| Apresentação do Roadshow Institutional Presentation 4Q18 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 91,6% outsourced Net revenues CAGR: 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 29.2% in 4Q18 Net Profit CAGR: 6.1% days (2014 - 2018 ) More than 3,000 points of sale 2,437 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 5 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 – 2019 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 BTG Others Aberdeen Management² Pactual 0.05% 5.0% 4.9% 38.9% Birman Family Float 51.1% 48.9% 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 December 31 th 2018 2. 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 Foundation 1972 2009 2015 1995 2008 Trendy Fashion Pop Design Casual New Up to date Flat shoes Exclusivity Brands Young profile Easy to use Bold Affordable Identity Urban Eclectic Provocative Colorful Seduction Modern Female target 20 – 45 years 16 - 60 years 15 - 30 years 18 - 40 years 12 - 60 years market O MB EX O F MB EX O F MB EX O F MB EX O MB EX Distribution POS 1 channel 1 14 1.188 76 150 5 413 2 405 17 73 1.094 108 3 1.439 28 4 29 43 % gross 12% 64% 14% 2% 43% 46% 0% 24% 16% 27% 21% 6% 52% 35% 1% 30% 5% 61% rev. 2 % Web Gross R$ 79,6 MM (8%) R$ 13,3 MM (6%) R$ 2,2 MM (3%) R$ 3,1 MM (12%) R$ 63,4 MM (11%) Revenue Retail price R$ 220,00/pair R$ 380,00/pair R$ 110,00/pair R$ 1.500,00/pair R$ 280,00/pair point Sales R$ 26,3 MM R$ 72,4 MM R$ 970.1 MM R$ 565,2 MM R$ 222,1 MM Volume 3 % Gross 3,9% 1,4% 52,% 30,3% 11,9% 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). 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 Multiple distribution channels Flexible platform through different distribution channels with specific strategies, maximizing the Company's profitability Broad 2,493 628 franchises FRANCHISE____________405 distribution 45 owned multibrand¹ in more than OWNED STORE__________14 network stores in clients in 250 cities in MULTIBRAND____________1.188 throughout more than Brazil Brazil Brazil 1,331 cities FRANCHISE____________73 OWNED STORE__________17 Gross Revenue Breakdown by Channel 2 – (R$ mm) MULTIBRAND____________1.096 FRANCHISE____________150 44,6% 20,6% 16,0% 8,7% 0,1% 10,0% 100,0% OWNED STORE__________3 1.866 MULTIBRAND___________1.439 OWNED STORE__________4 MULTIBRAND___________29 OWNED STORE__________5 MULTIBRAND___________413 Notas: OWNED STORE__________2 1. Without store overlap between brands MULTIBRAND____________248 2. LTM 9 Domestic Market – multibrand without overlap. 3.
1 The 6 th Brand – OWME (“ Own + Me ”) TIMELESS TARGET SEGMENT CONSTRUCTIONS WELLNESS @owmeoficial AB1 CLASSES COMFORT 35+ + STYLE 10
| 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
2 Atmosfera das lojas: conceitos diferenciados para cada marca Shelves, Niches and Suspended shelves New Store Concept Wall display Increased number of displayed items New store concept being tested in flagship stores Display of a large variety of products Products highlighted in the center of the stores New digital experience: mobile check-out, RFID mirror Inventory at the sales area: lower necessity of Favorable lighting project and touch-screen TV additional space for storage Distribution of the furniture provides more comfort to the Expected roll out for 2018/19 customers Each theme is disposed in different niches Experimental and creative Wellness and style Atmosphere of a jewelry store Focus on wellness (comfort and style) Experimental and creative space Private shop experience Timeless concept Interaction with the customer Focus on exclusivity, design and high quality Collaborative experience materials 16
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