3. Overview – Magazine Luiza
Market Leadership
One of Brazil’s largest durable goods retail chains with more than 728 stores nation-wide
− Gross revenues of R$5.3 billion and EBITDA of R$248 million in 9M11
− More than 20 thousand employees serving 23 million customers
Strong corporate culture and focus on people and innovation
Unique multi-channel model under a single brand
Physical stores, virtual stores, e-commerce website and telephone sales
Focus on Brazil’s fastest growing socioeconomic segment
The “C” (emerging middle class) represents 53% of Brazil’s population or more than 102 million people
History of successful organic growth and acquisitions
8 acquisitions in the last 10 years and recent entry in the high growth northeast market
July 2011, conclusion of the acquisition of 121 stores of Baú da Felicidade
Pioneer in Financial Services for retail
First retail chain to establish JVs with financial institutions focusing on consumer credit
Financial discipline focused on results
3
4. Overview – Magazine Luiza
Proven History of Strong Organic Growth and Successful Acquisitions
728 *
604
+121 stores
455
444 Northeast:
Madol, Killar +136 stores
391
351 346
253 5.3 + 42% 5.0
São Paulo (Capital):
Lojas Líder +46 stores
174
Rede Wanel Santa Catarina:
3.8
127 +100 stores 3.2 3.5
111
96 Rio Grande do Sul: 2.6 (9M10)
+51 stores 2.2
Campinas: 1.9
Upstate São Paulo: +20 stores 1.4
+5 stores
0.9
0.6 0.7
0.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 9M11
Gross Revenues from Retail Operations (R$ billion) Total Stores
* Total of stores in december, 2011.
4
5. Overview – Magazine Luiza
Geographic footprint covering Brazil’s main regions
% of Stores per regions
(75% of GDP)
728 stores
Northeast
20%
South
Cabedelo 30%
Central
West
Simões Filho
2%
Contagem
Ribeirão Preto
Ibiporã Loureira
Navegantes Southeast
Caxias 50%
States with stores
Distribution centers (8 + 1 cross docking)
5
6. Unique Business Model
Differentiated positioning to capitalize on industry growth
1 Strong corporate culture, focused on valuing people
2 Integrated sales platform with multiple sales channels
Large customer base, with relationship management
3 targeting customer loyalty and retention
Broad, competitive portfolio of services and financial
4 products
6
7. Focus on Innovation: Magazine Você
Personalized virtual store using Social Network to sell any of Magazine Luiza’s products
Permits users to receive reviews from contacts they trust
More than 25.000 virtual stores opened after 3 weeks of the release
Today’s
Once
Consumer search for decided, purchase
product’s information and takes place..
reviews
Now with Magazine Você
Consumer search for Purchases straight from
product’s information and those contacts and
reviews connections
7
8. Corporate Structure
100% 40.55% 50% 100% 100%
1 2
9.45%
(To be incorporated (Incorporated in
in 2012) 2011)
(1) JV with Itaú Unibanco
(2) JV with Cardif
8
9. Ownership Structure
Pre- IPO Post- IPO
Free Float
29.7%
LTD
Capital Int'l. Inc. Administração e
(Private Equity Capital Int'l. Inc.
Part. S.A.
Fund) (Private Equity LTD
75.4% Fund)
12.4% Administração e
2.5% Part. S.A.
Founding Family Founding Family 60.6%
Members Members
6.7% 2.7%
Wagner Garcia
Wagner Garcia
Part. S.A. Part. S.A.
5.6% 4.5%
150,000,000 shares 186,494,467 shares
9
11. 2011 Main Events
1Q11 2Q11 3Q11 4Q11
Consolidation of Sao Paulo Office
IPO Process
(Kick-off in Feb. and conclusion in Jun.)
Continuing the organic growth
Opened 24 new stores and refurbished 50 stores
Investments – TI and Logistics
Investments to ensure the success of the integrations
Integration Process – Lojas Maia
Initiated the process of refurbishment and brand name transition
Acquisition and Integration Lojas do Baú
Initiated process of refurbishment, corporate and
systemic integration
11
12. 2011 Main Events
1Q11 2Q11 3Q11 4Q11
Consolidation of the Office of Sao Paulo
IPO Process
(Kick-off in Feb. and conclusion in Jun.)
Continuing the organic growth
Opened 24 new stores and refurbished 50 stores
Investments – TI and Logistics
Investments to ensure the success of the integrations
Integration Process – Lojas Maia
Initiated the process of refurbishment and brand name transition
Acquisition and Integration Lojas do Baú
Initiated process of refurbishment, corporate and
systemic integration
12
13. IPO
Company listed on Novo Mercado
Net amount of R$550 million
Funds from the Offering
(% of primary offering )
• Opening of new stores:
• Increase Working Lojas do Baú: 100 stores
Capital (Maia e Baú) Work Capital / Magazine Luiza: 18 stores
Decrease on debt Opening Stores/
Acquisition
Lojas Maia: 6 stores
30%
• Reduction of 30%
product lines Total: 124 stores
• New distribution center in • Magazine Luiza: 50 stores
Guarulhos • Lojas Maia: 39 stores
Technology and Stores refurbishment
• Expansion of Louveira’s Logistics 20%
• Baú: 35 stores
20%
distribution center
• Total: 124 stores
• Pilot project: own fleet (SP)
13
14. 2011 Main Events
1Q11 2Q11 3Q11 4Q11
Consolidation of Sao Paulo Office
IPO Process
(Kick-off in Feb. and conclusion in Jun.)
Continuing the organic growth
Opened 24 new stores and refurbished 50 stores
Investments – TI and Logistics
Investments to ensure the success of the integrations
Integration Process – Lojas Maia
Initiated the process of refurbishment and brand name transition
Acquisition and Integration Lojas do Baú
Initiated process of refurbishment, corporate and
systemic integration
14
15. Integration Process – Lojas Maia
3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Integration Process of Lojas Maia
Brand name transition
Metropolitan Region of Recife 14 stores (Out.)
Metropolitan Region of Maceió 9 stores (Dec.)
Metropolitan Region of Fortaleza 15 stores (Dec.)
Metropolitan Region of Salvador 15 stores
Metropolitan Region of João Pessoa 15 stores
Corporation Integration
Systemic Integration of stores
Benefits (synergies) from integration
15
16. 2011 Main Events
1Q11 2Q11 3Q11 4Q11
Consolidation of Sao Paulo Office
IPO Process
(Kick-off in Feb. and conclusion in Jun.)
Continuing the organic growth
Opened 24 new stores and refurbished 50 stores
Investments – TI and Logistics
Investments to ensure the success of the integrations
Integration Process – Lojas Maia
Initiated the process of refurbishment and the brand name transition
Acquisition and Integration Lojas do Baú
Initiated process of refurbishment, corporate and
systemic integration.
16
17. Integration Process – Lojas do Baú
3Q11 4Q11 1Q12 2Q12
Integration process of Lojas do Baú (7 months)
Acquisition of 121* stores of Baú July 29, 2011 - R$80,3 millions
Documentation for starting operations Most of the stores closed during the period
Virtual Stores
Opening of the Virtual Stores 35 stores (Paraná)
Refurbishment of stores Complete refurbishment of stores
Systemic Integration End of December
Conventional Stores
Opening of the Conventional Stores 69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais)
Refurbishment of stores Change in storefront and uniform
Systemic Integration End of February
Benefits (synergies) from integration
* 13 stores were sold and four conventional stores were refurbished and attached to the already existing Magazine Luiza´s stores
17
19. 2012 Expectations
1 3
Sales Growth Essential Projects
Growth trend mainly in the 2nd half of 2012 (inverse Continue projects focused on:
performance 2011 X 2010)
Satisfaction of customers and employees
Effect of minimum salary
Sales Performance
Decrease in interest rates (SELIC)
Commercial and operational management
Stability of employment rate
Inflation under control
Maturation of new stores and acquired stores
2 4
Selling & Administrative Expenses Investments
Conclusion of the integration process (Lojas Maia e Baú) Investments Reduction
Dilution of administrative expenses of São Paulo Office ML 10 to 15 new stores
Focus on rationalizing costs and expenses: Maia 10 to 15 new stores
Store operations, marketing, logistics and consulting Total 20 to 30 new stores
Stability of delinquency rates and maintenance of
conservative provisions in Luizacred Finish the expansion of Louveira distribution center (from
60 to 95 square meters)
19
20. Investor Relations
ri@magazineluiza.com.br
www.magazineluiza.com.br/ri
Legal Disclaimer
Any statement made in this presentation referring to the Company’s business outlook, projections and financial and operating goals represent
beliefs, expectations about the future of the business, as well as assumptions of Magazine Luiza’s management and are solely based on
information currently available to the Company. Future considerations are not a guarantee of performance. These involve risks, uncertainties and
assumptions since they refer to forward-looking events and, therefore depend on circumstances that may not occur. These forward-looking
statements depend substantially on the approvals and other necessary procedures for the projects, market conditions, and performance of the
Brazilian economy, the sector and international markets and hence are subject to change without prior notice. Thus, it is important to understand
that such changes in conditions, as well as other operating factors may affect the Company’s future results and lead to outcomes that may be
materially different from those expressed in such future considerations. This presentation also includes accounting data and non-accounting data
such as operating, pro forma financial data and projections based on the Management’s expectations. Non-accounting data has not been
reviewed by the Company’s independent auditors.
20
22. Highlights for the Period (3Q11)
Sales growth above market average (+34%)
Same Store Sales growth (+20%)
Internet expansion (+48%) and Innovation (“Magazine You”)
Lojas Maia impressive performance (+58%)
Effective brand name transition in Recife region
Fastest administrative integration of Baú stores
Success in the opening of Parana’s virtual stores
Organic expansion: 11 stores till Sep/11 + 13 stores till Dec/11
Luizacred’s credit card base expanded to 4,2 million
Decrease in overdue portfolio
Adjusted EBITDA margin of 5.7%
22
30. Adjusted EBITDA (R$ million)
(=) EBITDA (reported) R$ 92.2 mm
(+) Pre-operation expenses at Baú stores R$ 14.1 mm
(+) Luizacred revenue recognition R$ 11.7 mm
(+) Sales at Lojas Maia R$ 4.0 mm
(+) Pre-operational expenses at new stores R$ 2.2 mm
(+) Consulting expenses at Magazine Luiza R$ 5.8 mm
(+) Pre-operational expenses at Consortium business R$ 1.6 mm
(-) Lojas Maia fiscal provision benefits R$ 32.6 mm
(-) Luizacred revenue from marketing selling structure R$ 21.4 mm
(+) Other expenses related to the network integration R$ 13.9 mm
(=) EBITDA (adjusted) R$ 91.5 mm
30
32. Consolidated Net Income (R$ million)
Adjusted Net Income*: R$18 millions / R$ 35 millions
(*) Adjusted by Income Tax and Social Contribution not accounted at Lojas Maia and Baú
48
29
23
12
3Q10 3Q11 9M10 9M11
Net Margin 1.9% 0.7% 1.5% 0.6%
32
33. Financed Mix Sale (% total sales)
23% 23% 25%
31% 36%
29% 29% 30%
38%
37%
12% 13% 11%
2% 0%
35% 35% 29% 34%
27%
Total 3Q10 ML 3Q11 Maia 3Q11 Baú 3Q11 Total 3Q11
Luiza Card CDC Third Party Cards Cash Sales/ Down Payment
33