slide presentation 2 q09
TRANSCRIPT
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Disclaimer
This presentation contains forward-looking statements regarding the prospects of thebusiness, estimates for operating and financial results, and those regarding Cia. Hering'sgrowth prospects. These are merely projections and, as such, are based exclusively onthe expectations of Cia. Hering management concerning the future of the business andits continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, governmentregulations, competitive pressures, the performance of the Brazilian economy and theindustry, among other factors and risks disclosed in Cia. Hering’s filed disclosuredocuments and are, therefore, subject to change without prior notice.
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AGENDA:AGENDA:AGENDA:AGENDA:
• Highlights• Operating Performance• Business Strategy and Outlook
2Q09 Highlights
CIA. HERING ENDS 2Q09 WITH GROWTH
• Gross revenue in domestic market up 48.9%
• Hering brand sales up 57.7%
• Same-store sales growth of 29.3% in the Hering Store Network
• EBITDA Margin up 4.1 percentual points
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• 14 Hering Stores and 2 PUC Stores were opened in the 2Q09
AGENDA:AGENDA:AGENDA:AGENDA:
• Highlights
• Operating Performance• Business Strategy and Outlook
3.542.5%
209.3
18.6
8.4
54.8%
39.1%
272.0
378.4
Gross Revenue (R$ million)
By Market
Foreign Market
6
138.2
205.88.7
2Q08 2Q09
48.9%
59.8%
146.9
Gross revenue in the domestic market represented 98 .3% of the total gross revenue in the 2Q09.
253.4
370.0
1H08 1H09
46.0%
Domestic Market
12.64.7
205.848.9%
By Brand
dzarm
Others
33.1
26.4
23.8
22.95.9
9.0
4.0%
253.4
370.0
46.0%
Gross Revenue – Domestic Market (R$ million)
108.8
171.6
16.9
13.9
12.6
12.23.3
2Q08 2Q09
57.7%
21.4%
3.7%138.2 PUC
dzarm
Hering
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Hering brand shows continuous growth potential
198.2
304.1
26.4
1H08 1H09
53.4%
25.4%
4.0%
108.5
205.853.0%
By Distribution Channel
130.8
174.3253.4
370.1
42.6%
49.6%
Gross Revenue – Domestic Market (R$ million)
MultiBrand
67.3
97.3
70.9
108.5
2Q08 2Q09
138.2
44.6%
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Expressive growth on Hering Store and PUC networks, as well as in multi brand.
122.6
195.7
130.8
1H08 1H09
42.6%
Franchise/Own Store
Brand
59.8%8,7Private
10.2
54.8%18.6
Private Label vs. Own Brands
Gross Revenue – Foreign Market (R$ million)
3.6 3.5
5.1
2Q08 2Q09
3.2%
100.0% 3.5
Private Label
OwnBrands
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Focus on Own Brands sales in the foreign market mai nly in Latin America and Mercosur.
8.4 8.4
1H08 1H09
0.3%
100.0% 8.4
Gross Profit
Gross Profit (R$ million) and Gross Margin (%)
45.4%
44.9%44.4%
7 0
8 0
9 0
1 00
0.3 5
0 .4
0 .4 5
133.6
44.1%
43.4%
43.4%
8 0
1 00
1 2 0
1 4 0
0.3
0 .3 5
0.4
0 .4 5
37.8%
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Excluding the amount of R$ 4 million registered as AVP (Current Value Adjustment), the gross margin in the 2Q09
would be 45.4% and in the 1H09 it would be 44.1%.
53.4
76.5
0
1 0
2 0
3 0
4 0
5 0
6 0
2Q08 2Q09
0.1
0 .1 5
0.2
0 .2 5
0.3
0 .3 5
43.3%97.0
133.6
0
2 0
4 0
6 0
1H08 1H09
0.1
0 .1 5
0.2
0 .2 537.8%
With AVPWithout AVP
EBITDA
19.1%8 0
1 00
1 2 0
0 .2
0 .2 5
4.1 p.p
17.3%
14.6%
5 0
6 0
7 0
8 0
9 0
1 00
0.1
0 .1 2
0 .1 4
0 .1 6
0 .1 8
0 .2
2.7 p.p
EBITDA (R$ million) and EBITDA Margin (%)
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18.032.5
15.0%
0
2 0
4 0
6 0
2Q08 2Q09
0
0.05
0 .1
0 .1 54.1 p.p
80.6%
The higher EBITDA margin is due to the better operationalperformance of the Company and the dilution of the fixed exp enses.
32.8
53.3
0
1 0
2 0
3 0
4 0
1H08 1H09
0
0.02
0 .04
0 .06
0 .08
62.8%
Stores Distribution
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Fourteen Hering Stores were opened in the quarter, of whi ch 2 ownedstores. Two PUC Stores were also opened. Our multibrand c lients
totaled 15,114 in 23 brazilian states.
59 61 6323
22 22 22
209248
311329
314Goal: 57
Goal: 224
Evolution of the Distribution Network
Distribution Network (number of stores)
151 181230 231 244
39441923
2006 2007 2008 1Q09 2Q09Abroad PUC Hering
209Goal: 172
Goal: 224
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For 2009, the openings are already mapped and in line wit h thestrategic growth plan.
226274
205151
181
230268
325
195
244
Expansion Plan
Hering Store Expansion
30
49
38
57
49
10 25 37 42 51 28 39
141
193226
167205
156
2006 2007 2008 2009* 2010* 2Q08 2Q09
Owned Stores Franchises*estimated
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The expansion plan is maintained with 81 stores to be opened up to the end of 2010.
HS network: New project versus old project
133 stores55%
111 stores45%
New Project Old Project
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Out of the total 244 Hering Stores, 133 are already in the new architectural project, 11 of which were remodeled i n 2Q09.
55%45%
Hering Store Indicators
Hering Store Performance 2Q08 2Q09 Chg. 1H08 1H09 Chg.
Number of Stores 195 244 25.1% 195 244 25.1%
Franchise 167 205 22.8% 167 205 22.8%
Own 28 39 39.3% 28 39 39.3%
Sales (R$ thousand) 109,372 162,989 49.0% 178,024 259,446 45.7%
Same Store Sales growth 38.4% 29.3% -9.1 p.p. 39.0% 25.3 % -35.1%
Sales Area (m²) 26,124 31,275 19.7% 26,124 31,275 19.7%
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The increase of 49.0% on sales is a result of the 1 9.7% in sales area, 29.3% increase in SSS and a 6.2% growth in the aver age sales ticket,
reflecting the increase of fashion and jeanswear pro ducts participation.
Sales (R$ per m²) 4,259 5,301 24.5% 7,085 8,541 20.6%
Check-Outs 1,145,453 1,607,123 40.3% 2,061,030 2,881,380 39.8%
Units 2,657,161 3,598,040 35.4% 4,807,703 6,497,557 35.1%
Average Sales Ticket (R$) 95.48 101.40 6.2% 86.38 90.00 4.2%
TI
Outros
1.7
0.2
52.0%10.0
23.5%
3.3
2.0
0.3
0.5
24.7%
11.3
15.0
39.4%
Capex (R$ million)
By activity
Indústria
Lojas
TI
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4.5
3.6 1.3
1,1
2.4
0.1
2Q08 2Q09
75.6%
33.3%
4.823.5%
Capex destinated to the stores´ opening and remodeling, a s well as equipment acquisition to update the industrial units.
5.64.3
5.6
4.7
1H08 1H09
23.2%
16.1%
Indebtedness Evolution Short Term x Long Term
Indebteness
Short Term
Long Term45%
201.3184.6
4.6
* EBITDA of the last 12 months
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Total Debt = R$ 96.5 million
Term55%
Net Debt/EBITDA*
Net Debt (R$ million)
-33.4
11.0
-4.0
4.63.5
-0.7 0.1-0.1
2005 2006 2007 2008 2Q09
• Positive Financial Result
– On june 30 2009, Cia. Hering registered a revenue of R$ 3.0 million due to the reversal of part ofthe expense accrued at the end of 2008, referring to the fair value of the derivatives.
Financial Result
R$ thousand 2Q08 2Q09 Chg. 1H09 1H08 Chg.
Net Financial Results (6,098) (200) -96.7% (7,579) (1,997) -73.7%
Net Foreign Exchange (136) 3,223 -2469.9% 123 3,922 3088.6%
Net Financial Derivative Instruments Results - 3,021 N.D - 25,059 N.D
Total Financial Results (6,234) 6,044 -197.0% (7,456) 26,984 -461.9%
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the expense accrued at the end of 2008, referring to the fair value of the derivatives.
• Swap
– April/09 and May/09 verifications: exchange rate lower than R$/USD 2.80
– On 05/04/09, Cia. Hering renegotiated the contract, eliminating nine monthly verifications, fromJun/09 to Feb/10 (included), at a cost of R$ 3.2 million.
– On 07/07/09 the Company renegotiated the contract, eliminating four monthly verifications, fromMar/10 to Jun/10(included), at a cost of R$ 2.0 million.
• Fair Value of Derivatives– On 07/30/09 the fair value of derivatives accounted on the Company’s liabilities in its financial
statements, totaled R$ 3.2 million regarding the current operations at that time.
The Company will remain searching alternatives to minimize and/or to eliminate the exchange risk ofthe remaining derivatives operations:
Shareholder’s Remuneration
Payment of Interest on Shareholder’s Equity
� The payment on 10/August/09 in the amount of R$ 15.2 million refers to:� R$0,1411/share related to the year ended on December 31 2008;� R$0,1405/share related to the first half of 2009;
Dividends� On May 11th 2009 the amount of R$ 10.6 million (R$ 0.19616/share) was paid,
regarding the 2008 year ended on December 31 2008, in accordance to the General
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regarding the 2008 year ended on December 31 2008, in accordance to the GeneralShareholders´ Meeting held on April 28th 2009.
Payment of Interest on Equity 2007 02/22/08 4,853 0.09000
Payment of Interest on Equity 2008 09/17/08 4,853 0.09000
Dividends 2008 05/11/09 10,578 0.19616
Payment of Interest on Equity 2008 08/10/09 7,609 0.14110
Payment of Interest on Equity 1H09 08/10/09 7,576 0.14050
Shareholders remuneration Year EndDate of
PaymentGross Value (R$ million)
Value per Share (R$)
AGENDA:AGENDA:AGENDA:AGENDA:
• Highlights• Operating Performance
• Business Strategy and Outlook
Strategy & Outlook
Hering brand and Hering Store network
� Continuity of brand potential exploration
� Sales increase (per square meter and SSS) in existing stores
� Ongoing expansion plan – 325 stores by the end of 2010
� Communication strategy focusing on sales points.
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PUC and dzarm. brands
� Development of a plan for the children segment
� dzarm. brand repositioning plan currently being carried out .
InvestorInvestor RelationsRelations
Fabio Hering Fabio Hering –– CEO CEO andand IR IR DirectorDirectorFrederico de Aguiar Oldani Frederico de Aguiar Oldani –– CFOCFOKarina Koerich Karina Koerich –– IR ManagerIR ManagerGracila Camargo Lopes Gracila Camargo Lopes –– IR IR AnalystAnalyst
Tel.: +55 (47) 3321Tel.: +55 (47) 3321--3469 3469 EE--mailmail: [email protected]: [email protected]: www.ciahering.com.br/ir: www.ciahering.com.br/ir
Investor Relations Consulting FirmFIRB – Financial Investor Relations BrasilLigia Montagnani – IR ConsultantTel: +55 (11) 3897-6857E-mail: [email protected]