two new share for each existing onetwo new share for each existing onetwo new share for each existing onetwo new share for each existing one./
4
8. 0
64
75
78
15
15
15
DistributionDistributionDistributionDistribution ChainChainChainChain---- Hering StoreHering StoreHering StoreHering Store andandandand PUCPUCPUCPUC
337337337337
393393393393
430430430430
StoreStoreStoreStore ChainChainChainChain EvolutionEvolutionEvolutionEvolution
Initial Goal
325 Stores0
3Q09 3Q10 2010*
258
303
337
Total Hering Store Total PUC Foreign - Franchised
* estimated
8
45 Hering45 Hering45 Hering45 Hering StoresStoresStoresStores and 11 PUC11 PUC11 PUC11 PUC StoresStoresStoresStores were opened compared to the
3Q09, and the Company revisedrevisedrevisedrevised its Heringits Heringits Heringits Hering StoreStoreStoreStore openingopeningopeningopening
planplanplanplan,,,, adding 12121212 storesstoresstoresstores to the initial plan.
325 Stores
9. Hering StoreHering StoreHering StoreHering Store ChainChainChainChain PerformancePerformancePerformancePerformance
Hering Store PerformanceHering Store PerformanceHering Store PerformanceHering Store Performance 3Q093Q093Q093Q09 3Q103Q103Q103Q10 ChgChgChgChg.... 9M099M099M099M09 9M109M109M109M10 ChgChgChgChg....
NumberNumberNumberNumber ofofofof StoresStoresStoresStores 258258258258 303303303303 17,4%17,4%17,4%17,4% 258258258258 303303303303 17,4%17,4%17,4%17,4%
Franchise 218 261 19,7% 218 261 19,7%
Owned 40 42 5,0% 40 42 5,0%
Sales (R$Sales (R$Sales (R$Sales (R$ thousandthousandthousandthousand)))) (1)(1)(1)(1)
128.595128.595128.595128.595 195.094195.094195.094195.094 51,7%51,7%51,7%51,7% 387.947387.947387.947387.947 559.618559.618559.618559.618 44,3%44,3%44,3%44,3%
Franchise 101.624 158.532 56,0% 308.832 453.329 46,8%
Owned 26.971 36.562 35,6% 79.115 106.288 34,3%
Same Store Sales growthSame Store Sales growthSame Store Sales growthSame Store Sales growth (2)(2)(2)(2)
20,86%20,86%20,86%20,86% 33,6%33,6%33,6%33,6% 12,8 p.p.12,8 p.p.12,8 p.p.12,8 p.p. 23,8%23,8%23,8%23,8% 26,8%26,8%26,8%26,8% 2,9 p.p.2,9 p.p.2,9 p.p.2,9 p.p.
SalesSalesSalesSales AreaAreaAreaArea ((((m²m²m²m²)))) 33.233 38.763 16,6% 33.233 38.763 16,6%
9
The SSSSSSSSSSSS of the Hering Store chain reached +33.6%+33.6%+33.6%+33.6% in the
3Q10, mainly boosted by the increase in the store traffic (+45.7%).(+45.7%).(+45.7%).(+45.7%).
SalesSalesSalesSales AreaAreaAreaArea ((((m²m²m²m²)))) 33.233 38.763 16,6% 33.233 38.763 16,6%
Sales (R$ perSales (R$ perSales (R$ perSales (R$ per m²m²m²m²)))) 3.956 5.163 30,5% 12.493 15.227 21,9%
CheckCheckCheckCheck----OutsOutsOutsOuts 1.507.785 2.196.420 45,7% 4.388.138 6.226.526 41,9%
UnitsUnitsUnitsUnits 3.428.509 4.925.048 43,6% 9.923.321 13.792.522 39,0%
UnitsUnitsUnitsUnits perperperper CheckCheckCheckCheck----OutOutOutOut 2,27 2,24 -1,3% 2,26 2,22 -1,8%
AverageAverageAverageAverage SalesSalesSalesSales PricePricePricePrice (R$)(R$)(R$)(R$) 37,51 39,61 5,6% 39,09 40,57 3,8%
AverageAverageAverageAverage Sales Ticket (R$)Sales Ticket (R$)Sales Ticket (R$)Sales Ticket (R$) 85,29 88,82 4,1% 88,41 89,88 1,7%
(1)
The amounts referred to the sales to final costumers. (sell out concept)
(2)
Compared to the same period of the previous year
10. 50.250.250.250.2%%%%
GrossGrossGrossGross ProfitProfitProfitProfit (R$(R$(R$(R$ MillionMillionMillionMillion)))) andandandand GrossGrossGrossGross MarginMarginMarginMargin (%)(%)(%)(%)
GrossGrossGrossGross ProfitProfitProfitProfit andandandand GrossGrossGrossGross MarginMarginMarginMargin
44.9%44.9%44.9%44.9%
47.8%47.8%47.8%47.8%
46.4%46.4%46.4%46.4%
49.7%49.7%49.7%49.7%
+2.9+2.9+2.9+2.9 p.pp.pp.pp.p....
+3.3+3.3+3.3+3.3 p.p.p.p.p.p.p.p.
47.5%47.5%47.5%47.5% 47.5%47.5%47.5%47.5%
48.8%48.8%48.8%48.8%
49.5%49.5%49.5%49.5%
0.00.00.00.0 p.pp.pp.pp.p....
+0.7+0.7+0.7+0.7 p.p.p.p.p.p.p.p.
34.034.034.034.0%%%%
3T09 3T10 9M09 9M10
83.4 111.8
217.0
325.9
10
Cash Gross MarginGross Margin
3Q09 3Q10
Growth of 0.7 p.p. in the GrossGrossGrossGross ProfitProfitProfitProfit CashCashCashCash compared to the
3T09, reaching 49.5 %49.5 %49.5 %49.5 % in this quarter.
11. 21.921.921.921.9%%%%
24.524.524.524.5%%%%
19.019.019.019.0%%%%
25.525.525.525.5%%%%
EBITDAEBITDAEBITDAEBITDA andandandand EBITDAEBITDAEBITDAEBITDA MarginMarginMarginMargin
EBITDA (REBITDA (REBITDA (REBITDA (R$$$$ millionmillionmillionmillion)))) andandandand EBITDAEBITDAEBITDAEBITDA marginmarginmarginmargin (%)(%)(%)(%)
+2.6 p.p....
+6.5 p.p.
89.8%89.8%89.8%89.8%
3Q09 3Q10 9M09 9M10
38.5 57.7
91.8
174.2
11
EBITDA Margin
50.0%50.0%50.0%50.0%
89.8%89.8%89.8%89.8%
The EBITDAEBITDAEBITDAEBITDA reached R$ 57.7 milhões,R$ 57.7 milhões,R$ 57.7 milhões,R$ 57.7 milhões, with 50.0%50.0%50.0%50.0% growth ih the 3Q10
and an EBITDAEBITDAEBITDAEBITDA marginmarginmarginmargin of 24.5% (+2.624.5% (+2.624.5% (+2.624.5% (+2.6 p.p.p.p.p.p.p.p.).).).).
12. 0,1% 0,9% 0.3% 0.3%
2.4%
14.0
0,2 1,8 1,3 0,8
5,8
EBITDAEBITDAEBITDAEBITDA andandandand EBITDAEBITDAEBITDAEBITDA MarginMarginMarginMargin ((((contcontcontcont.).).).)
EBITDA (R$EBITDA (R$EBITDA (R$EBITDA (R$ millionmillionmillionmillion)))) andandandand EBITDAEBITDAEBITDAEBITDA MarginMarginMarginMargin (%)(%)(%)(%) –––– QuarterQuarterQuarterQuarter VariationVariationVariationVariation
EBITDA
Margin 3Q09
Deductions Tax
Incentives
AVP Net Gross
Margin (ex TI
and ded)
SG&A
Dilution
EBITDA
Margin 3Q10
21.9% 24.%
EBITDA
3Q09
Sales
Growth
Deductions Tax
Incentives
AVP Net Gross
Margin (ex
TI and ded)
SG&A
Dilution
EBITDA
3Q10
38.5
57.7
12
The EBITDAEBITDAEBITDAEBITDA and the EBITDAEBITDAEBITDAEBITDA MarginMarginMarginMargin were affected by the salessalessalessales
growthgrowthgrowthgrowth andandandand thethethethe dilutiondilutiondilutiondilution ofofofof operationaloperationaloperationaloperational expensesexpensesexpensesexpenses....
13. 13.113.113.113.1%%%% 14.214.214.214.2%%%% 13.713.713.713.7%%%% 15.515.515.515.5%%%%
NetNetNetNet ProfitProfitProfitProfit
1.21.21.21.2 p.p.p.p.p.p.p.p.
NetNetNetNet ProfitProfitProfitProfit (R(R(R(R$$$$ millionmillionmillionmillion)))) andandandand NetNetNetNet MarginMarginMarginMargin (%)(%)(%)(%)
1.81.81.81.8 p.pp.pp.pp.p....
60.2%60.2%60.2%60.2%
3T09 3T10 9M09 9M10
23.0 33.5
66.1
106.0
13
67,9%67,9%67,9%67,9%
45.8%45.8%45.8%45.8%
The Net Profit growth of 45.8%45.8%45.8%45.8% in the 3Q10 was explained by the operatingoperatingoperatingoperating
performanceperformanceperformanceperformance and by the reduction of the effective income tax (IR)income tax (IR)income tax (IR)income tax (IR) and
social contribution on net profit (CSSL)social contribution on net profit (CSSL)social contribution on net profit (CSSL)social contribution on net profit (CSSL) compared to the 3Q09.
.
Net Margin
3Q10
14. 53.353.353.353.3
52,5%52,5%52,5%52,5%
126,8%126,8%126,8%126,8%
3,5
1,6
9,4
CapExCapExCapExCapEx
From R$ 58.7 toR$ 58.7 toR$ 58.7 toR$ 58.7 to R$ 86.7R$ 86.7R$ 86.7R$ 86.7 millionmillionmillionmillion
ByByByBy ActivityActivityActivityActivity (R$(R$(R$(R$ millionmillionmillionmillion)))) CapExCapExCapExCapEx RevisionRevisionRevisionRevision for 2010for 2010for 2010for 2010
CapExCapExCapExCapEx 2010201020102010
CapExCapExCapExCapEx 2010201020102010
ReviewReviewReviewReview
Stores 20.0 27.4
12.212.212.212.2
18.618.618.618.6
23.523.523.523.5
3Q09 3Q10 9M09 9M10
6.3
14.9
10.6
37.0
1,3 1,9
3,40,5
0,6
0,84,1 1,2
8,8
Industry IT Other Stores
14
Stores 20.0 27.4
Industry 28.1 48.2
IT/Others 10.6 11.1
TotalTotalTotalTotal 58.758.758.758.7 86.786.786.786.7
In R$ million
In this quarter R$ 18.6R$ 18.6R$ 18.6R$ 18.6 millionmillionmillionmillion were invested, of which R$ 14.9R$ 14.9R$ 14.9R$ 14.9 millionmillionmillionmillion
inininin thethethethe industryindustryindustryindustry areaareaareaarea, mainly to thethethethe expansionexpansionexpansionexpansion andandandand updateupdateupdateupdate ofofofof thethethethe
productionproductionproductionproduction unitsunitsunitsunits andandandand to meet the market demand.
18. HeringHeringHeringHering
• Hering Store Expansion
– 2010 – 12 HS were added to the initial plan, reaching 337 stores at the end of the year.
– Anticipation of the expansion plan for 2012 (405 stores) already for the end of 2011
• Continue to explore the brand´s growth potential
ChildrenChildrenChildrenChildren MarketMarketMarketMarket withwithwithwith opportunitiesopportunitiesopportunitiesopportunities totototo bebebebe exploredexploredexploredexplored::::
• Launch of the flagship pilot project for the Hering Kids and Hering Kids + PUC
• Positive perspectives for the multibrand retail after the launch of the High Summer
OutlooksOutlooksOutlooksOutlooks
• Positive perspectives for the multibrand retail after the launch of the High Summer
collection
• Adjustments in the product assortment and price ranges, allied to investments in the
marketing campaigns.
dzarmdzarmdzarmdzarm....
• Launch of the brand pilot store in the 4T10.
WebstoreWebstoreWebstoreWebstore::::
• Reevaluate the online business format in order to better explore the potential of this
channel.
18
19. INVESTOR RELATION TEAMINVESTOR RELATION TEAMINVESTOR RELATION TEAMINVESTOR RELATION TEAM
Fabio HeringFabio HeringFabio HeringFabio Hering - President
Frederico OldaniFrederico OldaniFrederico OldaniFrederico Oldani – Finance and IR Director
Karina KoerichKarina KoerichKarina KoerichKarina Koerich – IR Manager
Gracila Camargo LopesGracila Camargo LopesGracila Camargo LopesGracila Camargo Lopes – IR Analyst
Admar A. Topazio JuniorAdmar A. Topazio JuniorAdmar A. Topazio JuniorAdmar A. Topazio Junior – IR Analyst
FIRB – Financial Investor Relations Brasil
Tel. +55 (11) 3897-6857
E-mail: ligia.montagnani@firb.com
Tel. +55 (47) 3321-3469
E-mail: ri@heringnet.com.br
Website: www.ciahering.com.br/ir
