| Apresentação do Roadshow Institutional Presentation 1Q18 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 The 6 th Brand – OWME (“ Own + Me ”) “MINDSET MATTERS – TARGET NOT YOUR AGE” AB1 Classes @owmeoficial 35+ SEGMENT TIMELESS WELLNESS CONSTRUCTIONS COMFORT + STYLE 5
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 12.1 million pairs of shoes (1) More than 45 years of ~11,500 models created 90,9% outsourced Net revenues CAGR: experience in the sector per year production (1) 7.9% (2012-2017) 1,2 million handbags (1) Wide recognition Average lead time of 40 ROIC of 30.2% in 1Q18 Net Profit CAGR: 8.1% days (2012- 2017) More than 2,500 points of sale 2,419 employees 15 to 18 launches per year Increased operating leverage ~12% total market share and ~25% market share on AB classes 1. As of 2017 6 2. Refers to the Brazilian women footwear market (source: Company estimates).
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 – 2018 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) 7
1 Shareholder Structure BTG JP Others Aberdeen Management² Pactual Morgan 7.5% 0.07% 5.7% 30.5% 5.2% Birman Family Float 51.1% 48.8% 1. Arezzo&Co capital stock is composed of 90,302,408 common shares, all nominative, book-entry shares with no par value Shareholder structure as of May 25 th 2018 2. 3. Includes Stock Options plan 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 1 385 1,187 70 1,163 124 14 22 67 3 119 1,323 23 4 25 39 4 363 2 % gross 13% 65% 13% 2% 25% 17% 29% 18% 9% 49% 34% 2% 30% 5% 62% 50% 40% 0% rev. 2 % Web Gross R$64.3MM (7%) R$58.7MM (11%) R$10.7MM (6%) R$1.6MM (3%) R$1.8MM (10%) Revenue Retail price R$220 / pair R$380 / pair R$110 / pair R$1,500 / pair R$280 / pair point Sales R$912MM R$558MM R$172MM R$55MM R$18MM Volume 3 % Gross 53.2% 32.6% 10.0% 3.2% 1.0% Revenues 4 Notes: 1. Points of sales (LTM); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports (including US and ROW wholesalers). 2. % of each brand gross revenues (LTM) does not include other revenues (not generated by any of the 6 brands). 9 3. Gross revenues LTM, including external market; does not include other revenues (not generated by any of the 6 brands). % of Company’s total gross revenues as of March 31th, 2018. 4.
1 Multiple distribution channels Flexible platform through different distribution channels with specific strategies, maximizing the Company's profitability Points of Sale (1Q18) 2 2,379 multibrand¹ Broad distribution 47 owned 571 franchises in 385 franchises + clients in more network stores in more than 220 14 owned stores + than 1,250 cities 1.187 multibrand clients throughout Brazil Brazil cities in Brazil 67 franchises + 22 owned stores + Gross Revenue Breakdown by Channel 2 – (R$ mm) 1.163 multibrand clients 44,6% 20,5% 17,6% 8,0% 0,2% 9,2% 100% 119 franchises + 3 owned stores + 157 1.718 1.323 multibrand clients 137 4 302 352 766 4 owned stores + 25 multibrand clients Franchises Multibrand Owned Stores Web commerce Other Foreign Market Total Notas: 4 owned stores + 1. Without store overlap between brands 363 multibrand clients 2. LTM 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 15
2 Atmosphere of Stores: differentiated concepts for each brand “Home Feeling” Each theme is disposed in different niches Wall display Iguatemi Faria Lima - SP Experimental and creative Smart Mirror Mobile Checkout Distinguished storefront Suspended Shelves Combos Shelves, Niches and Suspended shelves Visual merchandising: Increased number of models exposed Products highlighted in the New Store Concept Sophisticated lighting center of the stores Storage Oscar Freire St 1128 New store concept being Favorable lighting project Accessories tested in flagship stores Atmosphere of a jewelry Distribution of the furniture New digital experience: mobile Display of a large variety of store provides more comfort to Experimental and creative check out, RFID mirror and products Private shop experience the customers space touch tv Inventory at the sales area: Focus on exclusivity, design Interaction with the customer Expected roll out for 2018/19 lower necessity of additional and high quality materials space for storage 16
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