Institutional Presentation May 2012
Marisa at a Glance 63 years of track record Financial services platform Focus on the middle class Largest women fashion and underwear retailer in Brazil Multiformat store strategy Brand strength National footprint 2
63 Years of Track Record in Apparel Retail Foundation Development and Growth Acceleration Current Status Foundation and development of business model Sales Area ( 000 m 2 ) Number of Stores 72 73 79 88 95 107 152 138 140 142 148 148 149 166 Management profissionalization and beginning of strong growth phase 207 236 250 201 217 227 295 277 Growth acceleration 346 336 Continuous growth Store maturation More per m 2 Focus on operational efficiency 1948... 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -> Future 3
The Brazilian Middle Class Brazilian Population per Income Class Middle Class Consumption Profile Income Class A / B C Average monthly income: R$1.829-3.379 D E 181 mm 193 mm 42,4% 53,9% +27 million people +11 million people 197 mm 58,3% Services 23,2% Home 31,6% Travel 1,5% Leisure 1,6% Food and Beverage 18,5% Education 2,1% Health and Beauty 8,3% Transport 8,2% Apparel 5,1% 4 Source: Data Popular 2004 2011E 2014E Source: Data Popular, as of 2011E
The Brazilian Apparel Market Apparel Spending in Brazil CAGR of +12,2% over the last 9 years 72,9 D / E Classes 18,0% A / B Classes 33,7% R$ 35,2 bi 25,9 Middle Class 48,3% 2002 2011E 5 Source: Data Popular, inflation adjusted based on the IPCA
Marisa Top of Mind Marisa Brand on Apparel Top of Mind Middle Class (Dec/11) 38% 29% Marisa Brand on Underwear Top of Mind All income classes (Jul/09) 42% 6% 6% 5% 4% 1% 14% 9% 4% 4% 4% 3% 6 Research methodology: conducted with women of the B and C income classes between 18 and 55 years old in different regions in Brazil 1 Objective: monitor the positioning, competitiveness and image of Marisa brand vs. competitors Source: Officina Sophia Note 1) Porto Alegre, São Paulo, Rio de Janeiro, Belo Horizonte, Recife Research methodology: conducted with women of the A,B and C income classes in Brazil between 20 and 45 years old in different regions in Brazil 2 and that bought underwear over the last 90 days Objective: measure consumer habits in the underwear segment Source: Nielsen Nota 2) São Paulo, ABC Region, Campinas, Ribeirão Preto, Porto Alegre, Recife
Store Portfolio Profile of our 336 Store Portfolio as of Dec/11 Expanded Feminine 1 1 Format Venue 171 226 Shopping Malls 84 Street 165 26 Lingerie 2 5 2 1 6 9 1 5 2 11 6 2 5 5 10 3 Southeast South North 5 10 129 24 5 Region 195 49 49 25 18 13 37 Northeast Midwest 24 12 0% 20% 40% 60% 80% 100% Distribution Centers Number of Marisa stores 7
Large Portion of the Sales Area Still Under Maturation Sales Area Breakdown by Year of Launch 346,440 m 2 of total sales area as of Dec/11 2011 14% 32% of sales area is less than 3 years old More than 109,000 m 2 of sales area still under maturation phase Prior to 2009 68% 2010 13% 2009 4% 8
Marisa Expanded Mix 9 Store #510 Aricanduva Shopping São Paulo, SP
Marisa Feminine 10 Store #696 Via Catarina Shopping Palhoça, SC
Marisa Lingerie 11 Store #051 Street Store São Bernardo, SP
Strategic Map 2012 New Stores Opening Plan Efficiency Plan More per m 2 Financial Services Initiatives 12
New Stores Opening Plan - 2012 22,3 thousand m2 of sales area Of the 33 new stores to be opened in 2012, 21 are already contracted with the following profile: 95% shopping malls and 5% street stores 90% Marisa Expanded Mix and 10% Marisa Feminine 45% Southeast, 25% Northeast and 10% South, Midwest and North 13
More per m 2 : Review of Product Mix Methodology Expected Benefits Track record Consumer profile Benchmark with competitors Analysis of Marisa product mix performance Focus on turnover, gross margin and sales area productivity Analysis of market researches, cross selling performance and Marisa Card database Store check in different regions in Brazil, looking at competitors product mix Product mix review Introduction of new product categories and/or sub-categories Review of sales area allocation Increase sales and profitability per m2 Increase ROIC 14 Source: Marisa and Bain
Review of Product Mix Preliminary Insights Increase assortment of Feminine categories Rebalance Male and Children categories 15
Introduction of Shoes in our Product Mix Rationale Co-Branded Card Consumption Profile Results of market research conducted with women between 20 and 40 years old, 50% clients and 50% non clients: Supermarkets 23% 88% want Marisa to offer shoes Other 43% Consumer acquire, on average, 1.8 pairs of shoes on each ticket Average price of shoes significantly higher than apparel Electronics 7% Department Stores 8% Apparel and Shoes Stores 19% 16
Introduction of Shoes in our Product Mix Average Price Roughly 2.5x our current average price per piece Main Brands Initially main shoes third party brands (learning curve and product quality) Sales Area Average sales area allocation of 70 m² per store Indicative Timetable Implementation in 100 stores within 2012 1st phase) Stores with sales area above 1,500 m² + virtual store 2nd phase) Stores with sales area above 1,000 m² 17
Enhancement of Marisa Lingerie Product Mix Enhancement of Marisa Lingerie Product Mix Stores with sales area above 200 m² 19 of the 26 stores Introduction of new product categories: Fitness Beachwear Starting as of March/2012 18
Financial Services Platform Co-Branded Card Initiative: Sale of the co-branded card directly to new customers Benefits: Higher profitability per client and increased lifespan of client base Programa Amiga Initiative: Launch of Marisa Card mileage program Benefits: Higher new cards activation rates, increased customer loyalty and higher average ticket per client through more buying frequency SAX Personal Loans Rationale: Clear synergies with our distribution platform and our knowledge of our customers credit profile Upside: Strong growth phase, could potentially double its size within the next two years 19
Efficiency Plan Efficiency Plan Expected Benefits Processes Rationalization Elimination of function duplicities Synergy gains among management divisions Expected annual economies of SG&A expenses of roughly R$ 52 million Management Modernization Reduction of hierarchical levels Span of control Commitment to Efficiency Tight budget for all areas Alignment of interests Reduction in administrative staff Internal synergies and management processes review Reduction of administrative expenses 33.3% 33.3% 33.3% 20
Strategic Agenda for 2012 Update New Stores 33 new stores in 2012 2 stores opened in April and four additional stores in the 1H12 More per m² New layout in 110 stores by August, privileging categories with higher sales per m2 (first phase) Introduction of shoes in the 100 stores in 2012 (first phase) Programa Amiga 1 p p. increase in Marisa Card participation in sales Marisa Card holders enrolled in Programa Amiga reached 1.63 million SAX Empréstimos Pessoais Strong growth Leverage on loans provided to pre-approved Marisa Card client base Efficiency Plan Reduction of 5.9% of SG&A expenses per sqm, already reflecting initiatives of the Efficiency Plan 21
Operating and Financial Highlights 1Q12
Sales Area and SSS Growth Format SSS Sales Area, Number of Stores and SSS Growth Comments # of Stores Sales Area (thousand m²) 1Q11 1Q12 1Q11 1Q12 Sales performance impacted by continuity of the factors that negatively affected our performance in the 4Q11 Marisa Expanded 205 226 255.2 278.7 Marisa Feminine 61 84 40.35 61.7 Inventory imbalances Promotional prices Short-term cannibalization effects Marisa Lingerie 15 26 4.0 6.0 Total 281 336 299.6 346.4 However, continuous recovery over the quarter 1Q11 12.7% 1Q12 2.0% Entry of the new autumn/winter collection that has been well received by customers Improvements on the macroeconomic environment on the back of real income increases and improvement of consumer confidence 23
Retail Net Revenues Retail Net Revenues (R$ million) Comments 8.4% growth + 8.4% SSS deceleration in line with the 4Q11 406 Recovery after entry of the new autumn/winter collection in March, well received by customers 374 1Q11 1Q12 Favorable macroeconomic environment 24
Retail Gross Profit and Gross Margin Gross Margin Gross Profit Retail Gross Profit (R$ million) Comments Comentários 50.0% 46.3% Gross profit increased 0.5% Gross margin, however, fell 3.7 percentage points ( p.p. ): + 0.5% 188.1 Aggressive pricing strategy adopted in the 1Q12 which, unlike the situation observed in the 1Q11, contemplated promotional prices all through the months of January and February 187.1 1Q11 1Q12 This situation was rebalanced on March with the entry of the new autumn/winter collection 25
Retail Selling Expenses % of Retail Revenues Selling Expenses R$/m2 Selling Expenses (R$ million) Comments 39.1% 39.3% - 6.2% 491.3 460.8 146.2 + 9.2% 159.6 9.2% increase, reaching 39.3% as percentage of net revenues The increase was lower than the growth of average sales area (equivalent to 16.4%) plus the inflation in the period Selling expenses per square meter decreased 6.2% This result already reflects the initiatives of our Efficiency Plan 1Q11 1Q12 26
Retail G&A Expenses G&A Expenses % of Retail Revenues General and Administrative Expenses (R$ million) Comments 6.2% 6.3% 23.0 + 11.9% + 3.2% (adjusted for nonrecurring items) 25.8 11.9% increase, reaching 6.3% as percentage of net revenues Comparison affected by: Reversal of provisions for variable compensation in the 1Q11 (reducing expenses in R$1.2 million) Strategic consulting services expenses in the 1Q12 (increasing expenses in R$0.7 million) Adjusting figures for those effects, growth would have been of 3.2%, significantly lower than the inflation in the period 1Q11 1Q12 This result reflects the initiatives of our Efficiency Plan 27
Retail EBITDA and EBITDA Margin EBITDA Margin EBITDA Retail EBITDA (R$ million) Comments 6.8% 2.5% - 59.4% 59.4% decrease EBITDA margin fell 4.3 p.p.: 25.3 SSS growth deceleration 10.3 Gross margin decline 1Q11 1Q12 28
Marisa Cards Accounts Base Active Account Base (million accounts) Comments + 2.2% 2.61 2.47 2.66 2.91 2.86 2.70 2.65 2.80 2.92 Private Label: 7.56 million eligible accounts (+5.0%) and 2.27 million active accounts (-2.1%) Co- Branded: 914.3 thousand eligible accounts (-14.4%) and 646.2 thousand active accounts (+20.9%) Total Active Accounts: After two quarters of consecutive declines over the previous year (3Q11 and 4Q11), in the 1Q12 there was an increase of 2.2% Impacts of loyalty program (Programa Amiga) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 29
Private Label Receivables Portfolio Private Label Receivables Portfolio Profile (R$ million) Private Label (R$ million) 1Q12 %Total 1Q11 %Total %Var On time: 263,5 59,6% 259,4 57,2% 1,6% Overdues: 178,8 40,4% 194,4 42,8% -8,1% 1-30 days 79,7 18,0% 89,6 19,8% -11,1% 31-60 days 28,7 6,5% 34,1 7,5% -15,7% 61-90 days 27,2 6,1% 29,8 6,6% -8,9% 91-120 days 16,7 3,8% 16,5 3,6% 0,9% 121-150 days 12,1 2,7% 12,5 2,8% -3,0% 151-180 days 14,3 3,2% 11,9 2,6% 20,9% Total 442,3 100,0% 453,9 100,0% -2,5% Comments 2.5% decrease in the receivables portfolio Lower demand for credit by customers Lower concentration of overdue receivables Lower level of losses / provisions in the 1Q12 30
Private Label EFICC Credit and Collection Efficiency Ratio EFICC Comments 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% Potential delinquency at normalized levels In fact, in March we saw record low level when compared to historical references 1,0% 0,0% jan feb mar apr may jun 2010 2011 2012 jul aug sep oct nov dec Positive perspective view for delinquency in the future 31
Marisa Cards Operating Result Operating Result (EBITDA) Marisa Cards Comments Marisa Cards (R$ million) 1Q12 1Q11 %Var Private Label Financial intermediation revenues 62,1 67,9-8,5% Fees and insurance sales 19,1 22,8-16,3% Net losses with credit operations (29,6) (31,0) -4,5% Costs and Expenses (29,0) (27,8) 4,1% Operating result (EBITDA) Private Label (A) 22,7 31,9-28,9% Co-Branded Exclusivity fee 3,0 3,0 0,0% Comissions revenues 1,7 2,6-35,6% Operating result (50%) 8,5 8,5-0,4% Operating result (EBITDA) Co-Branded (B) 13,1 14,1-6,7% Marisa Cards Operating result (EBITDA) Marisa Crads (A+B) 35,8 46,0-22,1% Retail activity deceleration and lower demand for credit by customers Change in our strategy to manage receivables that were more than 180 days overdue Expenses related to Programa Amiga Co-Branded: lower rate of activation of new accounts and card use 32
SAX Personal Loans SAX Receivables Portfolio and Operating Result (EBITDA) Comments 66.0 Strong growth 36.5 8.7 27.8 19.3 46.7 Overdue On Time Receivables portfolio reached R$66.0 million 1Q11 1Q12 SAX Personal Loans (R$ million) 1Q12 1Q11 %Var Operating result Net revenues with financial services 15,6 9,0 72,9% Net losses with credit operations (5,4) (2,1) 157,4% Funding costs (0,5) (0,3) 64,6% SG&A expenses (2,5) (1,8) 37,1% Other operating income (expenses) (0,0) (0,9) -97,7% Operating result (EBITDA) 7,1 3,8 85,3% EBITDA reached R$7.1 million, 85.3% increase Leverage on loans provided to preapproved clients of the Marisa Cards client base 33
EBITDA EBITDA Margin / Retail Revenues Marisa Consolidated EBITDA Consolidated EBITDA (R$ million) 20.1% 13.1% 75.1-29.2% 3.8 46.0 25.3 1Q11 53.2 7.1 35.8 10.3 1Q12 Sax Marisa Cards Retail 34
Marisa Consolidated Net Debt Net Debt Comments Net Debt (R$ million) 1Q12 2011 Net Debt Gross debt (A) 811.7 100% 984.5 100% Short term debt 129.4 16% 297.5 30% Long term debt 682.3 84% 687.0 70% Cash and equivalents (B) 316.1 647.3 Net debt (A) 495.5 337.1 Shareholder equity (B) 866.1 857.8 Total capital (A+B) 1,361.6 1,194.9 Financial Leverage Gross debt / (Gross debt + Equity) 48% 53% Net debt / (Net debt + Equity) 36% 28% Net debt / EBITDA (x) 1.34x 0.84x Net debt reached R$495.5 million Optimal capital structure strategy implemented during 2011 Target: 40% debt in relation to total capital 35
Marisa Consolidated Capex Capex (R$ million) Expansion Plan Capex (R$ million) 1Q12 2011 %Var Two new stores opened in April: New stores 21,5 29,2-26,2% Stores remodeling 4,0 5,0-20,4% Logistics 0,4 3,3-87,8% IT 3,2 2,5 27,5% Others 6,3 2,9 119,8% Shopping Bourbon Wallig (Porto Alegre, RS) Street store in Praia Grande, SP Total 35,4 42,9-17,4% Four additional new stores in the 1H12: Shopping Estação BH (Belo Horizonte, MG) Shopping Luziânia (Luziânia, GO) Shopping Bela Vista (Salvador, BA) Parque Shopping Belém (Belém, PA) 36
Investor Relations Team Paulo Borsatto CFO and RI Director Flavio Bau IR Manager Gabriel Succar IR Analyst Contact: dri@marisa.com.br