EARNINGS RELEASE 3Q14 AND 9M14

Transcription

1 EARNINGS RELEASE 3Q14 AND 9M14 B2W DIGITAL ANNOUNCES CONSOLIDATED GROSS REVENUE OF R$ 2,110.5 MILLION AND A SALES GROWTH OF 23.2% IN 3Q14 Rio de Janeiro, November 12 th, 2014 B2W Companhia Digital (BOVESPA: BTOW3), the leading e-commerce company in Latin America, announces today its results for the 3 rd quarter of 2014 (3Q14) and first nine months of 2014 (9M14). The accounting information that serves as basis for the comments that follow are presented according to the international financial reporting standards (IFRS), to the rules issued by the Brazilian Securities Exchange Commission (CVM), to the Novo Mercado listing rules and in Reais (R$). The following analysis refer to the consolidated results and the comparisons refer to the 3 rd quarter of 2013 (3Q13) and to the first nine months of 2013 (9M13), except where otherwise indicated. Gross Revenue (R$ MM) 1,713 3Q13 Gross Profit (R$ MM) 371 3Q13 SG&A (R$ MM) / (%NR) 17.6% 264 3Q13 Adj EBITDA (R$MM)/ Adj EBITDA Mg (%NR) 7.1% 107 3Q13 +23% Consolidated Consolidated +27% Consolidated FINANCIAL AND OPERATIONAL HIGHLIGHTS Executive Summary 3Q14 and 9M14 Comparison to 3Q13 and 9M13 2,110 3Q Q % 314 3Q14 7.4% 136 3Q14 Consolidated 3Q14 3Q13 Var. (%) Financial Highlights (R$ million) 9M14 9M13 Var. (%) 1, , % Net Revenue 5, , % % Gross Profit 1, , % 24.4% 24.7% -0.3 p.p. Gross Margin (%NR) 24.6% 25.1% -0.5 p.p % Adjusted EBITDA % 7.4% 7.1% +0.3 p.p. Adjusted EBITDA Margin (%NR) 6.9% 6.7% +0.2 p.p. (62.1) (38.6) 60.9% Net Result (184.3) (149.0) 23.7% -3.4% -2.6% -0.8 p.p. Net Margin (%NR) -3.5% -3.7% +0.2 p.p. B2W DIGITAL announces the creation of Digital Finance B2W DIGITAL established a partnership with Cetelem, from BNP Paribas Group, to create a promoter with a focus on offering credit cards and other financial services in Americanas.com and Shoptime websites, replicating the successful model of Submarino Finance. B2W DIGITAL launches an insurance and services store B2W DIGITAL launches in Submarino a store to offer insurance and services, being the first website to create a specialized category in this segment. B2W DIGITAL announces the opening of 4 new Distribution Centers and 1 expansion B2W DIGITAL opened 4 distribution centers: SP (1), PE (1) and SC (2); and expanded the Rio de Janeiro DC. With this strategic movement, B2W increased 50% its total storage capacity. B2W DIGITAL launches the Shipping Menu B2W DIGITAL launched the Shipping Menu, offering different shipping speeds and greater convenience to the customer. B2W DIGITAL launches its own fashion brand: LUK LUK reaches the market with the concept of making easy and uncomplicated fashion, with all the e-commerce convenience. B2W DIGITAL inaugurates the CEI - Center for Excellence and Innovation The CEI was founded in partnership with two of the most renowned global institutions of education and research: MIT and Harvard; and aims to develop skills in pursuit innovative solutions. B2W DIGITAL receives 4 awards for Customer Service / E-commerce B2W DIGITAL received the "Época Reclame Aqui - As Melhores Empresas para o Consumidor" (The Best Companies to the Customer) Award in three categories: Large E-commerce Operation and Costumer Relations Champion Team in Americanas.com and Financial Services in Submarino Finance; and also won the Most Appreciated Companies Award from Carta Capital in the e- commerce category in Submarino. Adjusted EBITDA (Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting). 1 1

2 COMPANY STRUCTURE B2W DIGITAL is the leading e-commerce company in Latin America. The Company operates through a digital platform, with businesses that present a strong synergy and a unique model, multichannel, multibrand and multibusiness. B2W DIGITAL has a portfolio with the brands Americanas.com, Submarino, Shoptime, SouBarato, Submarino Finance, Ingresso.com and B2W Viagens, that offer more than 38 categories of products and services through the internet, telesales, catalogs, TV and kiosks distribution channels. The following chart presents an integrated vision of B2W: 2 2

3 COMENTS ABOUT THE RESULTS In the first nine months of 2014, B2W - Companhia Digital presented sales growth of 30%, posting gross revenues of R$ 6.0 billion. With the results achieved in this period, the Company, for the ninth consecutive quarter, grew above-market levels, with significant market share gains. To offer to the customers an even better shopping experience, B2W established a partnership with Cetelem, from BNP Paribas Group, creating Digital Finance Promotora Ltda, focused on offering credit cards and other financial services on the Americanas.com and Shoptime sites, replicating the model developed with great success by Submarino Finance. Another highlight was the launchment in Submarino of an exclusive store to offer insurance and services, being the first website to create a specialized category in this segment. The new store already offers: extended warranty; insurance against theft, robbery and accidental breakage, pet care and air conditioning installation services. Aiming to be closer to the customer and provide the best delivery service, B2W DIGITAL opened 4 new Distribution Centers (DCs): one in São Paulo, one in Pernambuco and the other two in Santa Catarina; and expanded the one in Rio de Janeiro. As a result, two smaller-capacity DCs, located in São Paulo and Pernambuco, were replaced. With these changes, B2W increased its total storage capacity by 50% and now has 9 distribution centers located in São Paulo (4), Rio de Janeiro (1), Minas Gerais (1), Pernambuco (1) and Santa Catarina (2). In line with the announced investment plan, at least 3 new DCs will be opened by the end of Accordingly, the Company is raising the level of its logistics service, which also includes Click-Rodo and Direct, the two most important e-commerce specialized transportation companies in the country. In line with the goal of providing the best shopping experience, B2W launched the Shipping Menu, offering to the customers different shipping speeds and greater convenience. Three shipping modes currently are available: Express, Fast and Economical. Another important initiative was the launch of its own fashion brand, LUK, targeted at men, women and children; it brings to the market the concept of making fashion easy and uncomplicated, coupled with all the convenience of e-commerce. Besides LUK, which can be found on the Americanas.com and Submarino websites, B2W operates with 8 other private label brands: FunKitchen (Kitchen appliances), LifeZone (Sporting Goods), Casa & Conforto (Bedding and Bath) and La Cuisine (Kitchenware), that are found exclusively through Shoptime; and Orb (Furniture), Meemo (Petshop), NewMe (Beauty and Health) and TopDesk (Stationery) that are available through the Americanas.com, Submarino and Shoptime websites. With the goal of developing the best talents on the Brazilian Internet, B2W inaugurated its Center for Excellence and Innovation (CEI), born out of a partnership with two of world's most renowned global teaching and research institutions: MIT and Harvard. It will foster innovative solutions, stimulating entrepreneurship, a collaborative environment, intensive use of technology and, especially, encourage individuals to believe the desire to get it right must be greater than the fear of making mistakes. As a result of the mobilization of the entire company to deliver the best shopping experience, B2W DIGITAL received 3 customer service awards in the "Época Reclame Aqui - As Melhores Empresas para o Consumidor" (The Best Companies to the Customer) Award. Americanas.com won the Costumer Service Champion Team and was the winner for the second consecutive year in the Large E-commerce Operation category and Submarino Finance won top honors in the Financial Services category. B2W also was the winner in the Carta Capital "As Empresas Mais Admiradas" (Most Appreciated Companies) awards in the e-commerce category through Submarino. These achievements demonstrate that we are on track to consolidate our position as the best customer service on the Brazilian Internet. So we would like to express our gratitude for the dedication of all our associates, who again made the difference and are part of the best and most successful digital team in Latin America. We also would like to thank our suppliers for their partnering, our shareholders for their confidence and, especially, to our customers for their preference. THE MANAGEMENT 3 3

4 OPERATIONAL PERFORMANCE COMMENTS As a reward for the mobilization of the entire Company in the all-out effort to deliver Latin America s best digital experience, B2W DIGITAL s service level indicators continue to progress, reflecting the extensive improvements in its operations and logistical processes that are the main pillars of a sustainable growth. B2W DIGITAL RECEIVED 4 COSTUMER SERVICE/E-COMMERCE AWARDS B2W DIGITAL won the Época Reclame Aqui - As Melhores Empresas para o Consumidor (The Best Companies to the Customer) Award in 3 diferente categories: Americanas.com won the Costumer Service Champion Team and was the winner for the second consecutive year in the category Large E- commerce Operation and Submarino Finance received in the Financial Services category. B2W DIGITAL also received the As Empresas Mais Admiradas (Most Appreciated Companies) award from Carta Capital in the e-commerce category with Submarino. These achievements are a reward for the efforts of the entire company on delivering the best customer service. B2W DIGITAL RECEIVED 3 AWARDS IN THE SUSTAINABILITY AREA. As a recognition of the commitment of the whole company in applying the best sustainability practices, B2W has received 3 important awards: the Chico Mendes Green Seal certificate from the Chico Mendes Institute, the Sustainability Excellence Certificate from IBEF (Brazilian Institute of Finance Executives), and the recognition from the CDP (Carbon Disclosure Project) by actions to reduce the emissions of greenhouse gases. EVOLUTION OF CUSTOMER SERVICE RATINGS The four main B2W s brands (Americanas.com, Submarino, Shoptime and SouBarato) possess the "RA 1000" seal, the best reputation level in Reclame Aqui website, reflecting the continuing evolution of the main indicators related to service level and consolidating B2W DIGITAL as: - the best shopping experience; - the best delivery service; and - the best costumer service. Reclame Aqui B2W DIGITAL Competitors #2 #3 #4 12 Months RA 1000 Seal 4 of 4 Brands 0 of 3 Brands 0 of 1 Brand 0 of 1 Brand Average Grade Would Buy Again 79% 54% 45% 59% Ranking 20+ Complaints 0 of 4 Brands 2 of 3 Brands 1 of 1 Brand 1 of 1 Brand * Base Date: 10/31/

5 NET REVENUE In 3Q14, the consolidated net revenue reached R$ 1,839.5 million, compared to R$ 1,500.1 million in 3Q13, representing a growth of 22.6%. In 9M14, the consolidated net revenue reached R$ 5.218,1 million, compared to R$ 4,009.3 million in 9M13, representing a growth of 30.1%. 5,218 1,840 4,009 1,500 3Q13 3Q14 9M13 9M14 GROSS PROFIT AND GROSS MARGIN In 3Q14, the consolidated gross profit reached R$ million, a growth of 21.1% in relation to the R$ million registered in 3Q13. In 9M14, the consolidated gross profit reached R$ 1,281.6 million, a growth of 27.6% in relation to the R$ 1,004.5 million registered in 9M13. In 3Q14, the consolidated gross margin was 24.4%, when calculated as a percentage of the net revenue. In 9M14, the consolidated gross margin was 24.6%, when calculated as a percentage of the net revenue. 1, ,005 3Q13 3Q14 9M13 9M14 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES In 3Q14, the consolidated selling, general and administrative expenses totaled R$ million, representing 17.1% of net revenue, an evolution of 0.5 p.p. compared to 3Q13. In 9M14, the consolidated selling, general and administrative expenses totaled R$ million, representing 17.6% of net revenue, an evolution of 0.8 p.p. compared to 9M p.p p.p. 17.6% 17.1% 18.4% 17.6% 3Q13 3Q14 9M13 9M14 5 5

6 ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN In 3Q14, the consolidated adjusted EBITDA reached R$ million, a growth of 26.7% comparing to R$ million in 3Q13. In 9M14, the consolidated adjusted EBITDA reached R$ million, a growth of 34.4% comparing to R$ million in 9M13. In 3Q14, the consolidated adjusted EBITDA margin was 7.4%, when calculated as a percentage of the net revenue, an evolution of 0.3 p.p. compared to 3Q13. In 9M14, the consolidated adjusted EBITDA margin was 6.9%, when calculated as a percentage of the net revenue, an evolution of 0.2 p.p. compared to 9M % 7.4% 6.7% 6.9% Q13 3Q14 9M13 9M14 Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and excluding other operating revenues/expenses and equity accounting) is presented as additional information because we believe it represents an important indicator of our operating performance besides being useful for keeping the comparability with previous reported results. EBITDA (CVM 527/12) On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, which disposes about the voluntary disclosure of not of accounting information as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and making it comparable among the publicly listed companies. To keep the consistency and the comparability between previous periods, we present the reconciliation of EBITDA in the following table. Consolidated EBITDA Reconciliation - R$ MM 3Q14 3Q13 % 9M14 9M13 % Net Result (62.1) (38.6) 60.9% (184.3) (149.0) 23.7% (+) Income tax and social contribution % % (+) Net Financial Result (176.2) (127.4) 38.3% (512.6) (369.1) 38.9% (+) Depreciation / Amortization (43.2) (26.2) 64.9% (105.0) (76.3) 37.6% (=) EBITDA (CVM 527/12) % % (+) Other Operating Income (Expenses)* (8.2) (11.6) -29.3% (25.7) (48.9) -47.4% (=) Adjusted EBITDA % % * In the old accounting rules, considered as "non operating income". Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting. EBITDA s (CVM 527/12) calculation takes into account the net income of the period plus income taxes, net financial expenses of financial revenues and depreciation and amortization. 6 6

7 NET FINANCIAL RESULT In 3Q14, the consolidated net financial expenses were R$ million, a variation of 38.3% compared to the consolidated net financial expense of R$ million presented in 3Q13. In 9M14, the consolidated net financial expenses were R$ million, a variation of 38.9% compared to the consolidated net financial expense of R$ million presented in 9M13. The variation of the financial result in the quarter (3Q14) is related mainly to the cost of debts pre-payment with the resources from the capital increase operation. For the first nine months of the year (9M14), the variation of the financial result also reflects company s leverage prior to the capital increase and the increasing rate of the Interbank Deposit Certificate CDI*. Consolidated Net Financial Result - R$ Million 3Q14 3Q13 Δ% 9M14 9M13 Δ% Net Financial Result (176.2) (127.4) 38.3% (512.6) (369.1) 38.9% The Company continues to reaffirm its commitment to a conservative cash investment policy, manifested by the use of hedge instruments in foreign currencies, to offset eventual exchanges fluctuations, whether relative to financial liabilities or total cash position. These instruments offset the foreign exchange risk, transforming the cost of the debt to local currency and interest rates (as a percentage of CDI*). Similarly, it is worth mentioning that the Company s cash is invested with Brazil s largest financial institutions. *CDI - Certificado de Depósito Interbancário: average rate of borrowing in the interbank market. NET RESULT In 3Q14, the consolidated net result was R$ million, compared to the R$ million obtained in 3Q13. In 9M14, the consolidated net result was R$ million, compared to the R$ million obtained in 9M13. In 3Q14, the consolidated net margin was -3.4%, when calculated as a percentage of the net revenue. In 9M14, the consolidated net margin was -3.5%, when calculated as a percentage of the net revenue, representing an evolution of 0.2 p.p.compared to 9M13. Reconciliation of the Consolidated Net Result - R$ Million 3Q14 3Q13 Δ% 9M14 9M13 Δ% Adjusted EBITDA % % (+) Depreciation / Amortization (43.2) (26.2) 64.9% (105.0) (76.3) 37.6% (+) Net Financial Result (176.2) (127.4) 38.3% (512.6) (369.1) 38.9% (+) Other Operating Income (Expenses)* (8.2) (11.6) -29.3% (25.7) (48.9) -47.4% (+) Income Tax and Social Contribution % % (=) Net Result (62.1) (38.6) 60.9% (184.3) (149.0) 23.7% * In the old accounting rules, considered as "non operating income". Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting. INDEBTEDNESS B2W uses its cash generation prioritizing investments that presents better returns to shareholders. Thus, in the first nine months of 2014, the consolidated investments in plant, property and equipment and intangible (development of websites and systems) totaled R$ million. B2W s cash balance at 09/30/2014 amounted R$ 1,824.9 million, more than five times higher than the Company's sum of short-term debt and debentures, which totaled R$ million. At 09/30/2014, the Company s net cash was R$ 58.9 million, representing 0.1x the accumulated Adjusted EBITDA in the last 12 months. 7 7

8 In order to face the uncertainties and volatility of the financial market, B2W DIGITAL is guided to preserve cash and lengthen its debt profile. Over the past few months several measures were taken for this purpose which allows us to consolidate the investment plan of the Company in the long term. Consolidated Indebtedness - R$ MM 09/30/ /30/2014 Short Term Debt Short Term Debentures Short Term Indebtedness Long Term Debt 1, ,898.5 Long Term Debentures Long Term Indebtedness 1, ,297.0 Total Debt (1) 1, ,986.3 Cash and Equivalents 1, ,948.2 Credit Card Accounts Receivables Net of Discounts Total Cash (2) 1, ,626.7 Net Cash (Debt) (2) - (1) (58.9) Net Cash (Debt) / Adjusted EBITDA LTM (0.1) 0.7 Average Maturity of Debt (days) Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting. The accounts receivable is composed, mainly, by credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W s accounts receivable is demonstrated in the table below: Consolidated Accounts Receivable Conciliation - R$ MM 09/30/ /30/2014 Gross Credit-Cards Receivable 2, ,308.8 Receivable Discounts (1,714.1) (1,630.3) Credit Card Accounts Receivables Net of Discounts Present Value Adjustment (1.9) (8.2) Allowance for Doubtful Accounts (23.3) (31.5) Other Accounts Receivable Net Accounts Receivable - Consolidated For calculation of the working capital purposes the consolidated gross credit cards receivables, excluding FIDC at 09/30/2014 and 09/30/2013 were R$ 1,762.7 million and R$ 1,538.8 million, respectively. On June 11, 2013 the Board of Directors of the Company approved the expansion of the Receivables Investment Fund (FIDC) from R$ million, reaching approximately R$ 1.3 billion. The FIDC credit card model structured by the company is a unique tool on the market and represents an important source of funding. Because of the adoption of the new CPCs/IFRS, in particular the CPC 38 and its corresponding IAS 39, the Company began to write off (derecognize) receivables from credit card administrators at the moment they are effectively discounted (as of the explanatory notes of the financial statements). However, to better demonstrate the volume of receivables discounted on the base-dates analyzed, in the table above the Company presents the accounts receivable adjusted by the discounts made until the base-dates under analysis. FINANCING THE PROJECTS (FINEM) B2W DIGITAL contracted financing of R$ 1.46 billion with the BNDES, which aims to finance the Company's three-year investment plan ( ) for logistics, technology and innovation. 8 8

9 NO FOREIGN CURRENCY EXPOSURE At 09/30/2014, B2W DIGITAL s balance sheet recorded foreign currency denominated debt. Such debt, however, is FULLY PROTECTED against any foreign exchange fluctuations through derivative operations (swaps) that replace the foreign exchange risk for the variation in the basic Brazilian interest rate (CDI). CAPITAL INCREASE On January 24, 2014, a Meeting of the Board of Directors was held with the goal of approving the signing of an Agreement for Subscription of Shares concluded with Tiger Global Brazil LLC and Tiger Global Long Opportunities Brazil LLC (Tiger Global Long Opportunities Brazil LLC together with the Tiger Global Brazil LLC, the "Investor") and the controller of the Company, Lojas Americanas S.A., for a private capital increase, to be approved by an Extraordinary Shareholders Meeting of the Company, in the amount of R$ 2,380,000, through the issuance of 95,200,000 common shares, nominal and with no face value, at an issue price of R$ per share. On August 13, 2014, a Board of Directors meeting was held in order to approve: 1- Approval of the Company capital increase, approved in the extraordinary general meeting held on June 5, Due to the capital increase approval, the Company s capital was increased by R$ 2,380,000,000.00, therefore, from R$ 1,198,991, to R$ 3,578,991, divided into 254,199,202 common, nominal and no par value shares. SALES BY MEANS OF PAYMENT The evolution of the sales by means of payment can be seen in the following table: Means of Payment 3Q14 3Q13 % 9M14 9M13 % Credit Card 66% 62% +4 p.p 65% 64% +1 p.p Other Means of Payment 34% 38% -4 p.p 35% 36% -1 p.p NET WORKING CAPITAL The consolidated net working capital at September 30, 2014 was 53 days, representing an improvement of 2 days when compared to the 55 days presented at September 30, /30/ /30/2014 (Net Working Capital = Days of Inventory + Days of Accounts Receivable Days of Suppliers) B2W DIGITAL, confirming its commitment to maximize shareholder value, continues to manage working capital variables. Opportunities of improvement in internal processes and relationship with suppliers continue being implemented and we are certain that better levels can be achieved. 9 9

10 INVESTMENT AND INNOVATION We have adopted an investment plan which the main objective is to enable growth and improvements in the operations. In first nine months of 2014, B2W DIGITAL invested R$ million, mainly concentrated in logistics, technology and innovation areas. Logistics Aiming to be closer to the customer and provide the best delivery service, B2W DIGITAL opened 4 new Distribution Centers (DCs): one in São Paulo, one in Pernambuco and the other two in Santa Catarina; and expanded the one in Rio de Janeiro. As a result, two smaller-capacity DCs, located in São Paulo and Pernambuco, were replaced. With these changes, B2W increased its total storage capacity by 50% and now has nine distribution centers located in São Paulo (4), Rio de Janeiro (1), Minas Gerais (1), Pernambuco (1) and Santa Catarina (2). In line with the announced investment plan, at least 3 new DCs will be opened by the end of On June 14, 2014 B2W announced the acquisition of Direct, the biggest and best e-commerce logistics operator in Brazil, specialized in deliveries of small items (packets). The Administrative Council for Economic Defense (CADE) approved the acquisition on July 8, In 2013, the Company already had acquired Click-Rodo, a logistics operator also specialized in deliveries for e-commerce, focusing on large items (outsized packages). With these two acquisitions, B2W has enhanced its level of logistics services, counting on the two major Brazilian Internet last mile carriers. In addition, the Company established strategic alliances with the leading transportation companies of the country, ensuring the joint commitment to offer the best level of service to the customers. Technology In line with the investment plan and the strategy to be a reference in the technology and internet market, B2W DIGITAL acquired, during 2013, three technology companies specialized in the development of systems and solutions for e-commerce. Doing that, the Company doubled its technology/internet team, which is the largest in Latin America and nowadays has over 600 engineers. Below are the highlights of the acquired companies: Uniconsult: Optimization of orders control (shipping and reverse) and systems for managing multiple distribution centers and development of specific systems for marketplace operation; Ideais Tecnologia; Development and optimization of online sales platforms, B2B/B2B2C and mobile systems; Tarkena: Optimization of search systems and algorithms for shipping management. The investments in technological platforms in the areas of operations and logistics, television, customer service and telephone sales seeking to improve the quality and efficiency of Company s operations, aiming to provide the client an even better purchasing experience. During 2014 were implemented many projects evolving from improvements in the structure of the technological platform to new features. 10

11 OPERATIONAL HIGHLIGHTS B2W DIGITAL, always seeking to strengthen its multibusiness, multichannel and multibrand strategy, continues investing in a digital platform with business that presents huge synergy. The Company has a portfolio with the most known and beloved brands in the internet. Americanas.com The largest Store. The lowest prices. Since 1999, Americanas.com is Latin America's largest and most complete online store. Elected by consumers as the number 1 in service, the brand offers more than 500,000 products that can be purchased through the web site, telephone sales or in over 850 kiosks located inside of Lojas Americanas brick-and-mortar stores. In addition, its delivery, travel, mobile app and B2B services, among many others, contribute to a unique and increasingly more complete purchase experience. Submarino The products you like and the Internet's best service. Submarino - pioneer online store and benchmark in technology and innovation - offers more than 30 categories of products through the Internet, telephone sales, mobile and catalogs, with an emphasis on the sale of books, games, DVDs, electronics, computers, telephony, fashion and online services. In addition, Submarino has been consolidating other services, such as Submarino Viagens, B2B services and the Submarino Card. Shoptime Exclusive products and live demonstrations. Shoptime is the first Brazilian homeshopping channel and operates via Internet, catalog and telephone sales. The brand focuses on integrating its different sales channels aiming to provide customers the best shopping experience. The Shoptime assortment emphasizes home products, with its four private label brands: Casa & Conforto, Fun Kitchen, La Cuisine and Life Zone. SouBarato SouBarato is B2W Digital's outlet that offers a wide variety of products from the best brands, with promotional pricing below the market average. The site sells new and repackaged products in perfect condition, with discounts of up to 70%. Launched in the end of 2011, SouBarato presents a wide and varied selection of products, with more than 20 categories such as smartphones and mobile phones, computers, TVs, electronics, among others. B2W Viagens B2W Viagens operates through the Americanas Viagens, Shoptime Viagens, Milevo, Submarino Viajes and Submarino Viagens, brand with the latter having been elected by popular vote in 2013 three-time champion in terms of customer service and the Best Online Travel Agency in the country. B2W Viagens' sites have established partnerships with more than 750 airlines, 200,000 hotels and 4,000 attractions throughout the world. Ingresso.com Brazilian leader in Internet ticket sales, with more than 5 million customers, Ingresso.com offers the convenience of secure ticket purchases through the website, telephone sales and apps for the Iphone, Android phones and Facebook. In addition to leading the virtual world, its new ARENA software, which was launched in 2013, is considered the most intelligent strategic management tool in the market, allowing the Company to consolidate its presence in the country's biggest box offices. Submarino Finance Submarino Finance offers the Submarino Mastercard credit card, which comes with special advantages through Submarino, such as exclusive discounts and payment installment conditions, differentiated credit limits and Léguas Program, a distinctive loyalty program. Over 3Q14, we reached the milestone of more than 1,000,000 cards issued, garnering a 37% share in Submarino's website sales. 11

12 CORPORATE GOVERNANCE AND CAPITAL MARKETS B2W DIGITAL is listed on BM&FBOVESPA and Novo Mercado, the highest corporate governance level in Brazil, listing rules. These include an ownership structure exclusively comprised of common shares and the election of independent members to the Board of Directors. B2W DIGITAL s Board of Directors is comprised of seven members, four of whom appointed by the controlling shareholders and another three independent members. The requests to be registered as a publicly-traded Company and the listing of its shares under the Novo Mercado were approved by Brazilian Securities and Exchange Commission (CVM) and the BM&FBOVESPA on July, 25 and 26, 2007, respectively. B2W s common shares are listed on BM&FBOVESPA and have been traded under the ticker symbol BTOW3 (common) since August 8, Below is a short description of the main events occurred during the year: On January 24, 2014, a Meeting of the Board of Directors was held aiming to approve the signing of an Agreement for Subscription of Shares concluded with Tiger Global Brazil LLC and Tiger Global Long Opportunities Brazil LLC (Tiger Global Long Opportunities Brazil LLC together with the Tiger Global Brazil LLC, the "Investor") and the Controller of the Company, Lojas Americanas S.A., for a private capital increase, to be approved by an Extraordinary Shareholders Meeting of the Company, in the amount of R$ 2,380,000, through the issuance of 95,200,000 common shares, nominal and with no face value, at an issue price of R$ per share. On April 29, 2014 the Company s General and Extraordinary Shareholders Meetings were held, at which the following resolutions were approved: 1- To take recognizance of the accounts prepared by the managers and related financial statements for the fiscal year ended December 31, Setting the global compensation to be paid to officers; 3- Fiscal Council installation and election of Messrs. Carlos Alberto de Souza, Pedro Carvalho de Mello and Peter Edward Cortes Marsden Wilson to the positions of full members and Messrs. Ricardo Scalzo, Luciano Mancini and André Pines to the positions of alternate members. 4- Unanimous approval of the amendment to the caput of Article 5 of the Company s Bylaws to reflect the capital stock increases accepted by the Board of Directors on October 1 and November 1, 2013, through the exercising of options granted under the Company s Share Option Purchase Program adopted on August 31, On June 5, 2014, at the Company's Extraordinary Shareholders Meeting the following resolutions were passed: 1- Approval of the Company's capital increase in the amount of R$ 2,380,000, with the private placement of 95,200,00 common, nominal shares at no par value, at an issue price of R$ 25.00; 2- Reform of Paragraph 2 of Article 5 of the Company's Bylaws, to raise the authorized capital stock of the Company to up to 320,000,000. On July 3, 2014, a General Meeting of Debenture Holders of the 3rd issue of Debentures was held to approve the completion of Total Optional Early Redemption and exemption from the publication of the early redemption notice. On August 13, 2014, a Board of Directors meeting was held in order to approve: 1- Approval of the capital increase of the Company, approved in the extraordinary general meeting held on June 5, Due to the capital increase approval, the Company s capital was increased by R$ 2,380,000,000.00, therefore, from R$ 1,198,991, to R$ 3,578,991, divided into 254,199,202 common, nominal and no par value shares. The minutes of the shareholders meeting and the reelection aforementioned, as well as other corporate and financial information of B2W DIGITAL are available for consultation on our Investor Relations website ( 12

13 EXHIBIT I INCOME STATEMENT B2W - Companhia Digital Consolidated Consolidated Income Statements Period ended on September 30 Period ended on September 30 (in million of Brazilian reais, except result per share) 3Q14 3Q13 Variation 9M14 9M13 Variation Gross Sales and Services Revenue 2, , % 5, , % Taxes on sales and services (271.0) (212.7) 27.4% (757.1) (589.3) 28.5% Net Sales and Services Revenue 1, , % 5, , % Cost of goods and services sold (1,390.1) (1,129.0) 23.1% (3,936.5) (3,004.8) 31.0% Gross Profit % 1, , % Gross Margin (% NR) 24.4% 24.7% -0.3 p.p. 24.6% 25.1% -0.5 p.p. Operating Revenue (Expenses) (356.9) (290.2) 23.0% (1,025.6) (812.1) 26.3% Selling expenses (284.5) (240.2) 18.4% (841.2) (676.8) 24.3% General and administrative expenses (29.2) (23.8) 22.7% (79.4) (59.0) 34.6% Depreciation and amortization (43.2) (26.2) 64.9% (105.0) (76.3) 37.6% Operating Result before Net Financial Result and Equity Accounting % % Net Financial Result (176.2) (127.4) 38.3% (512.6) (369.1) 38.9% Financial revenues % % Financial expenses (275.1) (183.9) 49.6% (774.3) (514.0) 50.6% Other operating income (expenses)* (8.2) (11.6) -29.3% (25.7) (48.9) -47.4% Income tax and social contribution % % Net Result (62.1) (38.6) 60.9% (184.3) (149.0) 23.7% Net Margin (% NR) -3.4% -2.6% -0.8 p.p. -3.5% -3.7% 0.2 p.p. Adjusted EBITDA % % Adjusted EBITDA Margin (% NR) 7.4% 7.1% 0.3 p.p. 6.9% 6.7% 0.2 p.p. * In the the former accounting rules, considered as "non-operating income". Adjusted EBITDA: Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting. 13

14 EXHIBIT II BALANCE SHEET B2W - Companhia Digital Balance Sheet (in million of Brazilian reais) ASSETS CURRENT ASSETS Consolidated 09/30/ /30/2014 Cash and banks Marketable securities ,658.1 Accounts receivable Inventories Recoverable taxes Prepaid expenses and other accounts Total Current Assets 3, ,970.2 NON CURRENT ASSETS Deferred income tax and social contribution Recoverable taxes Escrow deposits and other receivables Plant, property and equipment Intangible assets 2, ,857.0 Total Non-Current Assets 3, ,929.2 TOTAL ASSETS 6, ,899.4 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Suppliers 1, ,472.7 Loans and financing Debentures Salaries and social contribution Taxes payable Deferred income tax and social contribution Other accounts payable Total Current Liabilities 2, ,315.0 NON-CURRENT LIABILITIES Long-term liabilities: Loans and financing 1, ,898.5 Debentures Provision for contingencies and other accounts payable Total Non-Current Liabilities 1, ,393.3 SHAREHOLDERS' EQUITY Capital 3, ,680.2 Capital reserves Equity valuation adjustment (0.6) (0.5) Accumulated income (losses) (559.1) (497.1) Total Shareholders' Equity 3, ,191.1 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6, ,

15 EXHIBIT III CASH FLOW STATEMENT B2W - Companhia Digital Cash Flow Statement (in million of reais) Consolidated Operating Activities 09/30/ /30/2013 Variation Net Result for the Period (184.3) (149.1) (35.2) Adjustment to the Net Result: Depreciation and amortization Deferred income tax and social contribution (100.4) (83.3) (17.1) Interest, monetary and currency changes (29.3) Others (14.2) Adjusted Net Result (115.6) (48.5) (67.1) Change in Working Capital: Accounts receivable (279.4) (29.5) (249.9) Inventories 97.1 (237.7) Suppliers (539.0) (886.4) Change in Working Capital: (721.3) 80.2 (801.5) Change in Assets: Prepaid expenses 0.7 (11.9) 12.6 Escrow deposits (6.2) (0.5) (5.7) Recoverable taxes (164.4) 7.2 (171.6) Other accounts receivable (current and non-current) (60.8) (96.3) 35.5 Change in Assets: (230.7) (101.5) (129.2) Change in Liabilities Salaries and social charges security Recoverable taxes (current and non-current) Other liabilities (current and non-current) Change in Liabilities: Cash Flow from Operating Activities (921.0) 45.5 (966.5) Investing Activities Marketable securities (321.6) 1,171.0 Purchases of property, plant and equipment assets (128.6) (34.5) (94.1) Intangible assets (542.1) (381.9) (160.2) Cash Flow from Investing Activities (738.0) Financing Activities Additions (584.9) Payments (2,065.9) (219.8) (1,846.1) Discount of receivables Capital increase in cash 2, ,395.9 Cash Flow from Financing Activities Change in cash balance 96.2 (5.9) Beginning Cash Balance Ending Cash Balance

16 INFORMATION ABOUT THE WEBCAST AND THE CONFERENCE CALL Conference calls with simultaneous translation into English, followed by a bilingual Q&A session will be held as followed: Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization and excluding other operating revenues/expenses and equity accounting) is presented as additional information because we believe it represents an important indicator of our operating performance and in order to maintain comparability with the results previously reported. EBITDA (CVM 527/12): On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, which disposes about the voluntary disclosure of not of accounting information as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and making it comparable among the publicly listed companies. EBITDA s (CVM 527/12) calculation takes into account the net income of the period plus income taxes, net financial expenses of financial revenues and depreciation and amortization. We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'' ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond B2W ability to control or predict. 16