R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

| Apresentação do Roadshow

Arezzo&Co Investor’s Day

Sourcing and industry features

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232 Arezzo&Co Sourcing: Competitive

Advantages

Brazil and the Vale dos Sino offer strong competitive advantages, a combination of production capacity, skilled labor and production flexibility

Source: Abicalçados, 2012 / ASSINTECAL / FAO / AICSUL.

Brazil is the world’s third largest footwear producer

The world’s largest livestock population: 13% of the market

RS: 1 third (BRL 1 billion) of Brazilian revenue for leather industry

Vale dos Sinos: one of the world’s largest footwear manufacturing hubs

1,700 manufacturers: components, footwear, machinery, tanneries and others

trade entities and research and teaching institutions

Abundant skilled and specialized labor force

Production flexibility: volume vs. variety vs. speed

2

.1

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232 Arezzo&Co Sourcing: Competitive

Advantages

Arezzo&Co is a leader in the Brazilian leather fashion footwear sector, but also has great growth potential through domestic sourcing

Source: Abicalçados, 2012 / ASSINTECAL / FAO / AICSUL./ Arezzo&Co

Production (million pairs)

Jobs (thousands)

819

338

Production (million pairs)

Jobs (thousands)

270

138

Production (million pairs)

Jobs (thousands)

216

110

BRAZIL SOUTHERN REGION Vale dos Sinos

819 237 160

Brazilian Production * Leather footwear * Women’s leather *

Women’s leather footwear production: nearly 70% of Brazil’s leather footwear production

Vale dos Sinos: 26% of Brazilian footwear production

* Milion of pairs

3

.2

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Source: Abicalçados, 2012 / ASSINTECAL / FAO / AICSUL.

Brazilian leather industry:

Leather production: • Bovine: 43,0

• Ovine: 5,0

• Goat: 2,5

749 tanneries

Vale dos Sinos component manufacturing:

• 31% of Brazilian companies in the category

# of

companies

27

197

46

152

83

Outsole complements

Upper complements

Packaging

Tools, dies/moulds

Chemicals

Segment # of

companies

78

33

47

37

134

Upper materials

Insoles

Footwear production

chemicals

Leather production

chemicals

Heels, outsoles and

high heels

Segment

Components:

- Micro: 3%

- Small: 2%

- Medium: 4%

Tanneries: 4%

Components:

- Micro: 1%

- Small: 3%

- Small: 3%

Tanneries: 10%

Components:

- Micro: 54%

- Small: 51%

- Medium: 41%

- Large: 33%

Tanneries: 41%

Components:

- Micro: 4%

- Small: 4%

- Medium: 5%

- Large: 7%

Tanneries: 12%

Components:

- Micro: 38%

- Small: 40%

- Medium: 44%

- Large: 60%

Tanneries: 34%

Distribution of components and tanneries:

Arezzo&Co is a leader in the Brazilian leather fashion footwear sector, but also has great growth potential through domestic sourcing

Arezzo&Co Sourcing: Competitive

Advantages

4

.3

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Competitive lead time, costs and minimum production requirements to serve the

Brazilian fashion market

Note:

Cost estimates based on Arezzo brand product

DDP (delivered duty paid): delivery in Brazil with all taxes paid

FOB: free on board

BRAZIL

Lead time: 40 days

Minimum/model: 800 pairs

Minimum/construction: 4,000 pairs

Production cap. (pairs) 894 million

Cost (w/o tax): USD 21/pair

Cost (w/tax): USD 27/pair

ITALY

Lead time: 70 days

Minimum/model: 800 pairs

Minimum/construction: 4,000 pairs

Production cap. (pairs): 202 million

Cost (FOB): USD 35/pair

Cost (DDP): USD 49/pair

INDIA

Lead time: 160 days

Minimum/model: 5,000 pairs

Minimum/construction: 20,000 pairs

Production cap. (pairs): 2,000 million

Cost (FOB): USD 15/pair

Cost (DDP): USD 23/pair

CHINA (different clusters)

Lead time: 120 to 150 days

Minimum/model: 5,000 pairs

Minimum/construction: 20,000 pairs

Production cap. (pairs): 10,000 million

Cost (FOB): USD 16-18/pair

Cost (DDP): USD 42-45/pair

VIETNAM

Lead time: 120 to 150 days

Minimum/model: 2,000 pairs

Minimum/construction: 8,000 pairs

Production cap. (pairs): 682 million

Cost (FOB): USD 18/pair

Cost (DDP): USD 26/pair

Arezzo&Co Sourcing: Competitive

Advantages

5

.4

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Nowadays, unlike what takes place with footwear, Asia is a good alternative

for bags and accessory supplies

Bags: 30%

Wallets and other accessories: 50%+

Profile of Arezzo&Co's imports from

China1:

Bag do not have forms or fitting

Less variety of models

Fashion content less perishable

Simpler production techniques

Lower costs: Brazil has little specialized production

Inexistence of anti-dumping fees

Arezzo&Co Sourcing: Bags and

Accessories

6

.5

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Raw material price negotiations

Scheduling

+

Manufacturer negotiation

1 2 3 4 5 6 7

Arezzo&Co Sourcing Process

Sourcing process focused on ensuring flexibility, speed and cost control in the

creation of new products

Trends and style

Design Technical

Design Engineering Samples Showroom

Logistics and

distribution Store

7

.6

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Investments in product

engineering: At home know how

Ensures agile, flexible outsourcing

Coordinated production chain

Management:

Gross material Gross material Gross material Manufacturers

Finished materials

Raw Materials

Arezzo

&Co

Cost data

Engineering folder

Cost management efficiency

Quality standard guarantee

Efficient lead time

Flexibility

Supply chain management

8

.7

1

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232 Understanding shoes

Spike rivet (2 parts)

Buckle (2 parts)

Anklet (8 parts)

Toecap (2 parts)

Half sole (3 parts)

Upper (11 parts)

Assembly insole

(11 parts)

Heel (7 parts)

High Heel (2 parts)

Outsole (3 parts)

SKU

MODEL

CONSTRUCTION

10%

35%

70%

Reused from collection to collection:

Packaging (10 parts)

A non-complex shoe has 61 raw materials administered by the factory team. R&D

optimization ensures management of costs and deadlines.

9

.1

2

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

• Specialized in producing small volumes of

special editions and customized products

• Agility and autonomy

• Capacity: 1,200 pairs/year

• Large quantities

• High level of specialization in certain categories

• Light asset

Own Factory

Outsourcing

500 2000 5,000 100,000

# pairs/

model

BR

L/p

air (

illu

str

ative

)

Efficient production

frontier

Volumes made in-house

Outsourcing

Production is guided by the end client's demand and the variables deadline

and quantities per model defined the sourcing format

Sourcing grid – in-house vs. outsourcing

Unitary cost curve

10

.2

2

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

| Apresentação do Roadshow

11