Results Important Disclaimer

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1 2Q18

2 Important Disclaimer Information contained in this document may include forward-looking statements and reflect Management s current view and estimates of the evolution of the macroeconomic environment, industry conditions, Company s performance and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this document, which do not describe historical facts, such as information about declaration of dividend payment, future direction of operations, implementation of relevant operating and financial strategies, investment program and factors or trends affecting the financial condition, liquidity or results of operations, are forward-looking statements, as set forth in the U.S. Private Securities Litigation Reform Act of 1995, and involve several risks and uncertainties. There is no guarantee that these results will occur. Forward-looking statements are based on several factors and expectations, including economic and market conditions, industry competitiveness and operational factors. Any changes in such expectations and factors may cause actual results to differ from current expectations. 2

3 3Q18 Highlights Net revenue in 3Q18 reached Net Revenue R$ million, a 10.7% increase against 3Q17. Arezzo&Co recorded a 870bps ROIC increase in ROIC, reaching a level of SSS Same-Store-Sales growth of 1.6% in the quarter. 32.6%. In 3Q18, Gross Profit totaled Sales Area Arezzo&Co opened 13 stores (net) and closed 3Q18 with a growth of 8.0% in store area in the last twelve months. Gross Profit R$ million (gross margin of 46.5%), a 12.3% increase against 3Q17. EBITDA for 3Q18 totaled Net Income In 3Q18, Net Income totaled R$ 40.2 million (net margin of 9.8%) 6.6% increase against 3Q17. EBITDA R$ 70.7 million with a net margin of 17.2% and a 8.1% increase against 3Q17. 3

4 Company Growth GROSS REVENUE / DOMESTIC AND FOREIGN MARKET (R$ MILLION) 1.360, ,7 134,5 113,7 10,5% 18,3% 455,0 39,0 9,4% 39,4% 497,9 54,3 416,0 443,6 6,6% 1.117,0 9,7% 1.225,8 THE COMPANY REACHED A GROSS REVENUE OF R$ MILLION IN THE 3Q18, A 9.4% GROWTH COMPARED TO THE 3Q17, WITH HIGHLIGHT TO THE EXTERNAL MARKET WITH GROWTH OF 39,4%. US OPERATIONS INCREASED 49,7% IN THE PERIOD, WHILE EXPORTS GROWED 26,2%. Domestic Market External Market 4

5 Gross Revenue by Brand Domestic Market GROSS REVENUE BREAKDOWN BY BRAND / DOMESTIC MARKET (R$ MILLION) 1.117,0 28,7 107,1 9,7% 1.225,8 44,7 154,1 56,0% 6,6% 343,9 43,9% 335,8 85,1% 443,6 416,0 10,6 19,6 45,8% 41,5 60,5 125,9-6,2% 118,1 637,3-2,4% 8,5% 691,1 IN 3Q18, WE HAD HIGHLIGHT THE ANACAPRI BRANDS WITH 45.8% GROWTH HIGHLIGHTING. 238,1 3,1% 245,4 Arezzo Schutz Anacapri Others 1 1. OTHERS: INCREASE OF 85.1% IN 3Q18 (INCLUDES ONLY DOMESTIC MARKETS FOR ALEXANDRE BIRMAN, FIEVER AND OWME BRANDS AND OTHER REVENUES). 5

6 Gross Revenue by Channel Domestic Market GROSS REVENUE BY CHANNEL / DOMESTIC MARKET (R$ MILLION) 1.225,8 6,6% 23,3% 416,0 7,2% 443,6 0,4 35,3 43,6 110,7 3,3% 118,7 67,9 70,1 4,6% 201,7 210, ,0 2,6 93,1 276,3 207,2 0,3 9,7% 26,4% 11,7% 1,8% 117,7 308,6 211,0 537,8 587,1 9,2% 1,4 Total Others Web Commerce Multi-brand Owned Stores Franchise SSS SELL-IN (FRANCHISES) 2,7% -1,2% 6,5% 3,0% SSS SELL-OUT (LOJAS PRÓPRIAS + WEB + FRANQUIAS) (OWNED STORES + WEB + FRANCHISES) 7,2% 1,6% 4,4% 4,4% 6

7 1.500 Distribution Channel Expansion 70, OWNED STORES AND FRANCHISES EXPANSION 1 60,0 NUMBER OF STORES DOMESTIC MARKET 3Q18 FRANCHISES ,4 4,7% 0,7% 1,3% 1,3% 41,2 41,5 42,0 42,6 50,0 40,0 OWNED STORES 14 MULTIBRANDS 1,215 FRANCHISES 68 OWNED STORES ,0 MULTIMARCAS 1,129 FRANQUIAS 129 OWNED STORES ,0 MULTIBRANDS 1,435 OWNED STORES ,0 MULTIBRANDS Q17 4Q17 1Q18 2Q18 3Q18 Franchises Owned Stores Area (000 m2) 2 - OWNED STORES 5 MULTIBRANDS 398 AREZZO&CO S OPENED 13 NET STORES AND ENDED THE QUARTER WITH 8.0% GROWTH OF SALES AREA OVER THE LAST 12 MONTHS. OWNED STORES 2 MULTIBRANDS INCLUDES SEVEN OUTLET TYPE STORES WITH A TOTAL AREA OF 1,961 M² AND STORES OVERSEAS. 2. INCLUDES ALEXANDRE BIRMAN AND SCHUTZ STORES, 3 IN NEW YORK AND ONE IN LOS ANGELES. 7

8 Gross Profit and EBITDA 750,0 GROSS PROFIT (R$ MILLIONS) EBITDA (R$ MILLIONS) 650,0 550,0 450,0 350,0 250,0 150,0 50,0-50,0 +70 bps +70 bps 45,8% 46,5% 45,6% 46,3% 190,6 169,8 454,2 13,6% 515,9 12,3% 8,1% Gross Profit Gross Margin 244,0 246,0 248,0 250,0 234,0 236,0 238,0 240,0 242,0 224,0 226,0 228,0 230,0 232,0 40% 100,0 102,0 104,0 106,0 108,0 110,0 112,0 114,0 116,0 118,0 120,0 122,0 124,0 126,0 128,0 130,0 132,0 134,0 136,0 138,0 140,0 142,0 144,0 146,0 148,0 150,0 152,0 154,0 156,0 158,0 160,0 162,0 164,0 166,0 168,0 170,0 172,0 174,0 176,0 178,0 180,0 182,0 184,0 186,0 188,0 190,0 192,0 194,0 196,0 198,0 200,0 202,0 204,0 206,0 208,0 210,0 212,0 214,0 216,0 218,0 220,0 222,0 90,0 92,0 94,0 96,0 98,0 20% 80,0 82,0 84,0 86,0 88,0 70,0 72,0 74,0 76,0 78,0 60,0 62,0 64,0 66,0 68,0 50,0 52,0 54,0 56,0 58,0 40,0 42,0 44,0 46,0 48,0 10,0 12,0 14,0 16,0 18,0 20,0 22,0 24,0 26,0 28,0 30,0 32,0 34,0 36,0 38,0 2,0 4,0 6,0 8,0-0% -40 bps -10 bps 17,6% 17,2% 15,2% 15,1% 65,4 70,7 151,8 10,7% 168,0 EBITDA EBITDA Margin GROSS PROFIT TOTALED R$ MILLION IN 3Q18 WITH AN INCREASE OF 12.3% (+ 70BPS IN GROSS MARGIN). EBITDA GREW BY 8.1% IN 3Q18 TO R$ 70.7 MILLION (EBITDA MARGIN OF 17.2%). 8

9 Net Income 160,0 NET INCOME (R$ MILLIONS) 12,0% 140,0 120,0 10,2% -40 bps -90 bps 9,8% 9,9% 1,3% 9,0% THE COMPANY POSTED A NET MARGIN OF 9.8% IN 3Q18 AND A NET INCOME OF R$ 10,0% 40.2 MILLION, 6.6% INCREASE AGAINST 3Q ,0 99,1 100,4 8,0% 80,0 6,0% 60,0 40,0 6,6% 37,7 40,2 4,0% 20,0 2,0% - 0,0% Net Income Net Margin 9

10 Operating Cash Flow OPERATING CASH FLOW (R$ THOUSAND) Operating cash flow 3Q18 3Q17 9M18 9M17 Profits before income tax and social contribution Depreciation and amortization Others (191) (2.925) (4.271) Decrease (increase) in assets / liabilities (17.898) (18.260) (53.368) (3.655) AREZZO&CO GENERATED R$ 38.5 MILLION CASH FROM OPERATIONS IN 3Q18, LOWER THAN THE AMOUNT PRESENTED IN 3Q17. IT IS WORTH HIGHLIGHTING THE PAYMENT OF INTEREST ON EQUITY RELATED TO 1ST SEMESTER OF 2018, IN JULY 25TH IN THE AMOUNT OF R$21.0 MILLION Trade accounts receivables Inventories Suppliers (51.604) (50.078) (50.007) (30.567) (5.883) (34.924) (9.794) Change in other noncurrent and current assets and liabilities (5.869) Payment of income tax and social contribution (7.855) (13.040) (13.996) (27.911) Net cash flow generated by operational activities

11 Investments (CAPEX) and Indebtedness CAPEX (R$ MILLIONS) 36,0 INDEBTEDNESS (R$ MILLIONS) 170,2% 559,1% 154,9% 5,1 5,1 0,8 25,0% 6,4 2,5 1,8 2,2 13,7 13,9 2,5 6,0 5,5 157,9% 314,4% 170,4% 71,7% 10,5 16,1 9,4 Stores Corporate Others total Cash position and Indebtedness 3Q18 2T18 3T17 Cash Total debt Short term % total debt 93,5% 92,3% 78,3% Long-term % total debt 6,5% 7,7% 21,7% Net Debt ( ) ( ) ( ) IN 3Q18, AREZZO&CO INVESTED R$ 13.7 MILLION IN CAPEX, INCLUDING: BRAZIL: (I) AREZZO&CO NEW OFFICE IN SÃO PAULO, (II) INVESTMENTS IN TECNOLOGY IN ALEXANDRE BIRMAN BRAND FACTORY, (III) REMODELING OF SCHUTZ STORES (IV) CONSTRUCTION OF AN ADDICTIONAL OWNED FACTORY, FOCUSED ON SNEAKERS AND COMFORT SHOES, (V) OPENING THE FIEVER STORE IN PÁTIO HIGIENÓPOLIS. UNITED STATES: (I) DESIGN AND IMPROVEMENT IN ALEXANDRE BIRMAN BRAND INTERNATIONAL WEB COMMERCE (II) INVESTMENTS IN BRANDING FOR THE SCHUTZ BRAND. 11

12 ROIC (Return on Invested Capital) Income from operations 3Q18 3Q17 3Q16 EBIT (LTM) + IR and CS (LTM) NOPAT Δ 18 x 17 (%) ,6% (8.247) (52.742) (38.381) (84,4%) ,5% RETURN ON INVESTED CAPITAL (ROIC) AGAIN SHOWED GROWTH IN 3Q18, REACHING 32.6%, 870BPS INCREASE VS 3Q17. Working Capital¹ Permanent assets Other long-term assets² Invested capital Average invested capital³ ROIC ,3% ,4% ,9% ,6% ,5% 32,6% 23,9% NCREASE OF 42.5% NOPAT AGAINST 3Q17, WHICH IS PARTIALLY DUE TO AN INJUNCTION OBTAINED IN 4Q17 EXEMPTING THE COMPANY FROM THE PAYMENT OF INCOME AND SOCIAL CONTRIBUTION TAXES (IR AND CSLL 34%) ON AN ICMS TAX BENEFIT RETROACTIVE TO 2017, WHICH REMAINED VALID DURING 9M18; (1) Working Capital: current assets minus cash, cash equivalents and financial investments less current liabilities minus loans and financing and dividends payable. (2) Less deferred income tax and social contribution. (3) Average invested capital in the period and same period previous year. (4) ROIC: NOPAT for the last 12 months divided by average invested capital. 12

13 Contacts CFO RAFAEL SACHETE IRO ALINE PENNA IR COORDINATOR VICTORIA MACHADO