Content Company Information Individual Interim Financial Information Statement of Changes in Equity Consolidated Interim Financial Information

Transcription

1 Content Company Information Capital Breakdown 1 Cash Dividends 2 Individual Interim Financial Information Balance Sheet Assets 3 Balance Sheet Liabilities 4 Statement of Profit or Loss 5 Statement of Comprehensive Income 6 Statement of Cash Flows 7 Statement of Changes in Equity Statement of Changes in Equity 1/1/2018 to 9/30/ Statement of Changes in Equity 1/1/2017 to 9/30/ Statement of Value Added 10 Interim Financial Information Balance Sheet Assets 11 Balance Sheet Liabilities 12 Statement of Profit or Loss 13 Statement of Comprehensive Income 14 Statement of Cash Flows 15 Statement of Changes in Equity Statement of Changes in Equity 1/1/2018 to 9/30/ Statement of Changes in Equity 1/1/2017 to 9/30/ Statement of Value Added 18 Earnings release 19 Notes to the Interim Financial Information 35 Opinions and Declarations Report on Review of Interim Financial Information 71 Officers Statement on the Financial Statements 73 Officers Statement on the Independent Auditor s Report 74

2 Company Information / Capital Breakdown Number of Shares (in thousands) Paid-in Capital Current Quarter 9/30/2018 Common 656,974 Preferred 637,226 Total 1,294,200 Treasury Shares Common 0 Preferred 0 Total 0 Page 1 of 74

3 Company Information / Cash Dividends Amount per Share Event Approval Type Date of Payment Type of Share Class of Share (Reais /Share) Annual Shareholders Meeting 4/26/2018 Dividend 6/21/2018 Common Annual Shareholders Meeting 4/26/2018 Dividend 6/21/2018 Preferred Page 2 of 74

4 Individual Interim Financial Information / Balance Sheet Assets R$ (in thousands) Code Description 9/30/ /31/ Total Assets 16,193,000 16,977, Current Assets 9,232,000 10,208, Cash and Cash Equivalents 276,000 2,802, Trade Accounts Receivable 3,066,000 3,061, Inventories 4,576,000 3,388, Recoverable Taxes 441, , Prepaid Expenses 39,000 28, Other Current Assets 834, , Other 834, , Related Parties 787, , Other Accounts Receivable 37,000 84, Financial Instruments Fair Value Hedge 10, Non-Current Assets 6,961,000 6,769, Long-Term Assets 4,143,000 4,180, Trade Accounts Receivable 171, , Deferred Taxes 409, , Receivables from Related Parties 304, , Other Non-Current Assets 3,259,000 3,088, Recoverable Taxes 2,301,000 2,147, Judicial Deposits 935, , Other Accounts Receivable 18,000 22, Financial Instruments Fair Value Hedge 5, Capital Expenditure 952, , Property, Plant and Equipment 1,261,000 1,200, Intangible Assets 605, ,000 Page 3 of 74

5 Individual Interim Financial Information / Balance Sheet Liabilities R$ (in thousands) Code Description 9/30/ /31/ Total Liabilities 16,193,000 16,977, Current Liabilities 11,224,000 11,219, Payroll and Related Charges 411, , Trade accounts payable 6,085,000 5,590, Tax Liabilities 94, , Loans and Financing 3,338,000 3,214, Other Liabilities 1,296,000 1,685, Related Party Liabilities 243, , Other 1,053,000 1,427, Dividends payable 0 15, Deferred Revenues 413, , Agreement Suppliers 100, , Transfer to third parties 335, , Other Accounts Payable 205, , Non-Current Liabilities 2,158,000 2,985, Loans and Financing 466, , Other Liabilities 822, , Other 822, , Deferred Revenue 777, , Tax Liabilities 37,000 43, Other liabilities 8,000 4, Provisions 870,000 1,599, Tax, Pension, Labor and Civil Provisions 870,000 1,174, Other Provisions 0 425, Provision for Investment Losses 0 425, Shareholders' Equity 2,811,000 2,773, Paid-in Capital 2,899,000 2,896, Capital Reserves -871, , Profit Reserves 944, , Retained earnings / Accumulated loss -127, , Other comprehensive income -34,000-47,000 Page 4 of 74

6 Individual Interim Financial Information / Statement of Profit or Loss R$ (in thousands) 7/1/2018 to 9/30/2018 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/2017 Code Description Revenue from the Sale of Goods and/or Services 3.01 Rendered 5,271,000 16,038,000 5,017,000 15,007, Cost of Goods Sold and/or Services Rendered -3,641,000-10,944,000-3,265,000-9,982, Gross Profit 1,630,000 5,094,000 1,752,000 5,025, Operating Expense/Income -1,563,000-4,555,000-1,461,000-4,415, Selling Expenses -1,255,000-3,575,000-1,162,000-3,504, General and Administrative Expenses -217, , , , Other Operating Expenses -64, ,000-43, , Depreciation and Amortization -50, ,000-43, , Other Net Operating Income (Expenses) -14,000-80, , Equity Income (Loss) -27, ,000-70, , Earnings Before Financial Result and Taxes 67, , , , Financial Result -165, , , , Earnings Before Income Tax -98,000 86,000 91, , Income Tax and Social Contribution on Net Income 19,000-74,000-46,000-84, Net Income/(Loss) from Continuing Operations -79,000 12,000 45,000 56, Net Income/Loss in the year -79,000 12,000 45,000 56, Earnings per Share - (Reais/Share) Basic Earnings per Share Common Preferred Diluted Earnings per Share Common Preferred Page 5 of 74

7 Individual Interim Financial Information / Statement of Comprehensive Income R$ (in thousands) 7/1/2018 to 9/30/2018 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/2017 Code Description 4.01 Net Income from the Year -79,000 12,000 45,000 56, Other Comprehensive Income (Loss) 6,000 13,000 14,000-16, Fair value of financial assets 2,000 15,000 19,000-3,000 Deferred income tax and social contribution on fair value of financial assets -1,000-5,000-7,000 1,000 Share of other comprehensive income in equity-accounted investments 5,000 3,000 2,000-14, Comprehensive Income from the Year -73,000 25,000 59,000 40,000 Page 6 of 74

8 Individual Interim Financial Information / Statement of Cash Flows Indirect Method R$ (in thousands) 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/2017 Code Description 6.01 Net Cash from Operating Activities -1,703,000-1,912, Cash Generated in Operations 1,260,000 1,157, Net Income (Loss) in the Period 12,000 56, Depreciation and Amortization 174, , Equity Income (Loss) 122, , Deferred Income and Social Contribution Taxes 74,000-67, Interest and Monetary Variations 221, , Provision for Lawsuits, Net 396, , Share-Based Compensation 6,000 8, Estimated Loss with Doubtful Accounts 390, , Gain (Loss) from Divestment of Fixed and Intangible Assets 31,000 4, Estimated Impairment Loss of Inventories 38,000 64, Deferred Revenue Recognized in Profit or Loss -205, , Others 1,000-3, Changes in Assets and Liabilities -2,816,000-3,113, Trade Accounts Receivable -353,000-1,174, Inventories -1,226, , Taxes Receivable -359, , Related Parties -344,000-16, Judicial Deposits 15, , Other Assets 40,000-22, Trade Accounts Payable 113, , Tax, Social and Labor Liabilities -123, , Legal claims -593, , Deferred Revenue 95,000-10, Other Liabilities -81,000 24, Others -147,000 44, Income tax and social contribution paid -147, Dividends received 0 44, Net Cash from/used in Investment Activities -781,000-1,159, Acquisition of Fixed and Intangible Assets -382, , Disposal of Fixed and Intangible Assets 1,000 12, Capital Increase in Subsidiary -400, , Net Cash From / (Used in) Financing Activities -42, , Funding 3,992,000 3,354, Principal Payments -3,777,000-3,519, Interest Payments -245, , Dividends Paid -15, Capital increase in parent company 3,000 1, Increase (Decrease) in Cash and Cash Equivalents -2,526,000-3,526, Opening Balance of Cash and Cash Equivalents 2,802,000 3,938, Closing Balance of Cash and Cash Equivalents 276, ,000 Page 7 of 74

9 Individual Interim Financial Information / Statement of Changes in Equity 1/1/2018 to 9/30/2018 R$ (in thousands) Code Description Paid-in Capital Capital Reserves, Options Granted and Treasury Shares Earning Reserves Retained Earnings / Accumulated Loss Other Comprehensive Income Shareholders' Equity 5.01 Opening Balances 2,896, , , ,000-47,000 2,773, Adjusted Opening Balances 2,896, , , ,000-47,000 2,773, Equity Transactions with Partners 3,000 10, , Capital Increases 3, , Options Granted Recognized 0 10, , Total Comprehensive Income/(Loss) ,000 13,000 25, Net Income from the Year , , Other Comprehensive Income (Loss) ,000 13, Adjustments on financial instruments ,000 15, Taxes in adjustments on financial instruments ,000-5, Share of comprehensive income in equity-accounted investments ,000 3, Closing Balances 2,899, , , ,000-34,000 2,811,000 Page 8 of 74

10 Individual Interim Financial Information / Statement of Changes in Equity 1/1/2017 to 9/30/2017 R$ (in thousands) Code Description Paid-in Capital Capital Reserves, Options Granted and Treasury Shares Earning Reserves Retained Earnings / Accumulated Loss Other Comprehensive Income Shareholders' Equity 5.01 Opening Balances 2,895, , , ,808, Prior year adjustments ,000-39, , Adjusted Opening Balances 2,895, , , ,000-39,000 2,657, Equity Transactions with Partners 1,000 4, , Capital Increases 1, , Options Granted Recognized 0 4, , Total Comprehensive Income/(Loss) ,000-16,000 40, Net Income from the Year , , Other Comprehensive Income (Loss) ,000-16, Adjustments on financial instruments ,000-3, Taxes in adjustments on financial instruments ,000 1, Share of comprehensive income in equity-accounted investments ,000-14, Closing Balances 2,896, , ,000-56,000-55,000 2,702,000 Page 9 of 74

11 Individual Interim Financial Information / Statement of Value Added R$ (in thousands) 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/2017 Code Description 7.01 Revenue 17,465,000 16,274, Sales of Goods, Products and Services 17,854,000 16,663, Other Revenue 1,000 11, Provision for/reversal of Doubtful Accounts -390, , Inputs Acquired from Third Parties -13,438,000-12,467, Cost of Goods Sold and Services Rendered -11,426,000-10,639, Materials, Energy, Third-party Services and Other -1,985,000-1,828, Loss/Recovery of Assets -27, Gross Value Added 4,027,000 3,807, Retentions -174, , Depreciation, Amortization and Depletion -174, , Net Value Added Produced 3,853,000 3,646, Value Added Received Through Transfer -25,000 74, Equity Income (Loss) -122, , Financial Income 97, , Others 0 1, Total Added Value to Distribute 3,828,000 3,720, Distribution of Value Added 3,828,000 3,720, Personnel 2,009,000 1,908, Direct Compensation 1,317,000 1,246, Benefits 174, ,000 F.G.T.S. (Government Severance Indemnity Fund for Employees) 139, , Other 379, , Labor claims 360, , Other personnel expenses 19,000 71, Taxes, Fees and Contributions 655, , Federal 353, , State 249,000 96, Municipal 53,000 52, Remuneration on Third-Party Capital 1,152,000 1,245, Interest 550, , Rent 591, , Other 11,000 3, Remuneration on Share Capital 12,000 56, Retained Earnings/Accumulated Losses in the Year 12,000 56,000 Page 10 of 74

12 Interim Financial Information / Balance Sheet Assets R$ (in thousands) Code Description 9/30/ /31/ Total Assets 18,520,000 19,745, Current Assets 10,747,000 12,204, Cash and Cash Equivalents 429,000 3,559, Trade Accounts Receivable 3,798,000 3,749, Inventories 5,557,000 4,379, Recoverable Taxes 681, , Prepaid Expenses 57,000 32, Other Current Assets 225, , Other 225, , Related Parties 145, , Other Accounts Receivable 70, , Financial Instruments Fair Value Hedge 10,000 17, Non-Current Assets 7,773,000 7,541, Long-Term Assets 4,888,000 4,804, Trade Accounts Receivable 173, , Deferred Taxes 502, , Receivables from Related Parties 336, , Other Non-Current Assets 3,877,000 3,688, Recoverable Taxes 2,893,000 2,725, Judicial Deposits 960, , Other Accounts Receivable 19,000 22, Financial Instruments Fair Value Hedge 5, Capital Expenditure 102,000 81, Property, Plant and Equipment 1,421,000 1,423, Intangible Assets 1,362,000 1,233,000 Page 11 of 74

13 Interim Financial Information / Balance Sheet Liabilities R$ (in thousands) Code Description 9/30/ /31/ Total Liabilities 18,520,000 19,745, Current Liabilities 13,396,000 14,278, Payroll and Related Charges 477, , Trade accounts payable 7,825,000 7,726, Tax Liabilities 103, , Loans and Financing 3,339,000 3,802, Other Liabilities 1,652,000 1,933, Related Party Liabilities 155, , Other 1,497,000 1,794, Dividends payable 0 15, Deferred Revenues 432, , Agreement Suppliers 194, , Transfer to third parties 546, , Other Accounts Payable 325, , Non-Current Liabilities 2,313,000 2,694, Loans and Financing 469, , Other Liabilities 884,000 1,053, Other 884,000 1,053, Deferred Revenue 839,000 1,006, Tax Liabilities 37,000 43, Other liabilities 8,000 4, Deferred Taxes 6,000 5, Provisions 954,000 1,239, Tax, Pension, Labor and Civil Provisions 954,000 1,239, Shareholders' Equity 2,811,000 2,773, Paid-in Capital 2,899,000 2,896, Capital Reserves -871, , Profit Reserves 944, , Retained earnings / Accumulated loss -127, , Other comprehensive income -34,000-47,000 Page 12 of 74

14 Interim Financial Information / Statement of Profit or Loss R$ (in thousands) 7/1/2018 to 9/30/2018 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/2017 Code Description 3.01 Revenue from the Sale of Goods and/or Services Rendered 6,377,000 19,463,000 6,109,000 18,248, Cost of Goods Sold and/or Services Rendered -4,513,000-13,586,000-4,106,000-12,458, Gross Profit 1,864,000 5,877,000 2,003,000 5,790, Operating Expense/Income -1,811,000-5,278,000-1,683,000-5,174, Selling Expenses -1,474,000-4,243,000-1,388,000-4,233, General and Administrative Expenses -255, , , , Other Operating Expenses -91, ,000-81, , Depreciation and Amortization -61, ,000-57, , Other Net Operating Income (Expenses) -30, ,000-24, , Equity Income (Loss) 9,000 21,000 7,000 16, Earnings Before Financial Result and Taxes 53, , , , Financial Result -204, , , , Earnings Before Income Tax -151,000 24,000 81,000 42, Income Tax and Social Contribution on Net Income 72,000-12,000-35,000 14, Net Income/(Loss) from Continuing Operations -79,000 12,000 46,000 56, Net Income/Loss in the year -79,000 12,000 46,000 56, Attributable to Partners of Parent Company -79,000 12,000 46,000 56,000 Page 13 of 74

15 Interim Financial Information / Statement of Comprehensive Income R$ (in thousands) 7/1/2018 to 9/30/2018 1/1/2018 to 9/30/2018 7/1/2017 to 9/30/2017 1/1/2017 to 9/30/2017 Code Description 4.01 Net Income from the Year -79,000 12,000 46,000 56, Other Comprehensive Income (Loss) 6,000 13,000 14,000-16, Fair value of financial assets 1,000 12,000 21,000-17, Deferred income tax and social contribution on fair value of financial assets 5,000 1,000-7,000 1, Comprehensive Income from the Year -73,000 25,000 60,000 40, Attributable to Partners of Parent Company -73,000 25,000 60,000 40,000 Page 14 of 74

16 Interim Financial Information / Statement of Cash Flows Indirect Method R$ (in thousands) 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/2017 Code Description 6.01 Net Cash from Operating Activities -2,075,000-2,881, Cash Generated in Operations 1,365,000 1,198, Net Income (Loss) in the Period 12,000 56, Depreciation and Amortization 249, , Equity Income (Loss) -21,000-16, Deferred Income and Social Contribution Taxes 0-166, Interest and Monetary Variations 282, , Provision for Lawsuits, Net 469, , Share-Based Compensation 6,000 8, Estimated Loss with Doubtful Accounts 461, , Gain (Loss) from Divestment of Fixed and Intangible Assets 51,000 7, Estimated Impairment Loss of Inventories 61,000 68, Deferred Revenue Recognized in Profit or Loss -206, , Other 1,000-3, Changes in Assets and Liabilities -3,284,000-4,122, Trade Accounts Receivable -471,000-1,783, Inventories -1,239,000-1,175, Taxes Receivable -578, , Related Parties -65,000 92, Judicial Deposits 12, , Other Assets 50,000-30, Trade Accounts Payable -191, , Tax, Social and Labor Liabilities -123, , Legal claims -676, , Deferred Revenue 100,000-10, Other Liabilities -103, , Others -156,000 43, Income Tax and Social Contribution Paid -156,000-1, Dividends Received from Subsidiaries 0 44, Net Cash from/used in Investment Activities -380, , Acquisition of Fixed and Intangible Assets -407, , Disposal of Fixed and Intangible Assets 27,000 11, Net Cash From / (Used in) Financing Activities -675, , Funding 3,992,000 3,925, Principal Payments -4,386,000-4,014, Interest Payments -269, , Dividends Paid -15, Capital Increase in Parent Company 3,000 1, Increase (Decrease) in Cash and Cash Equivalents -3,130,000-3,491, Opening Balance of Cash and Cash Equivalents 3,559,000 4,030, Closing Balance of Cash and Cash Equivalents 429, ,000 Page 15 of 74

17 Interim Financial Information / Statement of Changes in Equity 1/1/2018 to 9/30/2018 R$ (in thousands) Code Description Paid-in Capital Capital Reserves, Options Granted and Treasury Shares Earning Reserves Retained Earnings / Accumulated Loss Other Comprehensive Income Shareholders' Equity Non- Controlling Interest Shareholders' Equity 5.01 Opening Balances 2,896, , , ,000-47,000 2,773, ,773, Adjusted Opening Balances 2,896, , , ,000-47,000 2,773, ,773, Equity Transactions with Partners 3,000 10, , , Capital Increases 3, , , Options Granted Recognized 0 10, , , Total Comprehensive Income/(Loss) ,000 13,000 25, , Net Income from the Year , , , Other Comprehensive Income (Loss) ,000 13, , Adjustments on financial instruments ,000 12, , Taxes in Adjustments on Financial Instruments ,000 1, , Closing Balances 2,899, , , ,000-34,000 2,811, ,811,000 Page 16 of 74

18 Interim Financial Information / Statement of Changes in Equity 1/1/2017 to 9/30/2017 R$ (in thousands) Code Description Paid-in Capital Capital Reserves, Options Granted and Treasury Shares Earning Reserves Retained Earnings / Accumulated Loss Other Comprehensive Income Shareholders' Equity Non- Controlling Interest Shareholders' Equity 5.01 Opening Balances 2,895, , , ,808, ,808, Prior year adjustments ,000-39, , , Adjusted Opening Balances 2,895, , , ,000-39,000 2,657, ,657, Equity Transactions with Partners 1,000 4, , , Capital Increases 1, , , Options Granted Recognized 0 4, , , Total Comprehensive Income/(Loss) ,000-16,000 40, , Net Income from the Period , , , Other Comprehensive Income (Loss) ,000-16, , Adjustments on financial instruments ,000-17, , Taxes in Adjustments on Financial Instruments ,000 1, , Closing Balances 2,896, , ,000-56,000-55,000 2,702, ,702,000 Page 17 of 74

19 Interim Financial Information / Statement of Value Added R$ (in thousands) 1/1/2018 to 9/30/2018 1/1/2017 to 9/30/2017 Code Description 7.01 Revenue 21,664,000 20,149, Sales of Goods, Products and Services 22,099,000 20,656, Other Revenue 26,000 11, Provision for/reversal of Doubtful Accounts -461, , Inputs Acquired from Third Parties -16,928,000-16,283, Cost of Goods Sold and Services Rendered -14,142,000-13,964, Materials, Energy, Third-party Services and Other -2,704,000-2,335, Loss/Recovery of Assets -82,000 16, Gross Value Added 4,736,000 3,866, Retentions -249, , Depreciation, Amortization and Depletion -249, , Net Value Added Produced 4,487,000 3,633, Value Added Received Through Transfer 124, , Equity Income (Loss) 21,000 16, Financial Income 103, , Other 0 1, Total Added Value to Distribute 4,611,000 3,889, Distribution of Value Added 4,611,000 3,889, Personnel 2,211,000 2,082, Direct Compensation 1,471,000 1,367, Benefits 201, , F.G.T.S. (Government Severance Indemnity Fund for Employees) 151, , Other 388, , Labor claims 361, , Other personnel expenses 27,000 75, Taxes, Fees and Contributions 1,061, , Federal 332, , State 669, , Municipal 60,000 56, Remuneration on Third-Party Capital 1,327,000 1,421, Interest 678, , Rent 631, , Other 18,000 3, Remuneration on Share Capital 12,000 56, Retained Earnings/Accumulated Losses in the Year 12,000 56,000 Page 18 of 74

20 3Q18

21 3Q18 October 24, 2018 Via Varejo S.A., Brazil s largest electronics, home appliances and furniture retailer, announces its consolidated results for the third quarter of 2018 (3Q18). On January 1, 2018, the Company adopted the IFRS 9 standard, which affects how we recognize our impairment losses and consequently our provision for doubtful accounts (PDA). The following figures already include the impact of the new standard and the figures for 2017, which were adjusted in our Quarterly Information (ITR). For more information, please see Note nº 2-a to the ITR. 3Q18 Highlights o Net Revenue of R$ 6.4 billion in 3Q18, up 4.4% over the same period of last year. o Net sales in physical stores reached R$ 5.2 billion in 3Q18 (+5.2% vs. 3Q17), with same-store sales growth of +4.2%. o Online GMV in 3Q18 of R$ 1.6 billion, with growth of 13.6% and marketplace penetration of 26.2% (vs. 24.9% in 3Q17). o Click&Collect in 3Q18 reached 31.3% of Online sales in the main categories¹, demonstrating consistency in the evolution of our multi-channel strategy. o Gross Profit of R$ 1,864 million, representing a margin of 29.2%. o Adjusted EBITDA of R$ 161 million in 3Q18, with a margin of 2.5%. o We ended the quarter with net cash, including undiscounted credit card receivables, of R$ 1.6 billion. o Launch of the new Casas Bahia app, + 300% in orders only in September vs. the best month of the year. o Partnership with a call option of Airfox for the development of the digital CDC and the digital wallet. o Partnership with GetNet to develop the marketplace seller s portal with a wide range of financial services. o Extension of the Partnership with Zurich: centralized a large part of the insurance portfolio by a single insurance company, contributing to the omnichannel strategy and envisaging greater efficiency and operational synergy. ¹Main Categories: Cell phones, Televisions, Long Tail Technology and Long Tail Portables. Penetration over quarters: 1Q17: 12.2%, 2Q17: 19.1%; 3Q17:26.1% and 4Q17: 27.0%. 20

22 3Q18 Management Comments This quarter, we continued to register growth in revenue and market share in both channels, with our brick-and-mortar stores posting same-store sales growth of 4.2%, while invoiced GMV grew 13.6%. net revenue grew 4.4% to R$6.4 billion. Adjusted EBITDA came to R$161 million, while EBITDA margin was 2.5%, and we ended the quarter with loss of R$79 million. Due to lower-than-expected sales performance in the previous quarter and the continuation of weaker demand in the post-world cup period, we faced a more competitive environment. Other factors that also impacted the quarterly results were the lower penetration of our CDC and services. It is also worth mentioning that this last period was marked by important implementations in critical systems of the company. They are profound changes, essential for the company to restructure its foundations. Once we have overcome the natural process of adoption and learning curve, we believe that this strategic decision will bring significant improvements in productivity and in the experience of our customers. In this context we would like to highlight: (i) New sales system. At the end of July 2018, we launched Via+. Via+ brings together all the tools that we developed in recent months (compensation model, Via Única /CRM and the entire Online catalog) in a much more agile and intuitive platform, transforming our salespeople into sales consultants. Via+ will also enable us to advance in the Online channel catalog at stores (~2 million SKUs), earlier restricted to the items available at the store (~3,000 SKUs). Approximately 60% of the transactions in the quarter were through the new system. With the rollout of Via+ combined with the unification of B&M and Online Inventories, and the offer of our CDC, was the first step towards the insertion of a significant range of the population in the Online market. The next step will be to connect them to our sites and introduce the digital CDC, a process that was accelerated with the partnership with Airfox, announced in September/18. (ii) Costumer`s New Apps. We launched new Casas Bahia app and the new augmented reality app for rd furniture (launches were phased out during the 3 quarter). The new purchase apps, together with Via Única (CRM), will enable us to further improve the customer experience by delivering personalized offerings, which result in greater efficiency and higher conversion rates. This quarter, mobile traffic (msite+app) increased significantly, representing ~70% of Online visits and approximately ~40% of Online sales. (iii) Sales Team New Apps. In the quarter, we also launched applications for our store team. In addition to the EVVA application, the virtual assistant of our team that offers tips on how to improve their 21

23 3Q18 performance with internal benchmarks, we also launch the Via + application. The application will offer greater agility to our team and a better consumer experience with an agile sales process. (iv) Partnership with Airfox. We announced a partnership with a payment technology start-up located in Boston for the development of a mobile payment solution app. The partnership will develop an mpos (Mobile Point of Sale) technology solution that will enable Casas Bahia clients to authenticate and scan bills, as well as digitally pay Casas Bahia payment books directly through a mobile app. The solution will also provide other digital functionalities through a virtual portfolio, such as: a) the possibility of paying bills (water, electricity, gas, Internet, telephone, and others); b) collection and receipt of amounts directly in the user's virtual portfolio; c) instant reloads of prepaid mobile and public transportation cards; d) transfer of credits and funds to other users, including via QR code; e) user authentication through facial biometry and f) transactions in P2P Lending platform. Also in order to expand the advantages resulting from the partnership and betting on the success of this innovative solution in the Brazilian market, Via Varejo ensured the option to buy up to eighty percent (80%) of the capital stock of AirFox, valid for up to three (3) years and subject to certain price adjustments and compliance with conditions typical to such transactions. (v) Partnership with Getnet. Our partnership with Getnet, Santander's technology company, will help Via Varejo to offer to its marketplace partner a broad portfolio of financial products, including sale of receivables service, antifraud system, safe, recurring payment, sales reconciliation, acceptance and generation of bank payment slip, safe digital checkout, consulting and cloud infrastructure. In addition, the partnership complies with the new regulation of the Central Bank of Brazil. (vi) Renewal of the partnership with Zurich. Until 2025, the company will have exclusivity in the distribution of extended warranty, robbery, theft, life, lender and residential insurance in all channels (B&M and online) of Ponto Frio brand and in the online channel of Casas Bahia brand and exclusivity distribution of extended warranty, robbery and theft insurance for all physical stores of Casas Bahia brand. In this way, Via Varejo will centralize part of the insurance products portfolio into a single insurance company, contributing to the omnichannel strategy (same products and offers in all channels), aiming greater efficiency and operational synergy. With regard to store expansion, in 3Q18 the Company opened 15 new stores, 11 of them in the Smart format and 4 Kiosks. It is worth mentioning that the new Smart format stores, inaugurated since November 2017, continue to report results above expectations. On the other hand, as a result of poor performance, we closed 23 stores in the period. Regarding kiosks, due to their positive performance, we accelerated the expansion of this model and expect to end the year with 20 units. 22

24 3Q18 This quarter, we also opened 44 new Mini-Hub Stores, reaching a total of 62 units (last-mile store delivery) and over 6,000 Postal agencies with the Click&Collect service, resulting in a significant improvement in the quality of service offered to our customers, while reducing logistics expenses. We are continuing our efforts to accelerate the implementation of other mapped stores and to expand our Click&Collect services to more post offices, as well as other goods collection points. We continue to invest in our full-commerce platform. We expect to add more and more partners who will not only have access to our websites and our unique logistics infrastructure (DCs and delivery) but also to our entire store network, which includes Click&Collect and over 20,000 salespersons. Finally, we took another important step towards accelerating the digital transformation of Via Varejo with the arrival of the new Chief Digital Officer (CDO) Maurizio de Franciscis, who joined the team in September. He will be responsible for the marketing, marketplace, full-commerce and IT areas. Maurizio has vast experience in the digital world: he was CEO of Submarino Viagens and CDO of the CVC Group. He was also CEO of Hotel Urbano and COO of KaBuM! Previously, he was an executive at GE and a digital entrepreneur with over 20 years of management experience gained in Brazil, USA and Europe.We are certain that the new structure will speed up decision-making and foster a proactive approach among all our teams. The vision for the future based on transformational projects we have been putting into practice will make Via Varejo a reference in Omnichannel retailing and a business platform that delivers excellence in customer experience, while serving as the ideal partner for suppliers and sellers. The Management 23

25 3Q18 Operating Performance Highlights Net Revenue Gross Margin Adjusted EBITDA¹ Adjusted EBITDA Margin Net Earnings Net Cash with receivables not discounted² 3Q ,2% 161 2,5% (79) Q ,8% 419 6,9% Q18 4,2% 13,6% ,2% 31,3% 3Q17 18,6% 23,0% ,9% 27,6% % 4,4% (356bps) (61,6%) (433bps) na (211) 9M ,2% 961 4,9% M ,7% ,8% M18 6,9% 10,1% ,6% 30,2% 9M17 10,3% 17,1% ,4% 20,4% % 6,7% (153bps) (9,4%) (88bps) (78,6%) (211) (¹) Excluding other operational revenues and expenses (¹) 2017 Adjusted by IFRS 9 Operation Bricks and Mortar - SSS (%) Net GMV (y/y % growth) Net GMV (B2C+MP) Net Marketplace GMV Marketplace Penetration (% Net GMV) Click'n Collect Penetration² (% Net GMV) % 13,6% 19,5% 129bps 365bps % 10,1% 24,2% 313bps 980bps (²) Main Categories Performance of Revenue Net Sales - R$ million Bri cks and Morta r Onl i ne Net Revenue 3Q Q % 9M18 5,2% 1,0% 4,4% M % 7,7% 2,3% 6,7% Brick-and-mortar stores In 3Q18, same-store sales growth stood at 4.2%, even with a stronger comparison base of 18.6% in 3Q17. Net revenue from brick-and-mortar stores grew 5.2% in 3Q18 compared to 3Q17, which resulted in a significant market share gain in the period. Online Invoiced GMV grew 13.6% to R$1.6 billion in the period. We show an evolution of growth throughout the year, in line with the maturation process of the integration between the channels. Important projects, such as Via Única and the new apps, have yet to contribute their full potential to the results in this period. GMV invoiced in the marketplace accounted for 26.2% of Total Invoiced GMV in 3Q18, registering significant growth of 19.5% in the quarter. Net revenue from the Online business, which includes not only merchandise and marketplace, but also our services (ehub) and sales in the wholesale segment, grew 1.0% in 3Q18 compared to 3Q17. 24

26 3Q18 Services During 3Q18, revenue from payment books, services, assembly and freight decreased 1.5% from 3Q17, due to a more restrictive credit policy, which resulted in lower revenue from financial services. This reduction will result in an increase in the company s profitability. R$ million 3Q18 Mercha ndi se Frei ght a nd Ass embl y Servi ces Servi ces CDC/Credi t Ca rds Net Revenue Frei ght, Servi ces, CDC/Credi t Ca rd a nd As sembl y % Total Net Revenue 3Q ,5% ,2% % 5,2% 1,2% (2,9%) (1,0%) 4,4% (1,5%) (69bps) 9M ,0% 9M ,3% % 6,9% 12,0% 1,2% 6,1% 6,7% 4,7% (22bps) Breakdown of sales by payment means: 3Q18 Sales by means of payment Ca s h/debi t Ca rd CDC (Pa yment Book) Co-branded Credi t Ca rd Thi rd-pa rty Credi t Ca rd 3Q17 24,0% 10,5% 11,1% 54,4% 25,2% 11,8% 13,2% 49,8% % (120bps) (127bps) (210bps) 456bps Gross Profit R$ million Gros s Profi t Gros s Ma rgi n 3Q18 3Q ,2% ,8% % (6,9%) (356bps ) 9M ,2% 9M ,7% % 1,5% (153bps ) Gross margin closed 3Q18 at 29.2%, 356bps lower than 3Q17 due to a more challenging sales environment and lower penetration of profitable products such as CDC and services. In addition, in 3Q18 we reclassified part of our labor expenses to cost. It is worth mentioning that we added new implementations in critical systems of the company, an important step to improve your future performance. The changes were deep but essential for the company to restructure its foundations. The adoption process and learning curve for the new systems negatively impacted the margin during the quarter. However, the transition phase has been successfully completed and, therefore, we expect the reversal of this effect going forward. 25

27 3Q18 Selling, General and Administrative Expenses R$ million SG&A % Net Revenue 3Q18 (1.729) 3Q17 (1.609) (27,1%) (26,3%) % 7,5% (77bps ) 9M18 (4.987) 9M17 (4.805) (25,6%) (26,3%) % 3,8% 71bps In 3Q18, sales, general and administrative expenses in relation to net revenue reached 27.1% vs. 26.3% in 3Q17. We continue to seek opportunities in optimizing and reducing our operating expenses, without losing operational and administrative efficiency in our structure. We reduced our personnel expenses, the estimated losses for doubtful accounts - PDA. However, in the period, we had an increase in legal expenses and higher marketing expenses (stimulus and promotion of the new app and greater use of mass media). Adjusted EBITDA EBITDA - R$ million 3Q18 EBITDA EBITDA Margi n Other Opera ti onal (Expens es ) Revenues Adjusted EBITDA Adjusted EBITDA Margin 131 2,1% (30) 161 2,5% 3Q ,5% (24) 419 6,9% % (66,8%) (441bps ) 25,0% (61,6%) (433bps) 9M ,4% (113) 961 4,9% 9M ,7% (212) ,8% % (0,1%) (30bps ) (46,7%) (9,4%) (88bps) Adjusted EBITDA came to R$161 million, down 61.6% from the previous year. Adjusted EBITDA margin reached 2.5% in 3Q18, 433bps lower than in 3Q17. Financial Performance Net Financial Results - R$ million 3Q18 FinancialRevenues Financial Expenses Debt Fi na nci al Expens es CDC Fi nanci al Expens es Credi t Card Recei vabl es ' Di s counti ng Expens es Financial Results pre monetary % Net Revenue Monetary Va ri ati on Net financial results % Net Revenue 9 (188) (24) (62) (102) (179) (2,8%) (25) (204) (3,2%) 3Q17 9 (220) (22) (83) (115) (211) (3,5%) (28) (239) (3,9%) % 0,0% (14,5%) 9,1% (25,3%) (11,3%) (15,2%) 65bps (10,7%) (14,6%) 71bps 9M18 33 (555) (59) (199) (297) (522) (2,7%) (53) (575) (3,0%) 9M17 68 (643) (67) (273) (303) (575) (3,2%) 1 (574) (3,1%) % (51,5%) (13,7%) (11,9%) (27,1%) (2,0%) (9,2%) 47bps na 0,2% 19bps In 3Q18, net financial result before updates stood at 2.8% as a ratio of net revenue, down 65bps from 3Q17, reflecting the lower financial expenses with both consumer credit - CDCI and selling expenses, as well as sales of receivables. 26

28 3Q18 Net Income R$ million 3Q18 3Q17 % 9M18 9M17 % na (43%) EBT (151) % Net Revenue (2,4%) 1,3% (369bps ) 0,1% 0,2% (11bps ) Ta xes * 72 (35) na (12) 14 na Net Earnings (79) 46 na (78,6%) Net Margin (1,2%) 0,8% (199bps) 0,1% 0,3% (25bps) *3Q18 considers the recognition of deferred tax assets arising from temporary differences of subsidiary Cnova Brasil, in the amount of R$56 million, due to the project of partial Split-off and incorporation of operations of this subsidiary in Via Varejo. (see note 14-a from quarterly information ITR). The Company posted net loss of R$79 million in 3Q18, compared to net income of R$46 million in 3Q17. This result, despite sales growth, was due to the lower gross margin and higher SG&A (% of net revenue), in the period. Working Capital R$ million (+/-) Inventory Da ys of Inventory (+/-) Suppliers¹ Tota l Da ys of Suppl i ers Working Capital Change (+/-) da ys da ys (¹) Suppliers + Suppliers ('Fo rfait') We closed 3Q18 with an increase in working capital compared to 3Q17. Our strategy is to continue holding high inventories (financed by our suppliers), since we are entering a period of high sales for the company, with Black Friday and Christmas. Debt R$ million Ava i l abi l i ty On Ba l a nce Credi t Ca rd Recei va bl es Not Di s counted¹ Fi na nci a l Debt Net Debt with CC Receivables not Discounted LTM Adjus ted EBITDA Net ca s h/ltm EBITDA (518) ,1x (726) ,3x (+/-) (110) (238) +208 (140) (¹) Credit Card Receivables Sho rt Term and Lo ng Term, 2017 A djusted by IFRS 9 We ended the quarter with a solid Adjusted Net Cash position of R$1,625 million, including not discounted receivables portfolio of R$1,714 million. Delinquency in payment book portfolio (% of Portfolio) 27

29 3Q18 16,3% 16,3% 13,9% 14,4% 13,3% 13,1% 11,6% 9,5% Over 90 days 8,3% 3Q18 2Q18 7,5% 1Q18 7,2% 4Q17 2Q17 1Q17 7,6% 3Q17 9,1% 7,7% Over days Delinquency in our payment books portfolio exceeding 90 days is within the parameters of a sustainable business. We continue to invest in risk control processes and systems and in improving our customer experience. In May 2018, we adopted a new credit policy with new analysis and segmentation models that enable us to mitigate risks and reduce approval/denial time. In 3Q18, we reached 75% of decisions made automatically. Investments In 3Q18, Via Varejo s capital expenditure totaled R$191 million, broken down as follows: R$ million Logi s ti cs New Stores Stores Renova ti on IT Others Total 3Q Q % 103,1% na (15,0%) 122,3% 165,3% 117,0% 9M M % 171,2% na 33,5% 259,1% na 217,7% Store Activity by Format 28

30 3Q18 Casas Bahia Street Shoppi ng Mal l s Ki os k (total) Sales Area ('000 m2) Total Area ('000 m2) Pontofrio Street Shoppi ng Mal l s Ki os k (total) Sales Area ('000 m2) Total Area ('000 m2) Street Shoppi ng Mal l s Ki os k (total) Sales Area ('000 m2) Total Area ('000 m2) Opening Closure Opening Closure Opening Closure

31 3Q18 Accounting Information Audited Income Statement R$ million Gross Sales Net Sales Cost of Goods Sold Depreciation (Logistic) Gross Profit Selling Expenses General and Administrative Expenses Equity Income Other Operating Income (Expenses) Total Operating Expenses Depreciation and Amortization 3Q (4.496) (17) (1.474) (255) 9 (30) (1.750) (61) 3Q (4.088) (18) (1.388) (221) 7 (24) (1.626) (57) 5,7% 4,4% 10,0% (5,6%) (6,9%) 6,2% 15,4% 28,6% 25,0% 7,6% 7,0% 9M (13.536) (50) (4.243) (744) 21 (113) (5.079) (199) 9M (12.398) (60) (4.233) (572) 16 (212) (5.001) (173) 7,0% 6,7% 9,2% (16,7%) 1,5% 0,2% 30,1% 31,3% (46,7%) 1,6% 15,0% (83,4%) (2,8%) 40 (244) (204) (151) 72 (79) 36 (275) (239) 81 (35) 46 11,1% (11,3%) (14,6%) na na na 103 (678) (575) 24 (12) (813) (574) (56,9%) (16,6%) 0,2% (42,9%) na (78,6%) Earnings before Interest and Taxes - EBIT (83,4%) (2,8%) Depreciation (Logistic) Depreciation and Amortization Earnings before Interest, Taxes, Depreciation, Amortization-EBITDA¹ Other Operating Income (Expenses) Adjusted EBITDA (5,6%) 7,0% (16,7%) 15,0% (66,8%) (0,1%) ,0% (61,6%) (46,7%) (9,4%) % of Net Sales Revenue Gross Profit Selling Expenses General and Administrative Expenses Equity Income Outras Despesas e Receitas Operacionais Total Operating Expenses Depreciation and Amortization 3Q18 29,2% (23,1%) (4,0%) 0,1% (0,5%) (27,4%) (1,0%) 3Q17 32,8% (22,7%) (3,6%) 0,1% (0,4%) (26,6%) (0,9%) (3,6 p.p.) (0,4 p.p.) (0,4 p.p.) 0,0 p.p. (0,1 p.p.) (0,8 p.p.) (0,1 p.p.) 9M18 30,2% (21,8%) (3,8%) 0,1% (0,6%) (26,1%) (1,0%) 9M17 31,7% (23,2%) (3,1%) 0,1% (1,2%) (27,4%) (0,9%) (1,5 p.p.) 1,4 p.p. (0,7 p.p.) 0,0 p.p. 0,6 p.p. 1,3 p.p. (0,1 p.p.) Earnings before Interest and Taxes - EBIT 0,8% 5,2% (4,4 p.p.) 3,1% 3,4% (0,3 p.p.) Net Financial Income (Expense) Earnings before Income Tax Income Tax Net Income (3,2%) (2,4%) 1,1% (1,2%) (3,9%) 1,3% (0,6%) 0,8% 0,7 p.p. (3,7 p.p.) 1,7 p.p. (2,0 p.p.) (3,0%) 0,1% (0,1%) 0,1% (3,1%) 0,2% 0,1% 0,3% 0,1 p.p. (0,1 p.p.) (0,2 p.p.) (0,2 p.p.) EBITDA 2,1% 6,5% (4,4 p.p.) 4,4% 4,7% (0,3 p.p.) Adjusted EBITDA 2,5% 6,9% (4,4 p.p.) 4,9% 5,8% (0,9 p.p.) Earnings before Interest and Taxes - EBIT Financial Revenue Financial Expenses Net Financial Income (Expense) Earnings before Income Tax Income Tax Net Income (¹) EBITDA, Ajdusted EBITDA and EBIT are not revised by External Audit. 30

32 3Q18 Balance Sheet Assets R$ million Current Assets Cash and Cash Equivalents Accounts Receivables Credit Card Payment Book Others Accounts Receivables B2B Allowance for doubtful accounts Inventories Recoverable Taxes Financial Instruments - Fair Value Hedge Amounts Receivable from Related Parties Expenses in Advance and Other Accounts Receivable Noncurrent Assets Long-Term Assets Accounts Receivables Credit Card Payment Book Allowance for doubtful accounts Others Recoverable Taxes Financial Instruments - Fair Value Hedge Deferred Income Tax and Social Contribution Amounts Receivable from Related Parties Judicial Deposits Other Accounts Receivable Investments Property and Equipment Intangible Assets TOTAL ASSETS (510) (539) (33) (23) Liabilities and Shareholders' Equity R$ million Current Liabilities Taxes and Social Contribution Payable Suppliers Suppliers ('Forfait') Loans and Financing Payment Book (CDCI) Fiscal Obligations Debt with Related Parties Advanced revenues Onlending of third parties Other Long-Term Liabilities Loans and Financing Payment Book (CDCI) Debt with Related Parties Deferred Income Tax and Social Contribution Provision for lawsuits Anticipated Revenue Tax Obligations Other Liabilities Shareholders' Equity LIABILITIES AND SHAREHOLDERS' EQUITY

33 3Q18 Audited Cash Flow (R$ million) R$ million Net Income Adjustment for Reconciliation of Net Income Deferred Income Tax Depreciation and Amortization Interest and Exchange Variation Equity Income Provision for lawsuits Gain (loss) with fixed and intangible assets Share-based Payments Allowance for doubtful accounts Provision for Obsolescence and Retail Loss Deferred Revenue Others (21) (206) (166) (16) (191) (3) (471) (1.239) (578) 50 (65) 12 (2.291) (1.783) (1.175) (432) (30) 92 (177) (3.505) (191) (123) (676) 100 (103) (993) (710) 177 (242) (10) 168 (617) (156) (156) 44 (1) 43 Net Cash (used) in Operating Activities (2.075) (2.881) Cash Flow from Investment Activities Acquisition of fixed and intangible assets Sale of Property and Equipment Net Cash (used) in Operating Activities (407) 27 (380) (204) 11 (193) Cash Flow from Financing Activities Proceeds from borrowings Repayments of borrowings Payments of Interest Payments of Dividend Capital Increase Net Cash (used in) Financing Activities (4.386) (269) (15) 3 (675) (4.014) (329) 1 (417) Cash and Cash equivalents at the Beginning of the Period Cash and Cash equivalents at the End of the Period Change in Cash and Cash Equivalents (3.130) (3.491) Asset (Increase) Decreases Accounts Receivable Inventories Taxes to Recover Other Assets Net Related Parties Judicial Deposits Liabilities (Increase) Decreases Suppliers Payroll and Charges Lawsuits Deferred Revenue Other demandability Asset and Liabilities - Others (Increase) Decreases Dividends Received Income Tax Paid 32

34 3Q18 Earnings Conference Call and Webcast: October 25, p.m. (Brazil) / 1 p.m. (New York) / 6 p.m. (London) Portuguese / English (simultaneous translation): +55 (11) / +1 (646) Webcast: Replay +55 (11) Code: Via Varejo Glossary: Click&Collect (Retira Rápido): Products purchased Online that can be picked up by customers at our stores or our partner stores. 2 Digital Store: Store model with approximately 150 m that we use to test new technologies to improve the customer experience. GMV (Gross Merchandise Value): Amount transacted in Brazilian real on our website, including the Marketplace (third-party products). Kiosk Store: Store model that not only enables the testing of new regions, but also the penetration of Via Varejo in more competitive areas. Marketplace: Products of partners ( sellers ) offered for sale on our websites. MOVVE (Via Varejo Excellence Operational Model): Store management model implemented in Version 1.0 is responsible for the new management model and version 2.0 is responsible for the new compensation model. Same-Store Sales: Revenue from stores operating for more than 12 months. 2 2 Smart Store: Store model that employs more technology and spaces ranging from 500m to 1,000m. Via+: Web-based Sales System that unifies all the tools we developed in recent months (compensation model, Via Única/CRM and Online channel catalog). Via Única/CRM Single Path : Project developed in partnership with Accenture to create a single database (Brick-and-Mortar Stores, Online and Payment Book), segmented by the profiles of our 60 million customers. 33

35 3Q18 34