arezzo brand

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1

Arezzo&Co Investor Day

Arezzo Brand

Alexandre Birman CEO

Claudia Narciso BU Director

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The Arezzo brand accounts for 60% of the Company’s gross revenue

Brand Overview Update

2

O F MB EX

Trendy New

Easy to use Eclectic

16 to 60 years of age

R$189.00/pair

R$716.7 million

59.5%

Brand profile

Target Female Public

Sales Volume 3

% of Gross Revenue 4

Price at Point of Sale

Inception 1972

Dis

trib

uti

on

C

han

ne

l POS1

% Gross Rev.2

17 332 994

72% 15% 12%

14

1%

Top-of-mind brand in the sector, among the 30 most valuable

Brazilian brands

Points of sale homogeneously distributed throughout the country

Largest women’s footwear chain in Brazil

Continuous focus on product innovation

Improvement of the stores’ layouts, with a high level of

acceptance from clients Notes: 1. Points of Sales (2Q13); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports 2. % of gross revenues (FY 2012) 3. 2Q13 (LTM) gross revenues, internal market only: does not include other revenues (not generated by the brand) 4. % of total gross revenues (2Q13 LTM)

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The development of Arezzo, the Company’s flagship brand and the leading

brand in Brazil’s women’s footwear market, has been marked by making the

right changes at the right time

1970s

1980s

1990s

From 2000 to 2013

Founded in 1972, focused on product development and

branding, with the launch of its first iconic model.

Verticalized manufacturing model.

1.5 million pairs per year

In 1989, first

franchise

Inaugurates its 1st flagship store on Oscar Freire - SP.

Transfer of R&D and outsourcing of production in

the Vale dos Sinos region.

Strong communication and marketing strategy

Innovative store concept with a camelion design and expansion of the distribution

channels

Owned Stores

Franchises Multibrand stores

Consolidating the position as the market leader

17

332

994

Fast Fashion 7 to 9 collections

a year

Awarded the Best Franchise in Brazil

Arezzo History: Evolution of the brand

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4

ATTRACTION

CONVERTION

LOYALTY

Brand Update Sell-out initiatives

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5

2014 Summer Campaign Multiple contact points in order to strengthen the brand and product identity

Print and online media advertising in all of the country’s State capitals

+ 77 pages and 27.322.620 readers + 3.167.463 audience


Initiatives to attract consumers to the stores and strengthen the brand

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6


Promote the brand as an icon in the most relevant Fashion Editorials

Online Media: broad communication strategy, going beyond the product

Brand exposure during several moments and interfaces with consumers

Strengthen the Fast Fashion identity through specialized media

New institutional website

Daily posts with fashion trends, products

and lifestyle

Partnerships with bloggers and tastemakers

Promote the brand in websites of influent

journalists

High-profile fashion editorials (E.g.. Harper’s

Bazaar Brasil and Vogue Brasil)


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7


MOB PARTY: Summer invaded Arezzo on August 6th Store Windows: the brand’s greeting card

Weekly renovations to constantly stimulate consuming desires

Synchronized collection changes – higher impact and anticipating competitors, with high brand exposure in social networks


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8

Trainning in Fashion and

Retail

Support material for

sellers

Retail operation manual

Tranning Motivation Action

Monthly motivational sales

campaigns

Individual goals evaluated

National Sales Convention

Supporting sales material

(e.g. Pocket Arezzo)

POS campaigns to

stimulate consuming

Each selling opportunity has to be treated as unique: it must not be wasted

The team needs to be prepared,

Motivated in acheiving its

goals,

And with the right tools at hand

Focusing on conversion through the use of consuming stimulation techniques


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9

Loyalty initiatives in order to strengthen the relationship with consumers and

promote unique purchasing experiences


After Sales

Targeted actions

Structured telemarketing

Christmas CRM Campaign

CRM Program

Updated mailing

Client profile registration

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10

New strategy offers a better feedback from the stores’ sell-out, higher best-

seller frequency in stores and more assertive collections

Arezzo Innovative supply-chain structure

Collection strategy

1

2

3 Sell-out focus New sell-in dynamics with a suggested purchase

map results in a faster process, allowing an even

greater focus on sell-out initiatives

Supply-chain flexible to the fashion profile Collection quantity and frequence consideres the

product’s life cycle, with higher availability of best-

sellers

More assertive collections Agility to incorporate sell-out information in store

restocking and product development enhances the

efficiency of collections.

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Arezzo continues to strongly invest in processes in order to detail procurement

development and planning

11

P

R

E

Planning the collection

Revising the collection

Editing the collection

Planning the Volume

V

Predicting trends, in order to assure

collection assertiveness

Predicting volumes, in order to identify the

size of the ideal procurement for each store

Prevent remarking, in order to elevate the

average mark-up of stores

Prevent inventory shortage, in order to

increase sales volumes

Arezzo PREV Process = More assertive collections

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Product life cycles are now planned according to the fashion content that they

present

12

Arezzo Flexible supply-chain

Life cycle

Collection

Continuables

Classic

Showroom

Fashion

supplement

Fast fashion

Continuables

Classic

Supply chain model Major collection changes, with higher fashion

content, presented in runway shows

Supplements based on recent fashion

information, offered through an e-showroom

Automatic replenishment of best sellers and

their variations based on sell-out feedback

Selection of existing models with a good

historical sell-out performance in the colors of

the collection for automatic replenishment with

an open size run

Products with a good sales and turnover track

record for automatic replenishment with open

size run

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The new model for serving franchisees enables them to access a greater

number of products in a shorter time, reducing procurement lead time

13

Showroom parade dynamic enables

a greater number of shoes and bags

to be evaluated

Procurement map enables franchisee

to monitor the mix of products

purchased for their store

Suggested procurement according

to the profile of each franchisee

store

Attention to related products and the

creation of procurement maps result

in collections balanced among

themes, categories and price

marking

Arezzo New showroom = Focus in the sell-out

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The e-showroom allows the franchisee to build their store more quickly and

more assertively, since they are familiar with the entire collection

14

Theme book

Related products

Product features

Procurement map by

category and price

All information required by the franchisee is

provided before the procurement process

begins

Familirity with all products in the collection

Purchase by category and price range

Monitoring the store’s map during the

purchase

More time available for the franchisee and the sales team in the physical stores

Greater savings and comfort when presenting smaller collections

The purchasing experience is very similar to the physical experience

Arezzo Fashion complement + E-showroom

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100

121

0

50

100

150

Models in thecollection

Same models withautomatic

replenishment

Weekly Sales / SKU2

Basics Products with automatic replenishment assure the availability of best-

sellers, enhancing full-priced sales

More then 20% of growth in

weekly sales

21%

MA

IN B

ASI

CS

MO

DEL

S Arezzo Basics

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16

The changes resulting from GTM Arezzo have started to yield positive results

Accelerated growth in handbag sales, due to a better product mix

improving average prices

Basics Products with automatic replenishment with better then

estimated performance

Greater markup performed by stores during collection changes

Elevated franchisee satisfaction with the new sell-in model

Arezzo GTM Results

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Successful partnership: “win-win” Concentration of Franchises per Operator

5 year contracts with na average Payback of 40 months2

0% non-performing receivables

96% of satisfaction from franchisees1

Franchising Excellence Seal de Excelência for the last 8 years (ABF)

Best Franchiser in Brazil (2005) and of the segment for 7 years since 2004

4 or more

franchises

1 franchise

2 franchises

3 franchises

49%

10%

27%

15%

(Number of operators per number of Franchises operated)

17

Notes:

1. 96% of current franchisees mentioned they would open an Arezzo

franchise in case they weren’t currently franchisees

2. Annual Turnover of R$2.330 mil + average initial investment of R$ 600 mil

+ working capital of R$ 414 mil

Intensive retail training

Constant support: 6 stores per consultant on average and 22

visits per store/year

Solid relationship and constant support to the franchisee

Mono-branded franchises strengthen the brand in the cities

they are located

Arezzo GTM Results

The GTM Arezzo project is a new step in the healthy relationship Arezzo&Co sustains with its Franchisees

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Arezzo Architectural designs

Arezzo’s new architectural design highlights our products even more

18

With new shelves and niches,

we were able to increase in 50%

the number of models

exposed in the stores

Window relate to the pattern

used on our products’ soles,

forming the brand’s “ZZ”

symbol

Suspended shelves around

the entire store with lights

that highlight the products

Products highlighted in the

center of stores

Next to the cashier, a

dedicated shelf for

appliances allows us to add

units to the sale

A better distribution of the

furniture offers more

comfort for clients in the

stores

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24 Arezzo brand stores are to be expected in the new architectural design for

2013

19

Key Opened Being developed

Shopping Iguatemi -SP

Diamond Mall - MG

Aldeota - CE

Shopping Goiabeiras - MT

Ilha Plaza - RJ

BH Shopping - MG

Shopping Moinho dos Ventos - RS

Shopping Natal - RN

Praia do Canto - ES

Pátio Batel - PR

Shopping Buriti - GO

Iguatemi Ribeirão Preto - SP

Manauara Shopping - AM

Araras - SP Plaza Niterói - RJ

Ipatinga - MG

Rua Catalão - GO

Salvador Shopping - BA

Shopping Metropolitano - RJ

Ariquemes - RO

Shopping Ibirapuera - SP

Cadima Shopping - RJ

Shopping Morumbi - SP

Shopping Anália Franco - SP


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New architectural design of the store on Rua Oscar Freire in São Paulo

20


Digital

communication

allows us to show

marketing campaigns

inside the POS

Highly impacting

project reinforces the

identity and

positioning of the

brand

250 m² - largest

store of the brand

Larger and better

exposure of shoes

and handbags

arezzo brand

Business