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1
MANAGEMENT REPORT 2012
In compliance with legal provisions and pursuant to current Brazilian corporate law, B2W presents this
Management Report with financial and operating statements for the fiscal year ended December 31,
2012.
B2W is the leading online retail Company in Brazil and was formed in December, 2006 from the merger
between Americanas.com and Submarino. This report contains information regarding the brands
administered by the Company: Americanas.com, Submarino, Shoptime, BLOCKBUSTER® Online
and SouBarato, as well as the Company’s subsidiaries: B2W Viagens, Ingresso.com and Submarino
Finance.
The Company’s shares are listed on the São Paulo Stock, Commodities and Futures Exchange
(BM&FBOVESPA) under ticker symbol BTOW3 and figure on the Novo Mercado listing segment, which
is the highest level accorded for corporate governance in Brazil.
Lojas Americanas S/A is B2W’s controlling shareholder, with approximately 63% of the Company’s
shares. The Company’s free float corresponds about 37% of the Company’s total capital. The following
chart summarizes B2W’s share structure:
2
1. COMPANY OVERVIEW
B2W Digital is the leader in e-commerce in Brazil. Resulting from the merger between Americanas.com
and Submarino in 2006, the Company operates through a digital platform, with business that present a
huge synergy and a unique business model, multichannel, multibrand and multibusiness.
B2W has a portfolio with the brands Americanas.com, Submarino, Shoptime, B2W Viagens,
Ingresso.com, Submarino Finance, BLOCKBUSTER® Online and SouBarato, that offer more than 35
categories of products and services through the internet, telesales, catalogs, TV and kiosks distribution
channels.
Americanas.com
The largest Store. The lowest prices.
Operating for the past 13 years in e-commerce, Americanas.com (www.americanas.com.br) is Brazil’s
largest and most complete Internet store. The brand offers more than 500,000 items distributed in 32
categories such as computers, home appliances, electronics, cellphones, furniture, domestic utensils,
toys, books and much more.
Besides the online channel, the marketing operation is also conducted through telephone sales and
more than 700 kiosks located inside Lojas Americanas stores. The Americanas.com kiosks are
designed to offer the best client purchase experience, with competitive prices and the comfort of
receiving the product in one’s own home. They also provide additional options, such as different means
of payment, and contribute to digital inclusion, in many cases offering clients their first online shopping
experience with the help of a trained associate.
3
In 2012, the brand launched a ―Jet Delivery‖ service for more than 10,000 items for same-day-purchase
delivery to clients in the city of São Paulo. Furthermore, Americanas.com has developed an application
for smartphones, with a search tool that makes it possible to seek items using a bar code and providing
the address of the Lojas Americanas store closest to the customer. Another search tool the brand offers
is ―Caixa Expresso‖ (Express Check-Out), a speedier and easier way of concluding an Internet
purchase.
The brand also operates a travel agency (http://viagens.americanas.com.br), B2B (business-to-
business) services and a wedding list service.
In 2012, the brand was six-time champion in the Datafolha Institute’s Top of Mind Award in the e-
commerce category, and elected the preferred brand of residents of Rio de Janeiro in the Purchase Site
category, according to ―O Globo‖ newspaper.
Submarino
The products you like and the best Internet service.
Operating in the sector for 13 years, Submarino (www.submarino.com.br) – a pioneering online store
and the benchmark for technology and innovation – offers more than 30 product categories through its
sales channels: Internet, telephone sales and catalogs, with a strong emphasis on the sale of books,
CDs, DVDs, electronics, computers, telephone products, games and online services.
Moreover, Submarino has been consolidating itself through other services, such as Submarino Viagens
travel site (www.submarinoviagens.com.br), Submarino on Demand (sale of streaming digital films),
B2B (business-to-business) services and the Submarino Card (www.cartaosubmarino.com.br) – a credit
card that offers exclusive advantages on the Submarino and Submarino Viagens websites.
Designed to serve consumers in an easier, faster and fully encompassing manner, Submarino has
developed cell phone apps for models such as iPhone, Nokia and Android, with the following features:
search by QRCode, search by barcode, native (faster) browsing, product promotions on the home page
and 1-Click purchasing.
Submarino sponsors a number of events, and is present at national and international activities such as
Campus Party Brasil, the São Paulo Book Biennial and Rock in Rio.
Shoptime
Exclusive products and live demonstration.
Shoptime (www.shoptime.com.br) is Brazil’s first home shopping (television sales) and operates through
internet, telesales and catalogues. The TV channel reaches more than 28 million Brazilian households,
4
of which more than 12 million with pay TV subscriptions (Sky 19 and Net 31 channels) and more than
16 million - connected to satellite television (Vertical 5B), with interactive transmission including more
than 11 hours of live programming 7 days a week. Since 1995, the television channel broadcasts 24
hours a day, ensuring speed and improved interaction for clients’ shopping experiences. The catalogue
is distributed five times a year throughout Brazil with a printing run of 400,000 copies each.
Shoptime currently offers 23 product categories. Shoptime’s assortment focus is on articles marketed
under the Shoptime brand, with an emphasis on portable appliances (Fun Kitchen), bed, bath and
dining (Casa & Conforto), housewares (La Cuisine) and sports and leisure products (Life Zone). The
computer and technology department also plays an important role in the brand’s product mix.
Furthermore, Shoptime operates a travel agency through Shoptime Viagens
(http://viagens.shoptime.com.br).
B2W Viagens
B2W Viagens operatesthrough Americanas Viagens, Submarino Viagens, Shoptime Viagens and
Submarino Viajes brands and offers tour packages, plane tickets, online hotel reservations, cruises,
travel insurance, car rentals and tourist attractions packages in Brazil and abroad. The Company
markets its services through the Internet, telephone sales and television, and has been working to
expand product assortment aiming to aggregate the largest and best travel content in Latin America.
B2W Viagens’ objective is to build a platform that allows each brand’s clients to quickly and easily plan
and purchase their travel packages, so that the Company pursues a leadership position in Latin
America’s online travel market on account of the Company’s innovation, excellent customer service,
outstanding content and competitive prices.
Following its strategy of continuous innovation, B2W Viagens launched in 2010 Milevo
(www.milevo.com.br) a social travel network, which now has over 70,000 users. The site allows users to
add comments concerning their travel experiences, which enables B2W Viagens to gain access to a
qualified traveling public with guaranteed travel knowledge and experience. It is noteworthy that Milevo
complements the positioning strategy of B2W Viagens, because it interacts with the customers on the
travel planning and sharing experiences phases.
In 2011, B2W Viagens began its international expansion with the official launching of the travel
operation in Argentina through the brand Submarino Viajes (www.submarinoviajes.com.ar).
Ingresso.com
Ingresso.com provides technology and services of online purchase of tickets for movies, theater
productions, concerts, soccer games and cultural events. With more than 4 million registered clients,
5
Ingresso.com is the biggest online ticket seller in Brazil. The Company also allows clients to make seat
assignments online, which enables the client to comfortably choose his or her preferred movie or
theater seat. In addition, the Company has invested heavily in commercialization of tickets for concerts.
Ingresso.com is the operator ticket sales for Rock in Rio 2013.
In addition to the main site (www.ingresso.com.br), which includes an exclusive version for mobile
devices and iPhone, Blackberry and Android application, Ingresso.com is also available on the
Americanas.com, Submarino and Shoptime websites.
Another area in which Ingresso.com operates involves marketing its ticketing software in Brazil. The
Company is currently responsible for computerizing various movie theaters, theaters, sports stadiums
and concert venues.
Furthermore, Ingresso.com is present in Latin America and currently operates in Mexico, Argentina and
Chile through movie ticket sales in a partnership with Cinemark. This initiative allows B2W to explore
and study new markets with low entry costs.
Submarino Finance
Submarino Finance offers the Submarino Mastercard Card, which makes a number of special
advantages available on Submarino website like installment payments in up to 15 times without interest
charges, exclusive discounts, differentiated credit limit and the Léguas Program, which permits
accumulation of rewards so that one can exchange them for products on Submarino.
For B2W, the Submarino Card represents an opportunity to leverage sales, especially high-cost items,
to reduce the costs associated with credit-card administrative fees, to promote client’s loyalty and to
improve business revenue resulting from consumer financing. During the year, we have reached the
target of more than 790 thousand cards and participation of 40% of the sales on Submarino website.
BLOCKBUSTER® Online
B2W acquired the right to use the BLOCKBUSTER® trademark online in Brazil and started offering in
2008 online DVD and Blu-ray Disk rentals on www.blockbuster.com.br. BLOCKBUSTER® Online is a
rental store that allows clients to choose online the movies they want to watch, to create their wish list,
and to receive and return movie rentals from the comfort of their homes. It offers monthly plans that
allow clients to always have movies at home without worrying about return dates and late-return fines.
BLOCKBUSTER® Online currently includes the largest online selection of movies in Brazil, with more
than 20,000 titles, and it provides services to the states of São Paulo, Rio de Janeiro, Minas Gerais,
Paraná, Santa Catarina and Rio Grande do Sul. It also has the largest Blu-ray Discs collection available
for rent in Latin America, with about 2,000 titles. Lastly, it also offers the service of rental of videogame
6
games, being the unique online rental store offering DVD, Blu-ray and games in Brazil.
SouBarato
At the end of 2011, it was launched the SouBarato (www.soubarato.com.br) website, aimed at factory
outlet inventory selling. Since then, the site has been performing excellently, becoming a great way to
reach a distinctive audience, thereby contributing to the Company's growth.
SouBarato website is an e-commerce store whose great competitive advantage consists of lower-than-
market average price promotions offered to customers. The products sold are all new and repackaged,
passing strict quality testing and are in flawless condition to be sold.
7
2. MESSAGE FROM THE MANAGEMENT
Since it was founded, in 2006, B2W has undergone strong growth, intense transformation and a
significant learning curve to confront the many changes observed in the Brazilian digital retail market.
During this period, based on a digital platform for businesses with strong synergies, B2W more than
doubled in size. With its unique multichannel, multibrand and multibusiness model, the Company faced
the challenges of a market that was expanding and becoming more diversified every day — and
therefore more competitive and complex.
In 2012, the Company posted consolidated gross revenue of R$ 5.4 billion, representing a 15.3%
growth when compared to the same period of the previous year. During the fourth quarter of 2012, the
Company posted growth of 38.0%.
During 2012, a number of important measures that were implemented made it possible for the Company
to advance its strategy for moving closer to its clients — offering them the best purchase experience,
the best delivery option and the best customer service. In the month of October 2012, four new
Distribution Centers were opened and at least another 10 Distribution Centers will be inaugurated over
the next three years (2013, 2014 and 2015).
As a reward for the mobilization of the entire Company to provide the best digital experience in Latin
America, B2W received a series of honors and awards in 2012. It placed first, through the Submarino
brand, in three categories of the ―Reclame Aqui Service Quality" website’s annual award competition
and in two categories of the prize offered by ―Consumidor Moderno‖ Magazine; and it was elected,
through Americanas.com, the preferred brand of consumers in the city of Rio de Janeiro, according to
the O Globo newspaper. However, the greatest recognition was the trust placed in it by all of the clients
who purchased and approved the products and services offered by B2W.
The Company is totally engaged to continue transforming its processes and investing in the
infrastructure necessary to enable B2W to expand its competitive advantages, thereby enabling it to
capture the innumerable e-commerce opportunities that will be presenting themselves in the
forthcoming years. To be even closer to its clients the Company will invest more R$ 1 billion in the next
three years (2013, 2014 and 2015) in logistics, technology and innovation.
B2W is prepared for 2013, a year which already is replete with opportunities. During this year, the
Company will seek new and superior efficiency levels, expanding all of its operations and moving
forward with its strategy to get closer to the clients, that is offering the best Internet purchase experience
in Brazil and Latin America.
We would like to express our appreciation to all of our Associates, who made the’ difference during the
year and are part of the best and most successful digital team in Latin America. Our staff, one of the
8
Company's main assets, is made up of e-commerce pioneers — with active participation in the
development of the industry in Brazil and who have a privileged strategic vision about the digital retail
market — and by the most brilliant people in the market, the result of a strong recruiting and
professional development program to attract talented individuals.
We also would like to thank the support and trust of all of our clients, suppliers and shareholders.
THE MANAGEMENT
9
3. ECONOMIC LANDSCAPE
Throughout 2012, internal consumption was consolidated as an important driver of the economy,
boosted by incentive measures such as the temporary reduction of the Industrialized Product Tax (IPI)
and the cut in the economy's basic interest rate (SELIC) to a historical minimum of 7.25% per year.
Even facing macroeconomic challenges – with the Gross Domestic Product (GDP) growing 0.9% and
inflation as measured by the National Wide Consumer Price Index (IPCA) reaching an accumulated rate
of 5.84% — the retail sector was able to report a sales growth of 8.4%, up 1.7 p.p. over 2011. This
performance could also be partly attributed to the evolution of the indicators for the country's labor
market, which ended the year with the lowest unemployment rate in recent history (5.5%).
B2W reiterates its confidence in the country's economic development and in the growth opportunities in
the retail digital segment, mainly due to the perspectives of modest credit expansion and reduction of
consumers’ delinquency in 2013. The Company reaffirms its confidence regarding the country’s
economic development and underscores the resilience of its unique business model through its
nationwide presence and multichannel customer service.
*Source: Instituto Brasileiro de Geografia e Estatística and Banco Central do Brasil.
10
4. STRATEGY AND INVESTMENT
B2W’s strategy is to get closer to the client, offering the best purchase experience, the best delivery
service and the best customer service:
Best Purchase Experience – To offer the best products, the best prices and the best site
browsing experience on our websites, facilitating clients’ purchase process.
Best Delivery Service – We want to get even closer to the customers’ homes, making deliveries
in a faster and more reliable way.
Best Customer Service – We want to enchant clients, being speedy and efficient in solving any
problems.
In line with this strategy, we will invest more than R$ 1 billion over the next 3 years (2013, 2014 and
2015), in technology, innovation and logistics and we will open 10 Distribution Centers.
Investment
We have adopted an investment plan which the main objective is to enable growth and improvements in
our operations. In the year of 2012, B2W invested a total of R$ 322.5 million, mainly concentrated on
logistics, technology and innovation.
Logistics
In line with its strategy of getting closer to its clients, during the month of October, B2W Digital opened 4
new Distribution Centers, located in the states of SP, RJ, MG and PE. The new distribution centers will
guarantee speedier delivery of products purchased from the Company's websites and better client
service.
B2W Digital has been constantly investing to optimize its logistical systems and distribution chain.
During the last months, new equipment was installed and a number of construction projects at the
Company’s Distribution Centers were concluded, expanding the level of automation and thereby
reducing the time needed to deliver merchandise and also reducing human error. Likewise, systems
were installed to better satisfy new tax and legal requirements.
Another important investment front has been the development of a new customer service system, which
is used in the Distribution Center for localization and dispatch of orders processed and it will allow B2W
to operate more efficiently and assertively.
In addition, the Company established strategic alliances with the leading transporters of the country,
ensuring the joint commitment to offer the best level of service to the customers.
11
Technology
One of the goals of the technology investments is the creation of a robust infrastructure by optimizing
back office systems, sales layers and accessory systems, such as means of payment and management
information systems.
This way, the Company is able to benefit from productivity gains and to prepare itself for supporting the
future growth of its operations. It’s worth mentioning other important gains, such as the increase of the
browsing speed of the Internet sites, the greater agility in commercial actions and the notable advances
in management information systems.
The investments in technological platforms of the operational/logistics, television, customer service and
telephone sales areas seek to improve the quality and efficiency of Company’s operations, with the goal
of giving the client an even better purchasing experience.
Following its path of innovation, B2W Digital has proceeded to invest in new features, designed mainly
to improve the purchase experience, increase the conversion rate and strengthen the positioning of its
brands.
During last year, a lot of projects were implemented involving from improvements in the structure of the
technological platform to new features. We highlight the following recently introduced projects:
o Launch of the new search system in Submarino. Seeking to enhance the purchase experience of its
clients and offer greater convenience and speed, Submarino introduced its new search system. In
books, movies, music and games categories, clients can search by title, author, publisher, and many
others key words. For other categories, Submarino offers a refurbished and more assertive search
system focused on the relevance and popularity of each item and including new services that provide
greater ease of use for clients, such as ―auto-complete,‖ search suggestions and automatic filters;
o Launch of the ―Eu vi na TV‖ (I Saw It on TV) application by Shoptime. The iPhone-platform-based
application exhibits the latest offers available on TV with an easy shortcut to finalize the purchase
process;
o New home page for the Americanas.com iPhone app. Seeking to offer its clients greater speed and
convenience, Americanas.com introduced a new home page for its iPhone application. The new site
highlights the main services available and is simpler to browse, as well as being lighter and loading
faster, and is equipped with a more assertive search feature;
o Implementation of the ―Buy Later‖ tool. Now, clients of Americanas.com, Submarino and Shoptime
will be able to select their product preferences and use the "Buy Later" tool to place them in their
shopping carts and conclude purchases at a later time of their own choosing;
12
o Implementation of the ―Chat Service‖ tool. Clients of Americanas.com, Submarino and Shoptime now
can count on a fast and easy service option, known as Chat Online. Through this option, clients can
more comfortably clarify doubts, make suggestions or resolve eventual problems;
o Implementation of ―Product Evaluation.‖ Through the Americanas.com and Shoptime websites,
clients now have the opportunity to evaluate products, grading them and posting their opinions. As a
result, other clients can make use of these evaluations for their own purchase decisions;
o Implementation of the ―Store Payment‖ option. Besides the different options available on the
Americanas.com website itself, clients now have a new alternative: payment in the nearest Lojas
Americanas store;
o Implementation of ―1-Click Buy‖ tool in Shoptime. After the implementation of the fastest purchase
tool on the Internet by Americanas.com, Submarino and Ingresso.com, now its Shoptime’s turn to
offer the comfort and speed of ―1-Click Buy‖ on its website;
o Personalized offers in Submarino e-mails. Submarino now sends personalized offers by e-mail,
using behavior information in real time. Besides improving the relevance of the offers for clients, the
practice improves conversion of the average ticket;
o Launch of the Nokia Cellphone Application. To offer more comfort to clients and strengthen its
strategy of expanding product offerings to more mobile devices, B2W launched an Americanas.com
and Submarino application for Nokia cell phones. Then besides clients who have iPhone or Android
devices, now Nokia clients can also have this feature for greater ease of purchases;
o Launch of suggestions channel by Shoptime and Submarino. A channel was developed for the
clients of Shoptime and Submarino websites make suggestions regarding new products,
improvements, clarify doubts and other possibilities. This channel is designed to improve our
services and to enhance the client's online experience;
o New generation search engine at Americanas.com. The Americanas.com search system continues
being developed, becoming more assertive in its results, making use of such new features as
―autocomplete‖, search suggestions, automatic filters by model, size and color, as well as it’s a more
intelligent system that learns through the ―clicks‖ made by each user;
o Launch of the functionality of product evaluation by the customers - Bazaar Voice of Submarino. It’s
a platform that was created to host Submarino’s clients evaluations, reviews and contents, allowing a
greater interaction with consumers, who can post their assessments of products and leave
comments through images and videos.
13
People
One of B2W's main assets is the best and most successful digital team in Latin America, made up of e-
commerce pioneers — who have actively participated in the development of the sector in Brazil and
have a strategic and privileged vision about the digital retail market — along with the most brilliant
people in the market who have been attracted by strong recruitment and talent development programs.
The expansion of B2W’s operations directly reflects its Associates’ professional development. The
Company provides training and education programs to face the challenges that arise from the growth of
our businesses. Career opportunities follow a merit-based system that rewards Associates’ commitment
to the Company’s long-term vision.
Training and Development
In 2012, we consolidated the training schedule drawn up in the preceding year and logged 20,000
associate training hours.
Our focus on providing training and development to our Associates is a reflection of our pursuit of ever
more challenging goals.
Recruiting Talent
B2W’s policy is to develop talent internally by hiring Associates for our Internship, Trainee and New
Talents programs and for jobs at our business facilities. Thus, we emphasize the recruitment of young
university students and new graduates, which are provided with specific training that accounts for
challenges particular to the retail sector and immerses the associate in the Company’s organizational
culture.
Internship Program
The objective of the Internship Program is to recruit university students with an entrepreneurial spirit.
Thus, we look for young people whose profile fits with a results-oriented team. During their participation
in the program, interns are introduced to daily work routines in various departments at headquarters,
distribution centers and other business facilities. Monthly training models are also offered during this
period, and interns are given the opportunity to better understand the Company’s vision, mission and
values, its primary features and its respective departments, as well as the technical tools necessary to
work in a specific field. The countrywide Program has brought many young professionals into the
Company.
14
New Talents Program
The New Talents Program is focused on hiring recent university graduates, aiming at developing, in a
fast way, young professionals capable of following the growth of the group enterprises. The talents are
settled into specific areas since the beginning of the program, and undergo training where they have a
vision of all Company areas.
Trainee Program
Registration for the B2W’s Trainee Program is conducted on an annual basis. As rapid and dynamic as
the internet itself, this program is conducted over 12 months, representing an intense learning
experience for young candidates whose profiles suggest they could be future managers at Lojas
Americanas. The selection process consists of: registration, an online stage, skills laboratory, HR
interview, final assessment and hiring. In the first six months, the trainee learns about the company's
overall operations and undergoes various corporate training modules. After this period, each trainee is
sent to one business area for on-the-job learning and they all get an opportunity to develop a final
challenging project.
Program for People with Disabilities
B2W proactively seeks to include and train people with disabilities in its workplaces. The company
offers job positions through which disabled employees are given the opportunity to learn retail routines
and develop themselves professionally. Recruitment of candidates occurs through partnerships with
municipal authorities and specialized consultants, who indicate them for jobs in our stores and
distribution centers around the country. Furthermore, in Rio de Janeiro and São Paulo, we participate in
the "Special Opportunities" project, a specialized and accessible outreach program through which large
companies offer jobs to people with disabilities.
15
5. AN OVERVIEW OF THE COMPANY’S FINANCIAL RESULTS
General Considerations
The accounting information that serves as basis for the comments that follow are presented according
to the international financial reporting standards (IFRS), to the rules issued by the Brazilian Securities
Exchange Commission (CVM), to the Novo Mercado listing rules, and in Reais (R$). The follow analysis
refer to the Consolidated results and the comparisons refer to the 4th quarter of 2011 (4Q11) and the
year of 2011, except where otherwise indicated.
B2W’s portfolio is composed by the brands Americanas.com, Submarino, Shoptime, B2W Viagens,
Ingresso.com, Submarino Finance, BLOCKBUSTER® Online and SouBarato, that offer over 35
categories of products and services through the Internet, telesales, catalogs, TV and kiosks.
4T12 4T11 Var. (%) Financial Highlights (R$ million) 2012 2011 Var. (%)
1,588.2 1,176.6 35.0% Net Revenue 4,812.4 4,232.1 13.7%
362.3 273.6 32.4% Gross Profit 1,145.5 1,059.7 8.1%
22.8% 23.3% -0.5 p.p. Gross Margin (%NR) 23.8% 25.0% -1.2 p.p.
109.6 101.7 7.8% Adjusted EBITDA 331.2 415.4 -20.3%
6.9% 8.6% -1.7 p.p. Adjusted EBITDA Margin (%NR) 6.9% 9.8% -2.9 p.p.
(43.7) (28.8) 51.7% Net Result (170.7) (89.2) 91.4%
-2.8% -2.4% -0.4 p.p. Net Margin (%NR) -3.5% -2.1% -1.4 p.p.
Consolidated Consolidated
Net Revenue
In 4Q12, the consolidated net revenue reached R$ 1,588.2 million compared to R$ 1,176.6 million in
4Q11, a growth of 35.0%.
In 2012, the consolidated net revenue reached R$ 4,812.4 million compared to R$ 4,232.1 in 2011, a
growth of 13.7%.
4,232
4,812
2011 2012
1,177 1,588
4Q11 4Q12
+35%
+14%
Consolidated Consolidated
16
Gross Profit
In 4Q12, the consolidated gross profit reached R$ 362.3 million, a growth of 32.4% in relation to the R$
273.6 million registered in 4Q11.
In 2012, the consolidated gross profit reached R$ 1,145.5 million, a growth of 8.1% in relation to the R$
1,059.7 million registered in 2011.
1,060 1,146
2011 2012
274
362
4Q11 4Q12
Selling, General and Administrative Expenses
In 4Q12, the consolidated selling, general and administrative expenses totaled R$ 252.7 million,
representing 15.9% of net revenue.
In 2012, the consolidated selling, general and administrative expenses totaled R$ 814.3 million,
representing 16.9% of net revenue.
14.6%
15.9%
4Q11 4Q12
15.2%
16.9%
2011 2012
+8%
+1.3 p.p.
+1.7 p.p.
Consolidated Consolidated
+32%
Consolidated Consolidated
17
Adjusted EBITDA In 4Q12, the consolidated Adjusted EBITDA reached R$ 109.6 million, a growth of 7.8% comparing to
R$ 101.7 million registered in the same period of the preceding year.
In 2012, the consolidated Adjusted EBITDA reached R$ 331.2 million, comparing to R$ 415.4 million
registered in the preceding year.
102 110
4Q11 4Q12
415
331
2011 2012
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and excluding other
operating revenues/expenses and equity accounting) is presented as additional information because we
believe it represents an important indicator of our operating performance besides being useful for
keeping the comparability with previous reported results.
EBITDA (CVM 527/12) On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12,
which disposes about the voluntary disclosure of not of accounting information as EBITDA.
The Instruction aims to standardize the disclosure, in order to improve the understanding of this
information and making it comparable among the publicly listed companies.
To keep the consistency and the comparability between previous periods, we present the reconciliation
of EBITDA in the following table.
EBITDA Reconciliation - R$ MM 4Q12 4Q11 ∆ % 2012 2011 ∆ %
Gross Profit 362.3 273.6 32.4% 1,145.5 1,059.7 8.1%
(+) Selling Expenses (225.8) (146.5) 54.1% (732.7) (565.7) 29.5%
(+) General and Administrative Expenses (26.9) (25.4) 5.9% (81.6) (78.6) 3.8%
(=) Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%
(+) Other Operating Income (Expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%
(=) EBITDA (CVM 527/12) 84.0 81.2 3.4% 254.2 309.3 -17.8%
* In the old accounting rules, considered as "non operating income".
Consolidated
Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
Consolidated Consolidated
+8%
-20%
18
EBITDA’s (CVM 527/12) calculation takes into account the net income of the period plus income taxes,
net financial expenses of financial revenues and depreciation and amortization.
Net Financial Result
In 4Q12, the consolidated net financial expenses were R$ 126.2 million, a variation of 17.3% comparing
to the consolidated net financial expense of R$ 107.6 million presented in 4Q11. In 2012, the
consolidated net financial expenses were R$ 420.2 million, a variation of 13.0% comparing to the
consolidated net financial expense of R$ 372.0 million presented in 2011.
The growth of 13.0% in the consolidated net financial expenses in 2012 is related to the increase of the
financial discounts granted because of the mean of payment chosen. The increase of this line is in line
with the market practices observed during the period.
Consolidated Net Financial Result - R$ Million 4Q12 4Q11 Δ% 2012 2011 Δ%
Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%
The Company continues to reaffirm its commitment to a conservative cash investment policy,
manifested by the use of hedge instruments in foreign currencies, to offset eventual exchanges
fluctuations, whether relative to financial liabilities or total cash position. These instruments offset the
foreign exchange risk, transforming the cost of the debt to local currency and interest rates (as a
percentage of CDI*). Similarly, it is worth mentioning that the Company’s cash is invested with Brazil’s
largest financial institutions.
CDI - Certificado de Depósito Interbancário: average rate of borrowing in the interbank market.
Net Result
In 4Q12, the consolidated net result was R$ -43.7 million, compared to the R$ -28.8 million obtained in
the same period of the preceding year. In 2012, the consolidated net result was R$ -170.7 million,
compared to the R$ -89.2 million obtained in the preceding year.
Reconciliation of the Consolidated Net Result - R$ Million 4Q12 4Q11 Δ% Δ%
Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%
(+) Depreciation / Amortization (25.8) (16.0) 61.3% (94.3) (72.6) 29.9%
(+) Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%
(+) Other Operating Income (Expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%
(+) Income Tax and Social Contribution 24.3 13.6 78.7% 89.6 46.1 94.4%
(=) Net Result (43.7) (28.8) 51.7% (170.7) (89.2) 91.4%
* In the old accounting rules, considered as "non operating income".
2012 2011
Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
19
Indebtedness
B2W uses its cash generation prioritizing investments that present better returns to shareholders. Thus,
in the year of 2012, the consolidated investments in plant, property and equipment and intangible
(development of websites and systems) totaled R$ 322.5 million.
B2W’s cash balance at 12/31/2012 amounted R$ 1,370.2 million, amount higher than the Company's
sum of short-term debt and debentures, which totaled R$ 617.1 million.
At 12/31/2012, the Company’s net debt was R$ 641.0 million, representing 1.9 times the accumulated
Adjusted EBITDA in the last 12 months, which shows an evolution when compared to the same
indicator at 09/30/2012.
R$ million
Indebtedness 12/31/2012 09/30/2012
Short Term Debt 594.7 829.2
Short Term Debentures 22.4 31.1
Short Term Indebtedness 617.1 860.3
Long Term Debt 1,540.2 1,062.5
Long Term Debentures 601.5 599.1
Long Term Indebtedness 2,141.7 1,661.6
Total Debt (1) 2,758.8 2,521.9
Cash and Equivalents 1,370.2 1,167.4
747.6 686.0
Total Cash (2) 2,117.8 1,853.4
Net Cash (Debt) (2) - (1) (641.0) (668.5)
Net Cash (Debt) / EBITDA LTM 1.9 2.1
Average Maturity of Debt (days) 848 805
Consolidated
Credit Card Accounts Receivables Net of Discounts
Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.
20
The accounts receivable is composed, mainly, by credit card receivables, net of the discounted value,
which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts
receivable is demonstrated in the table below:
Accounts Receivable Conciliation 12/31/2012 09/30/2012
Gross Credit-Cards Receivable 1,835.5 1,859.7
Receivable Discounts (1,087.9) (1,173.7)
747.6 686.0
Present Value Adjustment (6.8) (3.5)
Allowance for Doubtful Accounts (49.7) (58.3)
Other Accounts Receivable 166.9 234.8
Net Accounts Receivable - Consolidated 858.0 859.0
Credit Card Accounts Receivables Net of Discounts
For calculation of the working capital purposes the consolidated gross credit cards receivables at
12/31/2011 were R$ 1,863.0 million.
Because of the adoption of the new CPCs/IFRS, in particular the CPC 38 and its corresponding IAS 39,
the Company began to write off (derecognize) receivables from credit card administrators at the
moment they are effectively discounted (as of the explanatory notes of the financial statements).
However, to better demonstrate the volume of receivables discounted on the base-dates analyzed, in
the table above the Company presents the accounts receivable adjusted by the discounts made until
the base-dates under analysis.
No Foreign Currency Exposure At 12/31/2012, B2W’s balance sheet recorded foreign currency denominated debt. Such debt, however,
is FULLY PROTECTED against any foreign exchange fluctuations through derivative operations (swap)
that replace the foreign exchange risk for the variation in the basic Brazilian interest rate (CDI).
Sales by Means of Payment
Sales by means of payment can be seen in the following table:
Means of Payment 4Q12 4Q11 ∆% 2012 2011 ∆%
Credit Card 62% 71% -9 p.p 65% 73% -8 p.p
Other Means of Payment 38% 29% +9 p.p 35% 27% +8 p.p
21
Net Working Capital The consolidated net working capital at December 31, 2012 was 98 days, representing an improvement
of 21 days when compared to the 119 days presented at December 31, 2011.
119
98
12/31/2011 12/31/2012
(Net Working Capital = Days of Inventory + Days of Accounts Receivable – Days of Suppliers)
B2W, confirming its commitment to maximize shareholder value, continues to manage working capital
variables. Opportunities of improvement in internal processes and relationship with suppliers continue
being implemented and we are certain that better levels can be achieved.
- 21 days
22
Consolidated Income Statement
B2W
Income Statements
(in million of Brazilian reais, except result per share) 4Q12 4Q11 Variation 2012 2011 Variation
Gross Sales and Services Revenue 1,821.4 1,319.9 38.0% 5,421.0 4,702.5 15.3%
Taxes on sales and services (233.2) (143.3) 62.7% (608.6) (470.4) 29.4%
Net Sales and Services Revenue 1,588.2 1,176.6 35.0% 4,812.4 4,232.1 13.7%
Cost of goods and services sold (1,225.9) (903.0) 35.8% (3,666.9) (3,172.4) 15.6%
Gross Profit 362.3 273.6 32.4% 1,145.5 1,059.7 8.1%
Gross Margin (% NR) 22.8% 23.3% -0.5 p.p. 23.8% 25.0% -1.2 p.p.
Operating Revenue (Expenses) (278.5) (187.9) 48.2% (908.6) (716.9) 26.7%
Selling expenses (225.8) (146.5) 54.1% (732.7) (565.7) 29.5%
General and administrative expenses (26.9) (25.4) 5.9% (81.6) (78.6) 3.8%
Depreciation and amortization (25.8) (16.0) 61.3% (94.3) (72.6) 29.9%
83.8 85.7 -2.2% 236.9 342.8 -30.9%
Net Financial Result (126.2) (107.6) 17.3% (420.2) (372.0) 13.0%
Financial Revenues 43.9 45.9 -4.4% 206.1 219.1 -5.9%
Financial Expenses (170.1) (153.5) 10.8% (626.3) (591.1) 6.0%
Other operating income (expenses)* (25.6) (20.5) 24.9% (77.0) (106.1) -27.4%
Income tax and social contribution 24.3 13.6 78.7% 89.6 46.1 94.4%
Net Result (43.7) (28.8) 51.7% (170.7) (89.2) 91.4%
Net Margin (% NR) -2.8% -2.4% -0.4 p.p. -3.5% -2.1% -1.4 p.p.
Adjusted EBITDA 109.6 101.7 7.8% 331.2 415.4 -20.3%
Adjusted EBITDA Margin (% NR) 6.9% 8.6% -1.7 p.p. 6.9% 9.8% -2.9 p.p.
Weighted average of outstanding shares (thousand) 156,536 135,627 156,536 135,627
(0.2791) (0.2124) 31.4% (1.0903) (0.6575) 65.8%
* In the the former accounting rules, considered as "non-operating income".
Consolidated
Period ended on December 31
Consolidated
Period ended on December 31
Operating Result before Net Financial Result and
Equity Accounting
Net Result per Outstanding Share (R$)
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6. CORPORATE GOVERNANCE AND CAPITAL MARKETS
B2W is subject to the BM&FBOVESPA’s Novo Mercado, the highest Corporate Governance level in
Brazil, listing rules. These include an ownership structure exclusively comprised of common shares and
the election of independent members to the Board of Directors. B2W’s Board of Directors is comprised
of seven members, four of whom are appointed by the controlling shareholders and another three
independent members.
The IPO and membership processes in the Novo Mercado were granted by the CVM and BOVESPA on
July 25 and July 26, 2007, respectively.
B2W’s common shares are listed on the BM&FBOVESPA and have been traded under the ticker
symbol BTOW3 (common) since August 8, 2007.
Below is a short description of the main events occurred during the year:
On April 30, 2012 the Company’s General and Extraordinary Shareholders Meetings were held, at
which the following resolutions were approved:
1- To take recognizance of the accounts prepared by the managers and related financial statements for
the fiscal year ended December 31, 2011.
2- Setting the global compensation to be paid to officers;
3- Inclusion of a statutory provision for adoption on the part of the Company of mechanisms that assure
compensation of the officers and members of the Fiscal Council and technical bodies;
4- Detailing of the Company’s corporate purpose;
5- Change in the wording of Art. 5th of the Bylaws to reflect the canceling of shares held in the treasury.
6- Fiscal Council Installation and election of Messrs. Carlos Alberto de Souza, Pedro Carvalho de Mello
and Peter Edward Cortes Marsden Wilson to the position of full members and Messrs. Ricardo Scalzo,
Luciano Mancini and Marcos Duarte Santos to the position of alternate members.
On May 25, 2012, at a Meeting of the Board of Directors, the third public issuance of Company’s
debentures was approved, in single series, unsecured, registered and book-entry, for public distribution
with restricted placement efforts. The debentures were issued on June 13, 2012 in the total amount of
R$ 300 million, maturing on June 13, 2017. The funds obtained through the issue of the debentures will
be used to strengthen the Company’s working capital.
On July 2, 2012, a meeting of the Board of Directors was held to elect Mr. Carlos Eduardo Rosalba
Padilha as Chief Operating Officer, for mandate that shall expire, along with the other members of the
Management, as of the holding of the General Shareholders Meeting in 2013.
24
On August 7, 2012, in the meeting of the Board of Directors was approved the election of Mr. Fabio da
Silva Abrate, in substitution to Mr. François Pierre Bloquiau, as Investor Relations Officer, for mandate
that shall expire, along with the other members of the Management, as of the holding of the General
Shareholders Meeting in 2013.
On August 9, 2012, the shareholders were informed through the publication of Material Fact that Lojas
Americanas S.A. (LASA), the controller Company, had ended a partnership with Itaú Unibanco Holding
S.A for the distribution and sales of financial products and services exclusively through FAI –
Financeiras Americanas Itaú. Pursuant to the obligations assumed in the constitution of the Company
on November 23, 2006, LASA will offer to B2W the portion of the right to exclusivity, acquire by it, to
offer, distribute and sell financial products and services through Company's distribution channels. It was
further communicated that the Company will consider the LASA offer, when received, and will keep the
market informed regarding the outcome of the negotiations of this matter.
On September 24, 2012, a General Meeting of Holders of the Second Issue of Simple Debentures was
held, approving on the occasion new wording of the definition of Consolidated Net Debt and the signing
of the second amendment to the issue registration to change the financial index related to the
Consolidated Net Debt/Adapted EBITDA ratio
On September 26, 2012 a Market Announcement was published reporting that the controller, Lojas
Americanas, had acquired 234,400 common shares issued by the Company, representing 0.15% of its
Capital Stock. Through this acquisition, the Company's parent company reached 93,263,207 shares,
representing 59.58% of its Capital Stock.
On September 28, 2012, a General Meeting of Holders of the First Issue of Simple Debentures was
held, approving on the occasion new wording of the definition of Consolidated Net Debt, and the signing
of the second amendment to the issue registration to change the financial index related to the
Consolidated Net Debt/Adapted EBITDA ratio.
On November 1, 2012, through the Consolidated Form for Trading between Administrators and
Connected Persons (Art 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas
Americanas, had acquired 950,100 of the Company's common shares. With this acquisition, the
participation of the controller in the Company reached 94,558,106 shares, corresponding to 60.47% of
the Social Capital.
On December 10, 2012, through the Consolidated Form for Trading between Administrators and
Connected Persons (Art 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas
Americanas, had acquired 2,200,800 of the Company's common shares. With this acquisition, the
participation of the controller in the Company reached 96,758,906 shares, corresponding to 61.81% of
the Social Capital.
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On January 2, 2013 through a Material Fact, the Company reported it had been informed, through its
controller’s management Lojas Americanas S.A., that Brazilian Central Bank had approved the
acquisition of the total shares owned by LASA in FAI - Financeira Americanas Itaú S.A. Crédito,
Financiamento e Investimento by Itaú Unibanco Holding S.A..
On January 10, 2013, through the Consolidated Form for Trading between Administrators and
Connected Persons (Art 11 of CVM Instruction 358/02), it was communicated that the controller, Lojas
Americanas, had acquired 1,426,300 of the Company's common shares. With this acquisition, the
participation of the controller in the Company reached 98,185,206 shares, corresponding to 62.72% of
the Social Capital.
On January 11, 2013 through a Material Fact, the Company reported it had been offered, through its
controller, LASA, the exclusive right to offer, distribute and market financial services, securities and
pension products through its distribution channels, as part of the process ending its partnership with Itaú
Unibanco Holding S.A. in FAI; and that B2W had paid LASA the amount of R$ 16,500,000.00 as agreed
on January 11, 2013.
Minutes of the last meetings and other financial or corporate information about B2W are available on
our website (www.b2winc.com).
On December 31, 2012, Lojas Americanas’ block of controlling stock was composed of 62.72% of the
Company’s shares, excluding treasury shares. The distribution of shares was as follows:
Shareholders Number of Shares (%)
Lojas Americanas 98,185,206 62.72
Market and Others 58,351,149 37.28
Subtotal 156,536,355 100.00
Treasury Shares -
Grand Total 156,536,355
Dividend Policy
The Company’s Bylaws, pursuant to the provisions of current legislation, set the minimum value for
dividends at 25% of net income for the fiscal year, adjusted according to current legislation.
In 2012, B2W have not distributed dividends to its shareholders.
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Stock
The shares of B2W (BTOW3) are part of the Ibovespa, the most important indicator of average
performance for the market price of Brazilian stocks. In addition, common and preferred shares of the
Company are part of the Special Tag Along Stock Index (ITAG). This indicator is composed of shares of
companies that offer the same conditions to minority shareholders as to majority shareholders in the
case of a change in the control of the Company. The Company is also part of other important Brazilian
indexes, such as the ICON, IGC and IVBX-2.
Participation on the Board of Arbitration
The Company, its shareholders and directors are obliged to resolve, through arbitration, any and all
disputes or controversies that may arise between them, related to or originating specifically from the
application, validity, efficacy, interpretation, violation and the attendant effects of matters contained in
the Bylaws; in the provisions of Law 6404/76; in the regulations issued by the National Monetary
Council, the Central Bank of Brazil, and the Brazilian Securities Exchange Commission (CVM); and in
the other forms of regulation applicable to the participation on the stock market in general; in addition to
those contained in the Novo Mercado Listing Rules, the Novo Mercado Participation Agreement, the
Market Arbitration Board’s Arbitration Rules and, especially, the Terms of Voting and Assumption of
Obligations (―Terms of Vote‖) signed on December 13, 2006 and on file at the Company’s
Headquarters, which will be conducted jointly with the Market Arbitration Board instituted by
BM&FBOVESPA, in conformity with the regulations of the aforementioned Board, unless both parties,
under the terms of Chapter 12 of the same regulations, choose by common agreement an alternative
board or arbitration center to resolve their differences.
Accordingly, the Company is subject to arbitration in the Market Arbitration Board, pursuant to its
commitment clause in its Bylaws.
Independent Auditors
Pursuant to CVM Instruction 381, the Company reports that its independent auditors rendered services
for evaluating the tax and accounting procedures adopted by the Company, having been hired on June
25, 2012, receiving fees of R$ 250,000, representing about 25% of the total fees related to the external
auditing services. The aforementioned services already have been carried out and are not in conflict
with the rules regarding independence of independent auditors. The Company’s policy regarding the
hiring of independent auditors for services not related to the outside audit assures that there is no
conflict of interest or loss of independence or objectivity with regard to the independent auditors’ work.
The Company’s policy regarding the hiring of independent auditors for services not related to the
outside audit assures that there is no conflict of interest or loss of independence or objectivity with
regard to the independent auditors’ work.
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7. SOCIO-ENVIRONMENTAL ASPECTS
Social Aspects
B2W promotes the Program for People with Disabilities, a project that encourages hiring employees
with special needs and fosters the social inclusion of these individuals by opening doors to the labor
market. We believe that diversity contributes different worldviews and enriches the workplace, which
improves service to all clients.
Environment
Aligned with its vision of being a socially and ecologically responsible organization, the
company created the Sustainability Committee in 2007. The Committee’s objectives are:
to strengthen environmental awareness, reduce the consumption of water, energy and
waste generation and develop social-environmental projects applicable to both business
and community realities, striving to improve the quality of life of its Associates and other
stakeholders (shareholders, clients, suppliers, service suppliers, government and society).
The Committee takes a multidisciplinary approach, made up of representatives of the Investor
Relations, Human Resources, Institutional Relations, Management, Commercial and Treasury
Departments. Each week it discusses and plans the implementation of actions designed to promote the
company's sustainable development — always referencing the needs of its social, environmental and
economic stakeholders.
The Sustainability Committee was formally established by the Board of Directors in 2010 and since then
has quickly assumed an important role within the company. In the same year, it was created a specific
hotsite to ―Companhia Verde‖ in the Investor Relations website. In this space are presented the
Committee objectives, the Company’s Environmental Policy, the Carbon Inventory and a specific
communication channel for the sustainability issues. Thus, it is possible that all stakeholders can
interact with the Committee, clarifying questions and sending suggestions.
In 2008, the Code of Ethics and Conduct underwent a makeover aiming to enlarge the adoption of
ethical and behavioral principles. The respect due individual differences and the constant care to be
taken regarding social responsibility inherent in relations with stakeholders.
The Code compiles values and commitments that must be applied by every associate to his or her
relationship with the other stakeholders (shareholders, clients, suppliers, service suppliers, government
and society).
As of the moment new Associates enter the company, they sign a Term of Acceptance of the Code of
Ethics and Conduct, thereby becoming committed to compliance with the rules and principles contained
28
in the document.
Through the Code of Ethics and Conduct, the company strengthens its commitment to:
Respect for laws;
Access to education and development activities;
Safety and health;
Eradication of force or compulsory work;
Eradication of child labor;
Prevention of harassment;
Commitment for combating sexual exploitation of children and teenagers;
Combating the practice of discrimination in all its forms;
Valuing diversity;
Respect for freedom to join unions and the right to collective bargaining.
In 2011, we have included environmental assignments in job description of all offices.
The Company practice the selective waste collection program at our Head Offices and Distribution
Centers to eliminate or better dispose of the waste that is generated. At the same time, we are
developing training and communication programs to encourage a reduction in the generation of waste
and the consumption of natural resources. In 2012, we also have continued to monitor water and energy
consumption through an internal application that facilitates weekly control, identifies anomalies and
allows problems to be handled as soon as they arise.
We continuously strive to be more transparent to the market and reduce our impacts on global warming.
Accordingly, we developed important initiatives:
In 2013, we are going to release our first Sustainability Report, already based on the internationally
recognized Global Reporting Initiative (GRI) standards. It is designed to elevate our sustainable
practices to a higher quality level, providing greater credibility in the Company’s social, environmental
and economic performance communication, besides strengthening our commitment to clients, society,
investors and all the value chain.
For the third consecutive year, B2W calculated emissions of greenhouse gases generated by the
Company, publishing the GEE Inventory on the B2W Investor Relations website. The Emissions
Inventory, a measurement of greenhouse gases resulting from our operations, is a key step in the fight
against global climate change. We also participate in initiatives of great importance to the market, such
as the Carbon Disclosure Project (CDP), a nonprofit organization whose goal is to encourage
transparency in relation to the climate management practices of public companies.
Environmental education is an important activity for the ―Companhia Verde‖. Training conducted at our
Americanas Development Center (CDA), newsletters sent by e-mail, a regular column on these topics in
29
all of the editions of "Isto é LASA" (the in-house corporate newspaper), periodic pop-up alerts on
computers and orientation materials for new employees are some of the ways that the Company has
found to increase the awareness and the engagement of all. We will continue to rely on this involvement
to achieve even better results in 2012, making our Company more socially and environmentally
responsible.