Institutional Presentation | Apresentação do Roadshow As of 3Q17 November 2017 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 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 More than 45 years of ~11,500 models created 90.7% outsourced Net revenues CAGR: 11.6 million pairs of shoes (1) experience in the sector per year sdproduction 10.5% (2011-2016) 1,244 thousand handbags (1) Wide recognition Lead time of 40 days ROIC of 23.9% in 3Q17 Net Profit CAGR: 4.0% (2011- 2016) 2,289 points of sale 15 to 18 launches per year 2,355 employees Increased operating 12% market share (2) leverage 1. 3Q17 LTM 5 2. Refers to the Brazilian women footwear market (source: Company estimates). Estimated for 2016.
1 Successful track record of entrepreneurship The right changes at the right time accelerated the Company's development Foundation and structuring Industrial Era Retail Era Corporate Era Industry Reference 70’s 80’s 90’s 00’s 2011 – 2017 Founded in 1972 Consolidation of industrial Focus on retail Specific brands for each business model located in segment Focused on brand and R&D and production Minas Gerais product outsourcing on Vale dos Sinos Expansion of distribution 1.5 mm pairs per year - RS channels and 2,000 employees Franchises expansion Efficient supply chain Launch of Consolidate new brands leadership Opening of the flagship Opening of the first store at Oscar Freire shoe factory position + Merger First store Schutz launch Strategic Partnership (November 2007) Commercial operations Launch of the centralized in São Paulo first design with national success Fast Fashion Initial Public Offering concept (February 2011) 6
1 Shareholder structure Others Aberdeen Management² 8.0% 0.0% 40.6% Birman family Float 51.4% 48.6% 1. Arezzo&Co capital stock is composed of 89,765,882 common shares, all nominative, book-entry shares with no par value 2. Shareholder structure as of September 2017 3. Includes Stock Options plan 7
1 Culture & Management Principles of success at Arezzo&Co: 01 That which cannot be transparent should not be done. 02 Always be true, so that at any point you are not false in your job. Always be authentic. 03 Clearly negotiate your goals and responsibilities, and consider achievement as a requirement for continuity and prosperity. 04 Do not uncover problems only. Blaming others will never be the solution. Take risks, propose solutions. In case of doubt, act! 05 Formalize everything, even if in an informal way. 06 Always be flexible. Be ready for changes. 07 Goals met are, at least, the basis for the next goal. 08 United we stand! Divergences are constructive, conflicts are destructive. 09 A humble stance: the key to our success. 10 Enjoy. Appreciate. Get involved. And always be happy! 2154 8
1 Strong platform of brands Strong platform of brands, aimed at specific target markets, enables the Company to capture growth from different income segments Foundation 1972 1995 2008 2009 2015 Trendy Fashion Pop Design Casual New Up to date Flat shoes Exclusivity Young Brands profile Easy to use Bold Affordable Identity Urban Eclectic Provocative Colorful Seduction Modern Female target 16 – 60 years 18 – 40 years 12 – 60 years 20 – 45 years 15 – 30 years market O F MB EX O F MB EX O F MB EX O MB EX O MB EX Distribution POS 1 channel 1 369 1,136 75 1,200 136 15 22 62 4 89 1,201 19 4 20 44 4 296 2 % gross 14% 65% 13% 2% 27% 16% 29% 18% 10% 46% 36% 2% 28% 4% 66% 38% 53% 0% rev. 2 % Web Gross R$55.5MM (6%) R$57.3MM (10%) R$8.7MM (6%) R$0.8MM (2%) R$1.5MM (9%) Revenue Retail price R$230 / pair R$330 / pair R$110 / pair R$1390 / pair R$248 / pair point Sales R$874MM R$557MM R$149MM R$50MM R$17MM Volume 3 % Gross 53.1% 33.8% 9.1% 3.0% 1.0% Revenues 4 Notes: 1. Points of sales (LTM); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports (including US and ROW wholesalers). 2. % of each brand gross revenues (LTM) does not include other revenues (not generated by any of the 5 brands). 9 3. Gross revenues LTM, including external market; does not include other revenues (not generated by any of the 5 brands). % of Company’s total gross revenues LTM. 4.
1 Multiple distribution channels Flexible platform through different distribution channels with specific strategies, maximizing the Company's profitability 520 franchises in 2,289 multibrand¹ Broad distribution 49 owned stores in more than 220 cities clients in more than network throughout Brazil in Brazil 1,220 cities Brazil Gross Revenue Breakdown by Channel – (R$ mm)² 44.4% 20.4% 18.3% 7.5% 0.2% 9.2% 100% 152 1,650 124 3 302 337 733 Franchises Multibrand Owned Stores Web commerce Other External Market Total 1. Without store overlap between brands 2. Last twelve months 10
| Business model
2 Unique business model in Brazil enhanced by…. 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 produce 15 to 18 collections per year I. Research II. Development III. Sourcing IV. 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 fulfills the various aspirations of women, delivering 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 sales Presence in electronic media and television Strong presence in printed media Digital communication Celebrity Endorsement Marketing Events Demi Moore Gisele Bündchen Blake Lively +2.2 million accesses to site/month Over 6 million followers/ fans: Facebook, CRM – VIP sales +180k monthly access to Schutz’s Blog Instagram and Twitter (all 4 Brands) Seasonal showroom in Los Angeles near In-store events – PA Arezzo is leader in interactions 1 Average navigation time: 8 minutes the Red Carpet Season Stylists Fashion Advisors 14 1 Source: Indexsocial/ Agência Espalhe, 2013
2 Communication & marketing program reflected in every aspect of the stores Stores constantly modified to incorporate the concept of each new collection, creating 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 15
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