2

Cia. Hering overview

Corporation
Leading company in the apparel retail industry

Broadly held corporation with solid corporate governance

Diversified and vertically integrated business model

High operational efficiency: asset light model

Strong cash generation and high payout ratio

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Differentiated business model
A unique diversified integrated business model with a high cash generation

BRAND SUPPLY CHAIN

CHANNEL
MANAGEMENT Own Production
Strong Brands
MANAGEMENT
Outsourced Production
Multichannel Distribution
Product Development Sourcing

94 15%
Owned
Casual wear - 75% Stores
Of

75% 25%
'democratic' Sales
For all types of public
across all ages Production Outsorcing

25%
664 Franchisees
35% Of
Sales
Children's wear

47%
A/B customers Manufacturing Purchase of
Of
16k Multibrand
Sales
processes finished
goods
50% Hering
5%
05 3%
Young women 20%Imported
A/B customers Webstores Of 50% third-parties
Of
Sales 5% Brazilian
sales
manufacturers
Data: 1Q18.
How we evolved in the recent years
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Paving the road to strengthen the current business

To reduce performance dispersion between stores and step-up in Shopping Experience

• ~35 stores to be refurbished – mostly franchises

• 100% financed by the Company – 25% can be granted linked to SSS
performance
• Investment: (R$3,500 -R$4,000 sq m²)

Improvements:
• Product as protagonist
• Young spirit
• Light
• +neutral and feminine
• Flexible
• +50% exposure capacity
• Cost reduction/sq²
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Paving the road to strengthen the current business

Marketing strategy aimed at the recovery of consumer brand desire
• Greater Investments in marketing:

• Campaigns with celebrities, following

promotional calendar (Carnaval, Mothers
day, Fathers day, Christmas)

• Focus on Digital (on and offline)

• Digital Influencers

• Costumer face

• Strengthening female audience connection

• Reinforces and enhances Hering essence:

specially young audience

Mother’s Day Campaign 2018

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Paving the road to strengthen the current business

High capillarity through multibrand and qualified retailers MULTIBRAND
SEGMENTATION

MULTIBRAND CHANNEL QUALIFIED RETAIL

Possibility of becoming franchisees
• ~ 16,000 points of sales in the medium term

• 27 States
2015 2018
• +3.000 cities 5% OF CLIENTS 10% OF CLIENTS

• ~ 150 showrooms per 16% OF SALES 35% OF SALES

collection

• ~47% of Company’s sales

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Paving the road to strengthen the current business

High capillarity through multibrand and qualified retailers

Qualified Retail Highlights

Development of point of sale communication Sell Out Reading
according to the segment
Operation Deepen understanding

Supply Prioritization: Billing and orders Development of relationship actions:

allocation according to the segments Sell Out actions and exclusive partners
importance

Qualified Retail Training:

Prioritization of the most important segments
Access to online training and partnerships for
for product apportionment financial and commercial training

Regional Meetings Evolution

Extend to all Brazil
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Paving the road to strengthen the current business

We are pioneers in the implementation and development solutions to operate in several channels
Roadmap of Omnichannel´s implementation Pickup in Store
Showrooming
Ship from Store
Ship to Store
Pickup in Store All Owned Stores
Showrooming Extension Franchises
All Owned Stores
Pilot Franchises 2019
Ship from Store
3 Owned Stores 2nd SEM Modalities implementation
Pickup in Store 2018 throughout the Network
23 Owned Stores
Showrooming
3 Owned Stores
1st SEM
2018 Communication plan
Ostensible disclosure for new
Start of the Project 2nd SEM modalities
2017 Communication plan
Ostensible disclosure for new
modalities
Feb
2017

Pickup in Store: Buy on-line > Take at the store Ship-From-Store: Buy on-line > Store Delivery
Showrooming: Buy at the store> Online store delivery Ship to Store: Buy on-line > E-commerce sends to the store
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Paving the road to strengthen the current business

Innovation and Technology at the point of sale

2017/2018
Cashier / POS
Mobile
Omnichannel
2018 2018
Frequency Mobile
Monitor Notifications

2018
Digital
2017 Assistance
Flow Salespeople
Monitor
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Cia. Hering at a glance

SALES R$ mn GROSS PROFIT; GROSS MARGIN R$ mn

EBITDA; EBITDA MARGIN R$ mn

CASH FLOW R$ mn
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Cia. Hering at a glance

HIGH PAYOUT RATIO R$ mn

154%
132% 150%

112% 130%
95% 110%
84%
90%
70%
209 199 185
187 177 50%
158 140
139 30%
124 115
10%
-10%
-30%
2013 2014 2015 2016 2017
Free Cash Flow Payout Ratio
Buyback
 Cia Hering
Investor Relations
www.ciahering.com.br/ir
ri@hering.com.br
+55 (11) 3371-4805
+55 (11) 3371-4867