November/December 2010

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Thomasina Burke
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1 1 November/December 2010

in 18 States and the Federal District More than 140,000

2 Largest Retailer in Brazil Gross Sales: R$ 44 billion (annualized based in 2010): 1,863 points of sales, located in 18 States and the Federal District More than 140,000 employees 600 million tickets per year 2.7 million m² of sales areas 2

Management Team Clique para editar o estilo do título mestre Clique para editar os estilos 13

Segundo nível CORPORATE EXECUTIVE OFFICERS Segundo nível Terceiro Terceiro nível nível Quarto

Chain IT 9 years in retail 25 years in retail 2 years in retail Quinto Quinto nível 4 GPA 8

Relations 31 years in retail 9 in GPA CEO BUSINESSES OFFICERS Paulo Food Commercial 21 years

in retail 18 in GPA Cash & Carry 22 years in retail 8 in GPA Electronics 12 years in retail 7

3 Management Team Clique para editar o estilo do título mestre Clique para editar os estilos 13 years do in texto retail Clique para editar os mestre Enéas estilos do texto mestre 7 in GPA Segundo nível CORPORATE EXECUTIVE OFFICERS Segundo nível Terceiro Terceiro nível nível Quarto Commercial Quarto nível nívelmarket Human Strategy Financial and Strategy Resources Supply Chain IT 9 years in retail 25 years in retail 2 years in retail Quinto Quinto nível 4 GPA 8 months in 25 years in retail 9 in GPA 2 in GPA retail and in GPA 10 in GPA nível Corporate Relations 31 years in retail 9 in GPA CEO BUSINESSES OFFICERS Paulo Food Commercial 21 years in retail 21 in GPA Retail Business 31 years in retail 31 in GPA Specialized Business 18 years in retail 18 in GPA Cash & Carry 22 years in retail 8 in GPA Electronics 12 years in retail 7 abroad and 5 in Brazil E-commerce 16 years in e-commerce 2 in Ponto Frio FIC 18 years in retail 2 in FIC 3

4 New Management Model Retail Cash & Carry Specialized Businesses Electronics.Com Indicators Market Strategy Expansion Sales Strategy Sales Margin Corporate Relations Image Supply Chain Logistics Result Corporate Services, Finance / IT Financial Costs Human Resources Retention and Succession Retail Results Cash & Carry Results Specialized Businesses Results Electronics Results.Com Results 4

Leadership (Right people in the right places) Method Processes Satisfaction & Happiness

5 GPA s Management Model Symbols Monitoring/Control and Adjustment of Non-Compliance Right People Model of Management Role & Responsibility Organizational Structure Technical Knowledge Leadership (Right people in the right places) Method Processes Satisfaction & Happiness Clients Our people Society Suppliers Shareholders Goals Results & Growth Government Guidelines and Goals 5

Channel Diversification Real Estate Boom Integration of

6 Retail Momentum in Brazil 6 Rise of the Purchasing Power Focus on middle popular class Informality Reduction Channel Diversification Real Estate Boom Integration of Ponto Frio and Casas Bahia 2014 World Cup 2016 Olympic Games

7 ECONOMIC SCENARIO Exame Magazine August,

8 Economic Scenario Since I can remember this is the first time I see Brazil growing distributing income Abilio Diniz 8 Source: Data Popular in the Newspaper O Estado de SP in August 2,

9 9 Formats

10 Multiformat Structure Operational efficiency Supermarkets Cash & Carry Hypermarket Proximity Specialized Stores E-commerce 10

service/quality products Fair prices Variety (~51,000 itens) Medium/Low income groups R$ 4.

11 Supermarkets High income groups R$ 4.3 billion gross sales in 2009 Avg. sales area: ~1,500 m 2 Differentials: Neighborhood supermarket Innovative solutions Best food service/quality products Fair prices Variety (~51,000 itens) Medium/Low income groups R$ 4.7 billion gross sales in 2009 Avg. sales area: ~1,500 m2 Differentials: Neighborhood supermarket Competitive prices ~ 21,000 itens 11

Extra Multiformat Structure All income groups R$ 11.

non-food products Competitive Prices 6,000 m2 ~ 69,000

itens Second highest growth among all the formats Business

Pernambuco and Fortaleza, ready to roll out 1,500 m2 ~

12 Extra Multiformat Structure All income groups R$ 11.8 billion gross sales in 2009 Broad range of food and non-food products Competitive Prices 6,000 m2 ~ 69,000 itens Rapid Service / Essential Products 300 m² ~ 4,500 itens Second highest growth among all the formats Business model to improve ROIC Stores located in São Paulo, Pernambuco and Fortaleza, ready to roll out 1,500 m2 ~ 25,000 itens Serve the growing number of multichannel consumers 12 Scale is crucial for expansion

13 Specialized Businesses 13

14 Specialized Stores Electronics, Home Appliance and Furniture Focused on High/Middle Income Classes Positioning based on social classes 14

15 E-commerce 15

16 Cash & Carry Low income groups R$ 2.2 billion gross sales in 2009 Avg. sales area: 4,000 m2 Highly competitive prices Number of stores: Low cost structure 40 High asset turnover 34 Return on Invested Capital is very attractive for GPA Increase operations in other states 3Q09 4Q09 3Q10 4Q10E 16

17 17 Extra Supermercado

18 18 Extra Supermercado x CompreBem Differentials

Regional Stores Distribution (3Q10) Total Middle-West São Paulo Rio de Janeiro North east 146 13 103 9 21 105 14 61 15 15 143 129 12 2 59 59 48 1 34 8 5 Total Food Business 608 stores

19 Regional Stores Distribution (3Q10) Total Middle-West São Paulo Rio de Janeiro North east Total Food Business 608 stores Gas Stations Drugstores Total Electronic Business 1,022 stores Total Specialized Businesses

20 Business Opportunities: Food 20

from specialized channels to hypermarkets Increase its presence in the

21 Strategy Growth in Same-Store Sales (SSS) Expansion through Organic Growth Rationalization of Brands Geographical Strategy Bring expertise from specialized channels to hypermarkets Increase its presence in the less saturated markets particularly in the Northeast and Middle-East 21

Food Brazilian Market Formal Sector in 2009: R$ 177

6% of the GDP Informal Sector accounts for

Fragmented Market: Small / Medium Chains Increasing

3% 13.8% 13.2% 14.8% 10.4% 10.4% 14.1% 11.0% 14.2% 10.

22 Food Brazilian Market Formal Sector in 2009: R$ 177 billion 5.6% of the GDP Informal Sector accounts for approximately 50% of total food consumption Fragmented Market: Small / Medium Chains Increasing formalization of the market Market share (%)¹ 13.3% 13.8% 13.2% 14.8% 10.4% 10.4% 14.1% 11.0% 14.2% 10.7% 14.5% 11.1% 65.9% 61.1% 61.9% 59.6% Others 22 (1) Source: Abras Brazilian Supermarkets Association

23 Continuous Gain of Market Share GPA vs Carrefour (Nominal same-store-sales) 9.7% Carrefour GPA 5.2% 7.7% GPA vs ABRAS (Nominal same-store sales) 3.9% 18.2% 15.2% 11.9% 15.1% 3T09 3T10 GPA s sales exceeded Carrefour s in In the last 9 consecutive quarters. In this period, the average sales growth was 2x higher than Carrefour s. 10.7% 9.8% * GPA Abras * up to September/2010

24 Business Opportunities: Electronics, Home Appliance and Furniture 24

25 New Globex Operation Street Shopping Malls * Positioning based on social classes A B C D E States * Includes Extra Eletro stores 25

The strategy is to offer the best business opportunities for the pyramid's base, ensuring

26 Positioning and Brand Strategy To be the best purchase choice for A/B class, and the best choice for B/C class after Casas Bahia. Reach consumers at the base of the pyramid. The strategy is to offer the best business opportunities for the pyramid's base, ensuring that the brand remains most remembered and admired by consumers in the base of the pyramid. 26

27 Furniture Factory - Bartira + Largest factory in Latin America 3 rd largest in the world Around 2 thousand employees More than 4 million items produced in 2009 High growth potential 27

28 Past Revenue Figures Total Gross Sales 1H10 (R$ mi) Growth same-store-sales (SSS) 1H10/09 6, % 2, % % Total 8,946 (1) (1) Proforma 28

Strategies for New Globex Strategy pillar Approach - actions 1 Commercial and operating management Commercial synergies Growth of sales 2 Management of Infrastructure and backoffice Centralization of

29 Strategies for New Globex Strategy pillar Approach - actions 1 Commercial and operating management Commercial synergies Growth of sales 2 Management of Infrastructure and backoffice Centralization of inventories and stock up To take advantage of synergies with GPA Utilization of GPA backoffice platform (Shared Services Center and Indirect Purchase Center) Total integration between Casas Bahia and Ponto Frio Centralization of information systems Improvement of processes 3 Management of financial and capital structure Capitalize Ponto Frio (agreement) Utilization of GPA financial management platform 29

30 2008 Market Share 16% 7% 3% 3% 3% 3% Source: Valor Econômico Ranking (2008) 30

31 Shareholder Structure GPA The Klein Family 53% 1 47% % 1 Globex 50.1% 1 100% Executive Officers 6% New.com NCB 1 Not including Globex s minority shareholders. 31

32 Business Opportunities: E-Commerce 32

33 E-commerce Market Share B2W 53,8% 47,2% R$2 billion Gross Sales GPA.com 8,0% 12,7% 20% others 38,2% 40,1% e 33

34 Business Opportunities: Financial Operation 34

35 Largest Retailer in Brazil 35

36 36 Guidance

GPA s Guidance for 2010 9M10 Guidances TOTAL GROSS SALES (R$) REAL GROWTH IN GROSS SAME-STORE SALES (%) GPA GPA+ Ponto Frio GPA+ Ponto Frio R$ 18,8 billion More than R$ 26 billion R$ 23,5 billion

37 GPA s Guidance for M10 Guidances TOTAL GROSS SALES (R$) REAL GROWTH IN GROSS SAME-STORE SALES (%) GPA GPA+ Ponto Frio GPA+ Ponto Frio R$ 18,8 billion More than R$ 26 billion R$ 23,5 billion More than R$ 33 billion 7.2% Between 4.0% and 5.0% EBITDA (R$) GPA+ Ponto Frio R$ 1.3 billion More than R$ 1.8 billion CAPEX GPA + Ponto Frio R$ 0.7 billion Approximately R$ 1.6 billion NET DEBT/ EBITDA GPA+ Ponto Frio 1.07 X Less than 1X 37

5% EBITDA MARGIN (1) 4.5 to 6.0% Higher than 7.5% FINANCIAL RESULT (1) -3.5 to -4.

38 Guidance for New Globex 2011E Year model GROSS SALES (R$) Above R$ 20 billion Growth (SSS) above the market GROSS MARGIN (1) Higher than 25.5% Higher than 26.5% EBITDA MARGIN (1) 4.5 to 6.0% Higher than 7.5% FINANCIAL RESULT (1) -3.5 to -4.5% Up to -4.0% CAPEX R$ 100 mn to R$ 120 mn (1) % of net sales. Projections include estimated synergies. 38

Main Synergies 1 Commercial and operating management 2 Management of infrastructure and back-office Integrate the Ponto Frio operating management to

and the other areas; Refine the operational processes; Take advantage of other synergies with GPA (logistics, IT etc); 3 Management of financial and

39 Main Synergies 1 Commercial and operating management 2 Management of infrastructure and back-office Integrate the Ponto Frio operating management to Casas Bahia model with margin and sales gains Centralization of purchase management with margin gains; Improvement of sales and pricing mix; Increase the penetration of services sales; Repositioning of Ponto Frio brand and maintaining strong the Casas Bahia brand Centralization of the companies inventories and stock ups; Utilization of GPA s back-office platform with Shared Services Center and total integration among Casas Bahia, Ponto Frio and the other areas; Refine the operational processes; Take advantage of other synergies with GPA (logistics, IT etc); 3 Management of financial and capital structure Manage the cash / Working Capital inside GPA platform; Reduction in funding costs / negotiation of financing instruments and lines at GPA cost; 39

Synergies Potential per year after total capture of

0% (R$ 170-340 mn) 2 Management of infra-structure and

0% (R$ 255-340 mn) 3 Management of financial and capital

40 Synergies Potential per year after total capture of synergies (1) 1 Commercial and operating management 1.0% - 2.0% (R$ mn) 2 Management of infra-structure and back-office 1.5% - 2.0% (R$ mn) 3 Management of financial and capital structure 0.5% - 1.0% (R$ mn) Total 3.0% - 5.0% (R$ mn) (1) Synergy calculated over the net sales. 40

41 3Q10 Results 3Q10 GPA Food Results 3Q10 Globex Results 41

(+590 bps) Net Income: R$ 115 M (margin of

6 M Approval of the Association with Casas

42 3Q10 Highlights compared to 3Q09 Consolidated Gross Sales: R$ 7.9 bn (+15.6%) Gross same store sales: +12.5% Gross Margin GPA Food (1) : 25.9% (+50 bps) Globex: 19.8% (+ 400 bps) Consolidated EBITDA: R$ 493 M (7.0%) GPA Food (1) : 7.5% (R$ M) (+50 bps) Globex: 5,1% (R$ 77,1 mi) (+590 bps) Net Income: R$ 115 M (margin of 1.6%) Dividend distribution of R$ 19.6 M Approval of the Association with Casas Bahia in Extraordinary Shareholders Meeting in 11/09/ GPA Food (1) : refers to Consolidated GPA excluding Globex

43 3Q 10 Results 3Q10 GPA Food Results 43

Personal Care & Household Cleaning Bazar

1% respectively In 9M10, gross sales totaled R$

44 Gross sales of R$ 6.2 bn, year-onyear growth of 10.0% R$ M GROWTH OF 7,7% IN GROSS SAME- STORE-SALES: 3Q10 X 3Q09 Highlights: Textile Personal Care & Household Cleaning Bazar Beverages and posted growth of 19.6% and 24.1% respectively In 9M10, gross sales totaled R$ 18,8 bn Missing R$ 7.2 bi in 4Q to reach the guidance of R$ 26 bi: % compared with 3Q % compared with 4Q09 44

Assaí 3Q10 Results: Gross Sales of R$ 816 M Gross Margin of 14.7% (+ 1oo bps compared to 3Q09) Expense of 11.3% of net sales (- 800 bps compared to 2Q10) 3.5% of EBITDA margin.

45 Assaí 3Q10 Results: Gross Sales of R$ 816 M Gross Margin of 14.7% (+ 1oo bps compared to 3Q09) Expense of 11.3% of net sales (- 800 bps compared to 2Q10) 3.5% of EBITDA margin. Larger interest on GPA s sales: from 8.1% in 3Q09 to 10.3% in 3Q10 3Q10 Openings: 2 new stores Number of stores: convertions (1 of CompreBem and 2 of Sendas) New logistic operation: 40 2 DCs dedicated to store operation 1 DC dedicated to external and counter sales 34 Food Service Market: Growth of twice the retail food Over 35% of Brazilians eat away from home 3Q09 4Q09 3Q10 4Q10E 45

46 Gross Profit of R$ 1.4 bn Margin of 25.9% 110 bps up on 2Q10 and 50 bps up on 3Q R$ M ,288 1, % 29,3% 28,3% 27,3% 26,3% The improvement on results was due to: % 25,3% 24,3% More advantageous negotiations with suppliers Improved operational management Pricing Management tool Tax substitution regime - against informality 3Q09 3Q10 and more balanced pricing policy 46

Total Operating Expenses of R$ 1.0 bn, equivalent to 18.4% of Net Sales 1.200 1.150 1.100 1.050 1.000 950 900 850 800 R$ M 1,028 931 18.4% 18.

47 Total Operating Expenses of R$ 1.0 bn, equivalent to 18.4% of Net Sales R$ M 1, % 18.4% 18,3% In this quarter, we had additional expenses with: Exceptional events Advertising and marketing Personnel (bargaining agreement) 3Q09 3Q10 Recurring Technology to support business expansion in the coming years Opening of new stores Despite the scenario above mentioned, expenses were in line with 3Q09 and 2Q10, which shows a dilution in other expenses. 47

48 EBITDA margin stood at 7.5% in 3Q10 EBITDA Margin EBITDA Margin of 8.1%, excluding Assaí The highest 3Q margin since 2007 GPA Food (excluding Assaí) GPA Food Assaí 48

Financial Result and Indebtedness Net Financial Result R$ M 1.

increase; SELIC rate increase % of net sales 0.

3%: interest and charges over other liabilities.

49 Financial Result and Indebtedness Net Financial Result R$ M 1.0%: interest and charges over the net debt: Net debt increase; SELIC rate increase % of net sales 0.5 %: cost of discounts on receivables: SELIC rate increase 0.3%: interest and charges over other liabilities. 49 (1) Net Debt in the end of the period. (2) Net Debt does not consider dicounted receivables.

50 Evolution of Net Debt Evolution of net debt (1) Acquisitions of R$ 792 M, including Globex (R$ 665 M) Organic growth Net Debt (2) / EBITDA: 1.07x 3Q09 3Q10 50 (1) Net Debt in the final of period (2) Net Debt does not consider Receivables..

51 FIC IN 3Q10 FIC s Result: R$ 9 M BANNER PRIVAT E LABEL PRIVATE LABEL WITH BANNER CO-BRANDED R$ M Continuous card issuance; 50% of clients are insured; and Extra Hiper and Super s 19% interest in FIC 51

52 3Q10 Net Income Adjusted Net Income (R$ M) Adjusted Net Income: R$ 144 M Net Margin: 2.6% 100 bps up on 2Q10, due to improvements on gross margin and EBITDA Non-recurring effects in 3Q10: R$ 2 M due to REFIS in 2Q10 R$ 6 M due to restructuring expenses from the ZBB Net Income: R$ 138 M Net Margin: 2.5% 52

53 3Q10 Globex Results 53

54 Message from CEO Joint venture with Casa Bahia approved on Extraordinary Shareholders Meeting held on November 9, 2010 Raphael Klein The beginning of a journey that is aligned with our plans A single team playing towards the same goal Full support to financial cost reducing initiatives 54

55 Gross Sales of R$ 1.7 bn, year-onyear growth of 42% R$ M 41.7% (1) higher than 3Q09 Growth of 15% in sales/s.q.m² terms 15.2% increase in SSS sales 61.8% increase in e-commerce sales in 3Q10 compared to 3Q09 55 (1) Incluiding e-commerce.

56 Gross Profit of R$ 300 M, with gross margin of 19.8% The beginning of a journey that is aligned with our plans 400 bps improvement over 3Q09 and 200 bps improvement over 2Q10 R$ M Turnaround started on August/2009: More advantageous negotiations with suppliers Reformulation of the product mix Adjustment of expense level Synergies with Casas Bahia as of July/2010: Reinforcement in negotiations with suppliers Improvement on product mix First Commercial actions jointly 56 (1) 3Q09: first quarter OF Globex under GPA s management.

57 Total Operating Expenses of R$ 223 M, equivalent to 14.7% of Net Sales R$ M The beginning of a journey that is aligned with our plans: In 3Q10, 200 bps down on 3Q09 and 400 bps down on 2Q10 Main effects: Installation of the Expense Committee Elimination of Ponto Frio core structure use of GPA/CB s back office platform Expect of additional benefits to be generated for the Group due to synergies with Casas Bahia 57

plans Main effects: Better negotiations with suppliers

58 EBITDA of R$ 77 M, with a margin of 5.1% EBITDA Margin 590 bps on 3Q09 (-0.8%) and 250 bps on 2Q10 (2.6%) The beginning of a journey that is aligned with our plans Main effects: Better negotiations with suppliers Expansion of the product mix with more profitable items Stricter control over expenses First synergy gains with Casas Bahia 58

Net Financial Expenses (1) in 3Q10 R$ 90 M: 5.

8% Net Financial Expenses (R$ M) Main factors: Increase

59 Net Financial Expenses (1) in 3Q10 R$ 90 M: 5.9% of net sales Excluding non-recurring effect of R$ 18 M, representing 4.7% of net sales In line with the 2Q10 level of 5.8% Net Financial Expenses (R$ M) Main factors: Increase of SELIC rate in the period Increase in sales volume Term (days) 59 (1) Net Financial Expenses: Financial Result

Actions to Improve Financial Results Key actions underway

Reduction of the average payment term of noninterest

5 months Sales Growth at the same level FIDC Constitution

60 Actions to Improve Financial Results Key actions underway to reduce the financial expenses: Constitution of FIDC Reduction of the average payment term of noninterest bearing sales from 9.5 months to 7.5 months Sales Growth at the same level FIDC Constitution (Receivables-Backed Investment Fund) AUM: R$ 1,166 M Rate: % of CDI Rating: AAA (Fitch) 60

61 FIC IN 3Q10 FIC s Results: R$ 2.3 mi Continuous card issuance; 75% of clients are insured; and 26% share in Ponto Frio s stores sales and 12% in e- commerce sales. 61

62 Net Income in 3Q10 Net Margin The beginning of a journey aligned with our plans, but full of accomplishmen ts to be made 62 * Adjusted Net Margin

63 Investiments and Area expansion (1) By the end of 2010: Investiments should amount R$ 1.3 bn Sales Area should reach 1,506,000 m 2 (+7% on 4Q09) Openings in 4Q10: 5 Extra Hipermercado (27,100 m²) 9 Assaí (31,200 m²) Sales Area Growth (000 m 2 ) 63 (1) GPA sem Globex

Largest Retailer in Brazil. Gross Sales: R$ 44 billion

Largest Retailer in Brazil. Gross Sales: R$ 44 billion 1 January 2011 Largest Retailer in Brazil Gross Sales: R$ 44 billion (annualized based in 2010): 1,863 points of sales, located in 18 States and the Federal District More than 140,000 employees 600 million