Slide presentation 1 q10
- 2. Disclaimer This 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.
- 3. AGENDA Highlights Operational Performance Economic-Financial Performance Outlooks
- 4. Highlights MAIN INDICATORS Total Gross Revenue totaled R$ 233.8 million in the 1Q10 (+38.2%) Same- Same-store sales in the HS chain: + 26.6% Two- Two-digit sales growth for the three brands EBITDA up 126.5% (R$ 47.2 million with 24.3% of EBITDA margin) Cash Gross Margin of 49.5% with expansion of 6.2 p.p. OTHER HIGHLIGHTS Opening of 2 Hering Stores in the 1Q10 Same Store Sales of 14.4% in the PUC chain 2010 CapEx: R$ 58.7 million 1Q10 ends up with Free Cash Flow of +R$ 77.0 million
- 5. AGENDA Highlights Operational Performance Economic-Financial Performance Outlooks
- 6. Sales Performance Gross Revenue (R$ million) 233,8 38,2% 5,3 169,2 4,9 7,7% 228,5 164,3 39,1% 1Q09 1Q10 Domestic Market Foreign Market Total Gross Revenue with 38.2% growth in the 1Q10 reaching R$ 228.5 1Q10, million, million, with highlight for the domestic market (+ 39.1%).
- 7. Sales Performance (cont.) Domestic Market (R$ million) 1Q09 1Q10 +44.7% R$ 132.5 R$ 191.7 84% 9% +19.1% R$ 16.3 R$ 19.4 + 6% +13.0% R$ 11.2 R$ 12.7 + Two-digit sales growth for the three brands in the chain stores (+44.2%) as well as in the multibrand retail (+ 34.6%) with highlight for Hering which represented 84% of the sales. Hering, sales.
- 8. Distribution Chain - Hering Store and PUC Distribution Chain Evolution 420 366 15 314 15 80 22 73 61 325 278 231 1Q09 1Q10 2010* Total Hering Store Total PUC Foreign - Franchised Total * estimated In comparison with the 1Q09, 47 HS and 12 PUC were opened, maintaining the estimate of 325 HS for 2010 2010. 8
- 9. Hering Store Chain Performance Hering Store Performance 1Q09 1Q10 Chg. Number of Stores 231 278 20,3% Franchise 194 238 22,7% Own 37 40 8,1% Sales (R$ thousand) (1) thousand) 96.363 137.363 42,5% Franchise 76.324 108.970 42,8% Own 20.039 28.392 41,7% Same Store Sales growth (2) 19,0% 26,6% 7,6 p.p. m²) Sales Area (m²) 29.893 35.478 18,7% m²) Sales (R$ per m²) 3.236 3.878 19,8% Check- Check-Outs 1.273.230 1.785.688 40,2% Units 2.896.772 3.985.723 37,6% Check- Units per Check-Out 2,28 2,23 -2,2% Average Sales Price (R$) 33,27 34,46 3,6% Average Sales Ticket (R$) 75,68 76,92 1,6% (1) The amounts reffered to the sales to final costumers. (sell out concept) (2) Compared to the same period of the previous year SSS of +26.6% in the Hering Store chain in the 1Q10 is mainly due to the increase in check-outs (+40.2%). 9
- 10. AGENDA Highlights Operational Performance Economic-Financial Performance Outlooks
- 11. Gross Profit and Gross Margin (R$ million) Gross Profit (R$ million) and Gross Margin (%) 49.5% +6.2 p.p. 47.5% p.p. +5.9 p.p. 43.4% 41.6% 61,6% 92,4 57,2 0 0 1Q09 1Q10 Gross Margin Gross Margin Cash Highlight for the Gross Profit Cash (without depreciation) which rose 6.2 p.p. when compared to 2009 and reached 49.5% in the 1Q10. 11
- 12. EBITDA and EBITDA Margin (R$ million) EBITDA (R$ million) and EBITDA Margin (%) 24,3% p.p. +9.1 p.p. 15,2% 126,5% 47,2 20,8 1Q09 1Q10 EBITDA Margin EBITDA reached R$ 47.2 million in the 1Q10, with +126.5% growth and EBITDA Margin of 24.3% (+ 9.1 p.p.). 12
- 13. EBITDA and EBITDA Margin (cont.) (R$ million) EBITDA (R$ million) and EBITDA Margin (%) – Quarter Variation EBITDA Margin - 1Q10 Variation EBITDA - 1Q10 Variation 2,3% 4,4 8,8 4,5% 0,1% 2,4% 0,2 5,4 8,0 24,3% 47,2 15,2% 20,8 EBITDA Sales Deduction Tax Net Gross SG&A EBITDA EBITDA Deduction Tax Net Gross SG&A EBITDA 1Q09 Growth Incentives Margin (ex Dilution 1Q10 Margin Incentives Margin (ex Dilution Margin 1Q10 TI and 1Q09 TI and ded.) ded.) EBITDA and EBITDA Margin expansion are explained, mainly due to the (i) sales growth and (ii) increase in the Gross Profit Cash (exluding tax incentives and deductions). 13
- 14. Net Profit (R$ million) Net Profit (R$ million) and Net Margin (%) 23,5% 15,4% 15,4% -8.1 p.p. 32,3 7,3% 29,9 1Q09 1Q10 Margem Líquida The Net Profit in the 1Q09 was positively affected by the reversion of R$ 22 million derivatives provision in Dec/08 If this effect is not Dec/08. considered, the Net Profit growth would have reached 191.4% growth. 14
- 15. CapEx By Activity (R$ million) million) 11,3 73,0% 0,7 0,3 6,5 0,7 2,3 0,1 9,6 0,8 3,2 1Q09 1Q10 Industry IT Other Stores R$ 11.3 million were invested, mainly in the production area (R$ 9.6 million) to update our units. million) units. 15
- 16. Cash Flow (R$ milllion) Cash Flow (R$ milllion) Cash Flow - Consolidated 1Q09 1Q10 Chg. EBITDA 20.846 47.226 26.380 No cash items 156 286 130 Current IR&CS (2.765) (8.575) (5.810) Cash Flow Capex 20.881 26.589 5.708 Increase in trade accounts receivable 11.021 29.616 18.595 Increase in inventories (17.191) (11.673) 5.518 Increase in accounts payable to suppliers 13.591 11.281 (2.310) Increase in taxes payable 7.166 2.228 (4.938) Others 6.294 (4.863) (11.157) CapEx (6.516) (10.093) (3.577) Free Cash Flow 32.602 55.433 22.831 The Free Cash Flow reached R$ 55.4 million in the 1Q10 due to the EBITDA growth and the reduction on the accounts receivable. receivable. 16
- 17. Indebtedness million) Net Debt (R$ million) Short Term x Long Term 4,6 3,5 0,1 1,6 -0,7 -0,2 Short Long Term; Term; 30,3% 69,7% 201,3 184,6 -33,4 11,0 -25,1 -77,0 2005 2006 2007 2008 2009 1T10 1Q10 Gross Debt = R$ 58.4 million Net Debt / EBITDA* * Last 12 months EBITDA The management maintains the strategy focused on low leverage and new financing with lower interest rate and longer terms terms. 17
- 18. AGENDA Highlights Operational Performance Economic-Financial Performance Outlooks
- 19. Outlooks Hering • New growth plan – 405 stores until 2012 (+42 in 2011 and +38 in 2012) • High perceived value products and the concept “Retail is detail”; detail” • Continuity of the marketing campaign with new approach: “Eu sou/eu uso Hering” (“I am / I wear Hering”) • Actions with the Hering Store Card and Hering Webstore Webstore. Children market with opportunities to be explored: explored: • Multibrand retail growth • Flagship store project for Hering Kids (2H10) • Assortment adjustment focused on each brand target public dzarm. dzarm . • Continuity of the repositioning plan plan: • Casual jeans concept • Marketing Campaign • Distribution channel qualification. 19
- 20. INVESTOR RELATION TEAM Fabio Hering – CEO and IR Director Frederico de Aguiar Oldani – Finance Director Karina Koerich – IR Manager Gracila Camargo Lopes – IR Analyst Tel. +55 (47) 3321-3469 E-mail: ri@heringnet.com.br Website: www.ciahering.com.br/ir FIRB – Financial Investor Relations Brasil Tel. +55 (11) 3897-6857 E-mail: ligia.montagnani@firb.com