Cia. Hering 2Q15 earnings presentation

1. 2Q15 Results
Conference Call
August 6th , 2015 – 10:30 a.m. (BrT)
9:30 a.m. (NY)/ 2:30 p.m. (London)

2. This presentation contains forward-looking statements
regarding the prospects of the business, estimates for
operating and financial results, and those regarding
Cia. Hering'sgrowth prospects. These are merely
projections and, as such, are based exclusively on the
expectations of Cia. Hering management concerning
the future of the business and its continued access to
capital to fund the Company’s business Plan. Such
forward-looking statements depend, substantially, on
changes in market conditions, government regulations,
competitive pressures, the performance of the
Brazilian economy and the industry, among other
factors and risks disclosed in Cia. Hering’sfiled
disclosure documents and are, therefore, subject to
change without prior notice.
DISCLAIMER

3. 2Q15
Outlook
Q&A
AGENDA

4. 2Q15 Results
4
GROSS REVENUES AND BREAKDOWN BY BRAND
R$ MILLION– DOMESTIC MARKET
Gross revenues of R$ 455.2 million, mainly influenced by the multibrand retraction given
environment deterioration and higher risk aversion.
GROSS REVENUES BREAKDOWN PER CHANNEL
DOMESTIC MARKET EX-‘OTHER REVENUES’
2Q15, R$ MILLION- CHANGE 2Q15 x 2Q14
2Q15 2Q14 Change 1S15 1S14 Change
442.9 490.6 -9.7% 848.7 949.2 -10.6%
330.2 356.7 -7.4% 632.8 699.4 -9.5%
51.7 54.5 -5.2% 96.5 106.4 -9.3%
32.0 44.1 -27.4% 64.3 78.6 -18.1%
24.2 29.7 -18.3% 45.1 51.5 -12.5%
4.8 5.6 -14.4% 10.0 13.4 -25.4%Others

5. 2Q15 Results
5
HERING STORE NETWORK
GROSS SALES ‘SELL-OUT’, R$ MILLION
Gross revenues of R$ 384.1 million (+2.4%), as a
result of net addition of 40 stores, which
compensated SSS decline.
¹ Stores opened in the last twelve months net from closings.
Supply management evolution, with a
plan in progress to adjust past collections
inventories since May, in order to improve
current collection’s sales turnover.

6. 2Q15 Results
6
GROSS PROFIT
R$ MILLION AND GROSS MARGIN
EBITDA
R$ MILLION AND EBITDA MARGIN
EBITDA reached R$ 66.6 million, down 31.3% and
EBITDA margin decreased 560 bp, mainly due to
sales decrease, generating operational
deleveraging.
Gross margin contraction of 200 bp due to higher
promotional activity, especially related to past
collections (‘saldos‘), and sales retraction, insufficient
to dilute fixed costs.

7. 2Q15 Results
7
NET INCOME
R$ MILLION AND NET MARGIN
CAPEX
R$ MILLION
Investments concentrated in logistic and
production, especially in plants located in the
state of Goiás and in IT, with SAP
implementation postponed for early 2016.
Net income of R$ 58.8 million (-20.7%) , mainly
explained by a decrease in operating income,
partially offset by higher net financial income and
lower effective income tax rate compared to 2Q14.

8. 2Q15 Results
8
CASH FLOWS
R$ MILLION
Cash flow of R$ 11.9 million in 2Q15, R$ 77.6 million less than 2Q14.
Negative EBITDA generation – offset by lower Income Tax and Social Contribution – and
higher working capital, due mainly to the increase in accounts receivable and inventories.
Cash Flow - Consolidated 2Q15 2Q14 Chg. 1S15 1S14 Chg.
EBITDA 66,557 96,894 (30,337) 113,698 191,391 (77,693)
No cash items 3,027 6,468 (3,441) 15,074 12,677 2,397
Current Income tax and Social Contribution (3,549) (20,942) 17,393 (11,187) (49,760) 38,573
Working Capital Capex (24,906) 28,989 (53,895) 11 (3,846) 3,857
(Increase) decrease in trade accounts receivable (23,508) (8,403) (15,105) 93,506 30,262 63,244
(Increase) decrease in inventories 10,111 30,713 (20,602) (31,231) 6,687 (37,918)
Increase (decrease) in accounts payable to suppliers (3,318) 11,632 (14,950) (26,273) (4,598) (21,675)
(Decrease) in taxes payable (10,614) (8,881) (1,733) (27,966) (39,066) 11,100
Others 2,423 3,928 (1,505) (8,025) 2,869 (10,894)
CapEx (29,184) (21,840) (7,344) (43,143) (33,396) (9,747)
Free Cash Flow 11,945 89,569 (77,624) 74,453 117,066 (42,613)
Reconciliation from accounting Cash flow to adjusted Cash flow (R$ thousand) 2Q15 2Q14 Chg. 1S15 1S14 Chg.
DFC - Cash provided by operating activities (accounting) 47,940 119,109 (71,169) 136,578 164,890 (28,312)
Adjustment – Financial items allocated to operating cash (6,811) (7,700) 889 (18,982) (14,428) (4,554)
Unrealized exchange and monetary variation (175) (439) 264 (594) (876) 282
Financial Result (6,850) (7,680) 830 (19,180) (14,413) (4,767)
Interest paid on loans 214 419 (205) 792 861 (69)
DFC - Cash flows from investing activities (29,184) (21,840) (7,344) (43,143) (33,396) (9,747)
Free Cash Flow 11,945 89,569 (77,624) 74,453 117,066 (42,613)
* The adjusted cash flow as presented above is not a Brazilian Generally Accepted Accounting Practice and IFRS financial performance measurement. The information on this table was
calculated for the management of the Company and has not been audited by independent auditors

9. 2Q15 Results
9
Share Buyback Program
1st Share Buyback Program concluded
74.7% of the plan executed
R$ 56.8 million
3.7 million of shares
New Buyback Program
Up to July, 2016
Up to 8 million shares
6.38% of the free float
THOUSANDS OF SHARES

10. 2Q15 Results
Outlook
Q&A
AGENDA

11. 2Q15 Results
11
Priority for actions that combine sales growth and margin recovery…
• Sales Growth - Focus on improving assortment and stores
supply
:: Assortment - Move on with initiatives implemented throughout
2014 looking to further improvement in product offering
:: Supply - Review of Supply strategy to the stores and relationship
with channels in order to increase control over sell-out and
stores’ efficiency
• Margin Recovery
:: Reduction of Leftovers Inventories - manufacturing calendar
normalization and inventories reduction. SAP go-live expected
to 1Q16
:: Reduction of Imported Mix
:: Pricing Strategy - Prices revision and products features ->
applied to 2H15 collections on
• Expenses Control
In 2Q15: Assortment
recomendation and VM
improvements for the year-end
cycle
In 2Q15: Latest collections
already shown decline in
leftovers and lower volume of
imported products
Greater expenses control observed in 2Q15

12. 2Q15 Results
12
• Hering for you Development
:: Model and assortment maturity
:: Store network extension for subsequent creation
of franchises’ network
• Webstores
:: Boost sales through the new
platform
:: Multichannel strategy
... without losing focus on building new growth fronts
• DZARM. New Business Plan
:: Relaunch plan implementation
:: Distribution channels expansion and store
opening in the coming quarters
1st store being developed,
opening expected for
September
3rd store lauched, with further
developments in exhibition
and assortment
Channel grew double-digit
in 2Q15

13. AGENDA
2Q15 Results
Outlook
Q&A

14. INVESTOR RELATIONS TEAM
Fabio Hering – CEO
Frederico Oldani – CFO and IRO
Bruno Salem Brasil – IR Manager
Caroline Luccarini – IR Analyst
www.ciahering.com.br/ri
(11) 3371 – 4867/4805
ri@hering.com.br