4Q14 and 2014 Results

Conference CallFebruary 27rd – 11 a.m. (Brt)

4Q14 & 2014 Results

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4Q14 and 2014 Results

Outlook

Q&A

AGENDA

DZARM. brand, relauched in 2015, illustrates this presentation. Images from Autumn’15 collection. More details on slide 12.

4Q14 & 2014 Results

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GROSS REVENUES AND BREAKDOWN BY BRANDR$ MILLION

Gross revenues of R$ 2.0 billion, influenced by macro scenario deterioration, which still does not

reflect the advances implemented in new organizational structure in 2014.

4Q13 4Q14 Change 2013 2014 Change

608.9 612.0 0.5% 2,019.4 2,011.0 -0.4%

469.8 475.0 1.1% 1,495.7 1,482.6 -0.9%

55.0 57.1 3.8% 199.1 213.3 7.1%

41.8 40.9 -2.2% 156.9 155.8 -0.7%

24.7 25.6 3.7% 101.8 99.5 -2.2%

8.5 8.1 -4.1% 31.8 24.7 10.3%International

Market

GROSS REVENUES BREAKDOWN PER CHANNELDOMESTIC MARKET EX- ‘OTHER REVENUES’2014, IN R$ MILLION, CHANGE 2014 x 2013

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HERING STORE NETWORKGROSS SALES SELL-OUT, R$ MILLION

Gross revenues of R$ 1,582.7 million (+0.7%), as a

result of stores’ net addition, which compensated

growth decline in stores opened up to 2013.

¹ Stores opened in the last twelve months net from closings.

:: New communication and marketing planBrand relaunch and new communication with theconsumer;

:: Basics relaunch and product offeringimprovementNew models, fabrics, washes and items;

:: New store designAlready used in more than 50 stores. Conversionadvances in 2015.

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GROSS PROFITR$ MILLION AND GROSS MARGIN

EBITDAR$ MILLION AND EBITDA MARGIN

EBITDA reached R$ 395.8 million, down 9.8%

due to lower sales growth and increase of

organizational structures.

Gross margin contraction of 150 bp due to higher

promotional activity and modest sales growth,

insufficient to dilute fixed costs.

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NET INCOMER$ MILLION AND NET MARGIN

CAPEXR$ MILLION

Net income of R$ 318.9 million (+ 0.2%) favored by fiscal

benefit of R$ 30.7 million impact in income tax related to

the fiscal agreement in Goiás and 19.4% increase of net

interest income in 2014.

Investments for the year concentrated in plants and IT:

SAP implementation and new platform for webstores. In

stores, stands out the beginning of the Hering reforms and

the opening of Hering for you.

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CASH FLOWSR$ MILLION

Cash flow of R$ 166.8 million in 2014 lead by lower working

capital (specially inventories).

Cash Flow - Consolidated 2013 2014 Chg.

EBITDA 439.0 395.8 (43.2)

Non-cash items 8.9 18.1 9.2

Current Income tax and Social Contribution (116.7) (74.0) 42.6

Working Capital Capex (135.3) (76.6) 58.8

(Increase) in trade accounts receivable (54.3) (37.6) 16.7

(Increase) decrease in inventories (83.2) (3.7) 79.4

Increase (decrease) in accounts payable to suppliers (1.6) 18.2 19.8

Increase (decrease) in taxes payable (1.1) (50.7) (49.6)

Others 4.9 (2.7) (7.6)

CapEx (72.2) (96.6) (24.3)

Free Cash Flow 123.7 166.8 43.1

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PAYOUT

Solid cash flow and dividends paid quarterly

2Q14: IOC

R$22.9 MMR$0.14 per share

3Q14: Dividends

R$50.0 MMR$0.30 per share

4Q14: IOC

R$22.9 MMR$0.14 per share

577 thousand shares repurchased in 4Q14 at an average price of R$ 20.59 per share, totaling R$ 11.9 million.

Additional dividends¹

R$50.0 MMR$0.30 per share

¹ To be confirmed at General Shareholders’ Meeting.

TOTAL

R$145.8 MMR$ 0.89 per share

BUYBACK PROGRAM

45.7%Payout

Alternative source of value creation to shareholders

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4Q14 and 2014 Results

Outlook

Q&A

AGENDA

4Q14 & 2014 Results

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OUTLOOK

:: Challenging economic environment

Expectations of weak GDP and low consumption growth;

Exchange rate pressures may lead to adjustments in our Supply chain.

:: Priorities in 2015

Store network: resume same-store sales growth;

Multibrand: sales growth in existing customers (same-customers);

Implementation of new growth endeavors : Hering for you and DZARM.;

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Hering: resume growth in both stores and multibrand retail

:: Assortment and supply improvements

:: Stores refurbishments

:: Qualified retail initiatives

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New Growth Fronts:

:: Positioning evolution and distribution strategy

Focus on the female public;

Product portfolio expansion with product segmentation per occasion and support for the look composition;

Brand strengthening communication, starring in 2015 by Alessandra Ambrosio model.

:: Opportunities

Brand leverage the in regions where it is already recognized;

More premium positioning but with better price than peers;

Develop stores network and better develop retail (currently 3,500 multi-brand)

:: Challenges

Compensate ~30% sales decline from discontinued male lines;

New customers addition (no longer be seen as ‘a sophisticated complement to Hering');

Increase share in cities up to 500 thousand through multibrand (low investment, high return)

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:: Stores opened in 2014 presented good consumer acceptance. Excellent cost-benefit perception;

:: Network expansion in 2015: owned stores, possibly franchises in 2016;

:: Further development in both store model and product line. Close relationship with consumers.

New Growth Fronts:

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AGENDA

4Q14 and 2014 Results

Outlook

Q&A

4Q14 & 2014 Results

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DISCLAIMERThis presentation contains forward-looking statements regarding the prospects of the

business, estimates for operating and financial results, and those regarding Cia. Hering's growth prospects. These are merely projections and, as

such, are based exclusively on the expectations of Cia. Hering management concerning the future of the business and its continued access to capital to fund the Company’s business Plan. Such forward-

looking statements depend, substantially, on changes in market conditions, government

regulations, competitive pressures, the performance of the Brazilian economy and the

industry, among other factors and risks disclosed in Cia. Hering’s filed disclosure documents and are,

therefore, subject to change without prior notice.

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INVESTOR RELATIONS TEAM

Fabio Hering – CEOFrederico Oldani – CFO and IRO

Bruno Salem Brasil – IR ManagerCaroline Luccarini – IR Analyst

www.ciahering.com.br/ir+55 (11) 3371 -4867/4805

ri@hering.com.br