Marisa Announces Net Revenue Growth of 19% and Adjusted EBITDA Growth of 32%

Transcription

1 Marisa Announces Net Revenue Growth of 19% and Adjusted EBITDA Growth of 32% São Paulo, Brazil, August 5, 2008 Marisa S.A. (identified as Marisa or Company ) - (BOVESPA: MARI3, Reuters MARI3.SA and Bloomberg MARI3 BZ), the largest retail chain specialized in women s fashion and lingerie in Brazil, announces today its results for the 2 nd quarter of 2008 (2Q08). The Company s operating and financial information is expressed in thousands of Brazilian Reais and is presented in accordance with the specific instructions of the CVM (Brazilian Securities and Exchanges Commission), which do not include all the changes in accounting practices established by Law 11638/07. All comparisons, except when stated otherwise, are with the second quarter of 2007 (2Q07). Main Highlights On August 5, 2008: Bovespa: MARI3 R$4.57/share Total shares: 184,503,230 Market Cap: R$843.2 million Contacts: Paulo Sergio Borsatto CFO and Investor Relations Officer Renata Isis Kater IR Manager dri@marisa.com.br Net Revenue from Retail Operations and Financial Services increased by 18.6%, from R$300.1 million in 2Q07 to R$355.9 million in 2Q08. On a same-store basis, net revenue grew by 5.8% in the same period and by 6.7% year-on-year in June alone; Revenue from interest bearing installment sales jumped by 63.2%, from R$22.5 million in 2Q07 to R$36.8 million in 2Q08; Adjusted EBITDA from Retail Operations and Financial Services climbed by 31.7%, from R$54.6 million in 2Q07 to R$71.8 million in 2Q08; Net Income totaled R$29.6 million, 35.2% up on the R$21.9 million reported in 2Q07; and Marisa expanded its total sales area by 6,500 m² in the2q08. (in thousand R$) Operating and Financial Highlights 2Q08 2Q07 Var. % 1H08 1H07 Var. % Net revenue from goods and services 355, , % 611, , % Gross Profit 181, , % 295, , % Gross Margin (%) 51.1% 51.7% -0.6 p.p. 48.4% 48.5% -0.1 p.p. Net income (loss) 29,575 21, % 17,175 37, % Growth of net revenue - Same Stores (1) 5.8% 22.7% p.p. 5.7% 21.3% p.p. Total number of stores (units) % % Average number of employees (units) 10,163 8, % 9,936 8, % Total Sales Area (m²) 213, , % 213, , % # of Marisa Cards ('000) 10,417 8, % 10,417 8, % Net revenue per m² (R$/m²) (2) (units) 1,681 1, % 2,921 3, % (1) All references to same stores are to our stores that have been operating for over 13 months. For calculating purposes, we have used data from our stores sales and related variations within the relevant calculating periods. If a same store is closed (2) Total net revenue of goods divided by the average sales area in the same period. 1

2 Number of Store Evolution CAGR : 15.6% Sales Area Evolution ('000) CAGR: 34.9 % 27.7% % % % % 43.2% % 89.8% % 83.7% 2Q06 2Q07 2Q08 (1) (2) Marisa Traditional Marisa Expanded 2Q06 2Q07 2Q08 (1) (2) Marisa Traditional Marisa Expanded (1) Women s apparel and lingerie / stores with average sales area of 400m² (2) Expanded product mix / stores with sales area of between 1,200m² and 1,700m² CAGR: Compound Annual Growth Rate Marisa S.A. Marisa initiated its activities in 1948 in the city of São Paulo under the leadership of Bernardo Goldfarb and is currently the country s largest retail chain specializing in women s fashion and lingerie and one of the largest department store chains for men s and children s apparel; The Company s strategic target comprises women aged between 20 and 35 in the C group, Brazil s largest income group. Apparel Consumption by Family Income Marisa s competitive advantages are: (i) a strong brand and widely recognized slogan From Woman to Woman (De Mulher para Mulher); (ii) nationwide presence and experience; (iii) best-quality fashion for customer s dollar and attractive margins; (iv) a modern chain of stores; and (v) results-driven management; In 2Q08, the Company received products from 371 suppliers across Brazil and worldwide. Purchases are widely distributed, with no significant dependence on any single supplier. In 2Q08, the largest supplier 21.3% 20.8% 15.1% "Market target" Marisa % 29.6% 8.9% 3.8% 0.4% Average Family Monthly Income R$ R$9, R$ R$6, R$ R$3, R$ R$2, R$ R$1, R$ R$ R$ R$ Source: IBGE, Brasil em Foco Target Marketing, ABEP accounted for less than 3.5% of the Company total purchases and the five largest for 12.9% of the total. In 2Q08, Marisa had 203 stores distributed across every Brazilian state and four distribution centers located in the states of São Paulo, Santa Catarina, Pernambuco and Goiás. 2

3 The following chart illustrates the Company s seasonality: Sales Seasonality History (Including Inaugurations Effects) 39.0% 38.2% 38.2% 23.1% 22.3% 23.2% 23.0% 22.6% 23.0% 16.2% 15.7% 15.5% 1Q 2Q 3Q 4Q Results Presentation Basis In order to permit a better understanding of the Marisa Group s results for the second quarters of 2008 and 2007, the retail and financial service figures have been separated. Retail results comprise those of Marisa Lojas Varejistas Ltda. and Due Mille Participações Ltda., while financial service results refer to those firms owned by the holding company, Fix Participações Ltda. Operating Performance The second quarter of 2008 was characterized by an unfavorable economic scenario, with an increase in inflation and interest rates. Nevertheless, Marisa recorded substantial year-on-year growth in its main performance indicators. The main period highlights were as follows: Adjusted EBITDA increased by 31.7%; Net income grew by 35.2%; 3

4 The Marisa Card s default levels have been falling, moving counter to the market in general; Revenue from interest-bearing installment sales climbed by 63.2%. Aware of the economic difficulties (higher inflation and interest rates), the Company has already adopted preventive measures designed to overcome these problems as of the first fortnight of June. The results were immediately apparent June s same-store sales recorded the biggest monthly increase of the second quarter (6.7%) and July s sales experienced double-digit growth. In addition, technological advances and improved in-store processes will help Marisa achieves its planned EBITDA. The Marisa Card should continue to perform satisfactorily now that is possible conciliate revenue increase and controls over default. As for the Company s image, Marisa s TV advertising campaign was elected the 4 th most remembered in Brazil in April Preference of brands on TV advertising campaigns April, Top 10 Ranking* (spontaneous and multiple answers, in %) Souce: Data Folha / M&M Casas Bahia Coca Cola Brahma Lojas Marisa Boticário Johnson & Johnson Antarctica Carrefour Skol Extra Ford Does not have preference Does not know / does not remember Not used to watch TV 3.8% 3.8% 2.9% 2.2% 2.2% 1.9% 1.8% 1.5% 1.4% 1.4% 0.5% 6.8% Hard Retail Beverage Beverage Soft Retail 12.6% 23.9% (*) The ranking criteria includes the top 10 brands. In this ranking, there are some ties. Question: What advertising campaign did you like the most on TV last month (April)? The Company inaugurated three stores and expanded and/or remodeled another four increasing its sales area, as shown in the chart below: New Stores City Total Sales Area (m²) Opening Month Taboão da Serra / SP 1,230 April Taubaté / SP 1,286 May Curitiba / PR 1,304 May 4

5 Store Extension and Remodeling City/State Total Sales Area (m²) - Initial Total Sales Area (m²) - Final Opening Month Porto Alegre / RS 1,127 1,462 April Recife / PE 1,182 1,552 April São Paulo / SP 251 1,721 May Osasco / SP 698 1,173 May Position on June 30, 2008: Geographic Region # of stores Total sales area %Total sales area % of GDP in Brazil Shopping mall' stores Streets' store Southeast , % 56.5% South 33 31, % 16.6% Northeast 39 41, % 13.1% North 9 14, % 5.0% 2 7 Middle West 12 13, % 8.9% 7 5 Total , % 100.0% Retail Net Revenue Net revenue from retail operations totaled R$343.4 million in 2Q08, 19.6% up on the R$287.0 million reported in the same period last year. This growth was due to (i) the 11.2% increase in the number of items sold, chiefly thanks to the 46,200 m 2 expansion of sales area and the increase in the productivity of the stores that are reaching maturity and (ii) the 8.3% rise in the average unit price 1, due to the change in the sales mix, with an increase in the sales of higher value-added products in 2Q % Total Net Revenue (R$ Million) % Q07 2Q08 1H07 1H08 In year-to-date terms, net revenue from retail operations climbed by 20.9%, from R$485.3 million in 1H07 to R$587.0 million in 1H08. As with the quarterly improvement, this upturn was chiefly due to the increase in the volume of items sold as a result of the expansion of the sales area, the higher productivity of stores that are reaching maturity and the increase in the average unit price. 1 Average unit price total gross operating revenue from retail operations (excluding returns and adjustments to present value) divided by the total volume of units sold in the same period. 5

6 Region In same-store terms, sales grew by 5.8% over 2Q07. Despite being below the Company s guidance for 2008, this increase was in line with Marisa s expectations. The reasons were as follows: i) the high comparative base (same-store sales grew by 22.7% year-on-year in 2Q07); ii) the more selective Marisa Card credit policy, given that there were several recently-opened stores and these ones had insufficient time to develop their Private Label Card base; and iii) the performance in the Northeast region, where store growth was below the national average, primarily due to: The weight of the basic staple basket in the population s total earnings is the highest in the country in this region; The greater selectivity of the Marisa Card in the region, due to higher default rates; and The fact that the collections sent to the Northeast performed less well than expected, jeopardizing regional results in April and May. Marisa has already implemented certain measures in the Northeast region to reverse this tendency, including: i) the sending of new exclusive collections to the region in June, specifically geared towards customers with less disposable income; ii) specific catalogs and point-of-sale advertising for the Valentine s Day Collection (Valentine s Day falls on June 12 in Brazil) and the Festa Junina (an exceptionally strong regional festival); and iii) more rapid store replenishment. Signs of an improvement were already apparent in June, but it was in July that the region recorded double-digit growth. In the first half, same-store sales increased by 5.7% year-on-year. As per the second quarter, this increase was below the Company s annual guidance, but within Marisa s expectations, for the same reasons stated above. Same Store Sales Growth 2Q08 South 15.3% Southeast 7.6% Middle West 8.3% Northeast -11.5% North 10.6% 11.1% Net Revenue by Segment 2Q08 7.3% 3.0% Women's Clothing 78.6% Children's Clothing Men's Department Bad, Bath and Table Lines Cost of Goods The cost of goods came to R$163.7 million in the 2Q08, 24.1% up on the R$131.9 million reported in the same period in the previous year, mainly due to higher volume of items sold. The year-to-date cost of goods rose by 24.8%, from R$236.8 million in 1H07 to R$295.5 million in 1H08 for the same reasons as for the quarter. Gross Profit Gross profit increased by 15.8%, from R$155.1 million, in 2Q07, to R$179.6 million. The gross margin stood at 52.3%, 1.7 p.p. down on the 54.0% recorded in 2Q07, jeopardized by winter product promotions as a result of higher temperatures, especially in the end of April and second fortnight of May. Note also that Marisa adopts the freshness concept (weekly in-store product renewal). Consequently, items that are not selling well are rapidly marked down since they cannot remain in stock for an extended period. The year-to-date gross profit rose by 17.3%, from R$248.5 million, in 1H07, to R$291.4 million in 1H08, when the gross margin stood at 49.7%, 1.5 p.p. down on the 51.2% recorded in the same period the year before. This decline was partially due to the above-mentioned effects and the higher number of promotions in the 1Q08, in turn caused by the build-up of merchandise inventories in the 4Q07 when sales were lower than expected. 6

7 Operating Expenses Operating expenses grew by 22.7%, from R$106.6 million in 2Q07 to R$130.9 million in 2Q08, mainly due to higher selling expenses and depreciation, as described below. Year-to-date operating expenses increased by 22.2%, from R$204.5 million in 1H07 to R$249.9 million in 1H08, for the same reasons. (in R$ million) Sales Operating Expenses 2Q08 %NOR 2Q07 %NOR 1H08 %NOR 1H07 %NOR Selling expenses (106.8) -31.1% (86.3) -30.1% (201.4) -34.3% (163.4) -33.7% General and administrative expenses (17.1) -5.0% (16.2) -5.7% (33.9) -5.8% (32.5) -6.7% Others (expenses) operating % % % % Depreciation and Amortization (17.0) -4.9% (8.5) -3.0% (33.3) -5.7% (16.7) -3.5% Total Operating Expenses (130.9) -38.1% (106.6) -37.2% (249.9) -42.6% (204.5) -42.1% Selling Expenses Selling expenses increased by 23.8%, from R$86.3 million in 2Q07 to R$106.8 million in 2Q08, chiefly due to the 46,200 m 2 expansion of the sales area and the consequent upturn in sales volume, which resulted in a nominal increase in personnel and rental expenses. Year-to-date selling expenses climbed by 23.2%, from R$163.4 million in 1H07 to R$201.4 million in 1H08, for the same reasons. As a percentage of net revenue, selling expenses increased by 1.0 p.p. over 2Q07, mainly due to the increase in radio and TV advertising expenses in 2Q08. The Company allocated these expenses differently, with a higher share of funds going to advertising in the first half 2008 when compared to the same period of the last year, thus distorting the comparative base. However, this allocation is part of the Company s marketing strategy and the total annual budget will be maintained. Another factor that helped delay the reduction in selling expenses as a percentage of net revenue was the large number of store inaugurations in recent months. In 2Q08, 21.7% of Marisa s total sales area was less than a year old and store revenue and expense trends in the first years following inauguration change over time. In the first year, especially, revenue does not keep pace with the expenses related to sustaining the expanded sales area and this mismatch jeopardizes the dilution of selling expenses in new stores. With the purpose of informing the market, if the same amount had been allocated to marketing and advertising in 2Q08 as in 2Q07, i.e. leveling the comparative base, selling expenses as a percentage of net revenue would have fallen by 1.0 p.p. Year-to-date selling expenses as a percentage of net revenue edged up by 0.6 p.p. due to the reasons cited above. Similarly, if the same amount had been allocated to marketing and advertising in 1H08 as in 1H07, leveling the comparative base, selling expenses as a percentage of net revenue would have fallen by 1.0 p.p. General and Administrative Expenses G&A expenses totaled R$17.1 million in 2Q08, 5.3% up on the R$16.2 million recorded in the same period of the previous year, fueled mainly by the pay rise in the 3Q07. It is worth emphasizing that G&A expenses as a percentage of net revenue fell by 0.7 p.p. year-on-year, from 5.7% in 2Q07 to 5.0% in 2Q08. This improvement was due to the increased dilution of head-office fixed costs as the Company s total sales volume expanded. 7

8 Year-to-date G&A expenses grew by 4.3%, from R$32.5 million in 1H07 to R$33.9 million in 1H08, once again due to the same reasons. As a percentage of net revenue, G&A expenses fell by 0.9 p.p., from 6.7% in 1H07 to 5.8% in 1H08. Other Operating Revenue (Expenses) Other operating revenue moved up by R$5.7 million, from R$4.4 million in 2Q07 to R$10.0 million in 2Q08, due to the recovery of PIS and COFINS tax credits. In year-todate terms, revenue grew by R$10.5 million, from R$8.1 million in 1H07 to R$18.7 million in 1H08 for the same reasons. Depreciation and Amortization Depreciation and amortization totaled R$17.0 million in 2Q08, 100.3% up on the R$8.5 million reported in 2Q07, mainly due to the 46,200 m 2 expansion of the sales area and improvements to third-party properties. Depreciation and amortization stood at R$33.3 million in 1H08, a massive 98.7% up on the R$16.7 million recorded in the same period a year ago for the same reasons. 8

9 Marisa Card Evolution of Card Base: the Company closed 2Q08 with 8.1 million accounts (5), 23.3% more than the 6.6 million at the end of 2Q07, as can be seen in the adjacent chart. The Company acquired 296,000 new accounts in 2Q08, versus 476,000 in 2Q07. This decline was caused, mainly, by the adoption of more selective credit policies as of 4Q07. The Marisa Card ended 2Q08 with 8,098,000 active cards 2 and 6,649,000 active accounts 3. Evolution of accounts and cards base (R$ Million) 10,417 8,570 8,110 6,577 5,914 4,397 2Q06 2Q07 2Q08 (5) Total Number of Accounts (6) Total Number of Cards (5) No. of inscribed CPFs (individual taxpayer s IDs) (6) No. of cards issued (CPFs + dependents) Marisa Card Sales: The sale of goods through the Marisa Card climbed by 7.2%, from R$264.8 million in 2Q07 to R$283.9 million in 2Q08, mainly due to the nominal increase in sales. In 2Q08, the Marisa Card accounted for 60.5% of total sales, less than the 68.0% recorded in 2Q07, chiefly due to (i) the average age of the stores, given that approximately 24% of Marisa s total sales area is less than one year old and the Marisa Card has less penetration in new stores; and (ii) greater credit selectivity in 2Q08 compared to the 2Q07. In year-to-date terms, the Marisa card was responsible for 58.8% of the Company s sales, less than the 66.2% recorded in 1H07 for the same reasons Financial Volume through Marisa's Credit Card (R$ Million) CAGR 29.8% Interest-bearing installment sales accounted for 32.5% of total Marisa Card total sales, 9.4 p.p. up on the 23.1% reported in 2Q07, due to internal campaigns directed at employees at the end of 1Q08 which began to generate results in 2Q08. 2Q06 2Q07 2Q08 2 Active cards are understood as the total number of cards issued (per CPF - Individual Taxpayer s ID + dependent), excluding those that have been canceled or blocked. 3 Active accounts are understood as the total number of CPFs registered, excluding those that have been canceled or blocked. 9

10 In year-to-date terms, interest-bearing installment sales accounted for 26.3% of total Marisa Card sales, versus 20.3% in 1H07. This increase was due to the above-mentioned reasons. Period Average Ticket of Marisa's Credit Card Average Ticket of the Company 2Q07 $91.08 $ Q08 $98.94 $ H07 $83.81 $ H08 $90.29 $60.61 Means of Payment 2Q08 8.9% Marisa's Credit Card 15.5% 15.1% 60.5% $/ Checks on demand Credit Card Debit Card Net Revenue Net revenue from services came to R$12.5 million, 4.7% down on the R$13.1 million reported in 2Q07, mainly due to: (i) the 11.8% reduction in revenues from delinquent fines and charges due to the improvement in the quality of the active client base; and (ii) the decline in revenue from the issue of invoices due to increase in the activation of clients with a higher average ticket. This result was partially offset by a 16.7% increase in insurance revenue, which still accounts for only 4.5% of total service revenue. Insurance Sold Units (000) Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 10

11 First-half net revenue stood at R$24.7 million, 3.0% down on the R$25.5 million recorded in the same period a year ago for the same reasons. Cost of Services The cost of services totaled R$10.2 million, 22.5% less than the R$13.2 million recorded in 2Q07, thanks to better cost management at the Credi-21 office and the transfer, in 2008, of part of the amount booked under cost of services in 2007 to G&A expenses. Adopting the same comparative base, the cost of services dropped by 12.0%, from R$11.6 million in 2Q07 to R$10.2 million in 2Q08, underlining the Company s effectiveness in cost controls. In year-to-date terms, the cost of services fell by 22.8%, from R$26.1 million in 1H07 to R$20.1 million in 1H08. Leveling the comparative base, however, the reduction was 7.3%, from R$21.8 million in 1H08 to R$20.1 million in 1H07. Gross Profit Gross profit moved up R$2.4 million year-on-year in 2Q08, from null in 2Q07 to R$2.3 million. This improvement was due to the cost reductions and accounting reclassification mentioned above. For the same reasons, year-to-date gross profit increased by R$5.2 million, from a negative R$0.6 million in 1H07 to a positive R$4.6 million. This improvement is explained by the same reasons above. Operating Expenses General and Administrative Expenses G&A expenses grew by R$0.5 million, from R$1.5 million in 2Q07 to R$2.0 million in 2Q08, largely due to the accounting reclassification mentioned under Cost of Services above. In 1H08, these expenses came to R$3.8 million, R$1.9 million up on the R$1.9 million recorded in the same period the year before, for the same reasons. Other Operating Revenue (Expenses) Other operating revenue (expenses) improved by R$8.9 million, from an expense of R$3.1 million in 2Q07 to revenue of R$5.8 million in 2Q08. This improvement was chiefly due to an increase in revenue from interest-bearing installment sales and stricter control over losses from Marisa Card operations. In year-to-date terms, other operating expenses rose by R$9.1 million, from an expense of R$3.1 million in 1H07 to an expense of R$12.2 million in 1H08, largely due to the increase in 1Q08 provisions for bad debt. 11

12 It is worth noting that, even with the hefty increase in revenue from interest-bearing installment sales, Marisa is not concerned about an increase in default due to the quality of the buyers. As can be seen in the adjacent chart, most purchases were made by longstanding Marisa Card holders with an excellent payment track record. Only 7.8% of purchases came from first-time buyers. 59.7% Distribution of Sales per Marisa Card Usage Frequency 7.8% 32.5% Number of purchases per clients through Marisa Card 1 purchase through Marisa Card From 2 to 5 purchases through Marisa Card Over 5 purchases through Marisa Card Other Operating Revenue (Expenses) (in R$ million) 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) Other operating income % % Interest on payment installments (1) % % Interest charges (2) % % Fines and default charges (3) % % Marisa Credit Card Loss recovery % % Others % % Other operating expenses (53.4) (46.6) 14.5% (101.3) (71.3) 42.0% Provision for Bad Debt (43.1) (37.7) 14.4% (85.2) (53.4) 59.5% Total Provisions (2.4) (1.4) 71.9% (2.7) (2.4) 11.8% Funding Costs (2.4) (7.1) -66.6% (4.8) (14.8) -67.8% Others (5.5) (0.4) n.a. (8.6) (0.7) % Total operating (expenses) income 5.8 (3.1) n.a. (12.2) (3.1) 290.2% (1) Revenue from interest-bearing installments sales. The value of the interest charge is 5.5% per month. (2) Revolving interest income. The value of the interest charge is 9.98% per month. (pro rata) (3) Fine of 2% per month and charge of 1% per month. (pro rata charge for the late payment) Provisions for Bad Debt: In the final quarter of 2006, the Company implemented several measures to increase the number of Marisa cardholders, including simplified application and credit processes for potential new users. Outsourced promoters were used to attract new customers and, as a result, credit facilities were made available to a substantial number of new cardholders. However, the number of workstations involved in collections was insufficient to keep pace with the increase in new customers and there were insufficient internal auditors to ensure quality growth in the cardholder base, resulting in higher default levels in relation to previous periods. The default impact began in the third quarter of 2007, as a result of the huge volume of card sales in the 4Q06 resulting from a 0+5x no interest promotion, according to which clients would have up to 100 days as of the 12

13 purchase date to make their first payment and overdue payments were only considered as losses 180 days after the first non-payment. Although the inefficient process of new cardholder selection was eliminated at the end of 2Q07, it is still affecting the Company s results. It is important to emphasize that steps have been taken to remedy these problems. Simplified applications have been eliminated; responsibility for managing new card applications is now shared with the stores; the number of collection-dedicated workstations has increased significantly, from 72 to 180; the use of outsourced promoters to attract cardholders is now only resorted to in the case of store inaugurations, and even then only under the strict supervision of Marisa Card coordinators and in-house auditors; the credit-score criteria have been adjusted; and auditing procedures have been intensified with the stores regarding new clients. All of this has resulted in an intense reduction of frauds and higher-quality cardholder base. The table below gives a more detailed picture of Marisa Card provisions and default levels: Period Initial Balance Effective Loss Constitution of Provisions for Doubtful Accounts Balance of Provisions for Doubtful Accounts (Asset Protection) Accounts Receivable Marisa Card Sales ,275 29,661 27,009 8, , , ,623 41,305 48,904 16, , , ,222 57,953 72,665 30, , , , , ,614 38, ,736 1,065,146 1Q08 38,326 49,586 42,107 30, , ,570 2Q08 30,847 39,332 43,092 34, , ,996 (In R$ Thousands) The Effective Loss decreased R$ 10.3 million It is worth noting that the above measures have already generated significant results, exemplified by the improvement in the following indicators: 13

14 a) FPD (First Payment Default) measures the quality of the credit granted to new Marisa Card users, i.e., it quantifies the efficiency of the new processes implemented by Marisa. Since June 2007, this indicator has dropped consistently. In order to protect both retail and Card operations, Marisa aims to maintain this figure between 8% and 9%. First Payment Default (FPD) 13.1% 10.5% 10.6% 10.6% 11.2% 11.4% 10.9% 9.7% 9.9% 9.1% 8.0% 8.2% 8.0% 7.2% 6.5% b) The Collection Efficiency Ratio measures default levels, taking into consideration the efficiency of the Company s collection process for the different overdue periods in a given month. The improvement in collection and, consequently, the roll-over of receivables can be seen in the graph below. Collection Efficiency Ratio 9.3% 9.9% 7.6% 7.6% 5.9% 6.2% 7.3% 6.7% 5.6% 5.5% 4.9% 4.5%

15 Operating Result of Marisa Card (in R$ million) 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) Fees (1) and Insurance % % Interest charges % % Fines and Charges % % Interest on Payment installments % % Marisa's Credit Card Loss Recovery % % Other % % Total Income % % Funding Cost (2.4) (7.1) -66.6% (4.8) (14.8) -67.8% Services Cost (10.2) (13.2) -22.5% (20.1) (26.1) -22.8% General and Administrative Expenses (4.4) (2.9) 50.3% (6.5) (4.3) 51.3% Provision for Bad Debt (43.1) (37.7) 14.4% (85.2) (53.4) 59.5% Other (5.5) (0.4) n.a. (8.6) (0.7) n.a. Total Expenses (65.6) (61.3) 6.9% (125.2) (99.3) 26.2% Total Card 6.1 (4.7) n.a. (11.5) (5.6) 103.7% (1) Collect and invoice fees Consolidated - Retail and Cards Financial Result The Company recorded a negative financial result of R$11.5 million in 2Q08, a 9.6% improvement over the negative R$12.8 million in 2Q07. Financial expenses fell by 2.7% while financial revenue climbed by 9.6%. This effect was mostly due to the swap adjustments on banking loans and the reduction in indebtedness. In 1H08, net financial result was an expense of R$20.9 million, an improvement of 8.3% over the R$22.8 million expense recorded in 1H07 for the same reasons. 15

16 (In R$ Thousands) Financial Revenue 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) Financial Investments 6, , % 13, , % Monetary gains % 1, % Adjustment to Present Value , % 2, , % Discount 1, % 1, % Hedge gains 5, , % 36, , % Other (247.8) n.a % Total Financial Revenue 13, , % 55, , % Financial Expenses Hedge losses (16,007.0) (14,703.1) 8.9% (47,612.6) (35,884.8) 32.7% Interest (9,250.1) (11,391.5) -18.8% (18,702.8) (22,340.2) -16.3% CPMF (1) 0 (2,087.1) % (43.8) (4,223.3) -99.0% Banking Expenses (715) (1,259.4) -43.2% (1,382.5) (2,528.0) -45.3% Monetary losses (1,136) (1,702.0) -33.3% (2,198.8) (2,862.1) -23.2% Adjustment to Present Value (5,308) (1,970.1) 169.4% (10,068.7) (4,246.3) 137.1% IOF (2) (63) (276.0) -77.1% (1,148.6) (1,963.2) -41.5% Other (24) (21.7) 8.5% (383.1) (444.1) -13.7% Total Financial Expenses (32,502.7) (33,410.9) -2.7% (81,540.7) (74,491.9) 9.5% Exchange Rate, Net Exchange rate gains 7, , % 14, , % Exchange rate losses (388.0) 83.2 n.a. (8,676.3) (1,035.3) n.a. Net Financial Result (11,533.3) (12,759.4) -9.6% (20,905.4) (22,793.6) -8.3% (1) Provisional Contribution on Financial Movements (2) Financial Transaction Tax Income and Social Contribution Taxes Current income and social contribution taxes decreased by 24.9%, from R$3.1 million in 2Q07 to R$2.3 million in 2Q08. In 1H08, these taxes totaled R$2.7 million, 49.3% down on the R$5.3 million recorded in 1H07. These reductions result from a lower taxable base under the actual income regime. Deferred income and social contribution taxes came to a negative R$11.2 million, 65.6% up on the negative R$6.8 million recorded in the same period the year before. In 1H08, deferred income and social contribution taxes amounted to a positive R$11.1 million, 60% down on the R$27.8 million recorded in the same period a year ago. Net Income (Loss) Net income totaled R$29.6 million in 2Q08, 35.2% up on the R$21.9 million recorded in 2Q07, chiefly due to (i) improved administration of the Marisa Card, with a consequent improvement in its results; (ii) the greater dilution of certain expenses. In year-to-date terms, net income declined by 54.0%, from R$37.3 million in 1H07 to R$17.2 million in 1H08, due to the increase in provisions for bad debt expenses, especially in the 1Q08. Net income from retail operations totaled R$27.4 million in 2Q08, slightly higher than the R$27.2 million recorded in the same period the year before. This result was chiefly due to the higher dilution of operating expenses and lower tax expenses (income and social contribution taxes). In 1H08, net income totaled R$20.0 million, 19.6% up on the R$16.7 million recorded in 1H07 for the same reasons. The Marisa Card s net result improved by R$7.5 million, from a net loss of R$5.4 million in 2Q07 to net income of R$2.2 million in 2Q08, chiefly due to increased revenue from interest-bearing installment sales and greater control 16

17 over losses. The year-to-date net result fell by R$23.4 million, from net income of R$20.6 million in 1H07 to a net loss of R$2.8 million in 1H08, mainly as a result of higher provisions for bad debt expenses. Indebtedness The Company closed 2Q08 with gross debt of R$451.8 million, 10.7% down on 1Q08. In comparison to the previous quarter, there was a distinct improvement in the profile. In 2Q08, short-term debt accounted for 54.6% of the Company s gross debt, versus 57.4% in the 1Q08, underlining the Company s success in extending the profile of your debt Indebteness (R$ Million) Q07 3T07 4Q07 1Q07 2Q Total net debt fell by 3.1%, from R$189.9 million Gross Debt Net Debt Net Debt/EBITDA (X) in 1Q08 to R$ million in 2Q08. This decline was due to the reduction in gross debt, especially short-term debt. The net debt-to-ebitda ratio 4 fell from 1.3x in the 1Q08 to 1.2x in 2Q08. On June 30, 2008, 43.4% of the Company s total gross debt was denominated in foreign currency (with a 100% CDI hedge) and the average weighted financial cost was 99.7% of the CDI. Capex (in R$ million) 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) New Stores % % Expanded / Remodeled Stores % % Others % % TOTAL % % Investments totaled R$30.1 million in 2Q08, versus R$35.2 million in 2Q07. As can be seen from the table above, R$16.0 million went to the opening of new stores, R$8.6 million to the expansion and remodeling of existing stores to adapt them to the Company s new layout, and R$5.5 million to the replacement of fixed assets and improvements to technology systems and equipment. 4 The net debt/ebitda ratio is based on LTM EBITDA. 17

18 Year-to-date investments stood at R$51.0 million, 11.0% up on the R$45.9 million recorded in the same period the year before. As the table above shows, R$31.6 million went to the opening of new stores, R$11.4 million to the expansion and remodeling of existing stores to adapt them to the Company s new layout, and R$8.0 million to the replacement of fixed assets and improvements to technology systems and equipment. EBITDA (unaudited) (in R$ million) EBITDA 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) NET OPERATING REVENUE % % Net income (loss) for the period % % (-) Income and social contribution taxes - Deferred % (11.1) (27.8) -60.0% (+) Income and social contribution taxes - Current % % (+) Financial result, net % % EBIT % % (+) Depreciation and amortization % % EBITDA % % (+) Minority Interest % % (+) Non operating result 0.2 (0.8) n.a % (+) IPO Expenses Adjusted EBITDA (1) % % Adjusted EBITDA Margin (2) 20.2% 18.2% +2,0 p.p. 10.4% 11.3% -0,9 p.p. (1) The inclusion of adjusted EBITDA s information aim to present a measure of our operational economic performance. Our adjusted EBITDA consists of EBITDA plus or minus the result from the equity method of accounting interest in real estate companies, revenue from the rental of spun-off property, net non-operating result, IPO expenses and minority interests. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, or as an alternative for the net income, as a measure operational performance, or an alternative for the operational cash flow, or as an indicator of liquidity. There is no standard formula for calculating adjusted EBITDA. Our adjusted EBITDA and how we calculate it may not be (2) Adjusted EBITDA margin is Adjusted EBITDA divided by net operating revenue. Adjusted EBITDA totaled R$71.8 million in 2Q08, 31.7% up on the R$54.6 million recorded in 2Q07, chiefly due to an increase in revenue from interest-bearing installment sales and stricter control over losses from Marisa Card operations. First-half adjusted EBITDA stood at R$63.4 million, 10.2% higher than the R$57.6 million recorded in the first six months of 2007 for the same reasons, although partially jeopardized by the increase in provisions for bad debt expenses in 1Q08. Retail operations closed the 2Q08 with an adjusted EBITDA of R$65.8 million, 15.5% up on the R$56.9 million recorded in 2Q07, accompanied by an adjusted EBITDA margin of 19.2%, 0.6 p.p. less than the 2Q07 figure of 19.8%. The narrower margin was chiefly due to the reduction in the gross margin, as explained previously, and to higher marketing and advertising expenses, discussed in the selling expenses section of this report. Adjusted EBITDA from retail operations came to R$74.8 million in 1H08, 15.5% up on the R$60.8 million recorded in the same period the year before. The margin widened by 0.2 p.p., from 12.5% in 1H07 to 12.7% in 1H08. 18

19 Adjusted EBITDA from Marisa Card operations totaled R$6.1 million, R$10.7 million higher year-on-year. This increase was due to higher revenue from interest-bearing installment sales and stricter control of losses from Marisa Card. First-half adjusted EBITDA was negative by R$11.4 million, a R$5.9 million improvement over the negative R$5.5 million reported in 1H07. This increase was due to higher provisions for bad debt expenses in 1Q08. Subsequent Events Notice published by the BNDES On July 29, 2008, the internal audit to evaluate BNDES (Brazilian Development Bank) procedures related to the granting of financing to Lojas Marisa concluded that there was no evidence of irregularities in the processing of said operations, which were submitted to all the pertinent authorities and conducted in accordance with BNDES regulations. The time between the onset of negotiations with the Bank and the execution of the agreement was also absolutely normal. Expansion in the 2H08 For 2008, Marisa has contracted, year-to-date, approximately 26,000 m². In regard to the 40,000 m² originally announced, the following changes have been made: - 5,000 m² were transferred to 2009, because the shopping mall managers responsible for these projects have confirmed that they will only be able to deliver the expansions next year; - 3,000 m² are still awaiting approval from municipal authorities; and - due to the Brazil s current economic scenario, the remaining 6,000 m² will not be inaugurated in 2008 because they will not be able to achieve the minimum IRR (internal rate of return) required by Marisa to allow the opening of a store. Therefore, in line with its philosophy of creating shareholder value, the Company will postpone these inaugurations to a more convenient time. New Stores City/State Sales Area (m²) Opening Month Chapecó / SC 1,125 July Montes Claros /MG 1,048 August Itaquaquecetuba /SP 1,313 August Macae /RJ 1,193 September Pato de Minas /MG 937 September Fortaleza /CE 1,003 October Rio Verde /GO 1,000 October Porto Velho /RO 1,053 October São Paulo /SP 1,228 November Salvador / BA 1,113 November Bauru /SP 1,112 November Imperatriz /MA 1,198 December Valparaiso /GO 1,000 December 19

20 Store Extension and Remodeling City/State Initial Sales Area (m²) Final Sales Area (m²) Opening Month Rio Grande/RS 502 1,205 September Pelotas/RS 283 1,387 September Caxias do Sul /RS 598 1,103 October S.J Miriti /RJ 482 1,210 November Uberlândia/MG 481 1,279 November Rio Claro/SP 268 1,117 November Guarulhos /SP 538 1,253 December Guidance 2008 Net Revenue Approximately R$1.5 billion Gross Margin 48.5% % SG&A/Net Revenue 38.0% % EBITDA R$215 - R$230 million Capex R$100 - R$110 million 20

21 2Q08 Results Conference Call Conference Call (in Portuguese) Conference Call (in English) August 7, 2008 August 7, :00 am (Brasília) / 10:00 am (US EST) 1:00 pm (Brasília) / 12:00 pm (US EST) Phone: +55 (11) Phone: +1 (973) Replay: +55 (11) Replay: +1 (706) Code: Marisa Code: This release may contain forward-looking statements concerning business outlook, estimates of operating and financial results and growth projections of Marisa S.A.. Such statements are based exclusively on the expectations of the management of Marisa S.A. about the future of the business and its continuing ability to access capital markets to finance the Company s business plan. Such future considerations are highly sensitive to changes in the capital markets, governmental and regulatory rules, the competitive landscape and other factors related to the sector and the Brazilian economy, including the other risk factors highlighted in documents previously filed by Marisa S.A., and are, therefore, subject to change without notice. ******* 21

22 Financial Statement - Consolidated (In R$ thousands) Financial Statement 2Q08 2Q07 Var (%) 1H08 1H07 Var (%) Gross Revenue from Retail Operations and Financial Services 522, , % 896, , % Gross Revenue from Retail Operations 507, , % 866, , % Gross Revenue from Financial Services 14,995 15, % 29,253 28, % Deductions from Gross Revenue (166,901) (137,837) 21.1% (284,575) (232,787) 22.2% Taxes on Goods Sales and Returns (164,430) (135,511) 21.3% (280,016) (229,280) 22.1% Taxes on Financial services and products (2,471) (2,326) 6.2% (4,559) (3,507) 30.0% Net Revenue from Retail Operations and Financial Services 355, , % 611, , % Cost of Goods and Financial Services (173,919) (145,076) 19.9% (315,657) (262,886) 20.1% Cost of Goods (163,726) (131,915) 24.1% (295,527) (236,820) 24.8% Cost of Financial Services (10,193) (13,161) -22.5% (20,130) (26,066) -22.8% Gross Profit 181, , % 295, , % Operating Expenses from Retail Operations and Financial Services (127,089) (111,277) 14.2% (265,933) (209,515) 26.9% Selling expenses - Retail Operations (106,785) (86,294) 23.7% (201,372) (163,388) 23.2% General & Administrative Expenses - Retail Operations (17,146) (16,220) 5.7% (33,884) (32,497) 4.3% DGeneral & Administrative Expenses - Financial Services (1,997) (1,483) 34.7% (3,722) (1,783) 108.7% Other Operating Revenue (Expenses) - Retail Operations 10,045 4, % 18,651 8, % Other Operating Revenue (Expenses) - Financial Services 5,771 (3,115) % (12,233) (3,134) 290.3% Depreciation and Amortization (16,976) (8,524) 99.1% (33,373) (16,856) 98.0% Operating Income (loss) before financial result 54,885 43, % 30,058 38, % Financial Result (11,533) (12,757) -9.6% (20,906) (22,792) -8.3% Financial Expenses (32,502) (33,411) -2.7% (81,540) (74,492) 9.5% Financial Revenues 13,847 12, % 55,147 40, % Exchange Rate, Net 7,122 8, % 5,487 11,130 n.a Operating Income (Loss) 43,352 31, % 9,152 15, % Non-Operating Result (232) % (442) (307) 44.0% Non-Operating Revenues (16) % 8 2, % Non-Operating Expenses (216) % (450) (2,400) -81.3% Income (Loss) before income and social contribution taxes 43,120 31, % 8,710 15, % Income and Social Contribution Taxes - Current (2,338) (3,113) -24.9% (2,662) (5,251) -49.3% Income and Social Contribution Taxes - Deferred (11,204) (6,767) 65.6% 11,130 27, % Net Income (Loss) before minority interest 29,578 21, % 17,178 37, % Minority interest (2) (64) -97.0% (3) (532) -99.4% Net Income (Loss) 29,575 21, % 17,175 37, % Net Income (Loss) per share % % Number of shares (in thousand) 184,503 44, ,503 44,634-22

23 Balance Sheet - Consolidated (in R$ thousands) ASSETS 06/30/ /31/2008 Var (%) CURRENT ASSETS Cash and cash equivalents 267, , % Securities % Trade accounts receivable 492, , % Inventories 146, , % Recoverable taxes 26,153 23, % Deferred income and social contribution taxes 14,798 24, % Other credits 17,163 24, % Total current assets 964, , % NONCURRENT ASSETS Long term receivable Intercompany receivables 1,932 1, % Deferred income and social contribution taxes 77,852 79, % Other receivable 10,364 11, % Total long term receivable 90,148 92, % Fixed assets Investments Property and equipment 230, , % Intangible assets 30,424 27, % Deferred charges 16,762 14, % Total fixed assets 277, , % Total noncurrent assets 367, , % TOTAL ASSETS 1,332,448 1,308, % 23

24 LIABILITIES AND SHAREHOLDERS' EQUITY 06/30/ /31/2008 Var (%) CURRENT LIABILITIES Trade accounts payable 138, , % Intercompany payables 2,084 1, % Loans and financing 246, , % Accrued payroll and related charges 24,952 21, % Taxes payable 34,024 26, % Dividends payable - 2, % Other payables 11,517 10, % Total current liabilities 457, , % NONCURRENT LIABILITIES Long term payable Loans and financing 205, , % Reserve for contingencies 83,953 76, % Taxes in installments 8,303 8, % Total noncurrent liabilities 297, , % MINORITY INTEREST % SHAREHOLDERS' EQUITY Capital 550, ,634 - Earnings Reserve 9,767 9,767 - Accumulated deficit 17,175 (12,400) n.a Total shareholders' equity 577, , % TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,332,448 1,308, % 24