3Q11 Results

Conference CallOctober 28, 2011

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.

3

AGENDA

Highlights

3Q11 Operating

Performance

Outlook

4

3Q11 HIGHLIGHTS

Gross revenue of R$ 386.6 million in the quarter (+34.6%);

Double-digit sales growth for all brands;

EBITDA at R$ 88.8 million (+54.4%), with EBITDA margin up 3.2 p.p. to 27.7%;

Net Profit at R$ 63.7 million (+63.0%).

Hering Store Chain:

Goal revision: 418 Stores to 433 Stores by the end of 2011

Total sales of R$ 257.3 million in the quarter (+31.9%);

Same Store Sales growth at 9.0%;

Opening of 89 stores since 3Q10, 17 in the quarter;

Remodeling of 10 stores in the quarter.

AGENDA

Highlights

3Q11 Operating

Performance

Outlook

6

SALES PERFORMANCE

In the 3Q11, gross sales reached R$ 386.6 million (+34.6%), sales growth

above 25% in all brands.

Total

R$ 207.3

R$ 26.5

R$ 18.3

R$ 275.0

R$ 33.3

R$ 24.1

+32.7%

R$ 21.3 R$ 31.3+46.8%

+25.7%

+31.3%

3Q10 3Q11

Gross Revenue ( R$ million) Domestic Market ( R$ million)

Domestic Market Foreign Market

34.6%

10.0%

35.2%

3Q10 3Q11

279.8

378.4

7.5

8.2 278.3

386.6

7

489

393

STORES CHAIN EVOLUTION

In the 3Q11 the Company reached 392 Hering Stores in the domestic

market, a yoy increase of 89 stores.

472

+ 17 stores ( + 17 Hering Stores)

+ 96 stores ( + 89 Hering Stores)

TotalHering Store Hering Kids PUC dzarm. Foreign Franchise

3Q10 2Q11 3Q11

303375 392

34

75

77761

1

15

1616

Hering Store Chain Performance 3Q10 3Q11 Chg. Acc 3Q10 Acc 3Q11 Chg.

Number of Stores 303 392 29.4% 303 392 29.4%

Franchise 261 347 33.0% 261 347 33.0%

Owned 42 45 7.1% 42 45 7.1%

Sales (R$ thousand) (1) 195,094,144 257,320,961 31.9% 559,617,797 773,276,424 38.2%

Franchise 158,531,932 216,537,088 36.6% 453,329,379 645,312,135 42.3%

Owned 36,562,213 40,783,873 11.5% 106,288,418 127,964,289 20.4%

Same Store Sales growth (2) 33.6% 9.0% -24.6 p.p 26.8% 15.6% -11.2 p.p

Sales Area (m²) 38,763 51,812 33.7% 38,763 51,812 33.7%

Sales (R$ per m²) 5,163 5,091 -1.4% 15,227 16,161 6.1%

Check-Outs 2,196,420 2,626,868 19.6% 6,226,526 7,873,189 26.4%

Units 4,925,048 5,610,529 13.9% 13,792,522 16,747,701 21.4%

Units per Check-Out 2.24 2.14 -4.7% 2.22 2.13 -4.0%

Average Sales Price (R$) 39.61 45.86 15.8% 40.57 46.17 13.8%

Average Sales Ticket (R$) 88.82 97.96 10.3% 89.88 98.22 9.3%(1)

The amounts referred to the sales to final costumers. (sell out concept)(2)

Compared to the same period of the previous year

8

HERING STORE CHAIN PERFORMANCE

In spite of the challenges faced in the 3Q11, SSS growth of 9.0%, below our

expectations, mainly driven by the increase in average sales ticket.

9

GROSS PROFIT AND EBITDA

The high operational leverage, strict expense management and reduction

of raw material costs pressure led to a 320 bps EBITDA margin expansion.

48.4% 48.1%

49.5% 49.3%

-0.3 p.p.

-0.2 p.p.

24.4%

27.7%+3.2 p.p.

35.6%

54.4%

Gross Profit and Gross Margin EBITDA and EBITDA Margin

% Cash Gross Margin% Gross MarginGross Profit (R$ Million)

% EBITDA Margin EBITDA (R$ Million)

3T10 3T11

57.5

88.8

3T10 3T11

113.8

154.4

3Q10 3Q113Q10 3Q11

10

NET PROFIT AND CAPEX

63.0%

16.6%

19.9%+3.2 p.p.

28.9%

18.6

13.2

Capex (R$ million)Net Profit (R$ million)

Net Profit (R$ Million) TotalIndustry IT Others Stores

3T10 3T11

14.9

6.8

1.9

4.5

0.6

0.2

1.2

1.7

3T10 3T11

39.1

63.7

% Net Margin

3Q10 3Q11

Expressive net profit growth, due to improved operating performance, increase

in financial revenue (AVP), and establishment of investment grants.

3Q10 3Q11

11

CASH FLOW

Increase of R$ 51.4 million in free cash flow, mostly due to EBITDA growth, and

lower investments and working capital needs.

Cash Flow - Consolidated (R$ thousand) 3Q10 3Q11 Chg. 9M10 9M11 Chg.

EBITDA 57,499 88,800 31,301 173,604 260,656 87,052

No cash items 777 603 -174 1,254 1,642 388

Current Income tax and Social Contribution -13,070 -23,187 -10,117 -44,780 -65,026 -20,246

Working Capital Capex -23,054 2,010 25,064 -5,606 -37,308 -31,702

Decrease (increase) in trade accounts receivable 6,267 34,599 28,332 -11,493 5,002 16,495

(Increase) in inventories -46,552 -26,047 20,505 -57,268 -46,412 10,856

Increase (decrease) in accounts payable to suppliers 21,181 -1,675 -22,856 48,101 2,670 -45,431

Increase in taxes payable 4,560 4,466 -94 17,038 16,027 -1,011

Others -8,510 -9,333 -823 -1,984 -14,595 -12,611

CapEx -18,593 -13,224 5,369 -52,174 -28,895 23,279

Free Cash Flow 3,559 55,002 51,443 72,298 131,069 58,771

Reconciliation from accounting Cash flow to adjusted Cash flow (R$ thousand) 3Q10 3Q11 Chg. 9M10 9M11 Chg.

DFC - Cash provided by operating activities 24,377 74,217 49,840 129,328 179,712 50,384

Adjustment – Financial items allocated to operating cash -2,225 -5,991 -3,766 -4,856 -19,748 -14,892

Unrealized exchange and monetary variation -1,535 -1,164 371 -4,713 -3,713 1,000

Financial Result -1,994 -5,890 -3,896 -5,585 -19,503 -13,918

Interest paid on loans 1,304 1,063 -241 5,442 3,468 -1,974

DFC - Cash flows from investing activities -18,593 -13,224 5,369 -52,174 -28,895 23,279

Free Cash Flow 3,559 55,002 51,443 72,298 131,069 58,771

Gross Debt = R$ 41.5 million

12

INDEBTEDNESS

* Last 12 months EBITDA

Net Debt/ EBITDA*

Cia. Hering increased its net cash position by R$ 60.9 million in 3Q11 and

reduced its debt by R$ 2.9 million, mainly due to cash generation.

Net Debt ( R$ million) Short Term x Long Term

Short Term

62.1% Long Term

37.9%

4.6

3.5

(0.7)0.1

(0.2) (0.2) (0.4)

2005 2006 2007 2008 2009 2010 3Q11

201.3 184.6

(33.4)

11.0

(25.1)(61.9) (147.4)

AGENDA

Highlights

3Q11 Operating

Performance

Outlook

14

Hering Brand still with high growth potential, although we belive recent historic performance

posted a more expressive level:

Stores opening and SS growth in Hering Store chain.

Multibrand retail channel: continuous market share increase in existing clients.

Children’s market :

Continuity of Hering Kids and PUC brands repositioning.

Higher confidence in the possibility of the development of a Hering Kids store network -

decision should be made in the near future.

Evaluation of PUC chain’s alignment to the brand’s new positioning - possible

discontinuation of some operations.

Continuity of the dzarm. strategy, investing in the brand´s development and evaluating the

possibility of opening more flagship stores.

Webstore relaunch, with new logistics and technology infraestructure.

Positive perspectives for 4Q11: reduction of raw material costs, high leverage, and operating

expenses dilution, contributing to the expansion of EBITDA margins for the remainder of the year.

OUTLOOK

INVESTOR RELATIONS TEAM

Fabio Hering – CEO

Frederico Oldani – CFO and IRO

Patrícia Salem – IR Manager

Tel. +55 (11) 3371-4867

E-mail: ri@hering.com.br

Website: www.ciahering.com.br/ri