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Brazilian Retail News

Year 10 - Issue # 374 - São Paulo, February, 14h, 2011

Phone: (5511) 3405-6666

Carrefour wants a new partner in its bank

French Carrefour is looking for a buyer for the 49% share Cetelem has in its bank in Brazil. The retailer has received
bids that may be up to R$ 500 million (US$ 303.03 million), according to sources. Bradesco has been considered as the
most likely buyer, as it intends to reduce its distance from leader Itaú Unibanco, who has partnered with Pão de Açúcar
and Walmart, two of the three largest retailers in the country (the other one is Carrefour).

Franchising segment launches CO2 reduction program

Sustainable Franchising Association (Afras), an arm of the Brazilian Franchising Association (ABF), has launched the
Low Carbon Franchising Program, aiming to reduce and offset the greenhouse effect gases from water, energy and waste
of 75 stores of 15 franchising chains. Under the program, a consulting firm will teach the franchisors how to measure the
carbon emissions, so that the companies will be able to prepare action plans to optimize the use of water and energy and
the waste production. The carbon emissions that can’t be lowered will be offset by planting trees to recovery river bank
forests in the Amazon.

ClickOn opens branches in Latin America

The fast growth of social shopping sites in Brazil has
been leading companies to a new age of expansion. One
of the largest players in this segment, ClickOn has started
opening branches in other Latin American countries, with
an Argentinian office, founded two weeks ago. This year,
the company plans to go to Uruguay, Chile and Colombia.

Brazilian Retail News 1 07/02/2011

Brazilian Retail News
Year 10 - Issue # 374 - São Paulo, February, 14h, 2011
Phone: (5511) 3405-6666

Wizard will teach English to 10,000 Chinese students

Language school chain Wizard partnered with Shanghai’s Education Secretary to teach English to 10,000 Chinese
students. The one-year deal will see classes starting next April. US teachers will be recruited, as the Chinese prefer
native tongue people to teach foreign languages. Today, Wizard has 50 schools outside Brazil, two of these units in China
(Shanghai and Tianjin).

Brazil increases presence in the organics market

The Organics Brazil Project’s exports rose 130% in 2010, to US$ 108.2 million. The Apex-Brazil and IPD project
gathers 72 companies. Food sales accounted for 96% of total exports, specially goods as sugar, fruits, honey, nuts and
industrialized goods.

Consumer’s demand for credit rises 12.9% in January

According to Serasa Experian, the number of people looking for loans and credit rose 12.9% in January year-on-year,
in the lowest growth of the last six months. Over December, the demand fell 6.7%, due to seasonality. For 2011, forecasts
are for a lower growth in the consumer’s demand, as interest rates have gone up.

Consumer confidence reaches second best level ever

The National Confidence Index (INC) measured by ACSP and Ipsos reached 161 points in January, slightly below
the all-time high 163 in December, but way above the 149 of January last year. The most optimist regions are North and
Midwest (200 points), leveraged by the rise of food commodities. On the other end, Northeastern consumers are the less
confident (135 points).

Brazilian Retail News 2 07/02/2011

Brazilian Retail News
Year 10 - Issue # 374 - São Paulo, February, 14h, 2011
Phone: (5511) 3405-6666

Before and after Arezzo’s IPO
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

The recent Initial Public Offering (IPO) of fashion footwear chain Arezzo will be considered in the future a pivotal
point in the Brazilian franchising business, due to the figures reached and the attention it brought by raising R$ 565.8
million (US$ 342.91 million), valuating the company in R$ 1.682 billion (US$ 1.02 billion). In the week before the IPO,
the demand was six times higher than the offer.

Today the company is based on the management of four brands (Schultz, Ana Capri, Alexandre Birman and
Arezzo), with 260 franchised stores (seven overseas) and only 27 private-owned stores. In the past, the company
also manufactured shoes.

Strategically, the company changed from a focus on private-owned development, manufacturing, product,
brands and stores to a more open and modern model, based on product development, third-party manufacturing,
brand management, small private-owned chain and, mainly, a large franchised chain in Brazil and overseas.

The IPO will be a strong sign to retailers, CPG industries and service developers review their business strategies
and expansion, dedicating more time and investments to the opportunities franchises and business networks can bring.

Brazil is a very interesting market, specially to companies in the consumer goods segment, with the forecast
of an ongoing virtuous cycle that even the recent global turmoil was not able to halt. But the companies’ challenge is
to develop tools to use this positive scenario, increasing their presence in new markets and speeding up expansion,
in a way consistent with their values and principles.

In this scenario, it’s crucial to speed up the search for new real estate; store projects and openings; the
development of new store formats that fit new markets; the development of leaderships able to expand the business;
recruitment and selection of people in adequate conditions, in a market with less capable people than needed; and
the operation of the growing chain, turning the business expansion into a big challenge.

That’s why franchising and business networks have a strong solution generation potential. Specially in today’s
environment, as master franchisees and franchisees can share investments, management and attention with
franchisors, thus speeding up growth.

Besides that, franchising has a growth potential that needs to be observed in a different, with less prejudice, way,
stimulating an open thinking process. It will always be important to remind that some global corporations have taken
a more positive approach on using franchises as part of their expansion strategy, also as a way to face restrictions
to their expansion imposed by law, specially in more mature markets, as Western Europe and Japan. It’s the case of
Carrefour, who has around 50% of its stores as franchises.

The Brazilian moment and its short- and long-term growth potential are sufficiently strong reasons to lead to
much deeper study of the opportunities that can be created by using franchising as an expansion and market cover
strategy. One can profit on that.

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

Av. Paulista, 171 - 10º floor
Paraíso – São Paulo – Brazil – Zip Code: 01311-904
Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066

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