B2W ANNOUCES GROSS REVENUE GROWTH OF 50% AND EBITDA GROWTH OF 67% FOR 1H07 Rio de Janeiro, Brazil, August 9, 2007 B2W Companhia Global do Varejo (Bovespa: BTOW3), company resultant from the merger between Americanas.com and Submarino, announces today its consolidated results for the second quarter (2Q07) and first half of 2007 (1H07). The merger between the two companies was approved at the Extraordinary Shareholders Meeting held on December 13, 2006. However, for comparison purposes, the comments on performance hereby compare 2Q07 and 1H07 results with respective proforma unaudited income statements for the second quarter (2Q06) and first half of 2006 (1H06) of Americanas.com, Shoptime and Submarino compounded. Such pro-forma information does not replace audited Financial Statements filed at the Brazilian Securities and Exchange Commission (CVM). B2W s portfolio comprises the brands Americanas.com, Shoptime, Submarino, Ingresso.com, Submarino Finance and Submarino Viagens, offering over 30 product categories throughout the Internet, catalogues, TV and kiosks. FINANCIAL HIGHLIGHTS 1H07 Results Gross Revenue (R$ million) 50% 1,481 Highlights of the Period (*) 44% 740 986 515 2Q06 2Q07 1H06 1H07 Operating Expenses (R$ million & % Net Revenue) 18.4% 17.8% 17.2% 179 16.7% 129 65 87 2Q06 2Q07 1H06 1H07 EBITDA (R$ million & % Net Revenue) 13.2% 13.4% 12.0% 11.7% 136 70 82 44 2Q06 2Q07 1H06 1H07 Gross Revenue 50% growth in 1H07 over 1H06. Gross Margin 30.4% of Net Revenue, growth of 30 basis points over the 30.1% posted in 1H06. Operating Expenses 17.2% of Net Revenue, reduction of 120 basis points in 1H07 when compared to same period of 2006. EBITDA 67% growth in 1H07 over 1H06. EBITDA Margin 13.2% of Net Revenue, growth of 150 basis points in 1H07, as compared to same period of 2006, showing that the Company continues to capture synergies resulting from the merger. Acquisition of Blockbuster On-line Operations B2W obtains approval to acquire the website and the right to use the BLOCKBUSTER trademark in on-line retail commerce. Submarino Card Submarino Card share in the sales of Submarino website surpasses the milestone of 8% in June Watch, Surf and Buy Shoptime broadcasts its TV program grade 24 hours a day on the Internet. New B2W ticker B2W is now traded under ticker BTOW3. (*) Financial Highlights and Highlights of the Period are based on unaudited pro forma results for 2Q06 and1h06.
GENERAL COMMENTS The merger between Americanas.com and Submarino was approved at the Extraordinary Shareholders Meeting held on December 13, 2006. However, for comparison purposes, the comments performance included in this report compare 2Q07 and 1H07 results with pro forma, unaudited income statements for 2Q06 and 1H06 of Americanas.com, Shoptime and Submarino. Such pro-forma information does not replace audited Financial Statements filed at the Brazilian Securities and Exchange Commission (CVM). The following discussion is solely based on the compounded result of the brands Americanas.com, Shoptime and Submarino, excluding, then, the subsidiaries (Ingresso.com, Submarino Finance and Submarino Viagens). HIGHLIGHTS OF THE PERIOD 50% growth in gross revenue. Gross revenue amounted to R$ 1,480.7 million in the 1H07 and R$ 740.3 million in the 2Q07, up 50% and 44%, respectively, when compared to the same periods of 2006. According to Forrester Research, an international consultancy company specialized in e- commerce surveys and projections, the market is expected to grow by 36% in 2007. 30 basis points growth in gross margin. 1H07 gross profit totaled R$315.0 million, generating gross margin of 30.4% of net revenue in the period, compared to gross profit of R$211.1 million and gross margin of 30.1% of net revenues in the 1H06. In the 2Q07, B2W s gross margin reached 30.1%, representing, also, a 30 basis points expansion, when compared to the same period of 2006. Reduction of 120 basis points in operating expenses. 1H07 operating expenses totaled R$ 178.7 million, representing 17.2% of net revenue, as compared to operating expenses of R$ 129.2 million, or 18.4% of net revenue posted in the 1H06. In the 2Q07, operating expenses accounted for 16.7% of net revenue, a 110 basis point reduction against the same period of 2006. The reduction of SG&A expenses in both periods reflects our operating leverage, as part of these expenses is fixed, and also, the continuous capture of synergies resulting from the merger of Americanas.com and Submarino. EBITDA 1 growth of 67%. Reflecting the revenue growth, reduction in costs and expenses, as well as the synergies resulted from the merger, EBITDA reached R$ 136.3 million in the 1H07, up 67% on the same period of 2006. EBITDA margin increased from 11.7% in the 1H06 to 13.2% in the same period of 2007. In the 2Q07, EBITDA increased 58% while the EBITDA margin posted a 140 basis points growth. Acquisition of Blockbuster s on-line operations. B2W, in a continuous search for new opportunities to generate value to its shareholders, obtained approval to acquire the website www.blockbuster.com.br as well as the right to use the BLOCKBUSTER trademark in on-line retail commerce. The transaction, which amounts to R$ 21 million, agreed between B2W and Lojas Americanas, has been conducted under the same terms agreed by Lojas Americanas on the acquisition of the trademark license use in Brazil. The business was offered to B2W by Lojas Americanas, in compliance with the clause 5.10 of the Merger Agreement and Other Covenants, executed on November 23, 2006, as the transaction involves a door-to-door retailing company. This new business will complement our product and service assortment offered to clients, and, at the same time, consolidate B2W s positioning in the multi channel retail industry. Submarino Card. Only 10 months after the launch, purchases made using the Submarino Card surpassed the milestone of 8% of Submarino website total sales. This share growth demonstrates the card strength, which offers to cardholders special discounts, financing in up to 24 months, and an exclusive Reward Program. For B2W, the card means an opportunity to leverage sales, particularly of high value items; reduce expenses related to credit card fees and discount of receivables; and profit out of the consumer credit business.
Ongoing synergies capturing process. Only seven months after the approval of the merger of Americanas.com and Submarino, the process for identifying, mapping and implementing synergies is at accelerated pace, and the capture of concrete gains has already been positively impacting B2W s results as stated in the 1H07. Watch, surf and buy. Since July 2007, Shoptime started broadcasting its TV program grade also on the Internet. The Internet user now can watch on real time the full program grade of Shoptine TV sales channel and buy the products at the same time. Based on innovative technology, the channel is broadcasted on the web and simultaneously shows further information on the product presented, enabling the user to immediately make his purchase decision. Additionally, it keeps the tracking record of what has been broadcasted. In order to permit the simultaneous broadcast on the web, the full operation of the TV channel is based on digital image and sound technology, providing total quality, speeding up the opening of the link and, consequently, facilitating navigability, what not only influences the purchase decision but entertains the users. Approval of the merger by the Brazilian Administrative Board for Economic Protection (CADE). The merger has been submitted to the approval of Brazilian antitrust agencies (Administrative Board for Economic Protection - CADE, Secretariat of Economic Law SDE, Secretariat for Economy Monitoring SEAE) on time and under the form required by law. The Concentration Action is still under analysis by SEAE and SDE and will be subsequently submitted to CADE s approval. B2W is following the progress of the process and collaborating with authorities as required. B2W is now traded under ticker BTOW3. The requests for being registered as a publicly-held company and listed under the Novo Mercado were approved in July 2007, enabling B2W to proceed with the replacement of Submarino s shares, previously traded on the Novo Mercado under ticker SUBA3, and currently traded under BTOW3. B2W launches a new investor relations website (www.b2winc.com). Launched last June, the new website offers customized home pages addressed to institutional investors, individual investors and market analysts, providing easy access to information most wanted by each of these publics. The new website also features important tools for analyzing the company, including stock charts and prices, market estimates and interactive worksheets. PERFORMANCE COMMENTS GROSS REVENUE In the 1H07, gross revenue totaled R$ 1,480.7 million, up 50% on the 1H06, when revenues reached R$ 985.6 million. In the 2Q07, the company s gross revenue amounted to R$ 740.3 million, compared to the R$ 514.5 million posted in the same period of 2006, representing a 44% growth year-on-year. 50% 44% 1,481 740 986 515 1H06 1H07 2Q06 2Q07
GROSS PROFIT 1H07 gross profit amounted to R$ 315.0 million (30.4% of net revenue) against the R$ 211.1 million (30.1% of net revenue) posted in the same period of 2006, representing a 49.3% growth. 30 bps 30.4% 30 bps 30.1% 30.1% 315 29.8% 156 211 110 1H06 1H07 2Q06 2Q07 Gross Profit (R$ MM) Gross Margin (%) Gross Profit (R$ MM) Gross Margin (%) OPERATING EXPENSES Selling, general and administrative (SG&A) expenses reached R$ 178.7 million in the 1H07, representing 17.2% of net revenue. When compared to the same period of 2006, the efficiency gain reached 120 basis points. In the 2Q07, SG&A expenses accounted for 16.7% of net revenue, implying a efficiency gain of 110 basis points when compared to the same period of last year. Operating expenses reduction posted in both periods reflects our operating leverage, as part of these expenses is fixed, and the ongoing capture of synergies resulting from the merger of Americanas.com and Submarino, in addition to the continuous application of our cost management best practices. 18.4% 120 bps 110 bps 17.8% 17.2% 110 bps 179 16.7% 87 129 65 1H06 1H07 R$ MM % Net Revenue 2Q06 2Q07 R$ MM % Net Revenue EBITDA Reflecting the revenue growth, the reduction in costs and expenses, as well as the synergies resulted from the merger, EBITDA amounted to R$ 136.3 million in 1H07, representing a 67% growth over the same period of 2006. The 1H07 EBITDA margin reached 13.2% of net revenue, up 150 basis points on the 11.7% recorded in the same period of 2006.
When analyzing the 2Q07 performance, once again we see a sound evolution of the EBITDA margin, posting a 140 basis point growth when compared to 2Q06. EBITDA is based on the Company s operating result before financial result and it excludes depreciation, amortization and extraordinary expenses. 150 bps 13.2% 140 bps 13.4% 11.7% 136 12.0% 70 82 44 1H06 1H07 EBITDA (R$ MM) EBITDA Margin (%) 2Q06 2Q07 EBITDA (R$ MM) EBITDA Margin (%) The continuous evolution of the EBITDA margin ratifies the Company s strategy to convert the competitive advantages identified through the last corporate events and the growth of sales associated to high operating efficiency standards. Our performance fosters us to reach new levels of results. FINANCIAL RESULT In the 1H07, net financial expense reached R$70.1 million (6.8% of net revenue), compared to a net financial expense of R$36.5 million posted in the same period of last year (5.2% of net revenue). The Company s financial result was strongly impacted by both the dividend payment of R$58.9 million held on December 27, 2006 and the capital reduction of R$441.0 million held in January 30, 2007. Excluding above mentioned effects, the net financial expense of 2007 would have stood at R$ 39.6 million (3.8% of net revenue), 140 basis points lower than that posted in the same period of 2006. The Company kept on its strategy of discounting receivables and taking loans to finance working capital in the period. As a result of the convergence of fees, the cost for discounting receivables is similar to bank finance costs, allowing the company to choose the best alternative to finance its operations. EQUITY RESULT The equity result includes, basically, the subsidiaries Ingresso.com, Submarino Viagens and Submarino Finance. In the 1H07, the equity result reported a R$ 1.9 million loss, especially due to the impact of Submarino Finance operations, which are still in the investment phase. The results posted by the Company s subsidiaries are according to our expectations, making us very optimistic regarding their growth outlook. NON OPERATING (EXPENSE) REVENUE Non-operating expenses of R$ 11.8 million and R$ 7.9 million posted in the 1H07 and 2Q07, respectively, are primarily related to the amortization of goodwill on investments.
NET INCOME 1H07 net income stood at R$ 23.8 million (2.3% of net revenue), versus R$ 52.0 million (7.4% of net revenue) posted in the same period of 2006. It is worthy mentioning, however, that the 1H06 results were positively impacted by the accounting of non-reoccurring values in the amount of R$43.8 million. Excluding the effects mentioned above, the pro forma net income would have reached a R$ 8.2 million in the 1H06. INDEBTEDNESS B2W ended the 1H07 with net cash of R$ 131.0 million, similar to the amount of 03/31/2007. Accounts receivable from clients is basically constituted of credit card receivables. Consolidated Indebtedness (R$ thousand) 06/30/2007 03/31/2007 Short Term Loans 149.717 148.822 Long Term Loans 115.070 112.791 Gross Debt (1) 264.787 261.613 Cash and Banks 244.130 246.360 Receivables from Clients 151.685 153.849 Total Cash and Equivalents (2) 395.815 400.209 Net Cash (2) - (1) 131.028 138.596 SUBSIDIARIES KEY METRICS AND HIGHLIGHTS Operating Key Metrics 1H07 1H06 Ingresso.com Number of tickets sold 575,271 557,175 Gross Revenue (R$ thousand) 3,113 2,633 EBITDA (R$ thousand) 1,287 633 Submarino Viagens Booking Amount (R$ thousand) 38,505 16,393 EBITDA (R$ thousand) 441 (701) Submarino Finance Gross Revenue (R$ thousand) 30,490 - EBITDA (R$ thousand) (3,041) - Number of Cards issued (accumulated) 135,206 - Ingresso.com. Ingresso.com surpasses the milestone of 1 million registered clients. The company has begun a cross-selling process among the brands with the following measures: i) creation of the Shopping Ingresso.com, which offers products of Americanas.com, Submarino and Shoptime, and (ii) advertisement of movie launches like Spiderman 3, Shrek The Third and Harry Potter and the Order of the Phoenix on the Shoptime TV. In the 2Q07, the company strengthened its operation as a
technology provider by exporting its ticket office management software to the Belas Shopping Center located in Angola, Africa. Submarino Card. Submarino Finance reaches the milestone of 135 thousand cards issued. The strong card base expansion results from an aggressive marketing campaign through both (i) its rewards program, which grants to card users Submarine Leagues that can be exchanged for products, and (ii) the Super Power Program, which offers special discounts for products under the main categories of the Submarino site. Submarino Viagens. Among the main actions to expand the assortment of products and services, the launch of the most complete resort channel in Brazil stands out. It includes full description of 102 resorts and over 3,500 photos. The channel of international destinations has been expanded in an association with the Viaje Mais magazine, providing clients with cultural and gastronomic tips and promotional packages throughout more than 105 destinations. We have also launched the Weather Forecast channel, which provides information on climate conditions in domestic and international destinations, and the Web Check-in service. As far as marketing actions are concerned, it is now possible to find in the two main Brazilian airports, Congonhas and Guarulhos, over 500 luggage carts sponsored by Submarino Viagens. SINERGIES LEVERS IMPLEMENTATION PROCESS AT ACCELERATED PACE Over the past seven months, since the approval of the merger between Americanas.com and Submarino, the identification, mapping and implementation process and of synergies is at accelerated pace and the capture of concrete gains has already been impacting B2W results as shown in the 1H07. During last months, the multi-disciplinary working group appointed to be part of the integration team has searched for improved efficiency standards and benchmarks. So far over various operating and financial levers have been identified, utilization of which aims at improving the Company s efficiency and, consequently, the quality of services provided to our clients. The lever implementation process, as well as the attainment of efficiency gains, is an working process which will go further during next months. CORPORATE GOVERNANCE AND CAPITAL MARKETS B2W is subject to the Listing Rules of Novo Mercado, the highest Corporate Governance level of the São Paulo Stock Exchange Bovespa, which includes an ownership structure exclusively constituted of common shares and the election of independent members to the Board of Directors. B2W s Board of Directors comprises nine members, out of whom five are appointed by Lojas Americanas and four are independent members. Lojas Americanas and B2W have entered into a Voting and Assumption of Debt Agreement, which rules corporate governance and stock ownership matters. For a 4-year period as of December 13, 2006, Lojas Americanas is impeded from acquiring additional shares of B2W in excess of 10% of the free float, without prior approval of most Board of Directors independent members. Additionally, Lojas Americanas is not allowed to sell its B2W s shares for 2 years as of the same date. The request to be registered as a public company and the listing of its shares under the highest corporate governance level, Novo Mercado, were approved by Brazilian Securities and Exchange Commission (CVM) and the São Paulo Exchange (Bovespa) in July, 25 and 26, 2007, respectively. B2W shares are listed on the São Paulo Exchange (Bovespa) and have been traded under ticker BTOW3 (common shares) since August 8, 2007.
EXHIBIT I PRO-FORMA SEMIANNUAL INCOME STATEMENT The merger between Americanas.com and Submarino was approved at the Extraordinary Shareholders Meeting held on December 13, 2006. However, for comparison purposes, the comments performance included in this report compare 1H07 results with pro-forma, unaudited income statements for 1H06 of Americanas.com, Shoptime and Submarino. Such pro-forma information does not replace audited Financial Statements filed at the Brazilian Securities and Exchange Commission (CVM). B2W S/A Pro Forma Income Statement In thousand of Reais 1H07 1H06 Gross sales 1,480,697 985,584 Taxes, returns and rebates (444,257) (283,916) Net sales 1,036,440 701,668 Cost of goods sold (721,404) (490,604) Gross profit 315,036 211,064 Gross margin (% n.s.) 30.4% 30.1% Operational expenses (192,732) (154,816) Selling (152,203) (109,563) General and administrative expenses (26,505) (37,341) Extraordinary expenses - (17,706) Other general and administrative expenses (26,505) (19,635) Depreciation and amortization (14,024) (7,912) Operating profit before net financial results 122,304 56,248 Operational margin (% n.s.) 11.8% 8.0% Net financial result (70,139) (36,510) Operating profit before equity result in subsidiaries 52,165 19,738 Equity result in subsidiaries (1,972) 579 Non-operating expenses, net (11,801) (8,736) Deferred Income tax and social contribution (14,590) 40,399 Net income for the period 23,802 51,980 EBITDA 136,328 81,866 EBITDA margin (% n.s.) 13.2% 11.7%
EXHIBIT II QUARTERLY PRO-FORMA INCOME STATEMENT The merger between Americanas.com and Submarino was approved at the Extraordinary Shareholders Meeting held on December 13, 2006. However, for comparison purposes, the comments performance included in this report compare 2Q07 results with pro-forma, unaudited income statements for 2Q06 of Americanas.com, Shoptime and Submarino. Such pro-forma information does not replace audited Financial Statements filed at the Brazilian Securities and Exchange Commission (CVM). B2W S/A Pro Forma Income Statement In thousand of Reais 2Q07 2Q06 Gross sales 740,313 514,501 Taxes, returns and rebates (220,828) (147,065) Net sales 519,485 367,436 Cost of goods sold (363,071) (257,927) Gross profit 156,414 109,509 Gross margin (% n.s.) 30.1% 29.8% Operational expenses (94,247) (85,560) Selling (73,137) (55,728) General and administrative expenses (13,539) (25,981) Extraordinary expenses - (16,229) Other general and administrative expenses (13,539) (9,752) Depreciation and amortization (7,571) (3,851) Operating profit before net financial results 62,167 23,949 Operational margin (% n.s.) 12.0% 6.5% Net financial result (36,460) (14,549) Operating profit before equity result in subsidiaries 25,707 9,400 Equity result in subsidiaries (511) 1,189 Non-operating expenses, net (7,928) (7,340) Deferred Income tax and social contribution (6,105) 43,149 Net income for the period 11,163 46,398 EBITDA 69,740 44,029 EBITDA margin (% n.s.) 13.4% 12.0%
EXHIBIT III BALANCE SHEET AS OF JUNE 30, 2007 The merger between Americanas.com and Submarino was approved at the Extraordinary Shareholders Meeting held on December 13, 2006. However, for comparison purposes, the comments performance included in this report compare 2Q07 results with pro-forma, unaudited income statements for December 31, 2006 of Americanas.com, Shoptime and Submarino. Such pro-forma information does not replace audited Financial Statements filed at the Brazilian Securities and Exchange Commission (CVM). ASSETS - (R$ 000) 6/30/2007 12/31/2006 Current assets Cash and equivalents 244,130 305,896 Account receivables 151,685 708,259 Inventories 221,285 254,952 Recoverable taxes 629 18,944 Deffered tax income and social contribution 26,517 12,032 Prepaid expenses 79,459 58,623 Total Current assets 723,705 1,358,706 Non-current assets Long-Term assets Deferred income tax and social contribution 35,035 50,386 Escrow deposits 1,990 1,566 Other receivables 421 1,468 Investment 8,396 7,865 Property and equipment 36,146 31,663 Intangible asset 151,881 161,037 Deferred charges 127,877 96,325 Total Non-current assets 361,746 350,310 Total assets 1,085,451 1,709,016 LIABILITIES AND SHAREHOLDERS EQUITY - (R$ 000) 6/30/2007 31/12/2006 Current liabilities Suppliers 314,499 440,126 Loans and financing 149,717 236,086 Salaries and social charges payable 7,478 7,154 Taxes payable 20,331 29,911 Accounts payable - Share redemption - 441,047 Advances from customers 15,675 18,823 Dividends proposed 2,729 2,729 Other accounts payable 51,264 76,678 Total current liabilities 561,693 1,252,554 Non-current Liabilities Long-term liabilities Loans and financing 115,070 73,936 Related parties 1,122 2,643 Provisions for contingencies 1,880 3,105 Other accounts payable 10,297 5,191 Total Non-current Liabilities 128,369 84,875 Stockholders equity Capital 171,587 105,515 Accumulated profit (deficit) / legal provision 200,000 257,311 Reserves 23,802 8,761 Total Stockholders' equity 395,389 371,587 Total liabilities and stockholders equity 1,085,451 1,709,016
CONFERENCE CALLS TO DISCUSS 1H07 RESULTS Conference calls with simultaneous translation into English, followed by a bilingual Q&A session will be held as follows: Friday, August 10, 2007 [ENGLISH] 01:00 p.m. US EDT Participants calling from USA: 1-888-700-0802 Participants calling from other countries: 1-786-924-8430 Code: B2W [PORTUGUESE] 01:00 p.m. US EDT Participants Calling from Brazil: +55 (11) 4688-6301 Code: B2W INVESTOR RELATIONS AREA Phone: + 55 21 2206-6000 Rio de Janeiro E-mail: ri@b2winc.com Investor Relations Website: www.b2winc.com 1 EBITDA - Earnings before Interest, Tax, Depreciation and Amortization, and excluding extraordinary expenses, is presented as additional information because we believe that it is an important indicator of our operating performance, besides being useful to compare our performance with other companies of the e-retail sector. However, no figure should be considered alone as a substitute to net income calculated in accordance with US GAAP or Brazilian Corporate Legislation (BR GAAP) or yet as a measure of the Company s profitability. In addition, our calculations may not be comparable to other similar methods adopted by other companies We make forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management, and on information currently available to us. Forward-looking statements include statements regarding our intent, belief or current expectations or that of our directors or executive officers. Forward-looking statements also include information concerning our possible or assumed future results of operations, as well as statements preceded by, followed by, or that include the words ''believes,'' ''may,'' ''will,'' ''continues,'' ''expects,'' ''anticipates,'' ''intends,'' ''plans,'' ''estimates'' or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Our future results and shareholder values may differ materially from those expressed in or suggested by these forward-looking statements. Many of the factors that will determine these results and values are beyond B2W ability to control or predict.