1Q17 Results Conference Call April 28 th, :00 pm (BrT) 11:00 am (NY)/ 4:00 pm (London)

Transcription

1 1Q17 Results Conference Call April 28 th, :00 pm (BrT) 11:00 am (NY)/ 4:00 pm (London)

2 1Q17 Results Financial Performance Outlook Q&A DISCLAIMER This presentation contains forward-looking statements regarding the prospects of the business, estimates for operating and financial results, and those regarding Cia. Hering's growth prospects. These are merely projections and, as such, are based exclusively on the expectations of Cia. Hering management concerning the future of the business and its continued access to capital to fund the Company s business Plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in Cia. Hering s filed disclosure documents and are, therefore, subject to change without prior notice. 2

3 FINANCIAL PERFORMANCE GROSS REVENUES AND BREAKDOWN BY BRAND 1Q17 1Q16 Change GROSS REVENUES BREAKDOWN PER CHANNEL DOMESTIC MARKET EX-OTHER REVENUES 1Q17, CHANGE 1Q17 X 1Q % % % % % International Market % Gross Revenue of R$ million in 1Q17, influenced by sales recovery in multibrand, own stores and webstores channels 3

4 HERING STORE NETWORK GROSS SALES SELL-OUT, STORE REFURBISHMENT PLAN Gross revenues of R$ million (-4.0%), impacted by SSS drop due to macroeconomic scenario, consumer s flow reduction and lower traffic. Evolutions in shopping experience, setting and VM ¹ Change in store count over the last 12 months. 4

5 FINANCIAL PERFORMANCE GROSS PROFIT EBITDA Gross margin gain (+320 bp) due to lower volume of past-season collections, result of improvements in the quality of company's inventory in recent quarters. EBITDA of R$ 42.2 million, 130 bp of margin expansion due to sales growth and gross margin increase. 5

6 FINANCIAL PERFORMANCE NET INCOME CAPEX Net income of R$ 37.8 million (+29.2%), due to operating income improvement, net financial income and lower income tax rate. Lower investments in IT past the conclusion of SAP implementation in 1Q16. 6

7 FINANCIAL PERFORMANCE CASH FLOWS Cash Flow - Consolidated (R$ thousand) 1Q17 1Q16 Chg. EBITDA 42,245 36,491 5,754 Non cash items 3,972 3, APV (Adjustment to Present Value) - Clients and Suppliers 9,857 5,712 4,145 Current Income tax and Social Contribution (2,744) (3,795) 1,051 Working Capital Capex 23,908 62,768 (38,860) Decrease in trade accounts receivable 87, ,202 (36,005) (Increase) in inventories (37,570) (10,378) (27,192) (Decrease) in accounts payable to suppliers (21,075) (37,329) 16,254 (Decrease) in taxes payable (6,353) (6,580) 227 Refurbishment Project - Franchisee Financing 3,397 (2,680) 6,077 Others (1,688) (3,467) 1,779 CapEx (4,579) (5,834) 1,255 Free Cash Flow 72,659 98,954 (26,295) Cash flow of R$ 72.7 million, R$ 26.3 million lower than 1Q16, explained by sales growth resumption and its consequent impact on working capital 7

8 OUTLOOK Signs of economic recovery, combined with operation s improvements from both Product and Store (P&S) fronts, should translate into brands resumption growth throughout 2017 Strategy based on Product and Store continues: Product: Store: winter collection displays important evolutions in style and value for money translated into good sales performance for the channels (sell-in) launching of Basicamente isso ( Basically this ) campaign of Hering brand that explores brand's casual style good momentum in the apparel market supply processes improvements with automatic replenishment of shrinkage for fast-selling basics Sales growth resumption combined with margins recovery through inventories normalization and strict expenses control will allow us to extract our brands greater value 9

9 INVESTOR RELATIONS TEAM Fabio Hering CEO Frederico Oldani CFO and IRO Bruno Salem Brasil IR Manager Caroline Luccarini IR Analyst (11) /4805