Btg pactual lat am ceo conference new york 2012 en

October, 2012
BTG Pactual LatAm CEO Conference New York 2012

2
 Overview of the Brazilian Market
 Magazine Luiza

3
Brazilian GDP has grown 11% annual rate over the last 9 years...
Source: LCA, IBGE 2009, Estimativas 2012 LCA
4,447
4,143
3,770
3,239
3,032
2,661
2,369
2,147
1,941
GDP (R$ Billion)
1,1%
5,7%
3,2%
4,0%
6,1%
5,2%
-0,3%
7,5%
2,7%
1,5%
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
1,700
Real Growth(%)
Nominal GDP (R$)

4
... and the country has reached the full employment for the 1st time recently
% working-age
population
Source: MTE (Ministério do Trabalho e Emprego), IBGE
New formal jobs creation
Number of jobs
created (MM)
0,9
1,9
1,8 1,9
2,5
1,8 1,8
2,9
1,9
1,0
5
6
7
8
9
10
11
12
13
14
0
0,5
1
1,5
2
2,5
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
Unemployment rate

5
38,9 39,0 37,9
40,7
45,1
47,7
51,2
54,2
58,1
60,3
63,8
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200
240 260
300
350
380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation...
Source: DIEESE (Depto. Intersindical de Estatísticas e Estudos Socioeconômicos), BACEN
Growth: 211%
Growth: 64%

6
... driven by the mid class, which already stood for 49.3% of the total
residences in 2011
A Class
B Class
C Class
D Class
E Class
4.5 4.1
17.5 30.7
30.9
33.8
13.2
49.3
15.1
0.8
1998 2011
Social classes composition - % of total residences
Source: IPC TARGET

7
Consumer credit has been considered the turbine of growth ...
1) Total credit operations over GDP
2) Data referred to June/12
Credit Operations Balance (R$ Bn)
% GDP
Total Operations
28% 31% 35% 40% 44% 45% 51% ²
1
384 418
499
607
733
936
1.227
1.414
1.706
2.030
2.168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26% 25% 26% 49%

8
0
5
10
15
20
25
30
35
40
45
jan/05 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12
... with stable compromised monthly income with debt services, despite the
constant increase of family indebtedness
1) Debt burden in % of disposable income
Source: BACEN
Debt Burden¹
Household Indebtedness
15.5%
17.6% 17.7% 18.0% 18.6% 19.7% 19.7%
22.2% 21.9%
18.4%
22.0%
24.9%
29.6%
32.2%
35.8%
39.5%
42.5% 43.4%
mai/12
Debt Burden

9
The drop of the income rate has begun to effect the credit takers, maintaining
the confidence of Brazilian consumers
Source: BCB, Fecomércio
0
5
10
15
20
25
90
110
130
150
170
190
jan/02 jan/03 jan/04 jan/05 jan/06 jan/07 jan/08 jan/09 jan/10 jan/11 jan/12
0
10
20
30
40
50
60
70
80
90
100
Average Debt Interests x SELIC
(% per year)
Indebtedness average term (months)
Brazilian’s Consumer Confidence
Goods acquisitions except vehicles Total
Natural Person Interest SELIC

10
In order to reach a satisfactory housing shortage level, it is expected that 23.5
million new houses be built from 2010 to 2022
4 7 11 12 18
33
56
70
6 9 14 21 23
47
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEF’s Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage (%)
11,3%
8,2%
5,0%
1,5%
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
0
20
40
60
80
100
2010 2014E 2018E 2022E
63.3
69.0 74.3
79.5
Cohabitants
Unsuitable Suitable
Source: LCA: (Construbusiness 2010 - FGV); Caixa Econômica Federal
1) Includes estimative of new families – 1.326 million per year; 2) % of families in the housing shortage
Housing Shortage

11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of
durable goods…
13,3
16,3
21,0 19,8
22,8
13,0
2007 2008 2009 2010 2011 1S2012
1) Includes: refrigerator, wash machine, stove, microwave, air conditioner and freezer; 2) LCD, LED, Plasma, 3D, DVD, Home Theater, Mini-system, and auto sound system
Source: GFK Retail
19,9
22,0
19,8
22,0
25,6
9,8
2007 2008 2009 2010 2011 1S2012
5,4 6,2 6,3 7,1
9,6
5,1
2007 2008 2009 2010 2011 1S2012
30,8
42,9 41,4
47,8
57,2
27,3
2007 2008 2009 2010 2011 1S2012

12
... and also to increase the penetration of these products in “C class”, still
considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage (%)
Total population
6
7
19
61
39
37
“C class”
Source: PNAD 2009 (Pesquisa Nacional por amostra de domicílios), IBGE,
1) Nielsen - Consumidor Móvel 2011
1

13
71
86
97
118
147
173
196
225
247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing, the retail market is usually responsable for the
“C class” access to financial services
1) Number of store cards – total of the population
Source: CETELEM (PesquisaObservador 2012, December 2011 – IPSOS) , ABECS (Associação Brasileira das Empresas de Cartão de Crédito e Serviços)
61%
37%
15%
39%
63%
85%
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR: 16,9% per year

14
 Overview of the Brazilian Market
 Magazine Luiza

15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture,
focus on valuing people
and customers
Company
Financial Information –
2Q12
Focus on the best
product mix
Pioneer in the retail
financial service
Magazine Luiza
First social e-commerce
in Brazil
Multiple opportunities
of growth
Multi-channel model
under the same brand

16
Besides the retail segment, Magazine Luiza has two JV’s – partners on
financial and insurance sectors – and the Luiza Consortium
• Joint Venture with Itaú Unibanco
• Financial institution established
in 2001
• Products:
o Co-branded card (Mastercard)
o Direct Credit(CDC)
o Consigned loan
o Personal loan
• Joint Venture with Cardif
established in 2005
• Products:
o Extended warranty
(The other insurances belong to
the operational agreement
between Magazine Luiza and
Cardif)
• Established in 1992
• Household appliances, furniture,
services and vehicle consortium
• 55 thousand actives clients
• 220 thousand goods delivered
Free Float
Controllers
50% 100%
50%
67.9% 32.1%
• Retail chain with focus on
durable goods, only one brand
(Lojas do Baú and Lojas Maia -
corporate integration concluded

17
Currently, 32% of the company’s stocks are in the free float, the remaining
belong directly to the family and to the LTD holding
Pre – IPO After– IPO
75,4%
Controllers
Capital Int’l Inc. (Private Equity Fund)
87.9%
32.1%
Controllers
Free Float (includes Capital Int’l Inc.)
186,494,467 stocks
150,000,000 stocks
12.4%
87.6%

18
Name / Post
Years with the
Company
Experience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
 Controlling shareholders with more than 50 years in the
industry
 Board of Directors with independent members since 2005
 Audit Committee led by an independent member
 Financial statements audited for the past 10 years by a “Big
Four” firm
 Senior Management: retention plan (stock options)
 Fiscal council established in 2012
Luiza Helena Trajano
President
>40 >40
Marcelo Silva
CEO
3 34
Roberto Bellissimo
CFO
>10 >10
Fabrício Garcia
Chief Commercial Officer
>10 >10
Frederico Trajano
Chief Sales and Marketing Officer
>10 >10
Isabel Bonfim
Chief Managemente and Control
Officer
>30 >30
Marcelo Barp (1)
Luizacred
4 9
Luis Felipe (1)
Luizaseg
6 >20
Note 1. Years of experience in the financial services industry
Experienced executives with strong corporate governance

19
Proven history of strong organic growth and successful aquisition even
throughout adverse economic scenarios
0,6 0,7 0,9
1,4
1,9 2,2 2,6
3,2
3,8
5,3
7,1
3,9
111 127
174
253
351 346
391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP:
+5 stores
Rede Wanel
Lojas Líder
Campinas:
+20 stores
Rio Grande Sul
+51 stores
Madol, Killar
Santa Catarina:
+100 stores
São Paulo (Capital):
+46 stores
Nordeste:
+136 stores
Gross Revenue – Retail Operation (R$ Billion) Number of Stores
Baú:
+104 stores

20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)
States with stores
% of stores per region (1H2012)
Cabedelo
Simões Filho
Contagem
Ribeirão Preto
Loureira
Ibiporã
Navegantes
Caxias
Geographic Footprint
31%
24%
731 stores
Gross Revenue evolution – Northeast
R$ MM
323,8 328
490,7 501,4
597
1H10 2H10 1H11 2H11 1H12
84%
30%
South
2%
Mid-West
20%
Northeast
48%
Southeast

21
Ranked the 23th most valuable brand in Brazil
1) Source: Istoé Dinheiro, Milward Brown/Brandanalytics
1. Petrobras
2. Bradesco
3. Itaú
4. SKOL
5. Banco do Brasil
First 5
most valuable
21 – 35 most valuable
36 – 50 most valuable brands
6 – 20 most valuable
6. Natura
7. Brahma
8. Vale
9. Sadia
10. Antartica
11. Vivo
12. Perdigão
13. Lojas Americanas
14. Bohemia
15. Ipiranga
16. OI
17. Casas Bahia
18. Totvs
19. TAM
20. Cielo
21. Multiplus
22. Porto Seguro
23. Magazine Luiza
24. GOL
25. Redecard
26. Net
27. Extra
28. BM&F
29. Banrisul
30. Hering
36. Anhanguera
37. Amil
38. Lojas Renner
39. MRV
40. Marisa
31. Iguatemi
32. Odontoprev
33. Pão de Açúcar
34. União
35. Embratel
41. Durafloor
42. Arezzo
43. Gerdau
44. Drogasil
45. Swift
46. Havaianas
47. Deca
48. PDG
49. Localiza
50. Riachuelo
Ranking published by Istoé Dinheiro Magazine – May 2012
Magazine Luiza brands values USD 479 MM

22
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

23
High influence of service and credit on
purchasing decision
15 years among the Best Place to Work
 Luiza Consortium: for the last 2 years among the best
companies to work (small and medium sized companies)
 Communication: Luiza TV, Radio Luiza, Town Halls
 Transparency: availability of management information and
frequently alignment
 Empowerment: sales staff and managers have flexibility to
negotiate sales conditions within a range
 Compensation: based on gross profit, financial margin and
sales
Strong corporate culture assisted by a sales model that is supported by
enthusiastic teams
Price
39.8%
37.0%
Service/Credit
8.4%
Product Variety
4.5%
Punctuality of
Delivery
3.2%
Offered Brands
7.1%
Others

24
Supported by robust CRM tools, the exceptional relationship management
drives customers loyalty
 CRM available to all stores: telemarketing tool based
in propensity to buy
 Boomerang: telemarketing incentive campaign
 Telemarketing during sales downtime – average of 500
thousand calls/month¹
 Return average: 5%
 Telemarketing represents 30% of total income in some
stores
 Buyback and loyalty increase
CRM Tool
 Unique program in the sector: recognition and
benefits to the most loyal clients
 Over 1 million clients: 5% of total, 20% of total income
 Golden clients usually spend 50% more than regular
ones
 Golden day: stores opened exclusively for program
clients with memorable experiences and purchasing
differentials
Golden Client
1) Data referrers to 2012
• Base: 30 million clients – 30% actives

25
Magazine Luiza clients are mainly from “C, D and E classes”
Millions of clients – South, Southeast and Mid-West1
1) Do not include Lojas do Baú and Lojas Maia database
+20%
2011
2010
2009
2008
2007
CDE Classes
AB Classes
14%
10%
10%
90%
90%
86%
86%
14%
14%
86%
10.8
13.2
16.0
18.9
22.2
CAGR

26
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
 Free-standing stores or in malls
 Physical showroom and in-store
stock
 Size:
• Free-standing 700m²
• Shopping 1.000m²
 Small or mid-sized cities
 Direct delivery
 No physical showroom or stock
 Size: 150 m2
 Sales per m2 is double
conventional store
 30,000 total SKU s
 More than 8 million unique visitors
 Constant growth
 Same product mix as the Internet
 Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil

28
Gross revenue growth for conventional and virtual stores was 29% annual rate
over the last 4 years ...
CAGR
Gross Revenue (R$ Bn)
+29%
2011
6.3
6.0
0.3
2010
4.8
4.5
0.2
2009
3.5
3.3
0.2
2008
3.0
2.8
0.2
Convencional Stores
Virtual Stores
1H2012
3.2
3,4
0.2

29
... and the e-commerce is growing above market average, influenced by the
increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
239.5
2011
2008
157.6
2009
2007 2010
324.9
568.7
821.1
+51%
1H2012
512.0

30
Magazine Luiza’s growth was significantly greater than the market growth in
general, turning into relevant market-share gains
4%
12% 14%
19%
28%
GDP Retail Furniture & Home Appliance Furniture & Home Appliance NE Magazine Luiza
33,0 31,1 30,0
24,3 25,6
14,4
20,0
10,1
15,9 13,0
2,1
1,0
0,5
2,2
2,4
1,4
1,1
1,5
1,2 1,1
0,0
0,5
1,0
1,5
2,0
2,5
3,0
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
Inflation
Same-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs. IPCA
¹
1) Gross Revenue CAGR of retail operations, do not include Luizacred, Luizaseg and Consortium revenues

31
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

32
CDC Third-party Card Cash Sales / Down Payment
Luiza Card
Pioneer in the financial services through Luizacred ...
• Financial institution established in 2001,
resulted from the partnership between
Magazine Luiza and Unibanco (nowadays,
Itaú-Unibanco)
• Consumer finance operations available in
every Magazine Luiza store
• Luizacred finances approximately 50% of
Magazine Luiza’s total sales
• Credit card base: 4.2 million (2Q12)
• Products: co-branded card (Mastercard),
direct credit(CDC), loans and other
financial services
• Another important tool to enhance
customer loyalty
• Itaú-Unibanco: responsible for credit-
scoring and funding
Comments
50% of sales are made through Luizacred
49%
30%
17% 13% 11% 16%
1%
19%
34% 39%
34% 23%
25% 24%
27% 26%
30%
31%
25% 27% 22% 22% 25% 30%
2007 2008 2009 2010 2011 1H2012

33
… and Luizaseg Joint Ventures
Luizaseg: significant growth in insurance product sales
• Joint venture with Cardif since 2005; operates in the massif insurance
segment and features on the extended warranty distribution
• Luizaseg has a complete structure toward client support, with staff in
stores, customer service department, exclusive team to take care of
customer damages and a wide network of technical assistance for the
extended warranty insurances
• Over 3 thousand accredited workplaces distributed all over the
country
• Featured among the best retail’s insurers
• In 2011, 4.8 million new issued insurances. Equivalent to R$ 220
million in prizes; 15% growth over the year before
• R$ 5.3 million distributed in prizes
• Over 2 million extended warranty insurances
• Operation with high cash flow generation and low damage
Comments
Products

34
• Through the letter of credit system, consortium is
based on the union between natural or artificial
person, aiming to participate in a common activity or
to pool their resources for achieving a common goal
• Luiza Consortium distributes furniture, household
appliance, vehicle and service consortium
• Available in every Magazine Luiza’s store
• Over 85 thousand active clients
• More than 60 authorized commercial representatives
• Over 220 thousand goods delivered
Comments
… and Luiza Consortium
Products

35
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

36
Focus on the best product mix...
Mix
% of sales, 1H2012
31%
24%
20%
15%
10%
Household
Appliances
Sound & Image
Tecnology
Furniture & Kitchen
appliance
Others

37
... to support changes in consumer behavior (1/4)
Television
South, Southeast and Mid-west
Units sold (%)
91%
2011
9%
2007
93%
7%
1) LCD, Plasma, LED, 3D
Television
Northeast
Units sold (%)
CRT
Flat TV 1
R$ 783 R$ 1,406
Weighed average ticket
R$ 636 R$ 1,007
67%
2011
33%
2007
95%
5%

38
Computer
Units sold (%)
84%
30%
2011
70%
2007
16%
Computer
Northeast
Units sold (%)
Notebook
Desktop
R$ 1,364 R$ 1,124
R$ 909 R$ 818
88%
47%
2011
53%
2007
12%

39
Washing Machine
Units sold (%)
52%
73%
2011
27%
2007
48%
Washing Machine
Northeast
Units sold (%)
“Tanquinho”
Washing Machine
R$ 701 R$ 884
R$ 581 R$ 586
43% 48%
2011
52%
2007
57%

40
Refrigerator
Units sold (%)
40%
20%
2011
80%
2007
60%
Refrigerator
Northeast
Units sold (%)
With freezer
Without freezer
R$ 1,323 R$ 1,501
R$ 1,139 R$ 1,142
64%
35%
2011
65%
2007
36%

41
Evolution of plans and interest rates have also supported those changes
TV LCD 32" Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2,947 1,187 2,002 1,246 1,159 1,046
Installments (R$) 293.00 99.36 199.45 104.30 115.47 87.56
Installment/Class C
Minimum Wage
25.7% 6.1% 17.5% 6.4% 10.1% 5.4%
1) Analysis: March to June 2007; April 2011
Source: Flyer Magazine Luiza
Interest Rate 5.50%
Form 0+15
2007
2.99%
2011
Minimum Wage (R$) 380.00 545.00
Main changes
• Interest rates became more attractive
through Luiza Card financing
• Purchase power increased while risk
decreased
Class C Minimum Wage (R$) 1,140 1,635

42
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

43
Magazine Você: leading our multi-channel strategy to the highest degree
•Brazil: fourth-largest market
– Revenue (2010): R$ 26 bn
•2.74 million direct sellers
Source: Ibope, Ebit, Forrester research, Magazine Luiza
• 23 million buyers
• 46.5% from “C class"
• Revenue (2011): R$ 20 bn
• 85% claim to be in a social
network
– Facebook: 30 MM users
–Orkut : 29MM users
•The user creates its own store with up to 60 products from Magazine Luiza website (magazineluiza.com.br) and
share the products with its friendsthrough Facebook and Orkut
• Comission goes from 2.5% to 4.5% per product sold in the store
• No initial investment is required
•Magazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks

44
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
of growth
Multi-channel model

45
Source: IBGE, Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
 Multi-channel model with
broad geographic reach
gives Magazine Luiza
advantage to spot new
stores opportunities
 Around 240 priority cities
for new Magazine Luiza
stores
 240 priority cities for new
Magazine Luiza stores
− 30% will be opened
with the Virtual Store
Concept
18
56
30
28

46
… and multiples opportunities to grow all over the country
Organic Growth
• Increase presence where
currently operating,
especially the northeast
and Greater São Paulo
• 33% of the stores have
not reached their
maturity
• Remodel to increase
same store sales
Industry Consolidation
• M&A potential with high
industry fragmentation –
more than 50% of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
• Amount of virtual store and
internet sales above market
growth
Increase Share of Financial
Products
• Over 4 million clients
have a Luiza credit card –
fidelity potential
• Penetration of Luizacred
in Lojas Maia sales

47
and customers
Company
2Q12
Focus on the best
product mix
financial service
Magazine Luiza
in Brazil
Multiple growth
opportunities
Multi-channel model

48
 Key Financial Indicators - Historical Evolution
 Integration Process – Lojas do Baú and Lojas Maia
 Latest release – 2Q12

49
Net Income Evolution (R$ million)
849
987
1.105
1.501
1.309 1.368
1.477
1.780
1.659 1.643
93
95
100
108
117
116
135
161
158 167
14
14
15
16
16
17
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1,073
1,197
1,596
1,416
1,473
1,603
1,928
1,805 1,802
LuizaCred
Retail LuizaSeg Consortium Eliminations Inter-Company

50
Gross Profit Evolution (R$ million)
261
297
339
451
388 403 430
549
457 469
81
81
84
88
94 94
108
135
132
146
13
13
14
15
15 15
17
17
17
19
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339
368
413
521
470 483
524
668
574
603
36.0% 34.3% 34.5% 32.6% 33.2% 32.8% 32.7% 34.7% 31.8% 33.5%
LuizaCred
Retail LuizaSeg Consortium Eliminations Inter-Company Gross Margin

51
Adjusted EBITDA Evolution (R$ million)
54
62
71
92
77
64
76
111
60
73
10
13
27
9
9
9
26
2
-12
5
2
3
2
2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
6.4% 6.6% 7.9% 5.9% 5.6% 4.5% 5.9% 5.5% 2.4% 4,1%
61
70
94
95
79
67
94
74
107
43
LuizaCred
Retail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin

52
Adjusted Net Profit Evolution (R$ million)
2,2
6,0 5,2
13,2
8,7
1,0
19,0
26,7
(10,3)
9,5
5,9
7,9
16,3
5,2
4,6
6,2
13,5
(1,6)
(8,3)
1,9
1,3
1,6
1,6
1,7
1,5
1,8
2,1
2,0
2,6
2,5
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
9.3
15.9
23.1
20.5
14.9
8.8
33.8
27.7
14.8
-15.4
1.0% 1.5% 1.9% 1.3% 0.6% 0.1% 1.2% 1.4% -0.6% 0.5%
LuizaCred
Retail LuizaSeg Consortium Eliminations Inter-Company Net Margin

53
 Key Financial Indicator - Historical Evolution
 Latest Release – 2Q12

54
Integration Process – Lojas do Baú
3Q11 4Q11 1Q12 2Q12
Lojas do Baú integration process
Acquisition of 121¹ stores from Lojas do Baú
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29, 2011 - R$80,3 million
Most of the closed stores were closed during this period
69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais)
Uniforms and storefront changes
End of feb/2012
(7 months)
35 stores (Paraná)
Complete stores renovation
End of dec/2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store

55
Integration Process – Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change – Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceió
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr/2012
Conclusion Oct/2012
1) The front end integration had been carried in 2010, which considers: sales force training, product range mix, financial services and small stores renovation

56
 Key Financial Indicator - Historical Evolution
 Latest Release – 2Q12

57
 2T12 Highlights
 Financial Performance
 Operational Performance
 Expectations for the Next Quarters

58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
 Significant sales growth versus 2Q11
• Total sales growth of 21.6%
• Same store sales growth of 13.0%
o E-commerce growth of 45.0%
o Physical stores sales growth of 9.0%
 Sustainable growth
• Consolidated gross margin evolution – 33.5% over net
revenues
o Increased by 0.7pp over 2Q11
o Increased by 1.7pp over 1Q12
• Financial discipline ( limited sales with no interest)
• Conservative credit approval rate
 Continuation of Lojas Maia integration process
• Corporate merger – April, 30th
• Systems integration – began in 2Q12
 Reduction and Rationalization of Costs and Expenses
• Rationalization of costs and expenses program –
Company’s main focus in 2012
• 0.6pp reduction on SG&A expenses of retail segment
o 24.7% of net revenues versus 25.3% in 2Q11
 Investments in infrastructure and expansion
• Total investments: R$35.1 million
o 1 new conventional store inaugurated in the
Northeast
o Stores remodeling
o Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
 Extraordinary expenses - integration:
• Totaled only R$3.3 million (as expected)
 Luizacred results
• Improved overdue indicators
• Maintenance of conservative approach
o Reduction of credit approval rate
o Substantial provisions for loan losses
• Participation in the rationalization of costs and
expenses program
 Magazine Luiza results
• Results in line with budget, despite the slowdown in
the economy activity
o Sustainable growth
o Program of rationalization of costs and expenses
• Positive results – retail and consolidated business

59
 2Q12 Highlights

60
Gross Revenues (R$ billion)
Retail
Consolidated
1,1
% of growth over the same quarter of 2011
1H12
3.9
2Q12
2.0
1Q12
2.0
1H11
2Q11
1.6
1Q11
1.6
3.2
• 19.7% growth in the retail segment versus 2Q11
and 13.0% same store sales growth, driven by:
— Stores maturation
— Increased productivity in renovated stores
— Accelerated growth in the Northeast
(R$301 million – 15.4% of total retail sales)
• 22.3% growth in the retail segment versus 1H11
• 21.6% growth in the consolidated gross
revenues versus 2Q11:
— 44.5% growth in revenues from the
consumer financing segment (chiefly
influenced by the increase in service
revenues, direct credit to consumer and
personal loans at Luizacred)
• Increase in store count – from 613 in the end of
2Q11 to 731 stores in the end of 2Q12
Comments
22.3%
19.7%
% of growth over the same half of 2011
1H12
4.3
2Q12
2.1
1Q12
2.1
1H11
3.4
2Q11
1.7
1Q11
1.7
23.6%
21.6%
25.0%
25.7%

61
Gross Revenues – Internet (R$ million)
1H12
512.0
2Q12
263.5
1Q12
248.5
1H11
355.7
2Q11
181.7
1Q11
174.0
• Internet sales climbed 45.0% in 2Q12 versus
2Q11 and 43.9% versus 1H11 influenced by:
— Increase in product mix
— Innovations in content
— Multi-channel approach: infrastructure
shared with other channels
Comments
Internet
43.9%
45.0%
% of growth over the same quarter of 2011 % of growth over the same half of 2011
42.8%

62
Net Revenues and Gross Profit (R$ billion)
33.2% 32.8% 33.0% 31.8% 33.5%
Gross Margin (%)
• Strong growth due to advancement of gross
revenues (retail segment and consumer
finance)
• Net revenues growth outpaced gross revenues
growth – higher volume of products subject to
tax substitution (booked under COGS)
Comments
Net Revenues - Consolidated
• Improve of 0.7% of gross margin in 2Q12
versus 2Q11 and 1.7% versus 1Q12 due to:
— Increase in gross margin from the consumer
finance (Luizacred)
— Slight decrease in retail segment margin
(higher share of Internet sales, integration of
Lojas Maia and AVP adjustments)
• Gross margin in the Northeast: from 21.2% in
1Q12 to 25.0% in 2Q12
Comments
32.7%
Gross Profit - Consolidated
1H12
3.6
2Q12
1.8
1Q12
1.8
1H11
2.9
2Q11
1.5
1Q11
1.4
24.9%
22.3%
1H12
1.2
2Q12
0.6
1Q12
0.6
1H11
2Q11
1.0
0.5
1Q11
0.5
23.7%
25.0%
% of growth over the same quarter of 2011 % of growth over the same half of 2011
27.5%
22.4%

63
Operating Expenses – Consolidated (R$ million)
Operating Expenses (R$ MM)
• Reduction of 0.5% on Sales, General and
Administrative Expenses versus 2Q11:
— Adjustments made to stores’
expenses in order to increase
productivity
— Result of the integration of the
offices of Baú stores and of
rationalization of expenses
• Provisions for Loan Losses:
— Substantial provisions (Luizacred
conservative approach)
• Other Operating Expenses (Revenues):
— See next slide
Comments
-26.0% -3.6%
% Net Revenue
Total
410.7
Other
Oper.
Expenses
(Revenues)
24.3
Provisions
52.7
SG&A
382.4
2Q11
SG&A
88.4
Total
531.3
Other
Oper.
Expenses
(Revenues)
16.1
Provisions
459.0
2Q12
-27.9%
1.7% -25.5% -4.9% -29.5%
0.9%

64
Other Operating Expenses (Revenues) – Consolidated
Other Operating Expenses (Revenues) (R$ MM)
• Other Operating Expenses (Revenues) :
— Deferred revenues:
o Reduction in the booking of
deferred revenues (straight-line
method)
o In 2Q12, other deferred revenues
of R$18.0 million (R$10.5 million
from the retail segment and R$7.5
million from Luizacred) – renewal
of the Agreement with Cardif
— Non-recurring expenses with the
integration of the store chains of
R$3.3 million
— Change in the booking of personal
loans, which are now recognized
under financial intermediation
result, thereby reducing revenues
from profit sharing from R$17.5
million to R$4.1 million
— Expenses with the introduction of
chips in Luiza cards totaled R$5.4
million in 2Q12
Comments
17,5
5,5 24,3
12,4
Total
Others
Introduction
of chips in
Luiza Cards
Personal
Loans
Integration
Expenses
Booking of
Deferred
Revenues
2Q11
16,1
23,8
Total
Others
3.2
Introduction
of chips in
Luiza Cards
5.4
Personal
Loans
4.1
Integration
Expenses
3.3
Booking of
Deferred
Revenues
2Q12

65
• EBITDA impacted by:
— Sales and gross profit growth
— Non-recurring costs, revenues and
expenses
— Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA (%)
Comments
5.9% 4.9% 5.4% 0.5% 4.0%
EBITDA
2.3%
Adjusted EBITDA
2Q11 2Q12
1H12
81.2
2Q12
71.9
1Q12
9.3
1H11
155.9
2Q11
71.9
1Q11
84.0
66,5
71,9
Adjusted
EBITDA
Deferred
Revenues
5.4
Extraord.
Expenses
0.0
Extraord.
Costs
0.0
Current
74,0
71,9
Adjusted
EBITDA
Deferred
Revenues
8.8
Extraord.
Expenses
3.3
Extraord.
Costs
7.5
Current
4.9% 4.5% 4.0% 4.1%

66
Financial Expenses – Consolidated (R$ million)
Financial Expenses (R$ MM)
% Net Revenue
• Financial Results:
— Decline from 2.9% of net revenue in
2Q11 to 2.5% in 2Q12:
o Positively impacted by the
reduction in CDI rate
o Partially offset by the increase in
working capital requirements
o Change in the estimated
discount rate used in the
adjustment to present value of
extended warranty operations
o Change in the appropriation of
the costs of prepayment of
receivables on third-party cards,
which is now recognized on the
date of the discount operation
Comments
2Q12
45.4
2Q11
42.4
Financial Expenses
-2.9% -2.5%

67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
0.9% 0.3% 0.6% -2.3% 1.2%
• Net Income impacted by:
— Non-recurring costs, revenues and
expenses
— Change in the appropriation of the costs of
prepayment of receivables
— Changes in accounting practices in the
financial result
— Non-recurring tax credits
Comments
-0.5%
Net Margin (%)
1H11
40.7
1H12
18.8
2Q12
21.9
1Q12
16.9
2Q11
4.6
1Q11
12.3
1,0
4,6
Extraord.
Fin.
Results
0.0
Extraord.
Ops.
Results
5.4
Net Income Adjusted
Income
Tax Credits
0.0
Extraord.
Taxes
1.8
9,5
20,7
2,1
21,9
Extraord.
Taxes
Adjusted
Income
Extraord.
Fin.
Results
Tax Credits
4.3
10.6
Extraord.
Ops.
Results
Net
Income
0.3% 0.1% 1.2% 0.5%

68
Working Capital (R$ millions)
1.006,8
470,0
536,8
Mar-12
889,9
422,2
467,7
Dec-11
748,3
307,3
441,0
Sep-
11
Jun-12
690,9
346,0
344,9
Jun-11
559,7
241,1
318,6
5,8%
Working Capital
Accounts receivable
5,3%
5,8%
4,0%
7.601,3
% over Gross Revenue of last 12 months
Gross Revenue of last 12 months (R$ MM)
8.036,6
6.751,3 7.228,8
3,6% 4,8%
4,7%
4,8%
8.413,3
6,4%
5,6%

69
Investments (R$ millions)
11,5
28,9
18,4 18,0
15,1
19,3
37,8
11,0
8,1
7,5
7,5
25,1
6,5
3,9
5,1
35.1
1Q12
43.2
7.3
4Q11
97.6
5.8
3Q11 2Q12
50.2
11.8
2Q11
40.0
1.9
15.4
• Stores remodeling
• New stores (inaugurated and to be) – 1
new conventional store inaugurated in
the Northeast
• Other investments include the
conclusion of expansion of the Louveira
distribution center and other
investments in logistics, which totaled
R$9.6 million in 2Q12
Comments
Investments
Others
Infrastructure
Store Refit
New Stores

70
Net Debt (R$ millions)
Net Debt / adjusted EBITDA
20%
12%
80%
82%
88%
60%
18%
40%
81%
19%
129,1
705,5
609,4
420,0
385,1
Net Debt – Long Term
Net Debt – Short Term
0,4x 1,1x 1,2x 2,0x
Jun-11 Mar-12
Sep-11 Dec-11 Jun-12
2,2x

71
 2Q12 Highlights

72
Operational Performance – Stores
Number of Stores (unit) Same Store Sales Growth (%)
69
69
103 106 106
1
1
1
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional Stores
Virtual Stores
2Q11
39.4%
14.4%
11.3%
2Q12
Same Stores Sale Growth - Physical Stores
Same Store Sales Growth (includes e-commerce)
Total Retail Growth
19.7%
13.0%
9.0%
Average Age – Stores
More than 3 years
453
2 to 3 years
6
1 to 2 years
158
Up to 1 year
114
+ 118 stores

73
Operational Performance – Luizacred
Financed Mix Sales (%) Luizacred’s Revenues (R$ MM)
293
923 1.297
150
2,085
2Q12
21.5%
450
45
2Q11
1,716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11%
18%
32%
23% 28%
30%
37%
2Q12
100%
22%
2Q11
100%
Luiza Card
CDC
Third Party Credit Card
Cash Sales/Down Payment

74
Operational Performance – Portfolio’s composition
Luiza Card – Total Credit Card Base (MM) Portfolio (R$ MM)
4,2
4,3
4,4
4,2
4,0
4Q11
3Q11
2Q11 2Q12
1Q12
376
661
2,655
2Q12
3,442
2,668
+29%
2,292
2Q11
126
CDC Credit card
Personal Loans

75
Luizacred Portfolio (% of portfolio)
• Differently from the market in general,
the portfolio’s overdue indicators
continue to improve both in relation to
the previous year and the previous
quarter, due to:
— Conservative approach in the
credit approval rate
— Constant control of delinquency
per store
• Coverage index increased in 2Q12
• Provisions should be proportionally
lower in 2H12
Comments
Portfolio Overdue
11.6%
10%
20%
Jun-12
15.9%
17.4%
12.7%
4.7%
Dec-11
16.8%
12.4%
4.4%
Sep-11
17.7%
13.6%
4.1%
Jun-11
19.2%
12.5%
6.7%
Mar-12
4.3%
Overdue above 90 days
Overdue 15-90 days Total overdue
112% 111% 114% 111% 117%
Coverage Ratio(%)

76
ML’s versus Brazil’s Default Rate
2
5
8
11
jan/10 apr/10 jul/10 oct/10 jan/11 apr/11 jul/11 oct/11 jan/12 apr/12
2
5
8
11
14
17
20
23
26
jan/10 apr/10 jul/10 oct/10 jan/11 apr/11 jul/11 oct/11 jan/12 apr/12
21,7% 22,0%
19,2%
24,5%
22,5%
20,9%
17,7% 16,8% 17,4% 15,9%
12,3% 12,9% 12,5%
13,3% 12,8% 12,5%
13,6% 12,4% 12,7% 11,6%
9,4% 9,1%
6,7%
11,2%
9,7% 8,4%
4,1% 4,4% 4,7% 4,3%
9,4% 9,1%
6,7%
11,2%
9,7%
8,4%
4,1% 4,4%
4,7%
4,3%
5,3%
6,7%
6,3%
5,9% 5,5% 5,3%
6,4% 6,0%
6,8% 6,4%
Magazine Luiza’s Default Rates
Magazine Luiza’s x Brazil’s Default Rates: 15 to 90 days
Fonte: BCB
Brazil 15 to 90 days¹ ML 15 to 90 days
ML above 90 days
ML total

77
 2Q12 Highlights

78
Expectations for the next quarters
Sales Growth
 Consistent sales growth:
• Maturation of new stores
• Northeast stores growth
• Internet
• Better performance by the Brazilian economy,
especially in 4Q12
Lojas Maia Integration Process
 Integration of Lojas Maia’s systems – conclusion:
oct/12
 Fully integrated management – 2013
• Dilution of administrative and logistics
expenses
• Benefits to working capital and price
management – increasing the gross margin
Investments
 Investments in technology, logistics and store
remodeling, which includes changing the Lojas Maia
brand to Magazine Luiza
 The Company plans the organic opening of 17 more
stores in 2H12, 10 of them in the Northeast
Results
 Continuality of cost and expense reduction and
rationalization program
 Capture of synergies from the integration of Lojas do
Baú and Lojas Maia
 Better productivity indicators and positive results in
2012
1
2
3
4

79
Investor Relations
ri@magazineluiza.com.br
www.magazineluiza.com.br/ir
Any statement made in this presentation referring to the Company’s business outlook. projections and financial and operating goals represent
beliefs. expectations about the future of the business. as well as assumptions of Magazine Luiza’s management and are solely based on
information currently available to the Company. Future considerations are not a guarantee of performance. These involve risks. uncertainties and
assumptions since they refer to forward-looking events and. therefore depend on circumstances that may not occur. These forward-looking
statements depend substantially on the approvals and other necessary procedures for the projects. market conditions. and performance of the
Brazilian economy. the sector and international markets and hence are subject to change without prior notice. Thus. it is important to understand
that such changes in conditions. as well as other operating factors may affect the Company’s future results and lead to outcomes that may be
materially different from those expressed in such future considerations. This presentation also includes accounting data and non-accounting data
such as operating. pro forma financial data and projections based on the Management’s expectations. Non-accounting data has not been
reviewed by the Company’s independent auditors.
Legal Disclaimer

80
October, 2012
BTG Pactual LatAm CEO Conference New York 2012

Btg pactual lat am ceo conference new york 2012 en

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (12)

Similar to Btg pactual lat am ceo conference new york 2012 en

Similar to Btg pactual lat am ceo conference new york 2012 en (20)

More from rimagazineluiza

More from rimagazineluiza (20)

Btg pactual lat am ceo conference new york 2012 en