MATERIAL ANNOUNCEMENT RESTOQUE COMÉRCIO E CONFECÇÕES DE ROUPAS S.A. Listed company CNPJ /

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1 MATERIAL ANNOUNCEMENT RESTOQUE COMÉRCIO E CONFECÇÕES DE ROUPAS S.A. Listed company CNPJ / Restoque absorbs 100% of the shares of S.A. Restoque Comércio e Confecções de Roupas S.A. (BM&FBovespa: LLIS3) ( the Company ), in compliance with CVM Instruction 358/02 and current legislation, hereby informs its stockholders and the market in general as follows: Today, the Board of Directors approved the Protocol and Statement of Justification of Stock Merger of 100% of the shares in S.A. ( the Stock Merger, and ). Upon completion of the Stock Merger Restoque will hold 100% of the shares of. The present stockholders of will receive new shares issued by Restoque and, after the issue, will hold 50% of the equity capital of Restoque. About reported 2013 net sales of R$ 435 million, EBITDA of R$ 131 million and net profit of R$ 110 million. gained prominence for the distinction in quality of its shirts its main product which combine impeccable cut with a highly distinguished quality of raw material. With focus on the high-end market, is a synonym of high quality finishing the result of technology developed over the Company s history of more than 57 years. distributes its products across Brazil through 3,000 multi-brand stores in 1,300 towns and cities (68% of sales), 66 company stores (26% of gross sales revenue) and 36 franchised stores (7% of gross sales). The average size of s stores is 57 m 2. Its annual sales per square meter is R$ 45,900. Approximately 80% of s products are, currently, manufactured in its own industrial facilities. The main stockholders of are funds managed by Warburg Pincus and Advent International. Rationale of the Stock Merger The Stock Merger of is in line with Restoque s growth strategy. The association between the two companies should result in gains and synergies, both in supply chain efficiency and management of general and administrative expenses; it increases the diversification of sales channels, and also accelerates the Company s deleverage process. The brand is complementary to Restoque s current brands, and contributes to the diversification of its client profile, with an average price in line with Restoque s current average price, and similar operating margins.

2 Combination and scale The aggregate net revenue of the two companies together would have been R$ 1,149 million in 2013, and R$ 573 million in the first half of Net revenue and EBITDA of the two companies Restoque (R$ mm) 15.4% 17.0% 23.7% Restoque + (R$ mm) 20.5% 21.9% 25.0% H (R$ mm) % 30.0% 27.0% H14 Net Revenues EBITDA EBITDA Margin H14 The distribution of revenues of the two companies across their sales channels is complementary: wholesale sales to multi-brand stores represent 68% of the sales of, and 9% of the sales of Restoque. Company stores provide approximately 26% of the sales of and 89% of the sales revenue of Restoque. has 36 franchised stores, while Restoque has none.

3 Gross revenue by sales channel (June 30, 2014) Restoque Restoque + Multi-brand 9% E-commerce 2% Franchises 7% Owned Stores 26% Franchises E-commerce 2% 1% Multi-brand 30% + = Owned Stores 89% Multi-brand 68% Owned Stores 67% Source: Companies Note: Information based on the last 12 months of each period. Jointly, Restoque and had a total of 308 stores as of June 30, This number is expected to grow to 338 by the end of The transaction in no way alters the plans for expansion of the brands of both companies, notably the expansion that is planned for the Rosa Chá brand. Number of stores Stores Base (end of June 2014) Stores Bases (end of 2014) Franchises Owned Stores 108 Le Lis Blanc(1) Bobo John John Combined Company Le Lis Blanc Bobo John John Rosa Chá Combined Company 31 (1) Includes tw o Noir independent stores. In addition, the two companies have an aggregate of approximately 4,000 multi-brand clients spread out throughout Brazil. The chart below contains figures for sales per square meter of the brands of Restoque and, which highlights the high productivity of all brands.

4 Net sales 1, R$ 000/m² (June 30, 2014, last 12 months) Le Lis Blanc Bobo John John Rosa Chá Note: The figure for Rosa Chá is an estimate of annual sales/m 2 based on seasonal adjustment of the sales of Rosa Chá in this 3 rd quarter of This is a brand which Restoque relaunched in July of this year and which has been selling well. has a client base complementary to Restoque s target market, and a similar price point: its average price is R$ 286, compared to R$ 222 of Restoque. The charts below compare prices and tickets of the brands, and number of items per ticket (peças por atendimento PA). Operational indicators 324 Average store size (m 2 ) Average ticket (R$) Average Price (R$) Clothes per sale 2,1 1,9 1,7 2,1 1,7 Information is based on figures for last 12 months, for each period. The figures for Rosa Chá are for 3Q Gross revenue, net of returns.

5 The margins of s main channels are also in line with Restoque s margins, benefiting the integration of the two companies. The figures below contain gross margin and EBITDA margin for the principal sales channels (wholesale and retail) of the two companies. Operating margins Retail Gross Margin (LTM in 30-jun-2014) Wholesale Gross Margin (LTM in 30-jun-2014) 74,3% 79,4% 75,1% 56,5% 52,4% 53,1% Restoque Restoque + Restoque Restoque + EBITDA Margin (LTM in 30-jun-2014) 34,8% 39,5% 35,6% EBITDA Margin (LTM in 30-jun-2014) 46,7% 40,2% 41,2% Restoque Restoque + Restoque Restoque + Source: Companies Note: Information based on the last 12 months of each period. Synergies Combination of the two companies generates opportunities for synergies in several areas. Some of the most important identified synergies are highlighted below: (i) Improvement of costs and reduction of production lead time, through use of the production capacity of s five plants currently operating (4.2 million units/year). (ii) Faster growth in sales of the Restoque brands through the wholesale channel of. (iii) Support for growth of s retail channel, through employment of Restoque s retail structure and management tools. (iv) Scale gains in administrative and marketing expenses. The company will engage an internationally renowned firm to develop an in-depth assessment of potential synergies.

6 Management and governance The present CEOs of the two companies Livinston Bauermeister, CEO of Restoque, and Sonia Hess, CEO of will hold their positions in both companies. Four new members will be elected to the Board of Directors of Restoque, increasing its number of members from 5 to 9. The new members of the Board of Directors will be: Alain Juan Pablo Belda Fernandes, Claudio Roberto Ely, Juan Pablo Zucchini and Wilson Lourenço da Rosa, all currently members of the Board of Directors of. There is no shareholders agreement, and after completion of the Stock Merger, Restoque will still have no single controlling stockholder. Summary financials The combination of the two companies creates one of the largest apparel retailers in Brazil, and the largest company in the high-end segment of this market. Both companies have healthy margins, and high conversion of EBITDA to cash. With the combination, the level of Restoque s consolidated debt will be reduced. In a pro-forma assessment of the two companies considered jointly, Net debt / EBITDA (based on prior 12 months) would have been 0.9x at the end of 2013, and 1.2x at the end of June Financial position at December 31, 2013 Net Debt (R$ million) Net Debt / EBITDA (x) 332 2,7x (105) 227 0,9x Restoque Restoque + -0,8x Restoque Restoque +

7 Financial position at June 30, 2014 Net Debt (R$ million) Net Debt / EBITDA (x) ,6x (49) 1,2x Restoque Restoque + -0,4x Restoque Restoque + Summary P&L (R$ 000) H14 Restoque Restoque + Restoque + Restoque Net Revenues Cash COGS ( ) ( ) ( ) ( ) (94.418) ( ) % Net Revenues -34,8% -39,2% -36,5% -34,0% -42,4% -37,3% Gross Profit Gross Margin 65,2% 60,8% 63,5% 66,0% 57,6% 62,7% SG&A ( ) ( ) ( ) ( ) (68.227) ( ) % Net Revenues -48,2% -30,8% -41,6% -42,3% -30,6% -37,7% EBITDA EBITDA Margin 17,0% 30,0% 21,9% 23,7% 27,0% 25,0% D&A (63.474) (8.705) (72.179) (37.432) (4.939) (42.371) Financial Results (85.310) (77.242) (43.780) (40.630) EBT (27.742) EBT Margin -3,9% 29,9% 8,9% 0,6% 26,2% 10,5% Income tax and social contrib (19.919) (10.584) (667) (9.789) (10.456) % -33,6% -15,3% -10,3% -33,2% -16,8% -17,3% Net Income (18.407) Net margin -2,6% 25,3% 8,0% 0,4% 21,8% 8,7% 2 Simple arithmetic sum of the lines from the financial statements of each Company.

8 Summary Balance Sheet (R$ 000) S14 Restoque Restoque + Restoque + Restoque Current Assets Cash and cash equivalents Accounts receivable from cus Inventories Others Noncurrent Assets Long-term assets Intangibles Fixed assets Total Assets Current Liabilities Short-term debt Suppliers Labor liabilities Dividends payable Others Long-term Liabilities Long-term debt Others Shareholders Equity Total Liabilities and Sharehol About the Stock Merger Today, the Boards of Directors of Restoque and of approved the Protocol and Statement of Justification of Stock Merger of 100% of the shares in. The Stock Merger of by Restoque will take place in accordance with Article 252 of the Brazilian Corporate Law (Law 6404/76), with the stockholders of becoming stockholders of Restoque. Restoque will issue 174,931,254 new shares, which after the Stock Merger will represent 50% of the total capital of Restoque. The exchange ratio will be: common shares in Restoque for each common share in. Restoque has retained Apsis Consultoria Empresarial Ltda., with head office at Rua da Assembleia 35, 12 th Floor, Centro, Rio de Janeiro/RJ, registered in the CNPJ/MF under Nº / , to prepare a Laudo de Avaliação (appraisal report) of. The value of indicated by this study is a range between R$ 1,718,680, and R$ 1,833,333, The Board of Directors has estimated the global 3 Simple arithmetic sum of the lines from the financial statements of each Company.

9 value of the shares in Restoque to be issued for the Stock Merger at a value within this range: R$ 1,749,312, The Stock Merger will be submitted immediately to the Brazilian anti-trust authority, CADE, in accordance with the current legislation. The Boards of Directors of Restoque and will call their stockholders to Extraordinary General Meetings, to be held on October 21, 2014 to decide on the Stock Merger. The decisions of these Extraordinary General Meetings of Stockholders will depend only on approval by Cade as referred to above to take effect. The additional information on the Stock Merger required under CVM Instruction 319/99 and other applicable regulations, including on the subject of the right to withdraw of stockholders in each of the companies, will be the subject of further Material Announcements to be published at the same time as the publication of the convocation notice for the General Meeting of Stockholders. The documents relating to the Stock Merger will be available to the Company s stockholders on and after October 2, For further information, please contact the Company s Investor Relations Officer. São Paulo, October 1, 2014 Glaucia Casali Pacola Investor Relations Officer