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- 2. We are one of the biggest retailers with nine million active customers Brazil is the world’s seventh largest economy and sixth biggest retail market Brazil is expected to build 23 million homes until 2022 “Minha Casa Melhor” programme to boost sales by US$9bn magazineluiza What is Brazil and Potential 2
- 3. We have 731 stores across 16 states covering 75% of Brazil’s GDP Our potential client base is more than 100 million low-income Brazilians #1 in the South and Northeast and #2 in the Southeast We sold 22.3 million products and opened 22 stores in 2012 magazineluiza Who We Are Within Brazil 3
- 4. We aim to be number one or two in all of our markets Multichannel approach to help Magazine Luiza achieve its leadership goals More than 50% of Brazil’s retail sector is highly fragmented, generating ample opportunity magazineluiza Strategy 4
- 5. More than 100 million Brazilians can buy any of our products where, when and how they like nationwide We offer clients a sales platform across five distinct formats 1) We are focused on improving delivery times and augmenting value-added services We are keen on expanding our product mix to 150,000 from current 40,000 SKUs magazineluiza Multichannel Approach Notes: 1) Conventional Stores, “Virtual” stores, E-Commerce, magazinevocê and telesales 5
- 6. Average ROIC stands at 20% for a mature store About 85% of our store base are of conventional format (624) Conventional store accounts for 81.4% of total group revenue Expect to open up to 20 conventional stores with an average size of 750m² in 2013 We are confident we will deliver high single-digit same-store sales growth in 2013 magazineluiza Conventional Stores 6
- 7. About 15% of our store base are of “virtual” format (106) “Virtual” store accounts for 4.4% of total group revenue “Virtual” store has an average size of 150m2 (5x smaller than a conventional store) Our “Virtual” stores are unique worldwide magazineluiza Virtual Stores Average ROIC more than 25% for a mature store 7
- 8. We have always focused on profitability and will integrate our online platform with all of our distribution centres by year end Expect to grow sales by 20%-30% this year E-Commerce represents 14.2% of total group sales One of the fastest e-commerce sites in Brazil with nine million users per month magazineluiza E-commerce We crossed the R$1bn mark last year 8
- 9. Today’s innovation represents tomorrow’s big growth markets for Magazine Luiza magazinevocê is a unique social media commerce platform on Facebook 100,000 Brazilians are specialized salespeople selling our products to friends and family magazinevocê initiative was a finalist for World Retail Awards in 2012 magazineluiza Innovation Chip & Social Media 9
- 10. Strong gross margin of 90.6% in 1Q13 versus 84.0% in 1Q12 1Q13 revenue jumped 9.8% to R$346m year on year Financed 34% of all of Magazine Luiza’s 1Q13 sales magazineluiza Luizacred JV with Brazil’s biggest bank Itau-Unibanco Brazil’s largest consumer financing business 10
- 11. JV with Cardif, a unit of BNP Paribas One of Brazil’s leading extended warranty insurance providers We sell two million extended warranty certificates a year 1Q13 gross margin 88.7% versus 90.8% a year earlier 1Q13 revenue R$21.2m versus R$18.4m year on year magazineluiza Luizaseg 11
- 12. Brazil’s leading Consórcio with 55,000 active customers, financing car and property purchases Consórcio is a unique Brazilian credit system allowing locals to buy big ticket items Delivered more than 220,000 units to clients 1Q13 gross margin 61.1% versus 60.1% year on year magazineluiza Consorcio Luiza 12
- 13. Our “Fantastic Sale” initiative is the nation’s favorite and benchmark for all retailers to beat The one-day sale is the equivalent of 10 days worth of revenue “Fantastic Sale” generates over R$50m a year in free advertising thanks to news coverage Other sales campaigns include “Golden Client Day” and “Only Tomorrow” magazineluiza Sales Campaigns 13
- 14. We will deliver double-digit revenue growth again in 2013 Organic growth and stores maturation will spur 2013-2014 sales History of delivering double-digit growth even in the face of a global economic crisis Ongoing remodeling of stores boost sales magazineluiza Revenue 14
- 15. In the first quarter we showed steady progress and increased gross margin 40bp to 28.2% We continue to improve margin with the integration of Northeast Lojas Maia We are implementing a pricing intelligence platform that will help boost margin further We will preserve margin this year and keep boosting EBITDA magazineluiza Margin Focus R$ million 1Q13 1Q12 % Chg Total Gross Revenue 2,131.2 1,992.1 7.0% Total Net Revenue 1,765.6 1,665.9 6.0% Gross Income 498.2 462.7 7.7% Gross Margin 28.2% 27.8% 0.4 pp EBITDA 62.7 22.8 175.4% EBITDA Margin 3.6% 1.4% 2.2 pp Net Income 0.8 (40.7) -102.0% Net Margin 0.0% -2.4% 2.5 pp 15
- 16. We are boosting productivity and cutting costs across the company Operating expenses dropped 0.8 percentage points in 1Q13 SG&A expected to drop gradually by year end Deeper controls and governance over costs implemented since 1Q13 (OBZ budget) magazineluiza SG&A Cutting Costs Operating Expenses (in R$ million) 1Q13 % NR 1Q12 % NR % Chg Selling expenses (355.1) -20.1% (333.3) -20.0% 6.5% General and administrative expenses (94.0) -5.3% (89.9) -5.4% 4.6% Provisions for loan losses (4.9) -0.3% (4.1) -0.2% 19.0% Other operating revenues, net 8.4 0.5% (6.8) -0.4% -223.2% Total Operating Expenses (445.5) -25.2% (434.2) -26.1% 2.6% 16
- 17. All of our debt is in local currency, no US dollar exposure We expect our 2.6x net debt to EBITDA ratio to end up between 2x-2.5x by year end We moved closer toward delivering cashflow in 1Q13 Our goals include improve leverage, free up working capital and generate positive cashflow magazineluiza Financial Result Debt Ca-Opex Net Debt (in R$ million) Mar-13 Dec-12 Sep-12 Jun-12 Mar-12 Gross Debt 1,420.5 1,236.0 1,115.5 1,126.9 985.6 Net Debt 792.0 690.7 818.2 803.3 731.1 Net Debt/ Ajusted EBITDA 2.6 x 2.3 x 2.5 x 2.4 x 2.2 x 17
- 18. We posted a R$0.8m profit in 1Q13 and reverted an R$40.7m loss in 1Q12 We will deliver better profit results quarter on quarter in 2013 Management is aligned across the board toward achieving consistently better earnings We will boost profitability gradually during the course of 2013 magazineluiza Profitability 18
- 21. We integrated more than 250 stores and reorganized our company in 2012 We increased our geographic presence by nine states and entered the Northeast market We integrated 254 Baú da Felicidade and Lojas Maia stores in March and October 2012 We implemented a company-wide cost-savings and productivity programme “More with Less” magazineluiza What We Did In 2012 21
- 22. We are working towards results and continue to grow, even under adverse market conditions Higher productivity from our stores, better pricing policies and lower expenses Expect to become free cashflow positive by year-end Decrease in payroll taxes and possible ICMS tax credits to boost margins magazineluiza What We Are Doing In 2013 22
- 23. magazineluiza Tatiana Santos Investor Relations, M&A and New Business Director tatiana.santos@magazineluiza.com.br 55 11 3504 2584 Anderson Rezende Investor Relations Manager andersonrezende@magazineluiza.com.br 55 11 3504 2581