| Apresentação do Roadshow Institutional Presentation 3Q19 1
Disclaimer Statements regarding the Company’s future business perspectives and projections of operational and financial results are merely estimates and projections, and as such they are subject to different risks and uncertainties, including, but not limited to, market conditions, domestic and foreign performance in general and in the Company’s line of business. These risks and uncertainties cannot be controlled or sufficiently predicted by the Company management and may significantly affect its perspectives, estimates, and projections. Statements on future perspectives, estimates, and projections do not represent and should not be construed as a guarantee of performance. The operational information contained herein, as well as information not directly derived from the financial statements, have not been subject to a special review by the Company’s independent auditors and may involve premises and estimates adopted by the management. 2
| COMPANY OVERVIEW
1 Platform of brands of reference Arezzo&Co is the leading Company in the footwear, handbags and accessories industry through its platform of Top of Mind brands 4
1 Company overview Arezzo&Co is the reference in the Brazilian retail sector and has a unique positioning combining growth with high cash generation Leading company in the footwear Development of Asset light: high Strong cash Controlling and accessories collections with operational generation and shareholders are industry with efficient supply efficiency high growth reference in the presence in all chain sector Brazilian states 13.5 million pairs of shoes (1) More than 47 years of ~11,500 models created Net revenues CAGR: 90,3% outsourced experience in the sector per year production 9.7% (2014 - 2018) 1.5 million handbags (1) Wide recognition Average lead time of 40 ROIC of 26.4% in 3Q19 (3) Net Profit CAGR: 6.1% days (2014 - 2018 ) More than 3,000 points of sale 2,463 employees 15 to 18 launches per year Increased operating leverage ~12% total market share and ~28% market share on AB classes 1. As of 2018 2. Refers to the Brazilian women footwear market (source: Company estimates). 5 3. Results excluding the adoption of IFRS 16 / CPC 06 (R2)
1 Successful track record of entrepreneurship The right changes at the right time accelerated the Company's development FOUNDATION AND INDUSTRIAL ERA RETAIL ERA CORPORATE ERA INDUSTRY REFERENCE STRUCTURING 70’s 80’s 90’s 00’s 2011 - 2019 Founded in 1972 Consolidation of industrial Focus on retail Specific brands for each business model located in segment Focused on brand and product R&D and production CONSOLIDATE Minas Gerais outsourcing on Vale dos Sinos Expansion of distribution LEADERSHIP POSITION 1.5 mm pairs per year - RS channels and 2,000 employees Franchises expansion Efficient supply chain Launch of new brands International expansion 9 owned stores in us Opening of the first shoe factory Opening of the flagship First store Merger store at Oscar Freire Launch of the first design with national success + Strategic Partnership (November 2007) Launch of new brands Schutz launch Commercial operations centralized in São Paulo Initial Public Offering (IPO) February 2011 Fast Fashion concept 6
1 Shareholder Structure Others Aberdeen Management³ 45.1% 4.1% 0.0% Birman Family Float 50.8% 49.2% 1. Arezzo&Co capital stock is composed of 90.954.280 common shares, all nominative, book-entry shares with no par value 2. Shareholder structure as of October 30, 2019 3. Includes LTI plan 7
1 Strong platform of brands Strong platform of brands, aimed at specific target markets, enables the Company to capture growth from different income segments 1972 2008 1995 TRENDY POP FASHION NEW FLAT SHOES UP TO DATE EASY TO USE AFFORDABLE BOLD ECLETIC COLORFUL PROVOCATIVE 16 – 60 YEARS 12 – 60 YEARS 18 – 40 YEARS CHANNELS AND % REVENUE CHANNELS AND % REVENUE CHANNELS AND % REVENUE O F MB EX O F MB EX O F MB EX US 10 419 1,210 108 3 165 1,628 104 17 73 1,086 121 6 12% 64% 13% 2% 4% 52% 36% 1% 18% 18% 26% 5% 21% WEB GROSS REVENUE WEB GROSS REVENUE WEB GROSS REVENUE R$ 90.9 MM (9%) R$ 73.3 MM (12%) R$ 16.9 MM (7%) RETAIL PRICE POINT RETAIL PRICE POINT RETAIL PRICE POINT R$ 240.00 / PAIR R$ 380.00 / PAIR R$ 140.00 / PAIR GROSS REVENUE GROSS REVENUE GROSS REVENUE R$ 985.7 MM (49.4%) R$ 617.1 MM (30.9%) R$ 248.8 MM (12.5%) Notes: 1. Points of sales (LTM); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports; US = US Operation (Owned Stores in US) 2. % of each brand gross revenues (LTM) does not include other revenues (not generated by any of the 6 brands). 3. Gross revenues LTM, including external market; does not include other revenues (not generated by any of the 6 brands). 8 % of Company’s total gross revenues of LTM. 4.
1 Strong platform of brands Strong platform of brands, aimed at specific target markets, enables the Company to capture growth from different income segments 2009 2018 2015 DESIGN COMFORT CASUAL EXCLUSIVITY WELLNESS YOUNG IDENTITY BEAUTY URBAN SEDUCTION SELF CARE MODERN 20 – 45 YEARS 30 – 60 YEARS 15 – 30 YEARS CHANNELS AND % REVENUE CHANNELS AND % REVENUE CHANNELS AND % REVENUE O F MB EX P MB EX O MB EX US 3 1 302 78 5 441 18 4 27 41 3 40% 53% 0% 30% 2% 53% 0% 27% 5% 12% 53% WEB GROSS REVENUE WEB GROSS REVENUE WEB GROSS REVENUE R$ 4.3 MM (4%) R$ 4.0 MM (15%) R$ 2.1 MM (15%) RETAIL PRICE POINT RETAIL PRICE POINT RETAIL PRICE POINT R$ 1,500.00 / PAIR R$ 320.00 / PAIR R$ 230.00 / PAIR GROSS REVENUE GROSS REVENUE GROSS REVENUE R$ 101.8 MM (5.1%) R$ 27.5 MM (1.4%) R$ 14.1 MM (0.7%) Notes: 1. Points of sales (LTM); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports; US = US Operation (Owned Stores in US) 2. % of each brand gross revenues (LTM) does not include other revenues (not generated by any of the 6 brands). 3. Gross revenues LTM, including external market; does not include other revenues (not generated by any of the 6 brands). 9 % of Company’s total gross revenues of LTM. 4.
1 Multiple distribution channels Flexible platform through different distribution channels with specific strategies, maximizing the Company's profitability NUMBER OF STORES – DOMESTIC MARKET 3Q19 Broad 2,659 658 franchises distribution 42 owned multibrand¹ Franchises________________419 in more than network stores in clients in Owned store ______________10 250 cities in throughout more than Brazil Multibrands_______________1.210 Brazil Brazil 1,385 cities Franchises________________73 Owned store ______________17 Gross Revenue Breakdown by Channel 2 – (R$ mm) Multibrands_______________1.086 43,8% 13,9% 20,4% 9,6% 9,2% 3,0% 0,1% 100,0% Franchises________________165 Owned store ______________3 1.996 Multibrands_______________1.628 Owned store ______________4 Multibrands_______________27 Owned store ______________4 Multibrands_______________441 Franchises________________1 Notas: Owned store ______________3 1. Without store overlap between brands 2. LTM Multibrands_______________302 10 Domestic Market – multibrand without overlap. 3.
| BUSINESS MODEL
2 Unique business model in Brazil Customer focus: we are at the forefront of Brazilian women fashion and design 1 2 3 4 5 SEASONED NATIONWIDE ABILITY TO SOLID MARKETING EFFICIENT MANAGEMENT DISTRIBUTION INNOVATE AND SUPPLY CHAIN TEAM WITH STRATEGY COMMUNICATION PERFORMANCE PROGRAM BASED INCENTIVES Communication & R&D Sourcing & Logistics Multi-channel Management Marketing BRANDS OF REFERENCE 12
2 Ability to Innovate We develop 15 to 18 collections per year I. Research II. Development III. Sourcing IV. Store Delivery Creation: 11,500 SKUs / year Available for selection: 63% of SKUs created / year Stores: 52% of SKUs created / year Activities JAN FEV MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Creation Launch Orders Production Delivery Normal sale Discount sale Winter I Winter II Winter III Summer I Summer II Summer III Summer IV Arezzo&Co delivers on average 5 new models at the stores per day, allowing for consistent desire- driven purchases 13
2 Broad Media Plan Each brand has an integrated and expressive communication strategy, from the creation of campaigns to the point of sale STRONG PRESENCE IN SOCIAL, DIGITAL AND PRINT MEDIA LIVE MARKETING AND EXPERIENCE AT POINT OF SALE OVER 12 MILLION FOLLOWERS CUSTOMER ACTIVATION THROUGH FASHION AND OVER 4 MILLION MONTHLY WEBSITE ACCESS LIFESTYLE EVENTS PUBLIC RELATIONS DIGITAL COMMUNICATION INTERNATIONAL CELEBRITIES ENDORSEMENT AND CUSTOMIZED CONTENT FOR DIFFERENT CLIENTS STRONG PRESENCE IN THE PRESS 14
2 Communication & Marketing Program reflected in every aspect of the stores Stores are constantly changed to incorporate the concept of each new collection, resulting in a higher level of desire-driven purchases POS materials (catalogs, packaging, and others) Flagship stores Store layout & visual merchandising All visual communication at stores is monitored and updated simultaneously throughout Brazil for each new collection 15
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