estil estil estil Segun Segun Segun 1 September 2010
Largest Retailer in Brazil R$ 44 billion Grs Sales: (annualized based in 2010): estil estil estil Segun Segun Segun 1,891 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 estil CEO Segun Enéas 7 in GPA Segun Segun CORPORATE EXECUTIVE OFFICERS estil 13 years in estil retail Commercial Strategy 25 years in retail 4 GPA Corporate Relations 31 years in retail 9 in GPA Market Strategy 2 years in retail 2 in GPA Financial and IT 5 months in retail and in GPA BUSINESSES OFFICERS Human Resources 25 years in retail 10 in GPA Supply Chain 9 years in retail 9 in GPA 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
Management Model estil estil estil Segun Segun Segun Market Strategy Sales Strategy Corporate Relations Supply Chain Corporate Services, Finance / IT Retail Wholesale Specialized Businesses Electronics.Com Indicators Expansion Sales Margin Image Logistics Result Financial Cts Human Resources Retention and Succession Retail Results Wholesale Results Specialized Businesses Results Electronics Results.Com Results 4
estil estil estil Segun Segun Segun Formats 5
Supermarkets estil estil estil Segun High Segun income groups Segun R$ 4.3 billion grs 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 grs sales in 2009 Avg. sales area: ~1,500 m2 Differentials: Neighborhood supermarket Competitive prices ~ 21,000 itens 6
Extra Multiformat Structure All income groups estil estil estil Segun Segun Segun Broad range of food and non-food products Competitive Prices 6,000 m2 ~ 69,000 itens R$ 11.8 billion grs sales in 2009 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 Scale is crucial for expansion 7
Extra Multiformat Structure estil estil estil Segun Segun Segun Drugstores galleries of GPA s supermarkets and hypermarkets Located in the commercial Wide range of drugs and related products Competitive Prices Gas Stations Installed in the stores parking lots and nearby Competitive Prices Quality Products 8
Specialized Stores Electronics, Home Appliance and Furniture estil estil estil Segun Segun Segun Focused on High/Middle Income Classes Focused on Lower Income Classes 9
E-commerce estil estil estil Segun Segun Segun Extra.com PontoFrio.com CasasBahia.com 10
Cash & Carry estil estil estil Segun Segun Segun Low income groups R$ 2.2 billion grs sales in 2009 Avg. sales area: 4,000 m2 Highly competitive prices Low ct structure High asset turnover Return on Invested Capital is very attractive for GPA Increase operations in other states 11
Rationalization of Brands estil estil estil Segun Segun Segun Conversion process: 2010-2011 EXTRA brand: strong recall Marketing synergies Better layout and assortment Improve sales and ROCE 12
Regional Stores Distribution (2Q10) estil estil estil Segun Segun Segun 13
estil estil estil Segun Segun Segun Food Business Opportunities: 14
Strategy Growth in Same-Store Sales (SSS) Expansion through Organic Growth estil estil estil Segun Rationalization of Brands Segun Segun Geographical Strategy Bring expertise from specialized channels to hypermarkets Increase its presence in the less saturated markets particularly in the Northeast and Middle-East 15
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 estil estil estil Segun Market share (%)¹ Segun Segun 13.8% 13.2% 14.8% Increasing formalization of the market 13.3% 14.1% 11.0% 61.1% 10.4% 10.4% 65.9% 14.2% 10.7% 61.9% 14.5% 11.1% 59.6% 2006 2007 2008 2009 Others GPA Carrefour 8.5% 8.6% 7.1% 4.3% Same Store Sales 15.0% 13.2% 10.3% 10.4% 9.7% 9,9% 10.6% 7.2% 8.7% 8.4% 7.8% 4.6% 4.8% 2,9% 3.9% 2.3% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 (1) Source: Abras Brazilian Supermarkets Association 16
Business Opportunities: estil estil Segun estil Electronics, Segun Home Segun Appliance and Furniture 17
New Globex Operation Street estil estil 518 504 1.022 estil Segun Segun Segun Shopping Malls 428 397* 825 90 107 197 States 11 11 12 + Pitioning based on social classes A B C D E * Includes Extra Eletro stores 18
New Globex is the largest advertiser in Brazil estil estil estil Segun Segun Segun 7th mt valuable brand in Brazil (English Brand Finance Consulting) 2009 19
Furniture Factory - Bartira estil estil estil Segun Segun Segun 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 20
Core Elements in the Business The capacity to generate operating cash flow estil 2 estil Management of infrastructure and estil Segun Segun Segun 1 Commercial and operational management Commercial competitiveness: special price, offers and credit Service and product availability/assortment Strategy to acquire and negotiate Furniture business The business of services Brand image Model, stores chain and execution : solid operating discipline (no conflict) good training process back-office Know-how and capacity in logistics terms Information Technology with high service levels Efficient furniture set up services 3 Management of financial and capital structure Solid capital structure is fundamental for the continuity of the business 21
Core Elements in the New Globex 2 Management estil estil of infrastructure and back-office capital estil Segun management Segun Segun 1 Commercial and operational Centralize the management of purchases; Improve the sales mix and pricing at Ponto Frio; Increase the penetration of extended warranty, Insurance and other services at Ponto Frio; Define the potential of the credit business (own, with a financial partner or a mix of both), looking at profitability, risk and the need for capital; Integrate the operating management at Ponto Frio with the Casas Bahia model; The capacity to generate operating cash flow Repition of the Ponto Frio brand and keep Casas Bahia brand strong. Centralize inventory and the supplying of companies (DCs); Centralize the information systems; Use GPA s back-office platform : Shared Services Center and Indirect Purchase Center; Total integration between Casas Bahia and Ponto Frio; Improvement in operating processes; Take advantage of the synergies between the Globex (New) and GPA. 3 - Management of finance and Use GPA s financial management platform : Utilize the ct of discounting receivables related to credit cards; similar to GPA; Reduce the ct of discounting Direct Consumer Credit receivables. 22
Pitioning and Brand Strategy estil estil estil Segun Segun Segun 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 mt remembered and admired by consumers in the base of the pyramid. To be the best purchase choice for A/B class, and the best choice for B/C class after Casas Bahia. 23
Past Revenue Figures 1H10 (R$ mi) estil estil 1H10/09 estil Segun Segun Segun Total Grs Sales 6,562 Growth same-store-sales (SSS) 22.0% 2,136 36.3% 248 23.3% Total 8,946 (1) (1) Proforma 24
Global Ranking estil Germany estil 33.0 768 estil 2 Media-saturn Segun 3 Expert Segun Segun 4 5 6 7 8 Rank Company Headquarters 1 9 Best Buy DSG International Euronics Yamada Denki Gome Suning Kesa Electricals USA Switzerland UK Netherlands Japan China China UK 2008 Sales (in US$ billion) 45.1 21.7 20.3 19.1 16.6 15.7 15.5 11.4 Stores 4,096 6,902 1,638 11,824 1,360 1,263 820 713 10 Nova Globex Brazil 10.3 1,015 11 Edion Japan 7.8 1,178 25 Source: Accenture R$ Billion Exchange Rate R$ / US$ Nova Globex 18.5 1.8
Brazilian Market Size estil estil estil Segun Segun Segun 2010e 2011e 2012e 2013e Source: Tendências Consultoria 26
2009 Market Share estil estil estil Segun 16% Segun Segun 7% 3% 3% 3% 3% 27
Shareholder Structure estil Family estil estil GPA Segun Segun Segun Executive Officers 6% 43.9% 1 53% 1 47% 1 50.1% 1 New.com Globex The Klein 100% NCB 1 Not including Globex s minority shareholders. 28
estil estil estil Segun Segun Segun Business Opportunities: E-Commerce 29
E-commerce Market Share estil estil estil Segun Segun Segun B2W GPA.com others 53,8% 8,0% 38,2% 47,2% 12,7% 40,1% R$2 billion Grs Sales 20 2008 2009 2010e 30
estil estil estil Segun Segun Segun Business Opportunities: Financial Operation 31
Largest Retailer in Brazil estil estil estil Segun Segun Segun 32
estil estil estil Segun Segun Segun Results and Guidances 33
* Deflated by the IPCA General Consumer Price Index 2Q10 Sales Performance Grs Sales (R$ million) (excluding Globex) 12.7% 9,648.3 estil estil 11.5% 10,932.7 estil Segun 6,287.3 5,641.3 Segun Segun In the quarter - same-store terms: 15.5% 12,630.2 2Q09 2Q10 1H09 1H10 [Comble-basis comments - excluding Globex] Grs and net sales: 9.9% (real growth* of 4.6%) and 11.3% increases, respectively; and Food and non-food sales: 7.9% and 16.2% increases, respectively. Net Sales (R$ million) (excluding Globex) 5,006.9 5,641.9 In 1H10 - same-store terms: In 1H10: Grs and net sales: 12.4% (real growth* of 7.0%) and 14.6% increases, respectively. 17.7% 11,357.9 2Q09 2Q10 1H09 1H10 [Consolidated comments - including Globex] In the quarter: Grs and net sales: 38.5% and 39.4% increases, respectively; and In 1H10: Grs and net sales: 42.7% and 44.6%, respectively. 34
Grs Profit and Grs Margin estil estil estil Segun Segun Segun Grs Profit (R$ million) (excluding Globex) 10.3% 2,443.7 1,267.5 1,398.2 25.3% 25.3% 24.8% % of Net Sales 14.8% 2,804.7 24.7% 2Q09 2Q10 1H09 1H10 [Comble-basis comments - excluding Globex] Grs Margin impacts in 2Q10: (-) increased share of Assaí s sales (-40 bps); (-) the expansion of the ICMS tax substitution regime (-20 bps.); and Partially offset by: (+) more advantageous negotiations with suppliers and a more profitable product mix (+10 bps). Grs Income in 1H10: R$ 2,804.7 million and grs margin of 24.7%. [Consolidated comments - including Globex] Grs Income: *bps: basis points R$ 1,635.3 million and grs margin of 23.4% in 2Q10. R$ 3,307.1 million and grs margin of 23.7% in 1H10. 35
Total Operating Expenses [Comble-basis comments - excluding Globex] Total Operating Expenses % of Net Sales estil estil (excluding Globex) -30 bps estil Segun Segun Segun R$ 1,038.4 million in 2Q10, 18.4% of net sales, increased by 12.6% year-on-year, chiefly due to: (i) the opening of 62 stores in the last 12 months; and (ii) higher expenses with advertising, marketing and IT. [Consolidated comments - including Globex] Total Operating Expenses R$ 1,240.4 million in 2Q10, 17.8% of net sales, less than the 18.4% recorded in 2Q09. 0,0% Total Operating Expenses 18.4% 18.4% 18.5% 18.2% 2.8% 2.7% 2.8% 2.9% 15.6% 15.7% 15.7% 15.3% 2Q09 2Q10 1H09 1H10 Selling Expenses Gen. and Adm. Expenses 36
EBITDA and EBITDA Margin [Comble-basis comments - excluding Globex] EBITDA estil estil estil Segun Segun Segun R$ 359.7 million in 2Q10, 4.2% up year-on-year, while the EBITDA margin stood at 6.4%, wn by 50 bps in comparison with 2Q09. R$ 737.0 million in 1H10, 12.1% more than the same period last year, while the EBITDA margin stood at 6.5% in 1H10, wn by 30 bps in comparison with 1H09. EBITDA [Comentári consolidad com Globex] R$ 394.9 million in 2Q10, 14.4% up on 2Q09, with a margin of 5.7%. Globex s margin stood at 2.6%, identical to the 1Q10 figure. R$ 805.3 million in 1H10 and margin of 5.8%. EBITDA (R$ million) (excluding Globex) 801 601 401 201 1 345.1 359.7 6.9% 4.2% 6.4% 657.4 6.8% 737.0 6.5% 2Q09 2Q10 1H09 1H10 % of Net Sales 12.1% 37
Financial Result [Comble-basis comments - excluding Globex] estil estil Financial Result (R$ million) estil Segun Segun Segun investments to support growth; and Net Financial Result grew by 50.2%, totaling an expense of R$91.8 million in 2Q10, due to: (i) the period increase in the average grs debt advertising expenses. and payments. (ii) the mark-to-market of financial instruments; (iii) the monetary restatement of tax installment Net Debt/EBITDA ratio of 0.97x. [Consolidated comments - including Globex] (excluding Globex) 250 200 150 100 50 27.9% (169.2) 50.2% (132.3) (91.8) (61.1) Net Financial Result was an expense of R$169.0 million in 2Q10. Net Debt/EBITDA ratio stood at 1.1x. 0 2Q09 2Q10 1H09 1H10 38
Ponto Frio Net Income and Net Margin estil 36.0 estil 2Q09 2.7% 1H09 estil Segun Net Income Segun Segun R$ 36.0 million and net margin of 2.7% in 2Q10. Adjusted Net Income R$ 32.3 million and net margin of 1.2% in 1H10. Excluding the non-recurring effects of the right to indemnification by CBD of certain recognized contingencies owed by Globex (Joint Venture Agreement with Casas Bahia) Net Income 200 (R$ million) 150 100 50 0-50 -100-150 -200 Adjusted Net Income (R$ million) 200 150 100 50 32.3 2Q10 1H10-8.5% -12.1% (94.0) (1) (129.5) (1) % of Net Sales 2Q09 2Q10 1H09 1H10 1.2% Net Ls of R$ 23.9 in 2Q10. Net Ls of R$ 27.6 in 1H10. 0-50 -100-150 -12.1% (94.0) (1) (23.9) (1) -1.8% -8.5% (129.5) (1) (27.6) (1) -1.1% -200 % of Net Sales (1) Excluding non recurring effects. 39
Investments Breakwn R$ 182.4 million in investments: estil estil R$ 46.7 million in the opening and construction of new stores and the acquisition of strategic sites : estil Segun 8 new Extra Fácil stores; 2 new Ponto Frio stores; Segun Segun 1 new Pão de Açúcar 1 new Assaí; and 1 new Extra Hipermerca. Supermerca. R$ 84.2 million in store renovations and conversions: 2 CompreBem stores converted into Extra R$ 51.5 million in infrastructure (technology and logistics) and others. 2Q10 CAPEX CAPEX (R$ million) 113.8 182.4 214.1 389.4 2Q09 2Q10 1H09 1H10 40
Dividends Dividend Policy: estil Segun Quarterly prepayments : Segun R$ 0.08 per class Segun A preferred share R$ 0.07 per common share estil estil 4, 2010. Total distributed in 2Q10: R$ 19.6 million. Date of payment: August 17, 2010. Shares to be traded ex-dividend as of: August As for the 4Q10, the Company will pay shareholders the minimum mandatory dividends, calculated in accordance with Corporate Law, less the amounts prepaid throughout 2010. Declared Dividends (R$ million) and Dividend Yield 1 (%) 0.3% 50.1 0.7% 0.7% 61.9 1 Source: Economatica 140.5 0.7% 1.1% 31.0 38.8 2007 2008 2009 1H09 1H10 2,0% 1,5% 1,0% 0,5% 0,0% -0,5% -1,0% -1,5% -2,0% 41
Guidances 2010 estil estil estil Segun GPA GPA+ Segun Segun Ponto Frio TOTAL GROSS SALES (R$) REAL GROWTH IN GROSS SAME-STORE SALES (%) EBITDA (R$) CAPEX GPA+ Ponto Frio GPA+ Ponto Frio GPA + Ponto Frio 2009 Guidances R$ 23,3 billion More than R$ 26 billion R$ 26,2 billion More than R$ 33 billion 4,5% Between 4,0% and 5,0% R$ 1,5 billion More than R$ 1,8 billion R$ 0,7 billion Approximately R$ 1,6 billion NET DEBT/ EBITDA GPA+ Ponto Frio 0,47 X Less than 1X 42
estil estil estil Segun Segun Segun Guidance New Globex 43
How the Companies Were Globex before estil estil Retail estil Segun Wholesale Segun Segun Credit Warranty PF.com Extra.com Extra Eletro Itau - FIC Globex after Globex (New) New Casas Bahia Casas Bahia Retail Real Estate Credit Warranty Insurance Receivables Receivables New.com CasasBahia.com 44
How the Companies Will Be Globex before estil estil Retail estil Segun Retail Segun Warranty Segun GPA Globex (New) Globex after New Casas Bahia Extra Eletro Credit Warranty Insurance Receivables New.com Casas Bahia Real Estate Receivables PF.com Wholesale CasasBahia.com Credit Itau - FIC Insurance Extra.com 45
Considerations for the Guidance The information contained herein represent an expectation for the new company in the formation stage, adjustments can be made in this process estil estil estil Segun responsibility Segun Segun Contingencies prior to the incorporation date are under the respective assets original controlling The guidance not consider the new.com company initial stage It es not consider any negotiation with financial partner and/or services, financial partner evaluation in Extra-Eletro includes Ponto Frio s results, except otherwise indicated 46
Strategies for New Globex Strategy pillar estil estil estil Segun Segun Commercial synergies Segun 1 Commercial and operating management 2 Management of Infrastructure and backoffice Centralization of inventories and stock up To take advantage of synergies with GPA Approach - actions Growth of sales 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 47
Renovations, Conversions and New Stores Renovations and Conversions estil Strategy for estil renovations: estil Segun Segun Segun Indicators 2010 2011 Stores to be converted 47 50 Stores to be renovated Ponto Frio 50 Estimated value (R$ million) 23,5 40,0 New Stores Indicators 2010 2011 Casas Bahia Stores - 10 Ponto Frio Stores - 5 Total - 15 Estimated value (R$ million) - 33,4 Water, soap and paint makeovers; Structural renovation of Ponto Frio stores Investments in technology to incorporate Ponto Frio; Structural renovations in Ponto Frio shopping mall stores 48
Working Capital Working Capital estil Beginning of 2011 Segun (in days net revenues) Inventories 47 Segun Segun Suppliers 38 estil estil (1) Net receivables 8 Net working capital 17 (1) Excludes Discounted Receivables Comments Manage the cash / Working Capital in accordance with GPA platform Reduction of funding cts / negotiation of financing instruments and lines at GPA ct Instruments and lines already available, inclusively a securitization fund for October/10. 49
Receivables estil estil estil Segun Total Receivables Beginning of 2011 Segun Installment Segun sales (% of sales) 75% Average term (months) 5 Comments: Manage the cash / Working Capital in accordance with GPA platform Reduction of funding cts / negotiation of financing instruments and lines at GPA ct Instruments and lines already available, inclusively a securitization fund for October/10. 50
Indebtedness, Shareholders Equity and Contingencies estil estil estil Segun Indebtedness and Shareholders Beginning of 2011 equity (R$ bn) Segun Segun Net Debt 0.2 Shareholders Equity (1) 2.9 Contingencies prior to the incorporation date are under the respective assets original controlling responsibility. (1) Subject to adjustments in accordance to accounting principles 51
Main Synergies 1 Commercial and operating management Centralization of purchase management with margin gains; estil estil Improvement of sales and pricing mix; estil Segun Segun Segun brand back-office 2 Management of infrastructure and Integrate the Ponto Frio operating management to Casas Bahia model with margin and sales gains Increase the penetration of services sales; Repitioning of Ponto Frio brand and maintaining strong the Casas Bahia 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 cts / negotiation of financing instruments and lines at GPA ct; 52
Synergies Potential per year after total capture of synergies (1) estil estil estil Segun 1 Commercial and 1.0% - 2.0% operating management (R$ 170-340 mn) Segun Segun 2 Management of infra-structure and backoffice 3 Management of financial and capital structure 1.5% - 2.0% (R$ 255-340 mn) 0.5% - 1.0% (R$ 85-170 mn) Total 3.0% - 5.0% (R$ 510-850 mn) (1) Synergy calculated over the net sales. 53
Guidance for New Globex 2011E estil Above estil Growth (SSS) R$ 20 billion above the market estil Segun GROSS SALES (R$) Segun Segun GROSS MARGIN (1) Higher than 25.5% Higher than 26.5% EBITDA MARGIN (1) 4.5 to 6.0% Higher than 7.5% FINANCIAL RESULT (1) Year model -3.5 to -4.5% Up to -4.0% CAPEX R$ 100 mn to R$ 120 mn (1) % of net sales. Projections include estimated synergies. 54