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Slide presentation 4 q08

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Slide presentation 4 q08

  1. 1. 1
  2. 2. Disclaimer This presentation contains forward-looking statements regarding the prospects of the business, estimates for operating and financial 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 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’s filed disclosure documents and are, therefore, subject to change without prior notice. 2
  3. 3. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  4. 4. 4Q08 Highlights CIA. HERING ENDS UP 4Q08 WITH GROWTH • Gross revenue in domestic market increased 53.0% • Hering brand sales rose 63.7% • Same-store sales growth of 29.1% in the Hering Stores • Ajusted EBITDA Margin of 31.6% (Comparable EBITDA Margin: 23.1%) CONTINUED GROWTH PLAN • 21 Hering Stores opened in the 4Q08 with the new architectural project • Marketing campaign “eu uso Hering…” with new celebrities • Actions focused on store operating performance optimization • New store architectural project for PUC brand • New business plan for dzarm. brand SUSTAINABLE GROWTH • Capex of R$ 10.5 million 4
  5. 5. AGENDA: •Highlights • Operating Performance • Business Strategy and Outlook
  6. 6. Gross Revenue (R$ million) By Market 629.2 33.0 596.2 200.6 42.1% 43.9% 5.1 442.6 Foreign 195.5 Market 51.7 391.0 139.4 11.6 36.2% 55.4% 127.8 Domestic Market 52.5% 53.0% 4Q07 4Q07 4Q08 4T08 12M07 12M08 Domestic Market represented 94.7% of the total gross revenue in 2008. 6
  7. 7. Gross Revenue – Domestic Market (R$ million) – 4Q08 By Brand By Distribution Channel 195.5 53.0% Others 3.9 11.7 dzarm 19.8 195.5 PUC 200 127.8 160.0 99.3 3.3 2.0% Multi- 11.5 150 127.8 Brand 15.3 29.7% Hering 63.0 57.7% 97.7 100 96.2 63.7% Franchise/ 50 64.8 Own Store 48.4% 0 4Q07 4Q08 4Q07 4Q08 Multi-brand sales rose more than the franchises and own stores together. 7
  8. 8. Gross Revenue – Domestic Market (R$ million) – 2008 By Brand By Distribution Channel 596.2 596.2 52.5% 600 Others 12.9 314.2 47.6 dzarm 61.9 500 PUC 391.0 473.8 391.0 400 44.9% 10.9 8.8% 216.9 Multi- 43.7 Brand 48.0 29.2% 300 Hering 288.4 200 64.3% Franchise/ 282.0 100 174.1 62.0% Own Store 0 12M07 12M08 12M07 12M08 Relevant growth for Hering brand and Franchise and Own Store in the domestic market. 8
  9. 9. Gross Revenue – Foreign Market (R$ million) – 4Q08 Private Label vs. Own Brands By Destination 11.6 7.5 11.6 55.4% 4.2 100.0% 5.2 Private 5.2 Label 3.6 North America 5.2 - 4.1 26.8% 2.5 Mercosul Own 1.0 Brands Europe 2.0 2.1 Latin America 0.8 0.5 Others 4Q07 4Q08 4T07 4Q07 4Q08 4T08 Own brands are the Export focus . 9
  10. 10. Gross Revenue – Foreign Market (R$ million) – 2008 Private Label vs. Own Brands By Destination 53 51.6 51.6 35.9 36.0% 43 18.4 33.0 33.0 33 59.9% 14.4 Private 6.7 North America 23 Label 15.4 Mercosul 18.6 18.5 Own 5.9 13 15.7 Brands Europe 18.2% 8.1 1.1 Latin America 3 5.1 Others 3.8 1.6 12M07 12M08 12M07 12M08 -7 Descontinuity of the private label production had an impact on the export commercial results in 2008. 10
  11. 11. Gross Profit and EBITDA (R$ million) – 4Q08 Gross Profit and Gross Margin Ajusted EBITDA and Adjusted EBITDA Margin 6.5 p.p. 12.0 p.p. 51.0% 44.5% 31.6% 83.2 51.5 19.6% 51.4 61.8% 127.5% 22.7 4Q07 4T07 4Q08 4T08 4Q07 4T07 4Q08 4T08 More participation of the own stores and cost dilution rose up the gross profit and EBITDA margins. 11
  12. 12. Gross Profit and EBITDA (R$ million) – 2008 Gross Profit and Gross Margin Ajusted EBITDA and Adjusted EBITDA Margin 7.0 p.p. 46.3% 238.5 6.7 p.p. 39.4% 20.5% 145.3 64.2% 13.8% 105.4 106.3% 51.1 12M07 12M08 12M07 12M08 EBITDA growth reflects the increase in revenue of the domestic market and the improvement of the Company’s operating margins. The reversals in 2008 for expense and tax provisions set up in previous years also impacted this growth. 12
  13. 13. Comparable EBITDA and EBITDA Margin (R$ million) 127.5% 106.3% 31.6% 20.5% 79.2% 17.8% 66.4% 105.4 23.1% 13.8% 13.8% 91.5 19.6% 19.6% 51.5 51.1 51.1 37.7 22.7 22.7 EBITDA Adjusted EBITDA EBITDA comparável Comparable EBITDA EBITDA Adjusted EBITDA EBITDA comparável Comparable EBITDA 4T07 4Q07 4T08 4Q08 2007 2008 Significant Comparable EBITDA growth of 79.2% even without considering the impacts neither of Law no. 11,638 nor of the reversals in 2008 for expense and tax provisions set up in previous years. 13
  14. 14. Stores Distribution Brands present in 23 brazilian states with 230 Hering Store, 59 PUC Stores and 14,748 multi-brand clients. 14
  15. 15. Hering Store Expansion Expansion Plan 325 57 268 38 230 181 151 * * * estimated Franchise Own Stores Review of the Hering own Stores opening, adapting the priorities to the expansion and remodeling of the existing stores, as well as possible acquisitions of franchises. 15
  16. 16. Distribution Network (number of stores) Distribution Network Evolution Goal: 57 311 22 248 59 23 209 19 44 Goal: 224 39 Goal: 172 230 181 151 2006 2007 2008 Hering PUC Abroad Cia. Hering surpassed the opening plan in 6 Hering Stores and 2 PUC stores estimated for the year. 16
  17. 17. Expansion 2008 – Franchise Period State City Location Status Status 1Q08 PI Teresina Shopping Riverside Walk Opened 1Q08 SP São Paulo Bourbon Shopping Pompéia Opened 2Q08 SP São Paulo Rua Dr. Diogo de Farias Opened 1Q08 2Q08 SP Santa B.D'Oeste Tivoli Shopping Opened 2Q08 SP São Paulo Rua Juventus Opened 2 Franchises Opened 2Q08 MG Juiz de Fora Independência Shopping Opened 2Q08 SP Guaratinguetá Shopping Buriti Guará Opened 2Q08 PB João Pessoa Shopping Tambiá Opened 2Q08 2Q08 SE Aracaju Shopping Jardins Opened 10 Franchises Opened 2Q08 PR Maringá Shopping Avenida Center Opened 2Q08 PE Caruaru Shopping Caruaru Opened 2Q08 DF Brasília Liberty Mall Opened 3Q08 3Q08 MG Divinópolis Rua A.Olimpio de Morais Opened 10 Franchises Opened 3Q08 SP Botucatu Rua Monsenhor Ferrari Opened 3Q08 SC Florianópolis Floripa Shopping Opened 3Q08 SP São Vicente Brisamar Shopping Opened 3Q08 SP Campinas Campinas Shopping Opened 3Q08 BA Feira de Santana Shopping Iguatemi Opened 3Q08 MG Patos de Minas Rua Agenor Maciel Opened 3Q08 SP Jau Rua Amaral Gurgel Opened 3Q08 PR S. José dos Pinhais Shopping São José Opened 3Q08 SP São Paulo Rua Bernardino de Campos Opened 17
  18. 18. Expansion 2008 – Franchise Period State City Location Status Status 4Q08 SP São Paulo Shopping Metrô Blvd. Tatuapé Opened 4Q08 SP São Paulo Rua Min. Roberto Cardoso Alves Opened 4Q08 PE Recife Shopping Plaza Casa Forte Opened 4Q08 4Q08 SP Votuporanga Rua Pernambuco Opened 21 Franchises Opened 4Q08 SC Criciuma Shopping Della Giustina Opened 4Q08 MG Três Corações Rua Julião Arbex Opened 4Q08 GO Rio Verde Shopping Rio Verde Opened 4Q08 SP Limeira Center Plaza Shopping Opened 4Q08 SC Jaraguá do Sul Shopping Center Breithaupt Opened 4Q08 MG Montes Claros Montes Claros Shopping Center Opened 4Q08 SP São Paulo Shopping Central Plaza Opened 4Q08 RO Porto Velho Porto Velho Shopping Opened 4Q08 RS Porto Alegre Barra Shopping Sul Opened 4Q08 MG Sete Lagoas Rua Santa Helena Opened 4Q08 GO Anápolis Brasil Park Shopping Opened 4Q08 SC Itajaí Itajaí Shopping Opened 4Q08 MG Uberaba Rua Arthur Machado Opened 4Q08 PR Curitiba Shopping Jardins das Américas Opened 4Q08 PR Londrina Royal Plaza Shopping Opened 4Q08 SP Pindamonhangaba Rua Bicudo Leme Opened 4Q08 SP Taubaté Taubaté Shopping Opened 18
  19. 19. Expansion 2008 – Own Stores Period State City Location Status 2Q08 RJ Rio de Janeiro Ilha Plaza Shopping Opened Status 2Q08 SP São Paulo Shopping Taboão Opened 2Q08 PR Curitiba Palladium Shopping Center Opened 2Q08 3Q08 SP São Paulo Shopping Penha Opened 3 Stores Opened 3Q08 SP São Paulo Shopping Metrô Itaquera Opened 3Q08 RJ Rio de Janeiro Shopping Tijuca Opened 3Q08 3Q08 PR Curitiba Rua XV de Novembro Opened 4 Stores Opened 4Q08 RJ Rio de Janeiro Shopping Grande Rio Opened 4Q08 1 Store Opened 19
  20. 20. Hering Store Indicators Hering Store Performance 4Q07 4Q08 Var. 2007 2008 Var. Number of Stores 181 230 27.1% 181 230 27.1% Franchise 156 193 23.7% 156 193 23.7% Own 25 37 48.0% 25 37 48.0% Sales (R$ thousand) 108,242 169,028 56.2% 276,121 438,844 58.9% Same Store Sales Growth 29.0% 29.1% 0.1 p.p. 29.0% 32.4% 3.4 p.p. Sales Area (m²) 24,106 29,791 23.6% 24,106 29,791 23.6% Sales (R$ per m²) 4,619 5,776 25.0% 12,625 16,256 28.8% Check-Outs 1,380,553 2,040,928 47.8% 3,353,403 5,225,865 55.8% Units 3,303,859 4,760,440 44.1% 7,973,839 12,222,332 53.3% Average Sales Ticket (R$) 78.40 82.82 5.6% 82.34 83.98 2.0% Sales per square meter in 2008 reached its goal of R$ 16,100/ m². 20
  21. 21. Capex (R$ million) By activity 35.8 35 1.2 6.1 30 25.3 10.3 10.5 25 Others 0.3 4.7 IT 13.0 10 0,1 1,7 0,4 1,2 20 Stores 8 2,2 5,5 15 11.8 15.5 6 6,6 10 4 8.4 2 3,1 5 Industry 0 0 4Q07 4Q08 2007 2008 In 2008, capex was mainly for store remodeling and opening as well as updating of industrial technology. 21
  22. 22. Indebtedness Indebtedness Evolution Short Term X Long Term 201.3 184.6 Short Term 58% Long Term 42% 4,6 3,8 11.0 .-0,7 0.1 Total Debt= R$ 145.1 million 2005 2006 2007 2008 -33.4 Net Debt/EBITDA* Net Debt (R$ million) * Last 12 months EBITDA 22
  23. 23. Financial Result R$ thousand 2007 2008 Var. Net Financial Expenses (30,571) (42,345) 38.5% Net Foreign Exchange Variation 13,198 (3,894) -129.5% Total Financial Expenses (17,373) (46,239) 166.2% - In 2008, Law no. 11,638/07 changed the method of measuring financial instruments, generating an atypical effect in the financial expense. -On 12/31/08, Cia. Hering registered an expense of R$ 46.7 million as derivatives’ fair value. - Main derivative: Swap with 19 verifications (Apr/09 to Oct/10), amounts between R$ 25 to 30 million, with effective losses if the exchange rate rises above R$/US$ 2.80. - The Company is actively monitoring the exchange market in order to minimize the exchange risk arising from derivative transactions. 23
  24. 24. Payment to Shareholders Interest on Shareholders Equity Payment amounting to R$ 4.8 million (R$0.09/share) on February 22, 2008, related to the year ended on December 31, 2007; Payment amounting to R$ 4.8 million (R$ 0.09/share) on September 19,2008, related to the year ended on December 31, 2008. Dividends The payment of dividends amounting to R$ 10.6 million (R$ 0.19616/share), related to the year ended on December 31, 2008, will be proposed at the General Shareholders’ Meeting to be held on April 28, 2009. 24
  25. 25. AGENDA: • Highlights • Operating Performance • Business Strategy and Outlook
  26. 26. Strategy & Outlook Hering Store chain Continue expansion plan – 325 stores by the end of 2010 Maximize operation performance – Store space allocation review and optimization – Automatic replenishment for basic items – Fast response for best sellers – Continuous promotional sales for slow movers Promote the Hering Store credit card Marketing campaign “eu uso Hering desde sempre” New architectural project for the PUC Stores Implementation of dzarm. brand relaunching plan 26
  27. 27. Investor Relation Team Fabio Hering – Vice President and IR Director Frederico de Aguiar Oldani – Financial Director Karina Koerich – IR Manager Gracila Camargo Lopes – IR Analyst Tel.: +55 (47) 3321-3469 3321- E-mail: ri@heringnet.com.br mail: Website: Website: www.ciahering.com.br/ir Investor Relations Consulting Firm FIRB – Financial Investor Relations Brasil Ligia Montagnani – IR Consultant Tel: +55 (11) 3897-6857 E-mail: ligia.montagnani@firb.com 27

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