slide presentation 1 q08
TRANSCRIPT
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Disclaimer
This presentation contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to 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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AGENDA: • Highlights• Operational Performance• Stock Market• Business Strategy and Outlook
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Highlights
STRONG PERFORMANCE IN BEGINING OF THE YEAR
• Goals outperformed
• Gross revenues of domestic market increased 43%
• EBITDA 41% higher
• Same-store sales up 40%
• Sales of Hering label 54% higher
• Three franchises launching: 2 Hering Stores and 1 PUC
GROWTH PLAN CONTINUED
• Hering Store chain expansion – Larger distribution network to support growth
• Hering Store credit card launch – To boost growth
• Successful Marketing – Campaign with celebrities and the IBCC
• Own brands – Wider and larger exposition in foreign market
CAPEX AND CAPITAL STRUCTURE
• Net cash balance of R$ 29.5 millions
• Capex of R$ 5.0 millions in 1Q08
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AGENDA: • Highlights• Operational Performance• Stock Market• Business Strategy and Outlook
80.5
115.2
10.0
12.2
1Q07 1Q08
18.2%
43.1%
35.0%
Domestic Market
Exports
92.7
125.2
By Market
Gross Revenues (R$ million)
Hering’s growth strategy is focused on the domestic
market
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Gross Revenues – Domestic Market (R$ million)
32.4
55.3
59.9
48.1
1Q07 1Q08
58.1
89.312.6
9.610.7
10.72.6
2.1
1Q07 1Q08
By Brand
115.2
0.6%
30.4%
53.8%
PUCdzarm.Other
80.5
Owned/ Franchised
Multi-brand
24.5%
70.8%
Hering
115.2
80.5
By Distribution Channel
Price repositioning of Hering brand and owned and franchised stores chain expansion are the cornerstones for domestic market strategy.
43.1%
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3.44.8
5.1
8.8
1Q07 1Q08
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Gross Revenues – Exports (R$ million)
Private Label vs. Own Brands
North America3.03.4
4.73.3
1.03.00.9
1.70.8
0.3
1Q07 1Q08
Mercosul
Latin AmericaEuropeOther
41.9%Private Label
Own Brands
12.210.0
43.8%
18.2%10.0
12.2
By Destination
Export’s strategy is focused on own brands for Latin America.
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Gross Profit and EBITDA (R$ million)
28.7 43.1
1.1
0.5
38.4% 42.2%
1Q07 1Q08
3.8 pp
56.6%
50.3%
46.3%
29,843,6 Exports
Domestic Market
14.8 10.5
14.3%13.5%
1Q07 1Q08
41.1%
0.8 pp
Gross Profit (by market) and Gross Margin EBITDA and EBITDA Margin
Strong sales performance and operating enhancement generated growth in operating profit and margin
142157
2510
1Q07 1Q08
36 51 51
141156
188
226274
2510
2006 2007 2008 2009 2010
Hering Store chain expansion (no of stores)
53
43
30151
181
224
277
325
Own storesFranchise
Expansion Plan Quarterly Analysis
152182
48
* estimated
* * *
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10
Stores’ Geographic Distribution
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Distribution Network (no of stores)
181 182224
39 38
44 45
56
19 21
23 22
22
152151
0
0
0
0
0
0
0
2006 1Q07 2007 1Q08 2008
Hering PUC Foreign
Goal: 172
249248
211
Distribution Network Evolution
302
209
Three new franchises opened: two Hering Stores and one PUC
* estimated
*
Quarter State City Location Status
1Q08 SP São Paulo Bourbon Shop. Pompéia Opened
1Q08 PI Teresina Shop. Riverside Walk Opened2Q08 SP São Paulo Rua Dr. Diogo de Farias2Q08 SP Sta. Barbara d'Oeste Tivoli Shopping2Q08 SP São Paulo Rua Juventus2Q08 MG Juiz de Fora Independência Shopping2Q08 SP Guaratingueta Shopping Buriti Guará Confirmed2Q08 PR Maringa Shop. Avenida Center Forecasted2Q08 PR Ponta Grossa Palladium Shop. Center Forecasted
2Q08 PB João Pessoa Shopping Tambiá Forecasted2Q08 SE Aracaju Shopping Jardins Forecasted
2Q08 PE Caruaru Caruaru Shopping Forecasted
2Q08 DF Brasilia Liberty Mall Forecasted2Q08 SP Botucatu R. Monsenhor Ferrari Forecasted
2Q08 MG Patos de Minas R. Agenor Maciel Forecasted2Q08 MG Divinopolis R. Antonio O. de Morais Forecasted2Q08 SC Florianópolis Floripa Shopping Forecasted
Confirmed
Confirmed
Confirmed
Confirmed
Expansion Plan for 2008 – Franchises
Status
1T08
2 Franchises opened
2T08
5 Franchises confirmed
10 Franchises forecasted
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Expansion Plan for 2008 – Own Stores
Quarter State City Location Status
2Q08 RJ Rio de Janeiro Ilha Plaza Shopping Confirmed
2Q08
SP Taboão da Serra Shopping Taboão Forecasted2Q08
PR Curitiba Palladium Shop. Center Forecasted
2Q08 PR Curitiba Rua XV de Novembro Forecasted
2Q08 SP São Paulo Shopping Penha Forecasted
Status 2Q08
1 Store Confirmed
4 Stores Forecasted
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Hering Store – Indicators
Hering Store Performance 1Q07 1Q08 Chg.
Number of stores 152 182 19.7%
Franchise 142 157 10.6%
Own 10 25 150.0%
Sales (R$ thous.) 42,053 68,640 63.2%
Same Store Sales growth - 39.9%
Sales area (m²) 20,724 24,399 17.7%
Sales per m² (R$) 2,036 2,829 39.0%
Check-outs (thous.) 566 915 61.9%
Units 1,309 2,150 64.2%
Average sales tickets (R$) 74.36 74.99 0.8%
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Capex (R$ million)
2.0
1.2
2.0
0.1
1.5
0.4
0.3
0.2
1Q07 1Q08
5.0
2.7
Industry
Stores
IT
Other
By Activity
Sustainable growth with investments in:• launching and updating stores• production technology update• IT - business intelligence
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Indebtedness
-29.5-33.4
184.3184.6201.3
-0.53-0.65
3.423.84.6
2005 2006 1Q07 2007 1Q08
* Last 12 months EBITDA
Short Term57%
Long Term43%
Net Debt/EBITDA*
Net Debt (R$ million)
Total Debt = R$ 114.1 million
Indebtedness Evolution Short Term x Long Term
Cash to support investments in growth
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AGENDA: • Highlights• Operational Performance• Stock Market• Business Strategy and Outlook
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Stock Market
Cia Hering vs. Ibovespa Base 100 = 12/28/2007
95.4
85.5
12/28/2007 01/28/2008 02/28/2008 03/28/2008
IBOVESPA HGTX3
Number of Trades 534 2.645 395,3%Participation in Trading Sessions (%) 83,6% 100,0% 16,4 p.p.Quantity Traded (000) 854 4.261 398,9%Volume Traded (R$) 5.874 40.991 597,8%Share Price (R$¹) 9,50 8,98 -5,5%Total Shares Outstanding (000) 33.095 53.928 62,9%Market Cap (R$ MM¹) 314.393 484.264 54,0%(¹) end of period
Indicators - HGTX3 1Q07 1Q08 Chg.
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AGENDA: • Highlights• Operational Performance• Stock Market• Business Strategy and Outlook
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Business Strategy and Outlook
HERING STORE CHAIN EXPANSION
• Own Stores
• Closer to customers
• Growth in EBITDA
• Franchises/Multi-label retail
• Widespread distribution
• Strengthened geographic presence
HERING STORE CREDIT CARD
• Information
• Customers shopping habits and needs/desires identification
• Operating profit increase
• Average sales ticket increase in Hering Stores
• Revenues from financial products
PRODUCTS
• Increase in cross-sales in other categories
• Continuity of “Eu uso Hering” marketing campaign
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Investor Relations Team Fabio Hering – Deputy-CEO and IR DirectorVilmar da Costa – CFOKarina Koerich – IR ManagerPhone +55 (47) 3321-3469 e-mail: [email protected]
Investor Relations Consulting FirmFIRB – Financial Investor Relations BrasilPhone: +55 (11) 3897-6857e-mail: [email protected]