Arezzo&Co's Investor Day 2016 - Inglês

AGENDA
SCHEDULE ACTIVITIES PRESENTER
14:00 14:05 Instructions and Agenda Paulo Ionescu
14:05 14:20 Opening remarks Alexandre Birman
FIRST PART
14:20 14:35 People Management Marco Vidal
14:35 15:00 Value Chain Cassiano Lemos / Silvia Machado
15:00 15:15 OMNI and Valorizza Mauricio Bastos
15:15 15:30 Finance Thiago Borges
15:30 15:45 Corporate Governance José Monforte
15:45 16:00 Q&A
16:00 16:20 Coffee Break
SECOND PART
16:20 17:15 Talk Show (moderator Alexandre Birman) Silvia Machado (Arezzo)
Fabíola Guimarães (Schutz)
Yumi Chibusa (Anacapri)
Marianna Arzinaut (Fiever)
Milena Ometto (A. Birman)
Fernando Baumer (Multibrands / External Market)
17:15 17:35 Q&A
17:35 17:45 Closing remarks Alexandre Birman

Arezzo&Co Investor Day
Opening remarks
Alexandre Birman
CEO
December 9th, 2016

4
Opening Remarks
Reference platform of brands
The Company has a strong portfolio of Top of Mind brands within Brazil

Franchises
Multi-brand
Owned stores
External Market
Webcommerce
0
100
200
300
400
500
600
700
2011 2016E
Sales per Channel (R$ MM)
Franchised stores: solid growth driver
for existing and new brands, strengthens
the asset light business model proposition
Owned stores act as a benchmark to
the rest of the network and testing of new
brands
Webcommerce operating model
evolution, strong growth channel
External Market: gaining momentum
due to brand portfolio
Multi-brand leverages sale distribution
of existing and new brands
Multiple growth channels strengthen the attractiveness of the business models
Opening Remarks
Evolution of distribution channels
5

Opening Remarks
Multi-brand and multichannel strategy
Footwear: Ongoing evolution in supply chain with higher collection assertiveness, agile reading of customers and quick response to sell-out
Handbags: Developing the knowledge triad product-price-branding and focus in differentiated marketing actions
Accessories: Fulfill the mix offered, expand lifestyle concept (Schutz)
Organic growth leveraged by multi-brand, multichannel strategy in footwear and handbags
Franchises
Multi-brand
Owned
stores
Web
Commerce
External
market
New categories
SSS focus (VPL²)
GTM – continuables
SSS Focus (VPL²)
GTM, focus on handbags
Stores projects Roll-out
Services segmentation
Not a current
focus
Share of wallet increase
Attracting new clients
Handbags Cross-sell
Recent brand
awareness in this
channel
Increase penetration
Handbags Cross-sell
MKT PDV activation
Sale at selected
points of sales in line
with our branding
Expansion to new
points of sales
Focus on SSS increase
(VPL²)
Store transfer of
ownership
Complete transfer of
pilot-stores keeping 2
flagship stores at the
most
SSS focus (VPL²)
Store transfer of
ownership
SSS focus
Opening of pop
up stores
Opening of some
flagship/pilot
stores
New F.I.S site, allowing
ongoing expansion
New app
Strengthen digital
presence
To increase flow and
conversion
Channel improvement,
ex.: app
In store shipping test
2017 launch
Present in global
retailers
Online presence to
increase brand
awareness and
penetration
USA trial project
Exports to multi-brand
stores
Focus on key
accounts
New plant will allow
to meet demand of
international clients
Not a current
focus
National Roll-out
Continuables
program
MKT investment
Start feasibility
studies
Launching of AB
brand franchises
6

Opening Remarks
Strategy
Business model allows multiple growth options
Adjacencies
Core
Brands
Categories
Geography
Female
Children
Teenager
Comfort
Male
White soles
Full plastic
Footwear
Leather accessories
Other accessories
Clothing
Other categories
Brazil
Latin America
North America
Europe
Middle East
Owned stores
Multi-brand
Exports
Online
Outlets
Kiosks
Department stores
Channels
Franchises
Handbags
Segment
Positioning
Class A1
Class B1
Class C2
Arezzo
Alexandre Birman
Anacapri
Schutz
Class A2
Class B2
Class C1
Other brands
Fiever
7

The Company strengthened its organizational identity by formalizing its Mission and Vision
PRINCIPLES
 Transparency
 Authenticity
 Meritocracy
 Involvement
 Alignment
 Flexibility
 Humility
 Passion
 Challenge
 Union
VISION
“To be the leader in Brazil in fashion footwear and handbags, with
international presence, satisfying our clients with the most
desirable brands, generating ongoing value for stakeholders
MISSION
“To help realize wishes by identifying and interpreting female
trends and behavior, providing the best experience by offering the
right product at the right time.”
Opening Remarks
Organizational Identity
8

Arezzo&Co keeps developing its business model in a sustainable way
Consolidated business model with multiple growth opportunities
• Launch of a new brand Fiever with encouraging results
• Improvement in the profitability of existing brands: Anacapri and Alexandre Birman
1
Staff management an ongoing development
• Broad range of selection, training and retaining of staff at all levels
• Strengthening of organizational identity
2
Ownership of the value chain, greater competitive advantage
• More agile and collaborative model
• Sell-out oriented to boost results in the value chain
3
Multi-channel management know-how, excellent platform to lift brands
• Omni channel growth: Fiever debut, Schutz FIS, Arezzo consolidation, Anacapri expansion
• Strong knowledge in franchises’ management in addition to improving opportunities
• Multibrand channel leverages growth of new brands
5
Financial strength allows for sustainable business growth
• History of cash generation together with consistent dividend payment policy
• Net cash position, an important differentiator in challenging economic times
4
Opening Remarks
Key messages
9

Marco Aurélio Vidal
People Management Director
People Management

People Management
Strategic framework for Arezzo&Co’s people management model
Performance aligned with the key components of the Company’s value creation
CHANGES
MANAGEMENT
STRATEGYRESULTS
STRATEGIC
HR
People management
AREZZO&CO
1. Value creation
2. Competitive differential
3. Results
4. Meritocracy
5. Development
6. Climate
7. Culture
8. Influence
9. Stable and trustworthy relationships
10. Efficient processes
11

Increase in engagement reflects several strategic initiatives focused on people
... Positively impacted turnover rate
40%
31%
2015 2016
9pp
LOWER
TURNOVER
INVOLVEMENT ALIGNED WITH THE PURPOSE OF
HIGHER PRODUCTIVITY
KNOWLEDGE RETENTION AND INNOVATION CAPACITY
The increase in engagement level…
43%
2014
8ppINCREASE
AREZZO&CO
52%
59%
67%
2013 2014 2016
2016 ENGAGEMENT
SURVEY RESULTS
85%
ADHESION
People Management
2016 Results
12

Arezzo&Co is #1 in female footwear in Brazil in the main career website
2015 2016
FOLLOWERS IN CAREER
PAGE OF AREZZO&CO
61%
40,5k
65,3k
In 2016, the Company shared its identity with
the market and reached out to people who
identified with our business
WE ARE A LINKEDIN’S
CAREER CASE
People Management
The importance of a good image
13

People Management
Effective employee participation in the development of the workplace
Focus on governance and methodology of organizational climate
Strategic initiatives focused on climate
Training and
development
Internal
communication
Quality
of life
Career
opportunity
TIMELINE OF MACRO ACTIONS OF PEOPLE MANAGEMENT
JAN FEB MAR APR MAI JUN JUL AUG SEP OCT NOV DEC
INTERVIEW WITH
MANAGERS
WOMEN DAY
EASTER
MOTHER’S
DAY
FATHER’S
DAY
BIRTHDAYS
FRESH FREE FRUITS
NEW CANTINE
SNACK CART
CHILDREN'S DAY
SHOEMAKER DAY
NEW COFFEE FLOW
FUN
THURSDAY
Multitask employees’ committee which reviewed
and made suggestions for areas of improvement
within the Company
MANIFEST
VIDEO
HOLIDAY PARTY
RECOGNITION OF
TALENT POOL
14

People Management
People management and business sustainability
Selection alignment and people formation in Arezzo&Co
IDENTITY
STRENGTHEN
OUR WAY
CLIMATE
LISTEN TO OUR TEAM
AREZZO&CO CULTURE INVOLVE PEOPLE
VALUES PEOPLE+
Belong feelings
DEVELOPMENT
Building a strong team
CLIMATE
Proximity with the team
RECRUIT
COMMUNICATION
Personal and personalized
2016 WORKING GROUPS
IDENTIFY
Recruit to address
current needs
ENGAGE
Become a reference
as one of the best
companies to work for
COMMUNICATE
Align the team
with business
strategy
DEVELOP
Develop now to prepare
for the future
15

People Management
Right people for the right roles
Performance evaluation and connection with Arezzo&Co’s principles starts in the recruiting and selection
process
TECHNICAL TESTING
FOR THE ROLE
BEHAVIOR
EVALUATION
ETHICS
ADHERENCE
• Retail roles
(sales, cashier and stockist)
• Production roles
• Back office roles
• Third line leadership
• Trainee program• Leadership Roles
Specialties
Culture
SELECTION PROCESS TOOLS
Entry tests and evaluation to identify the right applicant to the role
• Middle Officers
16

23%
54%
23%
MANAGERS
COORDINATORS
SPECIALISTS
ACTIVE DEC/2016
People Management
A new look to find and shape talents
2016 and 2017 trainee program focused in our business
Previous teams
24 young professionals graduated from Arezzo&Co’s
trainee program since 2012
4 TEAMS
GRADUATED
2016 TEAM
BUSINESS FOCUS:
Merchandising, commercial and
marketing.
DIFFERENTIALS:
• Greater retail experience
• Workshops in merchandising
• Projects management
57%
32%
11%
TRAINING HOURS
556 HH
INTEGRATION
STORE EXPERIENCE
PRODUCT AND COMMERCIAL
17

Continuity and development of
training programs to all leadership
levels
Development of training programs to
support the stores network
Reinforce Arezzo&Co’s way of doing
things
Strengthen the identity Leadership development Support to the retail network
2016 People Management
People Management
Key developments and initiatives in 2016
A special look into the shaping and development aligned with the Arezzo&Co’s culture and strategy
18

People Management
Strengthen organizational identity
Several initiatives and actions during the year generated greater alignment with our purpose
Identity strengthening to
Arezzo&Co’s leadership
Performance evaluation
by principles
Internal
communication
campaign
Intranet launchArezzo&Co’s
ambassador campaign
Retail team
deployment
OPEN CHANNEL
Strengthen and alignment achieved in the channel
for open dialogue and presentation of results
4 live meetings
+ than 700 employees impacted
Strengthen identity
Leadership
development
Support to retail
network
19

People Management
Ongoing formation of the team
To guarantee the development of the right skills for each level and public
2015 2016
TRAINED PEOPLE
(THOUSANDS)
12
18
Investment increased in training
reaching 80 thousands hours
(+48%)
Strengthen identity
Leadership
development
Support to retail
network
FOCUS ON
DEVELOPMENT
OF LEADERSHIP
AND IN THE
SPECIALTY
20

People Management
People development
Main training and development initiatives
AUDIENCE: OFFICERS AND GENERAL MANAGERS
4 meetings scheduled
Greater leadership development
AUDIENCE: TALENTED MANAGERS
Mentoring workshop
12 managers with a mentor’s officer
AUDIENCE: COORDINATORS,
SPECIALISTS AND SUPERVISORS
4 team building meetings
105 employees in the program
AUDIENCE: COMMERCIAL AND OWNED
STORES AND FRANCHISEES
14.000h training | 3.600 people
3 meetings
AUDIENCE: RETAIL AND OWNED STORES
AND FRANCHISEES
AIR PILLS
4.900h training | 21.624 views
AUDIENCE: PRODUCTION
TECHNICAL FORMATION IN FOOTWEAR
2.500h training/ 2016 | 95 people
Strengthen identity
Leadership
development
Support to retail
network
21

2
2
People Management
Franchisee preparation focusing on retail
Standardize processes and attendance to guarantee the best purchasing experience
86%OF STORES USES AIR
35 COURSES
FOCUSED IN RETAIL
AVAILABLE IN AIR
18.420H
ONLINE TRAINING IN 2016
FRANCHISEES INTEGRATION LIVE CONVENTIONS AIR TRAINING
Development focused
in retail
65
trained people
520 hours total
7.900
impacted people
Training with consultants
focused in sales processes
and techniques to
strengthen the network
TRAINING HOURS
COMMERCIAL TEAM
2015 2016
3.472H
1.440H
141%
STANDARD TRAINING
Arezzo sales
Schutz sales
Ana Capri sales
Product
Salesperson
Stockist
Cashier
Manager
+20 with specific
focus
Strengthen identity
Leadership
development
Support to retail
network
22

People Management
People management aligned with the strategy
Strategy deployment and annual goals to all managers aligned with the development cycle of HR
BUDGET
GUIDELINES AND
STRATEGIC
PLANNING
BSC
PEOPLE
CYCLE
MANAGEMENT
CYCLE
- 360º EVALUATIONS
- MANAGERS
MEETINGS
- PDI AND FEEDBACK
- ACTION PLAN
- FOLLOW UP MEETINGS
- BSC RESULTS UPDATES
BSC has a system focused in the monitoring of goals
Specialized software in following up goals and action plans to
guarantee synergies
23

People Management
Action plans and tools for achieving the goals
GOAL MONITOR
DASHBOARD
ACTION PLAN MONITOR
DASHBOARD
24

People and Development
Highlights and talent recognition
Development of a high performance team
OVER
PERFORMANCE
COORDINATION
COFFEE WITH IDEAS
ALL
COLLABORATORS
TALENT POOL
MANAGERS
TALENT POOL
OVER PERFORMANCE
COFFEE WITH IDEAS
PROGRAM TO RECOGNIZE POTENTIAL
MANAGERS BASED ON CRITERIA OF MEETING
GOALS AND PERFORMANCE EVALUATION
MENTORING PROGRAM PARTICIPATION AND
SUPPORT IN SPECIALIZATION COURSES
ACTION TO RECOGNIZE
COORDINATORS AND SPECIALISTS
INTERACTION AND PROXIMITY MOMENT WITH
CEO WITH COLLABORATORS
25

People Management
Continuous investment
2017 People pipeline focus on strengthening the team, results, culture and engagement with Arezzo&Co’s
purpose
• Leaders
development
• Retail training
• Retail productivity
model
• Trend&Co
• 2017 Trainee
• 2017 Intern
• AIR
• Shoemaker school
• Factory leadership
• Benefits politics
• Roles and wages
• Own resources
• Talents
• Long Term Incentive
and retention Plans
• Redesign budget
model
• Offsite
• 2017 Team Building
• 360º AVD Evaluation
• Scholarship policy
• High Potential Training
• Job Rotation
• Ergometry
• Labor exercises
• Running teams
• Posture blitz
• Prevention exams
• Birthdays
• Area/hang out
moments
• Social
responsibility
• Coffee with ideas
• Coffee with HR
• Climate committee
• Retail committee
• Ambassadors
• Discussion forum
• Governance on
budget
• BSC individual goals
deployment (Drive to
ICP)
• Action plan to all
goals
• Governance on
control and results
capture cycle
• KPI management in
stores
26

Promoting people development and strengthening our leaderships
Strategic positioning in People Management
- Value creation inside and outside Arezzo&Co
- Development of competitive differentials
1
Culture
- Organizational identity: Manifest, Mission, Vision, Principles
- Alignment of purposes and Arezzo&Co way of being
- Recruiting, performance evaluation and development with focus on principles adherence
2
Training and Developing
- Customized programs to the development needs of each level
- Pipeline strengthening of people through a strong leadership formation and technical capacitation
3
Climate and engagement
- Collaborators involvements on setting up the demands and actions to be implemented
- Focus on improvement points from the previous climate surveys
5
Management and meritocracy
- Strategic and annual goals deployed to all level of the Company, through performance indicators
- Stabilization of People management cycles (control and results capture)
- Recognition of best performances through criteria
4
27
People Management
Key messages

Value Chain
Cassiano Lemos Silvia Machado
Logistics and Planning Director Arezzo BU Director

1
2
3
Value Chain
Main developments on product management and results
• Average network mark-up increased, with greater % of shoes sold at full
prices
• Lower inventory levels at season end
• Higher participation of sales of reposition products
• Acceleration of Sell-out SSS this summer
• Sell-in SSS in line with sell-out SSS
Collection Planning
• Collection agenda evolution
• Product mix management
Collaborative attendance model
• E-showroom + Video Calls
• Product committee
• Planning aligned with the network
Sell-out driven supply models
• Cycles of best sellers repositions
• Continuables reposition program
Implemented a set of changes with greater focus on sell-out which raised sales frequency of bestselling
items and collections, demonstrating a high assertiveness to changes set forth
Sell-Out SSS and Sell-In SSS change comparison
2013 2014 2015 9M16
Sell In Sell Out
Fronts Results
29

Value Chain
The right product at the right time + Client experience with brand
FRANCHISEES MANAGEMENT
PRODUCT MANAGEMENT
30

Value Chain
PRODUCT MANAGEMENT
31

Improved collections agenda and consolidate method of collection construction that enables more
efficient decision making
Collection Agenda
E-showroom
Video Calls
Value Chain
Collections planning and franchisees interactions
Higher collection frequencies,
approaching sell out purchasing
decisions
Through audio and video calls, we are
able to effectively replicate to the rest of
the chain sales and products guidelines,
thereby optimizing fulfillment costs and
raise engagement
2013 2016
Orders Points
Winter
Summer
Reposition
Total
3
6
3
12
5
7
9
21
32
Interactive system with tools to tag
and follow up orders of each
franchisees

Distribution change Project benefits
Previous DC - Campo Bom (RS)
New DC - Cariacica (ES)
 Higher proximity to main markets, allowing
reduction in reposition lead time
 Reposition capacity expansion in open grid,
via storage and picking in flowrack
 More favorable dynamics of tax rates
 Receipt and storage capacity of 120
thousand items/day
 Segregation and expedition capacity of 150
thousand items/day
 Logistics condominium with infrastructure to
support expansion
Investment in New Distribution Center with a close proximity to main consumption markets
Value Chain
Logistic supporting the “right product at the right time”
 Started in Jun/16
33

Value Chain
Handbags categories
Collection Mix
Availability in POSMarketing and VM
Product development
 Family segmentation strategy
 Development of iconic
handbags for each brand
 Development oriented per price
range
 New raw materials and suppliers
 Meticulously product development
 Focus on details that convey the DNA of
each brand
 Marketing actions focused on iconic
products
 Handbags in brands campaigns
 Differentiated VM to expose handbags
 Handbags mix expansion in
collections reposition
 Handbag inclusion on continuous
reposition program
 Specific orientation to
franchisees’ purchases
34
Handbags became a core category in our business, with Schutz growing double-digit in the last 3
years and Arezzo increasing its share in the Summer collection
1
3
2
4

Value Chain
Collection of Arezzo Handbags
• Leather families
• Timeless models with language and symbols
representing Arezzo brand
• Prices starting at R$499
• Storytelling recorded in handbags
• Specific VM
• Prices starting at R$299
• Models created to be exposed alongside shoes
• Excellent cost x benefit models
• Entry price at R$199
• Focus on cost x benefit and functionality
• Commercial shapes: Shopping bag, Tote
and Cross Body.
35
Definition of distinct handbags aiming to create a clear value proposition for the product, balancing
glamor and price, while bringing greater consistency to the collection

Value Chain
Marketing action and visual merchandising of Arezzo Handbag
The marketing strategy of handbags is based on the release of iconic products and customization actions,
in addition to diferentiated visual merchandising strategies at the point of sale
ALEGRA ICONIC HANDBAG
ACTIVATION WITH
INFLUENCER THASSIA NAVES
PERSONA ME PINS ACTION PERSONA ME TAGS ACTION DIFFERENTIAL VISUAL
MERCHANDISING
36’

Value Chain
PRODUCT MANAGEMENT
37

Value Chain
Guidelines, monitoring and execution excellence
Brand evolution, results monitoring and excellence in execution are key factors for success in the
Company’s franchisee system
GUIDELINES AND
MONITORING
EXECUTION
Know-How
Standards
Orientation
Monitoring & Support
Recognition
Preparation
Standards implementation
Daily execution
Team management
38
Brand Product VM Attendance Relationship
Franchisor Franchisee

Value Chain
Arezzo&Co operation management pillars
Product Management
• Mix edition and definition of purchases per store
• Orders, deliveries and inventory follow up
• Management of the product performance in the
store
Counter Front
• Client attendance
• Local marketing and relationship actions
• Visual Merchandising standards reproduction
Counter Back
• Financial management
• Team management
• Process and POS systems management
39
Counter
Front
Counter
Back
Product
mgmt

Value Chain
Opportunities to Generate Value in Chain
Evolution of franchisee model aims to boost network performance, improve client purchase experience and
optimize service costs
A. Segmentation of service level by franchisee
profile
B. Meritocratic system implementation, based
on key business indicators
C. Development track construction focusing on
high performance
D. Structured succession plan implementation
E. Development of integration management
with OMNI, focusing on clients experience
Next Steps
Expansion
Process
Structure
High Performance
Focus
40

Integrated actions in product management and the planning of collections, sell-out supply model and collective
attendance, saw better chain-wide results
1
Higher order frequency throughout the year, with input from franchisees via E-show room and Product Comitte allowed
for greater assortment decisions
2
Stores supply more agile and collaborative, from initial planning of volumes up to repositions of collection items and
continuable, leveraging sales results and margin
3
Better understanding of each operator profile and adequate service will be the base of a clusterized and meritocratic
system, promoting high performance across the network, improving shopping experience
5
Endless evolution of brand guidelines, continuous monitoring of results and excellence in execution are key factors for
success in a franchised operating model
4
Value Chain
Key messages
41

OMNI and Valorizza
Mauricio Bastos
OMNI Manager

BEING OMNI MEANS TO BE PRESENT ACROSS ALL RELEVANT CONTACT
POINTS TO OUR CLIENTS, PROMOTING A UNIQUE EXPERIENCE
(UNFORGETTABLE AND INTEGRATED)
OMNI and Valorizza
From thesis to consolidation
43

CAGR 80% (2012-2016)
>
1
10
24
44
69
100
2011 2012 2013 2014 2015 2016
Arezzo&Co built an online operation, generating value across the chain
CHANNEL REVENUE IN R$ MILLION
OMNI and Valorizza
From thesis to consolidation
2017
44

INTERNALIZED STRUCTURE NEW WEB DC OPERATIONAL EXCELLENCE
OMNI
CREATION
LOGISTICS
DIGITAL
MARKETING
BUSINESS
INTELLIGENCE
TECHNOLOGYSAC
Leveraging the business with a significant efficiency gain in Logistics in 2016
57% cost reduction per shipped item
(vs 1H16)
-3 p.p. of logistics expenses before
implementation
+40% shipped products in November
(YoY) with OTD* of 98.3%
 NPS* of 75% in the last 6 months
(Brazil average of 65%)
 RA 1000 Stamp in all brands and
qualified in three categories of Época
magazine customer complain award
“Época Reclame Aqui”
 3 Awards by E-Bit, biggest E-
Commerce Award in Latin America
OMNI and Valorizza
Structure and process leads to operational excellence
Evolution of shipped cost per item in 2016
Costperitem(R$)
*OTD: On time Delivery / NPS: Net Promoter Score 45

Assertive OMNI strategy enabled
new sales leverage and alignment
with franchisees
2016Data.SourceArezzo&Co
OMNI and Valorizza
AREZZO Online Operation
3.2mm 1.9mm
TOOLS FOCUSING BRICK AND MORTAR STORES
(Franchisees and Owned stores):
+2.7 MILLION VIEWS
FIND THE NEAR STORE
740 THOUSANDS
VIEWS TO TRY IN STORE
251 THOUSANDS
VIEWS IN AREZZO MY STORE
+113 THOUSANDS
WARNINGS NOTIFY ME
+4 MIL
B.I. REPORTS SENT
46

OMNI and Valorizza
ANACAPRI Online Operation
240K 324K
First full year of online operation of Anacapri
brand forecast +70% revenue increase (SSS).
Marketing actions integrating online and offline
channels, leading more flow and conversion to
brick and mortar stores.
Increase of brand
digital presence
139% YoY
Site audience growth in 2016
Fonte:Arezzo&Co
47

OMNI and Valorizza
FIEVER Online Operation
39.8k (+148%) 26.1k (+1.353%)
Increase in 5/12 compared to 30/08
Fiever was born
digital
• Future projects can be launched faster with lower
investments.
• Lighter platform, with lower customization necessity
• Reduced launch time, 3 months
MAINS PROJECT LESSONS :
Online presence a tool to improve
BRAND AWARENESS.
155% increase in brand search on Google
80 cities already received Fiever products
Source:Arezzo&Co
48

OPPORTUNITY TO
ENGAGE THE
AUDIENCE
Volume and characteristics
of online audience to
Schutz brand brought
opportunity to reconsider
access, frequency and
conversion.
Strategic thought led to a
digital repositioning process
ANNUAL EVOLUTION OF SCHUTZ VISITS
MONTHLY AVERAGE VISITS PER USER
OMNI and Valorizza
SCHUTZ Digital Repositioning
Source:GoogleAnalytics
3.2mm 1.8mm
49

OMNI and Valorizza
50

MAIN INDICATORS REFLECT DIGITAL REPOSITIONING
FonteArezzo&Co-MarchtoSeptember2016
INCREASE IN ACCESS FREQUENCY PARTICIPATION OF CONTENT ACCESS INCREASE IN CONVERSION RATE
2xVisits per user doubled in the group
impacted by contents
3xPercentage visitors who consumed
content
~50%
Increase in conversion rate of users
impacted by contents
The lessons learnt from F.I.S. and from Online Schutz 5 years in Brazil will be
used to redesign its Online operation in USA
OMNI and Valorizza
51

NEW APP
LAUNCHED
ALIGNED TO F.I.S
CONCEPT
3x more
Depth in navigation (screens
seen per visit)
0.3% 5%
increase in revenue share
via app
21%
revenue increase before
Android availability
NEW MOBILE SITE
LAUNCHED WITH
SCHUTZ F.I.S. TURN
AROUND
20%
conversion increase compared
to September 2015
50% 55%
Increase in mobile
audience share
50%
mobile revenue + tablet
Source:Arezzo&Co
OMNI and Valorizza
52

Valorizza came from a major focus in sell-out with improvements in services
provided to stores and final clients
SALES TECHNIQUES
IMPROVEMENT
TRAININGS
OPERATING MANUALS
EFFICIENCY
IMPROVEMENT
MANAGERIAL TRAINING
COACHING AND FEEDBACK
MANAGEMENT
CONSULTANCY FOCUSED
IN PEOPLE
CLIENT FOCUS
CUSTOMIZED RELATIONSHIP
ACTIONS MORE RELEVANT
STORE TEAM TRAINING
OMNI and Valorizza
Focus on the Client: OMNI Integration + Valorizza
PRODUCT
SALES
OPERATION
PEOPLE
CLIENT
53

2016
ROLLOUT
TO THE NETWORK
2017
OTHER BRAND
EXPANSION
PRIORITIZATION
OF INTEGRATION
FOR OUR
CLIENTS
 System architecture
revision
 New developments
 Cross-channel
relationship scale
+40K
Mail merge
+375K
SMS
+31MM
E-mails
+1.5MM clients in active base
CONTACT POINTS
OMNI and Valorizza
54

ACTIVE CLIENTS
RETENTION
+60%
Retention of clients impacted by
Valorizza compared to control
group
INACTIVE CLIENTS
REACTIVATION
+90%
Reactivation of clients impacted
by Valorizza compared to control
group
AREZZO
+13%
Average frequency
SCHUTZ
+7%
Average Product per
salesperson
Fonte:Arezzo&Co
POSITIVE IMPACT IN REVENUE
VARIATION
+9%
Revenue variation of clients impacted
by Valorizza compared to control group
$
In the first year, the Schutz and Arezzo network rollout already shows success in reactivation,
retention and client revenue pillars
OMNI and Valorizza
55

Maturation of OMNI client journey
fundamentals
ISOLATED
EXPERIENCES
ONLINE INTEGRATION
OFFLINE INTEGRATION
OMNI INTEGRATION
OMNI INNOVATION
Customization in a single point of contact, using data for a unique channel. Fewer synergy actions. Low integration
Personalization in digital contact points using information from all channels
Personalization in physical contact points using information from all channels
Consistent and integrated experience between channels
with journey approaching multiples points of contact
Interactions 1:1 real time
ON and OFF
approach still
with limited
points of contact
Online
experience
personalized
starting from ON
and OFF data
integration
Customized
physical
experiences
starting from ON
and OFF data
integration
Mutual Data
supply from all
channels and
orchestrated
experience
Customized and
individualized
conversations
independent of
the channel or
journey
OMNI and Valorizza
56

HAS YOUR PURCHASE BEEN
INFLUENCED BY BRAND PRESENCE
ON THE INTERNET?**
2014 2015 2016
DO YOU PREFER TO SHOP ONLINE
OR OFFLINE**
B&M STORES INTERNET
84%
16%
36%
46%
51%
Digital influence in the purchase process went from 36% to 51% in the last two
55%
25%
20%
I’VE BOUGHT
ONLINE
I’VE BOUGHT
AT STORES
I’VE BOUGHT IN
BOTH CHANNELS
**Source: survey made on B&M stores in 2014 only with Schutz, 2015 with Schutz and Anacapri, and in 2016 with Schutz, Anacapri, Arezzo and Fiever.*Graph based on Omni channel Survey E-bit/Buscapé (last 6 months)
FASHION SEGMENT (FASHION AND
ACCESSORIES) IS IN THE HIGHER
OMNI POTENTIAL*
OMNI and Valorizza
57

Source:Arezzo&Co
+56%
OMNI* clients spend more than
clients that buy only in our stores
Evaluation of OMNI clients annual
investment levels in each channel
OMNI CLIENT
PROFILE
+40%
OMNI* clients spend more
online than just online
customers
OMNI CLIENTS’ VOLUME INCREASES ANNUALLY AS ITS AVERAGE EXPENSES
*Schutz OMNI client were used as reference
Ps.: Average 4 last years as of October to September of each year
OMNI CLIENTS QUANTITY OMNI CLIENTS AVERAGE EXPENSES
OMNI and Valorizza
58

STORE SHIPPING
TRIAL (WITH
FRANCHISEES)
2017+
MOBILE EXPERIENCE
DEVELOPMENT
COMPLETE
CLIENT
JOURNEY
SCHUTZ USA
2016
TO CAPTURE AREZZO
BRAND POTENTIAL
HIGHER OPERATIONAL
EFFICIENCY
NEW DC
WEB
SCHUTZ FIS
OMNI and Valorizza
Journey an ongoing evolution and sophistication
2011 a 2015
59

Strong structuring of digital operation, leading us to achieve 7% of gross revenues in a 5-year period1
Operational efficiency and synergies is OMNI’s key focus as new Web distribution center positively
impacted channel margins2
Maturation of the structure and management of online brands represented by SCHUTZ FIS digital
repositioning and faster FIEVER deploy3
Ability to operate new brands and huge opportunity in the internationalization of SCHUTZ brand
process5
OMNI and Valorizza integration as a fundamental pillar to capture the potential of the increased
digital influence in the purchases process4
Being OMNI means to be present in a consistent way across all relevant contact points, promoting a
unique experience (unforgettable and integrated)
60
OMNI and Valorizza
Key messages

Finance
Thiago Lima Borges
CFO and IRO

Finance
Overview
Operating cash flow yield¹ 5.4%
Capex / Depreciation LTM 1.1x
 The Company has a strong balance sheet and a net
cash/EBITDA ratio of 0.7x in Sep/16
Note: 1) Operating cash flow yield = Operating cash flow / Firm value. Considered Firm Value of R$1,962.2 mm based on average share price from 9/30/2015 to 9/30/2016
Net Debt / EBITDA LTM -0.7x
 Arezzo&Co generated R$105.3 mm in operating cash flow in the
last 12 months, translating into cash flow yield of 5.4%
Working Capital (% of Net Revenue) 29.1%  Reduction in working capital needs by 120 bps from 3Q15 to 3Q16
Dividend Payout > 50%  Consistent dividend payments, with a historical payout of more
than 50% net profit in the period
 From 2015 onwards capex trended roughly in line with
depreciation
Arezzo&Co has a solid balance sheet with a healthy net cash position, coupled with a strong ability to
generate operating cash flow and dividend payments
62

567 663 719 767 738
549 585
216
357
400
434 467
359 3430
0
41
72 93
68 80
11
18
10
9 9
6 13
815
1.070 1.170 1.282 1.307
982 1.020
2011 2012 2013 2014 2015 9M15 9M16
Arezzo Schutz Anacapri Other¹ Local market
Sales breakdown by brand in domestic market (R$ MM)
420
512 583 661 638
477 491
234
286
289
300 305
257 243
151
246
268
272 292
201 20747
39
62
76 128
86 114
1
10
23
44
69
45 77
863
1.109
1.232
1.358 1.435
1.068 1.135
(3000,00)
(2500,00)
(2000,00)
(1500,00)
(1000,00)
(500,00)
–
500,00
1000,00
1500,00
2000,00
–
200,00
400,00
600,00
800,00
1000,00
1200,00
1400,00
1600,00
1800,00
2000,00
2011 2012 2013 2014 2015 9M15 9M16
Franchises Multibrand Owned stores Exports²
Web commerce Other TotalNote 1: Includes Anacapri (up to 2012), Alexandre Birman and Fiever;
Note 2: Considers exports sales and USA
Note 3: Data label of “Other” category is hidden
Finance
Revenue diversification
Sales breakdown by channel (R$ MM)
CAGR: 12% 4% CAGR: 14% 6%
Consistent business model with brands and sales channels diversification and growth in domestic market
much higher than peers
63

49% 46% 47% 49% 44% 45% 43%
27%
26% 23% 22%
21% 24%
21%
18% 22% 22% 20%
20% 19%
18%
5%
4%
5% 6%
9% 8%
10%
1% 2% 3% 5% 4% 7%
1% 1% 1%
00%
20%
40%
60%
80%
100%
120%
2011 2012 2013 2014 2015 9M15 9M16
Franchises Multibrand Owned stores Exports² Web commerce Other
49% 46% 47% 49% 44% 45% 43%
27%
26% 23% 22%
21% 24%
21%
18% 22% 22% 20%
20% 19%
18%
5% 4% 5% 6%
9% 8%
10%
00% 01% 02% 03% 05% 04% 07%
1% 1% 1% 0% 0% 0% 0%
00%
20%
40%
60%
80%
100%
120%
2011 2012 2013 2014 2015 9M15 9M16
Franchises Multibrand Owned stores Exports² Web commerce Other
281,424
375,805
425,729
456,189
475,899
349,470
396,060
41,5%
43,7% 44,2% 43,3% 42,5% 41,8%
44,0%
–
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
–
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
2011 2012 2013 2014 2015 9M15 9M16
Gross profit Gross margin
Finance
Stable gross margin
Gross Profit (R$ MM) and Gross Margin (%) Sales breakdown by channel
CAGR: 14% 13%
Note 1: Data label of “Other” category is hidden
Note 2: Considers exports sales and USA
Stable margin by channel, changes only in sell-out and exports channels
64

163,696
223,138
250,325
266,755
276,437
203,621
233,409
24,1%
26,2% 26,5% 26,1% 26,0% 25,6%
27,6%
-23%
-13%
-03%
08%
18%
28%
38%
-
50,0
100,0
150,0
200,0
250,0
300,0
350,0
400,0
450,0
2011 2012 2013 2014 2015 9M15 9M16
SG&A % of net revenues
 Constant reinforcement of internal controls so to adequately
manage expenses so as to match revenues’ progress
 On a comparison basis, Cash SG&A¹ expenses remain stable
in the last 4 years
 9M16 SG&A was impacted by the increase in payroll taxes,
provision for bad debts, one-off expenses related to a new
distribution center, and the beginning of the online platform of
Arezzo and Anacapri brands
 Balanced control of SG&A with implementation of several
initiatives / pilot projects supporting future growth : (i) Fiever,
(ii) Anacapri, (iii) Alexandre Birman, (iv) ERP, (v) GTM Schutz,
(vi) GTM Arezzo, (vii) OMNI, (viii) VPL², (ix) CRM, (x) Unified
MM
 Given the Company's business model , investments in new
projects are mostly booked as operating expenses rather than
as Capex
Finance
Expenses control
Cash SG&A Evolution (R$ MM) and as % of net revenue¹
Note 1: The graph shows selling expenses, general and administrative expenses, excludes (1) depreciation, (2) USA operation since 2012 and (3) non cash and non recurring accountability effects in 2012 and 2014, amounting R$
8mm and R$ 1.8 mm respectively
Strong efforts in expense control allowing for recurring SG&A to grow in line with rest of the Company,
despite investments in several long term growth projects
65

92
102
111
120 120
86 80
13%
12% 11% 11% 11% 10%
09%
-30%
-25%
-20%
-15%
-10%
-05%
00%
05%
10%
15%
20%
-
50,00
100,00
150,00
200,00
250,00
2011 2012 2013 2014 2015 9M15 9M16
Net profit Net margin
118
144
159
170 165
121 123
17% 17% 17% 16%
15% 14% 14%
-30%
-25%
-20%
-15%
-10%
-05%
00%
05%
10%
15%
20%
-
50,00
100,00
150,00
200,00
250,00
2011 2012 2013 2014 2015 9M15 9M16
EBITDA¹ EBITDA Margin
EBITDA Evolution (R$ MM) and EBITDA Margin (%) Net Profit Evolution (R$ MM) and Net Margin (%)
Note1: Adjustments made in 2012 and 2014 EBITDAs due to non recurring expenses of R$ 8 mm and R$8.7 mm, respectively. In the net profit, the impacts are presented net of tax effect
Finance
Stable margins
CAGR: 9% 2% CAGR: 7% -7%
Several internal initiatives strengthened the sustainability of the business model even in a challenging
economic scenario
66

Note: 1) Working capital = Current Assets minus Cash, Cash Equivalents and ST Investments minus Current Liabilities minus Loans and Financing and Dividends Payments
Working capital (R$ MM) Capex (R$ MM)
192
236
291
305
327
342 345
28% 27%
30%
29% 29% 30%
29%
-26%
-16%
-06%
05%
15%
25%
35%
-
50,00
100,00
150,00
200,00
250,00
300,00
350,00
400,00
450,00
500,00
2011 2012 2013 2014 2015 9M15 9M16
Working Capital % of net revenues¹
30
57
44
51
26
21 21
4%
7%
5% 5%
2% 2% 2%
-26%
-21%
-16%
-11%
-06%
-01%
05%
10%
-
10,00
20,00
30,00
40,00
50,00
60,00
70,00
80,00
90,00
100,00
2011 2012 2013 2014 2015 9M15 9M16
Capex % of net revenues
Finance
Working Capital and Capex
For the last 5 years, average working capital averaged around 29% of net revenues with a downward
trend and reduction in working capital needs, in line with depreciation
67

91,613
102,154
110,555
119,628 119,663
24,065
49,263
55,674
70,935
61,783
26%
48% 50%
59%
52%
-50%
-30%
-10%
10%
30%
50%
70%
-
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
200,0
2011 2012 2013 2014 2015
Net Profit Dividends Dividend Payout
Net Profit¹ (R$ MM) and Dividends (R$ MM) Operating cash flow – Capex (R$ mm)
12,799
-6,224
21,277
59,435
65,473
21,235
35,245
-10,0
-
10,0
20,0
30,0
40,0
50,0
60,0
70,0
2011 2012 2013 2014 2015 9M15 9M16
Cash flow op - Capex
Finance
Operating cash flow and dividends
66%
Consistent dividend payment, with a historical payout of more than 50% of the profit in the period
Note1: As announced in Earnings Release: net profit adjusted in 2012 e 2014 due to non recurring expenses of $ 8 mm e R$8.7 mm, respectively, net of tax effect
68

Finance
Key messages
Resilient company growth, with constant investments to improve operations and develop new
brands and channels1
Stable gross margin with a growth bias, even in a challenging macroeconomic scenario2
Solid balance sheet as a competitive advantage in the sector, and aligned with Company strategy3
Consistent dividends payment policy in addition to strong cash flow generation5
Lower structural capex needs, reducing investments in fixed assets, thereby improving shareholder
returns4
Solid balance sheet and proven business model: healthy cash flow generation and strategy of greater
dividends payment
69

Corporate Governance
José Guimarães Monforte

• Sharing of purposes and challenges
• Alignment of long-term strategy
• Access to higher contribution in value creation
• Measurement of intensity and risk appetite
• Monitoring of results and execution of strategy
• Distribution of roles and responsibilities of governance components
Organisation
of Processes
• In decision making processes
• In roles and interrelationship within the governance system
• In the compilation of annual agendas
• In the communication flow and interaction among several governance components
• Getting deeper in the group’s impressions and concerns
• Discussions of critical milestones within the structure and interactive dynamics between governance
parts
Quantitative
Results
Qualitative
Results
Governance
Analysis of the dynamics and corporate governance climate
Evaluation of corporate governance climate and dynamics aimed at improving discussions over the
Board’s future Mission
71

CYCLE II
Post IPO
 New Governance
 Board of Directors
CYCLE III
Evolution
 Restructure of governance
 Framework, Processes, Practices
CYCLE IV
Evaluation
 Continuous improvement
 Increase of stakeholders
CYCLE I
Pre IPO
 Private company governance
 Board | Management committee
2007 2011 2012 2013 2014 2015 2016
Governance
Perceptions from Governance evolution cycles
72

Risk, Auditor and Financial
Committees
Strategy HR
Experience
Board of directors
Anderson Birman
Chairman
Founder of Arezzo and Chairman. More than 44 years of
experience in the industry
Fabio Hering
Independent board member
CEO and boar member of Cia. Hering, where he has worked
for more than 28 years.
Carolina Faria
Board member
Strong marketing experience, acting as senior executive in
True Brand & Business, Ambev and Reckitt.
Welerson Cavalieri
Board member
Partner of FALCONI Consulting firm, with 21+ years.
Previously he was a senior executive at mining companies
Juliana Rozenbaum
Board member
More than 13 years experience in Sell Side Equity Research,
focused in Consumer and Retail sectors
Claudia Soares
CEO of FNAC and has worked with management in
companies such as Votorantim Cimentos, Via Varejo, GPA and
Ambev
José Murilo Carvalho
Board member
President of Lawyers Association of Minas Gerais State.
Federal member of OAB (Brazil Bar Association )
Guilherme A. Ferreira
President of Bahema Participações, board member of GPA,
Banco Lazard, Eternit, Tavex and Rio Bravo Invest.
Rodrigo C. Galindo
President of Kroton Educacional S/A, one of the largest
educational group in the world, with more than 500,000
students.
José Bolonha
Board member
Founder and CEO of “Ethos Desenvolvimento Humano e
Organizacional – Ethos Human and Organizational
Development”; board member of Cies (UN, OMS)
Name
Role
Experience
Name
Role
Governance
Experienced Board of directors
Board composed of 10 members (4 independent), with profiles aligned with the strategy of Arezzo&Co
73

 Greater governance practices
 Higher participations from “players”
 Remarkable progress after IPO
 Restructuring
 Increased formalization of processes
Analysis Summary: Survey topics highlights
Assessment (2015):
• Need to implement business plan1ª
Assessment (2016):
• Greater focus and deeper analysis of issues, with broad engagement
• Personnel highlight
• Succession plan
• Plans for development of leadership roles
2ª
Arezzo has consistently improved its Governance System
Governance
Governance system evolution
74

Governance
New models of Governance Decision Making System
Direction
and agility
Processes
formalization
Emphasis on
“focus”
Evolution oriented towards business focus
 More strategic board
 Greater value creation
 Maintenance of value creation
 Structures
 Practices
 Governance procedures
New cycles of governance system
Innovation
improvements
75

Traditional governance
model with basic
engagement, focused in
the fiduciary duty,
providing support to CEO’s
agenda.
Goes deeper into the
understanding of the
business and connects the
operating performance to
competitive advantages.
The agenda is still the
CEO’s agenda.
The working board has
only one direction and
follows the Company’s
guidelines.
Use the capabilities that
were developed and that
combine fiduciary
responsibility, operating
leadership, contextual
intelligence, sistemic
thought and strategic
thinking. Its advantage is
the combination of three
elements: group’s
leadership, expanded
consciousness, fearless
engagement.
Has a better
understanding of the
company’s reach in a local
context, regional, national
and international. Expand
its vision by using outside
help and foresees
interdependency between
the parts. Sees the
company in a more ample
context. It is limited by its
focus in an industry and
segment.
Governance
New models in governance decision making process
Consensual
Board
Working
Board
Strategic
Board
Conscious
Board
76

AREZZO INDÚSTRIA E COMÉRCIO S.A.

Talk Show

Closing remarks
Alexandre Birman
CEO

Arezzo&Co should open from 25 to 30 new stores in Brazil in 2017
Closing Remarks
New store opening guidance
5
Source: Arezzo&Co. Illustrative scale
In 2016, the Company is likely to reach its guidance that calls for 21 new stores, 10 in the Anacapri brand
In 2017, the initial Guidance is from 25 to 30 openings
As a follow up to our multichannel strategy, we plan to transfer 4 owned stores to franchisees in 2017
# Owned stores
# Franchisees
492
3Q16 2016
45
537
489
2015
48
537 18
510
48
558
25-30
2017
44
# Transfers
3
3 -3
583-588
4 -4
539-544
83

Arezzo&Co keeps developing its business model in a sustainable way
Consolidated business model with multiple growth opportunities
• Launch of a new brand Fiever with encouraging results
• Improvement in the profitability of existing brands: Anacapri and Alexandre Birman
1
Staff management an ongoing development
• Broad range of selection, training and retaining of staff at all levels
• Strengthening of organizational identity
2
Ownership of the value chain, greater competitive advantage
• More agile and collaborative model
• Sell-out oriented to boost results in the value chain
3
Multi-channel management know-how, excellent platform to lift brands
• Omni channel growth: Fiever debut, Schutz FIS, Arezzo consolidation, Anacapri expansion
• Strong knowledge in franchises’ management in addition to improving opportunities
• Multibrand channel leverages growth of new brands
5
Financial strength allows for sustainable business growth
• History of cash generation together with consistent dividend payment policy
• Net cash position, an important differentiator in challenging economic times
4
84
Closing Remarks
Key messages

9 de dezembro de 2016

Arezzo&Co's Investor Day 2016 - Inglês

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Viewers also liked

Viewers also liked (20)

Similar to Arezzo&Co's Investor Day 2016 - Inglês

Similar to Arezzo&Co's Investor Day 2016 - Inglês (20)

More from Arezzori

More from Arezzori (18)

Recently uploaded

Recently uploaded (8)

Arezzo&Co's Investor Day 2016 - Inglês