Disclaimer
This presentation contains forward-looking statements regarding the prospects of thebusiness, estimates for operating and financial results, and those regarding Cia. Hering'sgrowth prospects. These are merely projections and, as such, are based exclusively onthe expectations of Cia. Hering management concerning the future of the business andits continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, governmentregulations, competitive pressures, the performance of the Brazilian economy and theindustry, among other factors and risks disclosed in Cia. Hering’s filed disclosuredocuments and are, therefore, subject to change without prior notice.
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AGENDA:AGENDA:AGENDA:AGENDA:
• Highlights• Operating Performance• Operating Performance• Business Strategy and Outlook
4Q08 Highlights
CIA. HERING ENDS UP 4Q08 WITH GROWTH
• Gross revenue in domestic market increased 53.0%
• Hering brand sales rose 63.7%
• Same-store sales growth of 29.1% in the Hering Stores
• Ajusted EBITDA Margin of 31.6% (Comparable EBITDA Margin: 2 3.1%)
CONTINUED GROWTH PLAN
• 21 Hering Stores opened in the 4Q08 with the new architectura l project
• Marketing campaign “eu uso Hering…” with new celebrities
• Actions focused on store operating performance optimizati on
• New store architectural project for PUC brand
• New business plan for dzarm. brand
SUSTAINABLE GROWTH
• Capex of R$ 10.5 million4
AGENDA:AGENDA:AGENDA:AGENDA:
•Highlights
• Operating Performance• Operating Performance• Business Strategy and Outlook
195.5
11.6
5.1
55.4%
43.9% Foreign Market
139.4
200.6
By Market
Gross Revenue (R$ million)
391.0
596.2
51.7
33.0
36.2%
42.1%442.6
629.2
127.8
4Q07 4T08
55.4%
53.0%
Domestic Market
Domestic Market represented 94.7% of the total gross reve nue in 2008.6
12M07 12M08
52.5%
4Q07 4Q08
99.3200
Gross Revenue – Domestic Market (R$ million) – 4Q08
160.0
19.811.7
3.3
3.9
By Brand
195.5
2.0%
PUC
dzarmOthers
127.8Multi -
By Distribution Channel
53.0%
195.5
127.8
64.8
96.2
63.0
0
50
100
150
4Q07 4Q08
97.715.311.5
3.3
4Q07 4Q08
2.0%
29.7%
63.7% Franchise/Own Store
Multi -Brand
57.7%
48.4%
Hering
127.8
Multi-brand sales rose more than the franchises and ownstores together.
7
314.2
400
500
600
473.8
61.947.6
10.9
12.9
596.2
8.8%
391.044.9%
52.5%
596.2
391.0
Gross Revenue – Domestic Market (R$ million) – 2008
By Brand By Distribution Channel
PUC
dzarmOthers
Multi -
174.1
282.0
216.9
0
100
200
300
400
12M07 12M08
288.448.043.7
10.9
12M07 12M08
8.8%
29.2%
64.3%
44.9%
62.0%
Relevant growth for Hering brand and Franchise and OwnStore in the domestic market.
8
Hering
Franchise/Own Store
Multi -Brand
4.2
7.5
Private Label vs. Own Brands
100.0%
11.6
55.4%
By Destination
11.6
Gross Revenue – Foreign Market (R$ million) – 4Q08
0.8 0.5
2.0 2.1
1.0
3.6
2.5
-
4T07 4T08
4.1
5.2
4Q07 4Q08
North AmericaPrivate Label
Own Brands
5.2
26.8%
9
5.2
Mercosul
Europe
OthersLatin America
Own brands are the Export focus .
4Q07 4Q08
18.4
35.9
14.433
43
53
59.9%
51.6
33.0
36.0%
33.0
51.6
Gross Revenue – Foreign Market (R$ million) – 2008
Private Label vs. Own Brands By Destination
3.8 1.6
8.15.1
5.9
1.1
15.4
18.5
6.7
12M07 12M08
15.718.6
14.4
-7
3
13
23
12M07 12M08
18.2%
10
Descontinuity of the private label production had animpact on the export commercial results in 2008.
Private Label
Own Brands
North America
Mercosul
Europe
OthersLatin America
31.6%83.2
44.5%
51.0%6.5 p.p.
Gross Profit and Gross Margin Ajusted EBITDA and Adjusted EBITDA Margin
Gross Profit and EBITDA (R$ million) – 4Q08
12.0 p.p.
22.7
51.5
19.6%
4T07 4T08
51.4
4T07 4T08
61.8%
11
More participation of the own stores and cost dilution rose up the gross profit and EBITDA margins.
4Q07 4Q08 4Q07 4Q08
127.5%
238.539.4%
46.3%7.0 p.p.
Gross Profit and EBITDA (R$ million) – 2008
Gross Profit and Gross Margin Ajusted EBITDA and Adjusted EBITDA Margin
6.7 p.p.
145.3
12M07 12M08
64.2%
12
EBITDA growth reflects the increase in revenue of t he domestic market and the improvement of the Company’s operating margins. The reversals in 2008 for
expense and tax provisions set up in previous years also impacted this growth.
51.1
105.413.8%
20.5%
12M07 12M08
106.3%
51.5
19.6%
31.6%
19.6%
23.1%
Comparable EBITDA and EBITDA Margin (R$ million)
106.3%127.5%
105.4
91.513.8%
20.5%
13.8%
17.8%66.4%
79.2%
22.7 22.7
37.7
EBITDA EBITDA comparável
4T07 4T08
13
Significant Comparable EBITDA growth of 79.2% even without considering the impacts neither of Law no. 11,638 n or of the
reversals in 2008 for expense and tax provisions se t up in previous years.
51.1 51.1
EBITDA EBITDA comparável
2007 20084Q07 4Q08
Comparable EBITDA Comparable EBITDAAdjusted EBITDA Adjusted EBITDA
Stores Distribution
Brands present in 23 brazilian states with 230 Hering St ore, 59 PUC Stores and 14,748 multi-brand clients.
14
38
151
268
32557
181
Hering Store Expansion
Expansion Plan
230
Own StoresFranchise* estimated
* *
Review of the Hering own Stores opening, adapting t he priorities to the expansion and remodeling of the existing stores , as well as
possible acquisitions of franchises.15
39
4419
23
22
59
Goal: 172
248
311
209
Goal: 224
Goal: 57
Distribution Network (number of stores)
Distribution Network Evolution
151181
230
2006 2007 2008
Hering PUC Abroad
Goal: 172
Cia. Hering surpassed the opening plan in 6 Hering Stores and 2 PUC stores estimated for the year.
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Period State City Location Status
1Q08 PI Teresina Shopping Riverside Walk Opened1Q08 SP São Paulo Bourbon Shopping Pompéia Opened2Q08 SP São Paulo Rua Dr. Diogo de Farias Opened2Q08 SP Santa B.D'Oeste Tivoli Shopping Opened2Q08 SP São Paulo Rua Juventus Opened2Q08 MG Juiz de Fora Independência Shopping Opened2Q08 SP Guaratinguetá Shopping Buriti Guará Opened2Q08 PB João Pessoa Shopping Tambiá Opened2Q08 SE Aracaju Shopping Jardins Opened
Status
1Q08
2 Franchises Opened
2Q08
10 Franchises Opened
Expansion 2008 – Franchise
2Q08 SE Aracaju Shopping Jardins Opened2Q08 PR Maringá Shopping Avenida Center Opened2Q08 PE Caruaru Shopping Caruaru Opened2Q08 DF Brasília Liberty Mall Opened3Q08 MG Divinópolis Rua A.Olimpio de Morais Opened3Q08 SP Botucatu Rua Monsenhor Ferrari Opened3Q08 SC Florianópolis Floripa Shopping Opened
3Q08 SP São Vicente Brisamar Shopping Opened
3Q08 SP Campinas Campinas Shopping Opened3Q08 BA Feira de Santana Shopping Iguatemi Opened3Q08 MG Patos de Minas Rua Agenor Maciel Opened3Q08 SP Jau Rua Amaral Gurgel Opened3Q08 PR S. José dos Pinhais Shopping São José Opened3Q08 SP São Paulo Rua Bernardino de Campos Opened
10 Franchises Opened
3Q08
10 Franchises Opened
17
Period State City Location Status
4Q08 SP São Paulo Shopping Metrô Blvd. Tatuapé Opened
4Q08 SP São Paulo Rua Min. Roberto Cardoso Alves Opened
4Q08 PE Recife Shopping Plaza Casa Forte Opened
4Q08 SP Votuporanga Rua Pernambuco Opened
4Q08 SC Criciuma Shopping Della Giustina Opened
4Q08 MG Três Corações Rua Julião Arbex Opened
4Q08 GO Rio Verde Shopping Rio Verde Opened
4Q08 SP Limeira Center Plaza Shopping Opened
Status
4Q08
21 Franchises Opened
Expansion 2008 – Franchise
4Q08 SP Limeira Center Plaza Shopping Opened
4Q08 SC Jaraguá do Sul Shopping Center Breithaupt Opened
4Q08 MG Montes Claros Montes Claros Shopping Center Opened
4Q08 SP São Paulo Shopping Central Plaza Opened
4Q08 RO Porto Velho Porto Velho Shopping Opened
4Q08 RS Porto Alegre Barra Shopping Sul Opened
4Q08 MG Sete Lagoas Rua Santa Helena Opened
4Q08 GO Anápolis Brasil Park Shopping Opened
4Q08 SC Itajaí Itajaí Shopping Opened
4Q08 MG Uberaba Rua Arthur Machado Opened
4Q08 PR Curitiba Shopping Jardins das Américas Opened
4Q08 PR Londrina Royal Plaza Shopping Opened
4Q08 SP Pindamonhangaba Rua Bicudo Leme Opened
4Q08 SP Taubaté Taubaté Shopping Opened18
Period State City Location Status
2Q08 RJ Rio de Janeiro Ilha Plaza Shopping Opened
2Q08 SP São Paulo Shopping Taboão Opened
2Q08 PR Curitiba Palladium Shopping Center Opened
3Q08 SP São Paulo Shopping Penha Opened
3Q08 SP São Paulo Shopping Metrô Itaquera Opened
3Q08 RJ Rio de Janeiro Shopping Tijuca Opened
3Q08 PR Curitiba Rua XV de Novembro Opened
Status
2Q08
3 Stores Opened
3Q08
Expansion 2008 – Own Stores
3Q08 PR Curitiba Rua XV de Novembro Opened
4Q08 RJ Rio de Janeiro Shopping Grande Rio Opened4 Stores Opened
4Q08
1 Store Opened
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Hering Store Indicators
Hering Store Performance 4Q07 4Q08 Var. 2007 2008 Var.
Number of Stores 181 230 27.1% 181 230 27.1%
Franchise 156 193 23.7% 156 193 23.7%
Own 25 37 48.0% 25 37 48.0%
Sales (R$ thousand) 108,242 169,028 56.2% 276,121 438,844 58.9%
Same Store Sales Growth 29.0% 29.1% 0.1 p.p. 29.0% 32.4% 3.4 p.p.
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Sales per square meter in 2008 reached its goal of R$ 1 6,100/ m².
Sales Area (m²) 24,106 29,791 23.6% 24,106 29,791 23.6%
Sales (R$ per m²) 4,619 5,776 25.0% 12,625 16,256 28.8%
Check-Outs 1,380,553 2,040,928 47.8% 3,353,403 5,225,865 55.8%
Units 3,303,859 4,760,440 44.1% 7,973,839 12,222,332 53.3%
Average Sales Ticket (R$) 78.40 82.82 5.6% 82.34 83.98 2.0%
1,7 1,20,1 0,410
13.04.7
6.1
0.3
1.2
20
25
30
3535.8
25.3
Stores
IT
Others
By activity
10.510.3
Capex (R$ million)
3,1
6,6
5,52,2
1,2
0
2
4
6
8
4Q07 4Q08
8.4
15.511.8
0
5
10
15
2007 2008
Industry
Stores
21
In 2008, capex was mainly for store remodeling andopening as well as updating of industrial technolog y.
Long Term42%
Short Term58%
Indebtedness Evolution Short Term X Long Term
Indebtedness
201.3184.6
42%
Total Debt= R$ 145.1 million
22
* Last 12 months EBITDA
Net Debt/EBITDA*
Net Debt (R$ million)
-33.4
11.0
4,63,8
.-0,70.1
2005 2006 2007 2008
Financial Result
- In 2008, Law no. 11,638/07 changed the method of measuring fi nancialinstruments, generating an atypical effect in the financia l expense.
R$ thousand 2007 2008 Var.
Net Financial Expenses (30,571) (42,345) 38.5%Net Foreign Exchange Variation 13,198 (3,894) -129.5%Total Financial Expenses (17,373) (46,239) 166.2%
23
-On 12/31/08, Cia. Hering registered an expense of R$ 46.7 mil lion as derivatives’fair value.
- Main derivative: Swap with 19 verifications (Apr/09 to Oct/ 10), amounts betweenR$ 25 to 30 million, with effective losses if the exchange rat e rises above R$/US$2.80.
- The Company is actively monitoring the exchange market in o rder to minimizethe exchange risk arising from derivative transactions.
Payment to Shareholders
Interest on Shareholders Equity
� Payment amounting to R$ 4.8 million (R$0.09/share) on Febru ary 22, 2008,
related to the year ended on December 31, 2007;
� Payment amounting to R$ 4.8 million (R$ 0.09/share) on Septe mber 19,2008,
related to the year ended on December 31, 2008.
24
Dividends
� The payment of dividends amounting to R$ 10.6 million (R$ 0.1 9616/share),
related to the year ended on December 31, 2008, will be propos ed at the
General Shareholders’ Meeting to be held on April 28, 2009.
Strategy & Outlook
Hering Store chain
� Continue expansion plan – 325 stores by the end of 2010
� Maximize operation performance
– Store space allocation review and optimization
– Automatic replenishment for basic items
26
– Fast response for best sellers
– Continuous promotional sales for slow movers
� Promote the Hering Store credit card
Marketing campaign “eu uso Hering desde sempre”
New architectural project for the PUC Stores
Implementation of dzarm. brand relaunching plan
InvestorInvestor RelationRelation TeamTeam
Fabio Hering Fabio Hering –– Vice Vice PresidentPresident andand IR IR DirectorDirectorFrederico de Aguiar Oldani Frederico de Aguiar Oldani –– Financial Financial DirectorDirectorKarina Koerich Karina Koerich –– IR ManagerIR ManagerGracila Camargo Lopes Gracila Camargo Lopes –– IR IR AnalystAnalyst
Tel.: +55 (47) 3321Tel.: +55 (47) 3321--3469 3469 EE--mailmail: [email protected]: [email protected]: www.ciahering.com.br/ir: www.ciahering.com.br/ir
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Investor Relations Consulting Firm
FIRB – Financial Investor Relations Brasil
Ligia Montagnani – IR Consultant
Tel: +55 (11) 3897-6857
E-mail: [email protected]
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