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| Apresentação do Roadshow

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Arezzo&CoArezzo&CoArezzo&CoArezzo&Co Investor DayInvestor DayInvestor DayInvestor DayRetail Retail Retail Retail ---- Owned Stores and FranchisesOwned Stores and FranchisesOwned Stores and FranchisesOwned Stores and Franchises

David PythonSchutz PMO

Carlos PontinArezzo Franchisees

Manager

By leveraging its strengths in products, Arezzo&Co has progressively the retail as its center of gravity

1 Concept to

store

2 Technology

applied

Retail

3PDCA

� Merchandising� Planning� Feedback

� Stores architecture project

� Visual merchandising� Sell-out analysis

� Breakdown of point of sales’ goals by sales person

� Structured managing process

Retail - Owned Stores and Franchises

2

By leveraging its strengths in products, Arezzo&Co has progressively the retail as its center of gravity

1 Concept to

store

Retail

3PDCA

� Merchandising� Planning� Feedback

� Stores architecture project

� Visual merchandising� Sell-out analysis

� Breakdown of point of sales’ goals by sales person

� Structured managing process

Retail - Owned Stores and Franchises

2 Technology

applied

3

4

1- Concept to store

Merchandising

MERCHANDISINGASPECTS

CRIATIVITY

PlanningSales performance

(sales turn, cluster, sell-in, sell-out, etc)

MarketingStimulating desire-driven

purchasesTecnical DrawingQualityMargis

Sourcing / ManufactureCosts and product execution

Design / StyleTendencies

Retail driven collection planning and product mix

5

Shoes type Price range

Style level

Life Cycle

Occasions of use

Analysis and definition of product mix for each sto re

1 - Concept to store

R$XXX-XXX R$XXX-XXX R$XXX-XXX R$XXX-XXX

R$XXX-XXX R$XXX-XXX R$XXX-XXX R$XXX-XXX

R$XXX-XXX R$XXX-XXX R$XXX-XXX R$XXX-XXX

R$XXX-XXX R$XXX-XXX R$XXX-XXX R$XXX-XXX

By leveraging its strengths in products, Arezzo&Co has progressively the retail as its center of gravity

1 Concept to

store

2 Technology

applied

Retail

3PDCA

� Merchandising� Planning� Feedback

� Stores architecture project

� Visual merchandising� Sell-out analysis

� Breakdown of point of sales’ goals by sales person

� Structured managing process

Retail - Owned Stores and Franchises

6

77

2 - Technology applied at retail

Schutz architectural project bets on flagships essence and highlights the products at a modern and cosmopolitan background

Closet� Jaquets and accessories� Brand horizontalization

Video Wall� Campaigns and marketing actions

Updated windows� Differentiated products

Niches and lighting• More preeminence to products

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� Project model allows visual communication updates at low-cost investment

� Visual merchandising brings the most relevant collection information to stores’ level

� 3 main display updates per year

Flagship

Arezzo Oscar

Freire SP

Summer

Winter

2 - Technology applied at retail

Arezzo architectural project bets on chameleon concep t, with its stores constantly modified to incorporate the concept of each new col lection

By leveraging its strengths in products, Arezzo&Co has progressively the retail as its center of gravity

1 Concept to

store

2 Technology

applied

Retail

3PDCA

� Merchandising� Planning� Feedback

� Stores architecture project

� Visual merchandising� Sell-out analysis

� Breakdown of point of sales’ goals by sales person

� Structured managing process

Retail - Owned Stores and Franchises

9

10

Supply management� Monitoring each product

performance and store’s inventory level

Store productivity (revenues)� Ongoing valuation process

of stores results

Average ticket

Average price

Items per service

Average price

Volume

Traffic

Conversion rate

Sales Service

Retail management based on metrics and structured s ales process, together with supply management per category

DC for regional

replacement (SP)

+Variables analised

� Weekly Routine‒ Cluster analysis‒ Sales performance

analysis‒ Information sharing

among sales teams

� Monthly Routine‒ Team meetings‒ Best practices sharing‒ Metrics definition for the

following month

3 - PDCA applied at retail management

Averagemark-up

Inventory level

Product Flow

Sales

Average Ticket

Service

Traffic

Conversionrate

Average price

Items per service

� Analyze handbag display

� Increase accessories at POS

� Analyze store’s size-run

� Team incentives/motivational

compensation

� Cash management training

� Essentials/Classic training

Recommended actionsSales vs Metrics 1º Why 2º Why

Exemple on how to use management tools for sales ma nagement

X

X

X

3 - PDCA applied at retail management

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12

Operating Manager

Owned Stores Coordinator

SalesManager

� Point of sales metrics� Monthly meetings with sales team

� Weekly analysis of stores productivity (revenues)

We count on a dedicated structure aiming fast imple mentation of our action plan at owned stores

Responsabilities

� Weekly analysis of stores, by cluster

� Metrics breakdown by store� Elaboration of action plan at stores with weak performance,

together with sales manager

� Daily metrics for sales team

� Performance monitoring of the sales team

� Training and team management aiming achieve sales goals

3 - PDCA applied at retail management

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� Intense retail training

� 8 stores per consultant

� Team distribution among main sales clusters

� Consumer proximity

� Solid relationship and support to each franchisee

Successful partnership: “win-win” Constant support by consultants to franchisees

3 Consultants

7 Consultants

24 Consultants

8 Consultants

4 Consultants

Franchise BusinessManagement

South RegionCoordinator

Interior SP RegionalCoordinator

CMG and CORegional

Coordinator

NE RegionCoordinator

SP Metropolitan AreaRegion Coordinator

RJ and ES RegionCoordinator

N RegionCoordinator

Retail extension based on franchisees integration, which apply the best sales practices, supported by a commercial team composed by 46 consultants

3 - PDCA applied at retail management

Sales assistance also counts with other metrics/too ls to support the franchisees retail management

IAF - Instrument of Franchisees Management (planning, objectives and metrics)

Performance monitoring – sales score and flow reports

On line Promoter - Monitoring system for consultants follow-up

Show Room Web – Open and closed size-run (right product at the right time)

Shopping experience analysis: Hidden Client

Manuals of visual merchandising – simultaneously applied throughout Brazil

Arezzo Classic - automatic reposition of sold-out sizes

Trianon project - standardized shipment for hot and cold regions

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3 - PDCA applied at retail management

15

0% lost on receivables

96% satisfaction of franchisees 1

Excellency in Franchising Award in the last 8 years (ABF)

Best Franchise in Brazil and in the sector for 7 years (since 2004)

Notes:1. 96% of the current franchisees indicated they would be interested in opening a

franchise if they did not already have one (Source: Arezzo&Co)

86.0%95.7%

2008/2009 2009/2010

Satisfaction of Franchisees

Current franchisees answer when asked if they would open a franchise it they did not have one

96% of the current franchisees indicated they would be interested in opening a franchise if they did not already have one

3 - PDCA applied at retail management