2Q18

2

Results | 2Q18

ImportantDisclaimer

Information contained in this document may include forward-looking

statements and reflect Management’s current view and estimates of

the evolution of the macroeconomic environment, industry conditions,

Company’s performance and financial results. Any statements,

expectations, capabilities, plans and assumptions contained in this

document, which do not describe historical facts, such as information

about declaration of dividend payment, future direction of operations,

implementation of relevant operating and financial strategies,

investment program and factors or trends affecting the financial

condition, liquidity or results of operations, are forward-looking

statements, as set forth in the “U.S. Private Securities Litigation

Reform Act of 1995”, and involve several risks and uncertainties.

There is no guarantee that these results will occur. Forward-looking

statements are based on several factors and expectations, including

economic and market conditions, industry competitiveness and

operational factors. Any changes in such expectations and factors

may cause actual results to differ from current expectations.

3

2Q18 Highlights

Net revenue in 2Q18 reached

R$ 373.9 million, a 13.7% increase against

2Q17.

Arezzo&Co recorded a 750bps

increase in ROIC, reaching a level of

31.2%.

In 2Q18, Gross Profit totaled

R$ 178.8 million (gross margin of 47.8%), a

15.8% increase against 2Q17.

Arezzo&Co opened 11 stores and

closed 2Q18 with a growth of 8.0% in

store area in the last twelve months.

EBITDA for 2Q18 totaled

R$ 56.6 million with a net margin of 15.1%

and a 12.4% increase against 2Q17.

Net Revenue

Gross Profit

ROIC

EBITDA

Sales Area

Results | 2Q18

Same-Store-Sales growth of 3.9% in the

quarter.SSS

Excluding the non-cash effect from

exchange rate variation, net income

would have reached R$ 46.9 million,

19.4% higher than in 2Q17.

Net Income

4

Company GrowthGROSS REVENUE / DOMESTIC AND FOREIGN MARKET (R$ MILLION)

THE COMPANY REACHED A GROSS

REVENUE OF R$ 454.7 MILLION IN THE

2Q18, A 11.6% GROWTH COMPARED TO

THE 2Q17, THE HIGHLIGHT BEINIG THE

DOMESTIC MARKET WITH GROWTH OF

12.4%.

Results | 2Q18

360,3 404,9

701,0 782,1 47,0

49,7

74,7

80,2

407,3 454,7

775,7

862,4

2Q17 2Q18 1H17 1H18

Domestic Market Foreign Market

11.6%

5.7%

12.4%

11.2%

7.4%

11.6%

199,8 227,0

399,2 445,7

119,7 114,5

218,1 217,7

31,9 48,3

65,6

93,6

8,9 15,2

18,1

25,2

360,3

701,0

2Q17 2Q18 1H17 1H18

Arezzo Schutz Anacapri Other Brands

12.4%

404,9

782,1

5

Gross Revenue by Brand | Domestic MarketGROSS REVENUE BREAKDOWN BY BRAND / DOMESTIC MARKET (R$ MILLION)

IN 2Q18, WE HAD HIGHLIGHTING

THE AREZZO AND ANACAPRI

BRANDS WITH 13.6% AND 51.5%

GROWTH RESPECTIVELY.

WE ALSO HIGHLIGHT THE BRANDS

ALEXANDRE BIRMAN AND FIEVER

THAT HAD EXPRESSIVE RESULTS

1. OTHERS: INCREASE OF 72.0% IN 2Q18 (INCLUDES ONLY DOMESTIC

MARKETS FOR ALEXANDRE BIRMAN, FIEVER AND OWME BRANDS

AND OTHER REVENUES).

Results | 2Q18

1

72.0%

51.5%

-4.4%

13.6%

11.6%

-0.2%

39.0%

42.6%

11.6%

162,9 184,8

336,1 376,2 76,7 75,0

139,3 140,9

87,6 104,2

165,6 189,9

32,5 40,7

57,8

74,1

0,6 0,3

2,2

1,1

360,3 404,9

2Q17 2Q18 1H17 1H18

Total

Other

Web Commerce

Multibrand

Owned Stores

Franchises

6

Gross Revenue by Channel | Domestic MarketGROSS REVENUE BY CHANNEL / DOMESTIC MARKET (R$ MILLION)

1. OTHERS : DECREASE OF 52.6% IN 1Q18 (INCLUDES

DOMESTIC MARKET REVENUES THAT ARE NOT SPECIFIC

FOR DISTRIBUTION CHANNELS).

Results | 2Q18

SSS SELL-IN(FRANCHISES)

SSS SELL-OUT(OWNED STORES + WEB + FRANCHISES)

1

SSS SELL-OUT(OWNED STORES + WEB + FRANCHISES)

SSS SELL-IN(FRANCHISES)

-0.8%

6.8%

7.3%

3.9%

6.2% 5.4%

4.9% 5.9%

18.9%

28.3%

14.7%

1.1%

11.9%

701,0

12.4%

11.6% 782,1

-2.3%

25.5%

13.5%

7

Distribution Channel ExpansionOWNED STORES AND FRANCHISES EXPANSION1 NUMBER OF STORES – DOMESTIC MARKET 2Q18

AREZZO&CO’S OPENED 11 STORES AND ENDED THE QUARTER WITH 8.0%

GROWTH OF SALES AREA OVER THE LAST 12 MONTHS.

1. INCLUDES SEVEN OUTLET TYPE STORES WITH A TOTAL AREA OF 2,100 M² AND STORES OVERSEAS.

Results | 2Q18

518 525 568 576 584

49 51 50 49 52

38.9 39.441.2 41.5 42.0

-

10,0

20,0

30,0

40,0

50,0

60,0

70,0

-100

100

300

500

700

900

1.100

1.300

1.500

2Q17 3Q17 4Q17 1Q18 2Q18

Franchises Owned Stores Area (000 m2)

+8

-1-1 +3

+8+43+7

+2

1.1% 4.7% 0.7% 1.3%

FRANCHISES__ 388

OWNED STORES 14

MULTIBRANDS 1,167

FRANCHISES 67

OWNED STORES 22

MULTIMARCAS 1,122

FRANQUIAS 124

OWNED STORES 3

MULTIBRANDS 1,304

OWNED STORES 4

MULTIBRANDS 24

OWNED STORES 4

MULTIBRANDS 402

OWNED STORES 1

MULTIBRANDS 97

2

2. INCLUDES ALEXANDRE BIRMAN AND SCHUTZ STORES, 3 IN NEW YORK AND ONE IN LOS ANGELES.

154,3 178,8

284,4

325,3

46.9% 47.8%45.4% 46.2%

0,0%

20,0%

40,0%

60,0%

-40,0

60,0

160,0

260,0

360,0

460,0

560,0

2Q17 2Q18 1H17 1H18

Gross Profit Gross Margin

15.8%

+80 bps

50,3 56,6

86,3 97,3

15.3% 15.1% 13.8% 13.8%

- 2,0 4,0 6,0 8,0

10,0 12,0 14,0 16,0 18,0 20,0 22,0 24,0 26,0 28,0 30,0 32,0 34,0 36,0 38,0 40,0 42,0 44,0 46,0 48,0 50,0 52,0 54,0 56,0 58,0 60,0 62,0 64,0 66,0 68,0 70,0 72,0 74,0 76,0 78,0 80,0 82,0 84,0 86,0 88,0 90,0 92,0 94,0 96,0 98,0

100,0 102,0 104,0 106,0 108,0 110,0 112,0 114,0 116,0 118,0 120,0 122,0 124,0 126,0 128,0 130,0 132,0 134,0 136,0 138,0 140,0 142,0 144,0 146,0 148,0 150,0 152,0 154,0 156,0 158,0 160,0

2Q17 2Q18 1H17 1H18

EBITDA EBITDA Margin

12.7%

-20 bps 0 bps

8

Gross Profit and EBITDAGROSS PROFIT (R$ MILLIONS) EBITDA (R$ MILLIONS)

GROSS PROFIT TOTALED R$ 178.8 MILLION IN 2Q18 WITH AN INCREASE OF 15.8% (+ 90BPS IN GROSS MARGIN).

EBITDA GREW BY 12.4% IN 2Q18 TO R$ 56.6 MILLION (EBITDA MARGIN OF 15.1%).

Results | 2Q18

14.4%

12.4%

+90bps

9

Net IncomeNET INCOME (R$ MILLIONS)

THE COMPANY POSTED A NET MARGIN OF 8.9% IN 2Q18

AND A NET INCOME OF R$ 33.1 MILLION, DOWN 15.7% IN

2Q17. EXCLUDING THE NON-CASH EFFECT, NET INCOME

WOULD HAVE REACHED R$ 46.9 MILLION, 19.4% HIGHER

THAN IN 2Q17. EXCLUDING THE NON-CASH EFFECT, NET

INCOME WOULD HAVE BEEN R$ 46.9 MILLION, 19.4%

HIGHER THAN IN 2Q17.

IN 4Q17 THE COMPANY OBTAINED AN INJUNCTION EXEMPTING IT FROM THE

PAYMENT OF INCOME AND SOCIAL CONTRIBUTION TAXES (IR AND CSLL) ON

AN ICMS TAX BENEFIT RETROATIVE TO 2017, WHICH REMAINED VALID

DURING THE FIRST HALF OF 2018.

ON THE OTHER HAND, NET INCOME WAS NEGATIVELY IMPACTED BY THE

WORSENING OF THE FINANCIAL RESULT - DUE TO:

(I) HIGHER EXCHANGE RATE VARIATION IN THE PERIOD (NON-CASH

EFFECT IN THE COMPANY'S RESULTS);

(II) HIGHER FINANCIAL EXPENSES, COUPLED WITH HIGHER

INDEBTEDNESS COMPARED TO 2Q17 AND;

(III) LOWER FINANCIAL INCOME DUE TO THE REDUCTION OF THE SELIC

RATE OVER THE LAST 12 MONTHS.

Results | 2Q18

39,3 33,1

61,4 60,2

11.9%

8.9%9.8%

8.6%

-14,0%

16,0%

-

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0

2Q17 2Q18 1H17 1H18

Net Income Net Margin

-15.7%

-2.0%

-300 bps -120 bps

Operating Cash FlowOPERATING CASH FLOW (R$ THOUSAND)

AREZZO&CO GENERATED R$ 28.0

MILLION CASH FROM

OPERATIONS IN 2Q18, LOWER

THAN THE AMOUNT PRESENTED

IN 2Q17.

IT IS WORTH HIGHLIGHTING THE PAYMENT

OF SUPPLEMENTARY DIVIDENDS FOR 2017

IN THE AMOUNT OF R$ 2.8 MILLION AND THE

PAYMENT OF INTERIM DIVIDENDS BASED

ON THE PROFITS RESERVE, CONSTANT OF

THE COMPANY’S BALANCE SHEET OF

DECEMBER 2017, IN THE AMOUNT OF R$

46.0 MILLION. BOTH PAYMENTS WERE MADE

ON JUNE 8, 2018.

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Results | 2Q18

Operating Cash Flow 2Q18 2Q17 1H18 1H17

Profits before income tax and social contribution 34.883 48.497 68.444 82.934

Depreciation and amortization 8.788 6.737 17.213 13.412

Others 15.226 1.509 14.163 (1.346)

Decrease (increase) in assets / liabilities (28.098) (1.541) (35.470) 14.605

Trade accounts receivables 9.804 21.450 1.597 19.511

Inventories (14.689) (5.462) (29.041) (14.808)

Suppliers (25.485) (23.682) 2.936 22.905

Change in other noncurrent and current assets and liabilities 2.272 6.153 (10.962) (13.003)

Payment of income tax and social contribution (2.751) (14.421) (6.141) (14.871)

Net cash flow generated by operational activities 28.048 40.781 58.209 94.734

11

Investments (CAPEX) and IndebtednessCAPEX (R$ MILLIONS) INDEBTEDNESS (R$ MILLIONS)

IN 2Q18, AREZZO&CO INVESTED R$ 15.0 MILLION IN CAPEX, INCLUDING:

• BRAZIL: (I) AREZZO&CO NEW OFFICE IN SÃO PAULO, (II) OPENING OF OWME'S FIRST FLAGSHIP STORE (II) REMODELING OF SCHUTZ STORES INTO THE NEW DIGITAL STORE

CONCEPT, (IV) DESIGN AND CONSTRUCTION OF AN ADDITIONAL OWNED FACTORY, FOCUSED ON SNEAKERS AND COMFORT SHOES.

• UNITED STATES: (I) OPENING OF SCHUTZ STORE AND ALEXANDRE BIRMAN STORES IN NYC (II) OPENING OF THE ALEXANDRE BIRMAN SHOWROOM IN EUROPE (MILAN).

THE COMPANY ENDED 2Q18 WITH R$ 107.7 MILLION IN CASH AND THE DEBT POLICY REMAINS CONSERVATIVE.

Results | 2Q18

Cash position and Indebtedness 2Q18 1Q18 2Q17

Cash 283.172 333.338 310.115

Total debt 175.501 172.112 110.847

Short term 162.002 156.354 88.311

% total debt 92,3% 90,8% 79,7%

Long-term 13.499 15.758 22.536

% total debt 7,7% 9,2% 20,3%

Net Debt (107.671) (161.226) (199.268)

Net Debt/EBITDA -0.5x -0.8x -1.0x

2,0 3,7 3,7

7,1 2,3

7,4

3,4

9,7

1,4

3,9

1,8

5,4

5,6

15,0

8,9

2Q17 2Q18 1H17 1H18

Stores Corporate Others total

150.9%

207.2%

94.7%

181.7%

167.8%

225.7%

188.1%

87.4%

22,2

12

ROIC (Return on Invested Capital)

RETURN ON INVESTED CAPITAL (ROIC)

AGAIN SHOWED GROWTH IN 2Q18, REACHING

31.2% AND A 750BPS INCREASE VS 2T17.

AMONG THE FACTORS RESPONSIBLE FOR THIS

IMPROVEMENT ARE:

(I) INCREASE OF 37.8% NOPAT AGAINST 2Q17, WHICH

IS PARTIALLY DUE TO AN INJUNCTION OBTAINED IN

4Q17 EXEMPTING THE COMPANY FROM THE PAYMENT

OF INCOME AND SOCIAL CONTRIBUTION TAXES (IR

AND CSLL – 34%) ON AN ICMS TAX BENEFIT

RETROACTIVE TO 2017, WHICH REMAINED VALID

DURING THE FIRST HALF OF 2018 AND;

(II) PERMANENT ASSET REDUCTION, RESULTING FROM

THE LOWER SHARE OF OUR OWNED STORES IN THE

COMPANY'S MIX.

(1) Working Capital: current assets minus cash, cash equivalents and financial investments less current liabilities minus loans and financing and dividends payable.

(2) Less deferred income tax and social contribution.

(3) Average invested capital in the period and same period previous year.

(4) ROIC: NOPAT for the last 12 months divided by average invested capital.

Results | 2Q18

Income from operations 2Q18 2Q17 2Q16 Δ 18 x 17

(%)

EBIT (LTM) 180.797 169.714 136.651 6,5%

+ IR and CS (LTM) (15.181) (49.539) (38.515) (69,4%)

NOPAT 165.616 120.175 98.136 37,8%

Working Capital¹ 378.688 307.097 327.433 23,3%

Permanent assets 154.515 156.998 165.567 (1,6%)

Other long-term assets² 34.156 29.173 29.505 17,1%

Invested capital 567.359 493.268 522.505 15,0%

Average invested capital³ 530.314 507.887 4,4%

ROIC4 31,2% 23,7%

ContactsCFO

RAFAEL SACHETE

IRO

ALINE PENNA

IR COORDINATOR

VICTORIA MACHADO

IR ANALYST

RAFAELLA NOLLI

+55 11 2132 4300

RI@AREZZOCO.COM.BR

WWW.AREZZOCO.COM.BR