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| Apresentação do Roadshow
1
Institutional PresentationAs of 3Q17
November 2017
Statements regarding the Company’s future business perspectives and projections of operational and
financial results are merely estimates and projections, and as such they are subject to different risks and
uncertainties, including, but not limited to, market conditions, domestic and foreign performance in general
and in the Company’s line of business.
These risks and uncertainties cannot be controlled or sufficiently predicted by the Company management
and may significantly affect its perspectives, estimates, and projections. Statements on future
perspectives, estimates, and projections do not represent and should not be construed as a guarantee of
performance. The operational information contained herein, as well as information not directly derived from
the financial statements, have not been subject to a special review by the Company’s independent
auditors and may involve premises and estimates adopted by the management.
2
Disclaimer
| Company overview
Platform of brands of reference
Arezzo&Co is the leading Company in the footwear and accessories industry through its platform of Top of Mind brands
1
4
Company overview
Arezzo&Co is the reference in the Brazilian retail sector and has a unique positioning combining growth with high cash generation
1
51. 3Q17 LTM
2. Refers to the Brazilian women footwear market (source: Company estimates). Estimated for 2016.
Leading company
in the footwear
and accessories
industry with
presence in all
Brazilian states
Controlling
shareholders are
reference in the
sector
Development of
collections with
efficient supply
chain
Asset light: high
operational
efficiency
Strong cash
generation and
high growth
11.6 million pairs of shoes (1)
1,244 thousand handbags (1)
2,289 points of sale
12% market share (2)
More than 45 years of
experience in the sector
Wide recognition
~11,500 models created
per year
Lead time of 40 days
15 to 18 launches per year
90.7% outsourced
sdproduction
ROIC of 23.9% in 3Q17
2,355 employees
Net revenues CAGR:
10.5% (2011-2016)
Net Profit CAGR: 4.0%
(2011- 2016)
Increased operating
leverage
Founded in 1972
Focused on brand and
product
Consolidation of industrial
business model located in
Minas Gerais
1.5 mm pairs per year
and 2,000 employees
Focus on retail
R&D and production
outsourcing on Vale dos Sinos
- RS
Franchises expansion
Specific brands for each
segment
Expansion of distribution
channels
Efficient supply chain
First store
Fast Fashion
concept
Launch of the
first design with
national success
+
Schutz launch
Launch of
new brands
Merger
Commercial operations
centralized in São Paulo
Strategic Partnership
(November 2007)
Industry ReferenceFoundation and structuring Industrial Era Corporate EraRetail Era
2011 – 2017 70’s 80’s 90’s 00’s
Opening of the first
shoe factory
Opening of the flagship
store at Oscar Freire
Successful track record of
entrepreneurship
The right changes at the right time accelerated the Company's development1
Consolidate
leadership
position
Initial Public Offering
(February 2011)
6
Shareholder structure
1. Arezzo&Co capital stock is composed of 89,765,882 common shares, all nominative, book-entry shares with no par value
2. Shareholder structure as of September 2017
3. Includes Stock Options plan7
51.4% 48.6%
Birman family Float
1Management²Others
40.6%
Aberdeen
8.0% 0.0%
8
Culture & Management
101 That which cannot be transparent should not be done.
02 Always be true, so that at any point you are not false in your job. Always be authentic.
03 Clearly negotiate your goals and responsibilities, and consider achievement as a requirement for
continuity and prosperity.
04 Do not uncover problems only. Blaming others will never be the solution. Take risks, propose
solutions. In case of doubt, act!
05 Formalize everything, even if in an informal way.
06 Always be flexible. Be ready for changes.
07 Goals met are, at least, the basis for the next goal.
08 United we stand! Divergences are constructive, conflicts are destructive.
09 A humble stance: the key to our success.
10 Enjoy. Appreciate. Get involved. And always be happy!
Principles of success at Arezzo&Co:
2154
Foundation 1972 1995 2008 2009 2015
Brands profile
Trendy
New
Easy to use
Eclectic
Fashion
Up to date
Bold
Provocative
Pop
Flat shoes
Affordable
Colorful
Design
Exclusivity
Identity
Seduction
Casual
Young
Urban
Modern
Female target
market16 – 60 years 18 – 40 years 12 – 60 years 20 – 45 years 15 – 30 years
% Web Gross
RevenueR$55.5MM (6%) R$57.3MM (10%) R$8.7MM (6%) R$0.8MM (2%) R$1.5MM (9%)
Retail price
pointR$190 / pair R$330 / pair R$110 / pair R$960 / pair R$248 / pair
Sales
Volume3 R$874MM R$557MM R$149MM R$50MM R$17MM
% Gross
Revenues4 53.1% 33.8% 9.1% 3.0% 1.0%
Strong platform of brands
Strong platform of brands, aimed at specific target markets, enables the Company to capture growth from different income segments
1D
istr
ibu
tio
n
ch
an
nel1 POS 1
9
% gross
rev.2
O F MB EX
15
65%14%
75
2%
22 62
16% 29%27% 18%
4 89
46% 36%10%
19
2%
O MB EX
4
4%28%
44
66%
20
O MB EX
4
53%38%
2
0%
296136
O F MB EX O F MB EX
1,136369
13%
1,200 1,201
Notes:1. Points of sales (LTM); O = Owned Stores; F = Franchised Stores; MB = Multi-brand Stores; EX = Exports (including US and ROW wholesalers).
2. % of each brand gross revenues (LTM) does not include other revenues (not generated by any of the 5 brands).
3. Gross revenues LTM, including external market; does not include other revenues (not generated by any of the 5 brands).
4. % of Company’s total gross revenues LTM.
Multiple distribution channels
1
10
Flexible platform through different distribution channels with specific strategies, maximizing the Company's profitability
49 owned stores in
Brazil
2,289 multibrand¹
clients in more than
1,220 cities
520 franchises in
more than 220 cities
in Brazil
Broad distribution
network throughout
Brazil
Gross Revenue Breakdown by Channel – (R$ mm)²
1. Without store overlap between brands
2. Last twelve months
44.4% 20.4% 18.3% 7.5% 0.2% 9.2% 100%
733
337
302 124 3
152 1,650
Franchises Multibrand Owned Stores Web commerce Other External Market Total
| Business model
Management
BRANDS OF REFERENCE
Customer focus: we are at the forefront of Brazilian women fashion and design
Multi-channelSourcing & LogisticsCommunication &
Marketing
SEASONED
MANAGEMENT
TEAM WITH
PERFORMANCE
BASED INCENTIVES
NATIONWIDE
DISTRIBUTION
STRATEGY
EFFICIENT
SUPPLY CHAIN
SOLID MARKETING
AND
COMMUNICATION
PROGRAM
ABILITY TO
INNOVATE
R&D
1 4 5
12
Unique business model in Brazil
enhanced by…. 2
2 3
Ability to Innovate
We produce 15 to 18 collections per year2I. Research
Creation: 11,500 SKUs / year
II. Development III. Sourcing IV. Delivery
Arezzo&Co fulfills the various aspirations of women, delivering on average 5 new models at the stores per day, allowing for consistent desire-driven purchases
Available for selection:
63% of SKUs created / year
13
Stores:52% of SKUs created /
year
Creation
Launch
Orders
Production
Delivery
Normal sale
Discount sale
Winter I Winter II Winter III Summer I Summer II Summer III Summer IV
Activities JAN FEV MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
CRM – VIP sales
In-store events – PA
Stylists Fashion Advisors
Broad media plan
2
14
Each brand has an integrated and expressive communication strategy, from the creation of
campaigns to the point of sales
Strong presence in printed media
Digital communication
Presence in electronic media and television
Demi Moore
Seasonal showroom in Los Angeles near
the Red Carpet Season
Celebrity Endorsement Marketing Events
+2.2 million accesses to site/month
+180k monthly access to Schutz’s Blog
Average navigation time: 8 minutes
Gisele Bündchen Blake Lively
1 Source: Indexsocial/ Agência Espalhe, 2013
Over 6 million followers/ fans: Facebook,
Instagram and Twitter (all 4 Brands)
Arezzo is leader in interactions1
Stores constantly modified to incorporate the concept of each new collection, creating desire-driven purchases
Communication & marketing program
reflected in every aspect of the stores2
15
All visual communication at stores is monitored and updated simultaneously throughout Brazilfor each new collection
Flagship storesStore layout & visual merchandising
POS materials (catalogs, packaging, and others)
15
Distinguished storefront
Atmosphere of stores: differentiated
concepts for each brand2
16
Video Wall
Closet Essentials
Niches and lighting
Jackets and accessories
Campaigns and marketing
actions
Preeminence for products
Differentiated products
Display of a large variety of
products
Inventory at the sales area:
lower necessity of space for
storage
Atmosphere of a jewelry
store
Private shop experience
Focus on exclusivity, design
and highly selected materials
Wall display
Combos
Each theme is disposed in different niches
Accessories
Sophisticated lightingStorage
Iguatemi Faria Lima - SP
Shelves, Niches and Suspended shelves
Visual merchandising:
Window related to the
brand’s “ZZ” symbol
To increase in 50% the
number of models exposed
Products highlighted in the
center of the stores
Lights that highlighting the
product
A better distribution of the
furniture offers more
comfort for clients
Suspended Shelves
Experimental and creative
space
Interaction with the customer
Collaborative experience (in-
store office)
Experimental and creative
Oscar Freire St 1128
Large distribution network and scale of
store chain2
17
BrandAverage
size (m2)
Net Revenue/m2
(R$ 000s)
Total
Stores1
69 32 562
140 16 644
1,317 10 444
1,040 6 398
59 11 327
Mono-brand store chain with high distribution network, reaching more than 220 cities and well-positioned among the retail companies
369 franchises +
15 owned stores +
1,211 multibrand clients
62 franchises +
22 owned stores(ii) +
1,336 multibrand clients
Points of sale (3Q17)3
89 franchises
4 owned stores
1,220 multibrand clients
4 owned store +
64 multibrand clients
Source: IBGE, Companies’ filings.1. Considers only mono-brand stores of Arezzo&Co.2. Domestic market only.3. Domestic and external market – multibrand without overlap.
GDP³: 14%
A&C¹: 17%
GDP³: 55%
A&C¹: 55%
GDP³: 17%
A&C¹: 14%
GDP³: 9%
A&C¹: 9%
GDP³: 5%
A&C¹: 5%
85sq m
80sq m
Points of sale – average size: new stores are increasing
the network’s average store size
2011 new
stores
2012 new
stores
2013 new
stores
55sq m
3
2014 new
stores
52sq m
2015 new
stores
69sq m
4 owned store
298 multibrand clients
17
Size and average sales per mono-brand stores – 2016
66sq m
2016 new
stores
Reception: 100,000 units/day
Storage: 100,000 units/day
Picking: 150,000 units/day
Distribution: 200,000 units/day
Flexible production process…
2
18
Production speed, flexibility and scalability to ensure Arezzo&Co’s expected growth based on asset light model
Arezzo’s scale and structure gives flexibility to source a large number
of SKU’s from various factories on a short time frame at competitive
prices
Owned factory with capacity to produce 1,1mm pairs annually and a
strong relationship with Vale dos Sinos production cluster as the
main outsourcing region
Sourcing Model Gains of scale
Joint purchasesCertification and auditing of suppliers
In-house certification and auditing ensure quality and punctuality
(ISO 9001 certification in 2008)
Coordination of material purchase jointly with shoe, handbag and
accessories’ suppliers
New Distribution Center Sourcing model – 91% of production outsourced¹
Consolidation and improvement of distribution in
national scale
12
34
9%
91%
Arezzo&Co OwnedFactories
Others
497 515 514 518 525
47 50 48 49 51
37.7 38.8 38.6 38.9 39.4
-
100
200
300
400
500
600
700
3Q16 4Q16 1Q17 2Q17 3Q17
Franchises Owned Stores¹ Area (000 M²)
... sold through owned stores…
Capturing value from the network while developing retail know-how and brands’ visibility2Flagship Stores
19
Greater brand awareness coupled with operational efficiencies
Clustering higher productivity stores in main areas (mainly SP and RJ) improving
operational efficiency and profitability:
Direct costumers interaction develops retail assets which are also reflected at
franchised stores
Flagship stores ensure greater visibility and reinforce brand image
R$6.2mm
Ow
ned
Fra
nchis
eAverage
Sales per Store
3Q17 LTM
Total sales area and # of stores (000 m2)
R$1.4mm
Arezzo – Iguatemi / SP
Schutz – Oscar Freire/ SP Arezzo – Oscar Freire/ SP
Schutz – Morumbi/ SP
Anacapri – Oscar Freire/ SP1.1%
+18
-0.2% 0.5%
+3 -2
-1
0.3%
+1
+4
+2
+7
Structure applied to retail in order to achieve better sales and margin results as well as to integrate and connect all monobrand stores’ back office
2
20
… based on a retail oriented
structure...
Strong focus on franchise and owned store performance
• All sales team (4,000+) get connected through national internet broadcast for three sales conventions per year,creating an aligned sales pitch and a great sense of motivation before each season
• Large service program to assist franchisees on sales and profitability goals
• Recurring training programs in products, fashion trends, sales techniques, store management, IT, among others
• Strong visual merchandising, trade marketing and ambiance investments and training
57%24%
9%
9%
Intense retail training
Ongoing support: average of 6 stores/ consultant and average of
22 visits per store/ year
Strong relationship with and ongoing support to franchisee
IT integration with our franchises amounts to 100%
As mono-brand stores, franchises reinforce branding in each city
they are located
24 or more
franchises
1 franchise
2 franchises
3 franchises
.10 …with efficient management of the
franchise network...
Model allows rapid expansion with low invested capital by Arezzo&Co and high profitability to franchisees
Successful Partnership: “Win – Win” Franchise Concentration per Operator
96% satisfaction of franchisees1
Excellence in Franchising (ABF). Awarded in the last 8 years
Best Franchise in Brazil (2005 and 2012) and in the industry for 7 years since 2004
(# of franchises by # of franchisees)
Notes:
1. 96% of the current franchisees indicated they would be interested in opening a
franchise if they did not already have one
2. Annual sales of R$ 3.3 million + average initial investment of R$ 900 thousand +
working capital of R$ 600 thousand
21
5-year contract and average payback of 48 months2
291
337 2,091
2,289
1.800
1.900
2.000
2.100
2.200
2.300
2.400
200
250
300
350
400
450
500
2016 2017
Gross Revenue LTM
# Stores MB
...and of the multi-brand stores
2
22
Multi-brand stores’ Gross Revenue¹ Improved distribution and brand visibility Greater brand distribution network
Presence in over 1,220 cities
Rapid expansion at low investment and risk
Main focus: share of wallet
Owner’s loyalty
Schutz Club – Relationship program that offers
advantages to the 50 Top Multi-brand stores, such as
better products display, training and awards to the best
sales teams.
Important sales channel for smaller cities
Sales team optimization: internal team and commissioned sales
representatives
Multi-brand stores widen the distribution network and the brands’ visibility, resulting in a strong retail footprint
Notes:
1. Domestic market only
Multi-brand stores
15.9%
9.5%
• USA
• Fiever/ New Brands
• Strategic Planning
/Innovation
/Franchising /CRM
/PMO
• Expansion*
• Portfolio Management
/Competitive
intelligence
• BU Arezzo
• BU Schutz
• BU Anacapri
• BU A.Birman
• E-commerce
• Commercial
(Multiband/Exports)
• Sourcing
• Engineering
• Quality
• Industry
• Planning
• Logistics
• People
• Sustainability*/PR
• Non productive
purchase
• Management
(Method, goals and
indicators)
• Finance/Legal/Fiscal
• IT
• Controller
• Investor Relations
• Risk Management
Board of Directors
BrandsSilvia Machado
Industrial & OperationsCisso Klaus e Cassiano Lemos
New Business DevelopmentAdministrative & Finance
Daniel LevyHR & ManagementMarco Aurélio Vidal
Risk, Audit and Finance Committee
People Committee
Strategy Committee
Internal Auditing
* 2018 onwards
CEO
The new structure presents a reduction in the number of CEO reports, value chain integration and higher speed
in decision making, with an increased focus on people and sustainability
New Organizational Structure
2
José Bolonha (Coordinator)Juliana Rozenbaum (Coordinator)
Corporate governance
2
24
Risk, Audit and Finance Committee
Committees
Strategy and Brands Committee People Committee
Members:
Alessandro Carlucci, Guilherme A. Ferreira and
Edward Ruiz
Members:
Alexandre Birman, Paula Bellizia and Juliana
Rozenbaum
Members:
Luiz Fernando Giorgi, José Bolonha and Ligia
Martins
The Board is comprised of 7 members, of which 2 are independent, and has a very large engagement on the strategic planning of Arezzo&Co
Name Experience Name Experience
Title Title
Board of Directors
Alessandro CarlucciChairman of the Board
Natura’s CEO for over a decade and former Board
Member of Lojas Renner, Redecard, Alcoa Latam and
Itau-Unibanco
Luiz Fernando Giorgimember
28 years of experience in Management and Leadership.
Current member of people committees for Santander, Sul
América and Grupo Martins
Alexandre BirmanMember
Current CEO of Arezzo&Co and part of the controlling group.
Founder of Schutz brand, with over 18 year of experience on
the footwear industry.
Juliana RozenbaumMember
Over 13 years of experience as sell side equity research
analyst, focused on retail and consumer sector
Paula BelliziaIndependent member
CEO of Microsoft Brasil. Former CEO for Apple Brasil and
Facebook Latam Sales Diretor. Member of the Economic
and Social Development Council (CDES).
Guilherme A. FerreiraIndependent Member
CEO of Bahema Participações, current board member of
Petrobras, Valid, Sul América, Gafisa and T4F
José BolonhaVice Chairman of the Board
Founder and CEO of “Ethos Desenvolvimento Humano e
Organizacional“; Board member of the Inter-American
Economic and Social Council (UN, WHO)
Guilherme A. Ferreira (Coordinator)
Ownership of the value chain, greater competitive advantage• More agile and collaborative model• Sell-out oriented to boost results in the value chain
25
Key messages
2Arezzo&Co keeps developing its business model in a sustainable way
Consolidated business model with multiple growth opportunities• Launch of a new brand Fiever with encouraging results• Improvement in the profitability of existing brands: Anacapri and Alexandre Birman1Staff management an ongoing development• Broad range of selection, training and retaining of staff at all levels• Strengthening of organizational identity2
3
Multi-channel management know-how, excellent platform to lift brands• Omni channel growth: Fiever debut, Schutz FIS, Arezzo consolidation, Anacapri expansion• Strong knowledge in franchises’ management in addition to improving opportunities• Multibrand channel leverages growth of new brands
5
Financial strength allows for sustainable business growth• History of cash generation together with consistent dividend payment policy• Net cash position, an important differentiator in challenging economic times4
26
…a multi-brand and multichannel
strategy…2Organic growth leveraged by multi-brand, multichannel strategy in footwear and handbags
27
….aligned with a clear focus of the future
2
| Financial Highlights03
567663 719 767 738 804
220 238
216
357400
434 467458
130 126
0
0
4172 93
119
33 42
11
18
10
9 921
6 11
8151.070 1.170
1.,282 1.307 1.402
390 416
-3.000, 0
-2.500, 0
-2.000, 0
-1.500, 0
-1.000, 0
-500,0
-
500 ,0
1.00 0,0
1.50 0,0
2.00 0,0
-
200 ,0
400 ,0
600 ,0
800 ,0
1.00 0,0
1.20 0,0
1.40 0,0
1.60 0,0
1.80 0,0
2.00 0,0
2011 2012 2013 2014 2015 2016 3Q16 3Q17
Arezzo Schutz Anacapri Others
29
Operational and financial highlights
3Gross Revenue Breakdown by Brand – Domestic Market (R$ million)
CAGR: 12%
7%
Others: includes only domestic markets for Alexandre Birman and Fiever brands and other revenues.
47 39 62 76 128 15236 39
420 512583
661 638686
182 202
234
286289
300 305304
107 111
151
246
268
272292
301
71 68
1
10
23
4469
108
29 35
9
15
7
53
3
1 0
8631.109
1.2321.358 1.435
1.554
390 416
(3000,0 0)
(2500,0 0)
(2000,0 0)
(1500,0 0)
(1000,0 0)
(500,00 )
–
500 ,00
100 0,00
150 0,00
200 0,00
–
200 ,00
400 ,00
600 ,00
800 ,00
100 0,00
120 0,00
140 0,00
160 0,00
180 0,00
200 0,00
2011 2012 2013 2014 2015 2016 3Q16 3Q17
Foreign Market Franchise Multibrands Owned Stores Web commerce Others Total
30
Operational and financial highlights
3Gross Revenue Breakdown by Channel – Domestic Market (R$ million)
CAGR: 13%
7%
Others: includes domestic market revenues that are not specific for distribution channels.
194
367 412
572
679
860
963
1,053
1,121
1,239
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
3
31
Operational and financial highlights
Key highlights
Sales area increased 4.2% in the last twelve months.
Gross revenue reached R$455 million in the 3Q17, a increase of 6.7% over 3Q16.
Number of Stores (R$ mln) and Total Area (m2- ‘000)
CAGR 2007-2016: 20.4%
Net Revenues (R$ mln)
Area CAGR 2008-2016: 12.6%
89.4%
12.3%
38.7%
18.8%
26.7%
11.9%
9.3%
6.4%
10.6%
497 515 514 518 525
47 50 48 49 51
37.7 38.8 38.6 38.9 39.4
-
100
200
300
400
500
600
700
3Q16 4Q16 1Q17 2Q17 3Q17
Franchises Owned Stores¹ Area (000 M²)
1.1%
+18
-0.2% 0.5%
+3 -2
-1
0.3%
+1
+4
+2
+7
281
376
426 456
476
549
152 170
41,5%43,7% 44,2% 43,3% 42,5%
44,3% 43,9%45,8%
–
5,0%
10,0 %
15,0 %
20,0 %
25,0 %
30,0 %
35,0 %
40,0 %
45,0 %
50,0 %
–
100
200
300
400
500
600
700
800
2011 2012 2013 2014 2015 2016 3Q16 3T17
Gross Profit Gross Margin
92102
111120 120 116
35 38
13,5%
11,9%11,5% 11,4%
10,7%
9,4%
10,2% 10,2%
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10, 0%
12, 0%
14, 0%
16, 0%
-
50,0
100 ,0
150 ,0
200 ,0
250 ,0
2011 2012 2013 2014 2015 2016 3Q16 3Q17
Net Profit Net Margin
3Operational and financial highlights
Gross Profit Evolution (R$ MM) and Gross Margin (%) Net Profit Evolution (R$ MM) and Net Margin (%)
32
6.3%
0 bps
+ 190 bps
11.6%
118
144
159170 165
177
5665
17,3%16,7% 16,6% 16,1%
14,8%14,3%
16,1%
17,6%
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10, 0%
12, 0%
14, 0%
16, 0%
18, 0%
20, 0%
-
50,0
100 ,0
150 ,0
200 ,0
250 ,0
300 ,0
2011 2012 2013 2014 2015 2016 3Q16 3Q17
EBITDA EBITDA Margin
47 39 62 76 128 15236 39
815
1.070 1.170
1.282 1.307
1.402
390 416
863
1.109
1.232
1.3581.435
1.554
426 455
–
200 ,0
400 ,0
600 ,0
800 ,0
1.00 0,0
1.20 0,0
1.40 0,0
1.60 0,0
1.80 0,0
–
200 ,0
400 ,0
600 ,0
800 ,0
1.00 0,0
1.20 0,0
1.40 0,0
1.60 0,0
1.80 0,0
2.00 0,0
2011 2012 2013 2014 2015 2016 3Q16 3Q17
Foreign Market Domestic Market
3Operational and financial highlights
Gross Revenue (R$ MM) EBITDA Evolution (R$ MM) and EBITDA Margin (%)
33
+ 150 bpsCAGR: 13%
17.1%
6.7%
3Operational and financial highlights
34
Arezzo&Co has a solid balance sheet with a healthy net cash position, coupled with a strong ability to generate operating cash flow and dividend payments
Operating cash flow yield¹ 5.9%
Capex / Depreciation LTM 0.2x
Net Debt / EBITDA - 0.6x
Working Capital (% of Net
Revenue)23.5%
Reduction in working capital needs by 560 bps from
3Q16 to 3Q17
Dividend Payout (YTD) 111.3%Consistent dividend payments, with a payout of more
than 90% of net profit in 2016. In 9M17, payout of
more than 100% of net profit.
Arezzo&Co generated R$173.6 mm in operating cash
flow in 3Q17, translating into cash flow yield of 5,9%
From 2015 onwards capex trended roughly in line with
depreciation
The Company has a strong balance sheet and a net
cash/EBITDA ratio of -0.6x in Sep/17.
1) Operating cash flow yield = LTM Operating cash flow / Firm value. Considered Cash Flow LTM of R$ 2,835.4mm (as of 09/29/2017)
35
3Operational and financial highlights
Cash Conversion Cycle (R$ thousand)
Cash Flow From Operating Activities (R$ thousand)
Capex (R$ thousand)
¹ Days of COGS
² Days of Net Revenues
Operational Indicators
Operating Cash Flow 3Q17 3Q16 Δ 17 x 16
(R$)
Δ 17 x 16
(%) 9M17
58.213 52.769 5.444 10,3% 141.147
9.218 6.500 2.718 41,8% 22.630
(2.925) (880) (2.045) 232,4% (4.271)
(18.260) (21.674) 3.414 (15,8%) (3.655)
(50.078) (50.634) 556 (1,1%) (30.567)
5.014 3.741 1.273 34,0% (9.794)
19.670 21.930 (2.260) (10,3%) 42.575
7.134 3.289 3.845 116,9% (5.869)
(13.040) (10.672) (2.368) 22,2% (27.911)
33.206 26.043 7.163 27,5% 127.940
Income before income tax and
social contribution
Depreciation and amortization
Others
Payment of income tax and
social contribution
Net cash flow generated by
operational activities
Decrease (increase) in assets /
liabilities
Trade accounts receivables
Inventories
Suppliers
Change in other noncurrent and
current assets and liabilities
Summary of investments 3Q17 3Q16 Δ 17 x 16
(%) 9M17
Total CAPEX 5.084 5.343 (4,9%) 13.945
Stores - expansion and refurbishing 1.798 856 109,9% 5.453
Corporate 2.517 3.174 (20,7%) 5.963
Other 770 1.313 (41,4%) 2.529
#days (R$'000) #days (R$'000)
115 355.827 97 347.924 -18
Inventory¹ 68 124.019 59 116.783 -10
Accounts Receivable² 103 334.858 93 340.155 -10
(-) Accounts Payable¹ 57 103.050 55 109.014 -1
Change
(in days)Cash Conversion Cycle
3Q16 3Q17
Operating Indicators 3Q17 3Q16Δ
17 x 169M17
# of pairs sold ('000) 3.414 3.231 5,7% 8.480
# of handbags sold ('000) 353 284 24,2% 899
# of employees 2.355 2.206 6,8% 2.355
# of stores* 576 544 32 576
Owned Stores 51 47 4 51
Franchises 525 497 28 525
Outsourcing (as % of total production) 90,7% 89,5% 1,2 p.p 90,1%
SSS² Sell-in (franchises) 7,2% 2,1% 5,1 p.p 6,5%
SSS² Sell-out (owned stores + franchises) 1,5% 5,6% -4,1 p.p 3,2%
SSS² Sell-out (owned stores + franchises + web commerce) 2,7% 6,4% -3,7 p.p 4,4%
36
3Operational and financial highlights
Indebtedness (R$ thousand)
Total indebtedness of R$93.2 million in 3Q17 against R$95.7 million in 3Q16.
Long term indebtedness of 21.7% of total debt in 3Q17, compared to 30.7% in 3Q16.
The weighted average cost of the company’s total debt in 3Q17 remained at low levels.
It is worth mentioning that during 3Q17, the Company distributed the amount of
R$ 88.8 million in dividends.
3Q17 2Q17 3Q16
Cash 218.254 310.115 221.591
Total debt 93.221 110.847 95.785
Short term 72.946 88.311 66.424
% total debt 78,3% 79,7% 69,3%
Long-term 20.275 22.536 29.361
% total debt 21,7% 20,3% 30,7%
Net debt (125.033) (199.268) (125.806)
Cash position and Indebtedness
37
Appendix
38
Key financial indicators
A3Q17 3Q16
Δ (%)
17 x 169M17 9M16
Δ (%)
17 x 16
Net revenues 370.793 346.941 6,9% 996.873 900.240 10,7%
COGS (200.974) (194.741) 3,2% (542.659) (504.180) 7,6%
Gross profit 169.819 152.200 11,6% 454.214 396.060 14,7%
Gross margin 45,8% 43,9% 1,9 p.p 45,6% 44,0% 1,6 p.p
SG&A (113.602) (102.804) 10,5% (325.061) (292.115) 11,3%
% of net revenues (30,6%) (29,6%) (1,0 p.p) (32,6%) (32,4%) (0,2 p.p)
Selling expenses (79.149) (75.208) 5,2% (226.054) (209.528) 7,9%
Ow ned stores and w eb commerce (30.876) (30.625) 0,8% (91.132) (89.437) 1,9%
Selling, logistics and supply (48.273) (44.583) 8,3% (134.922) (120.091) 12,4%
General and administrative expenses (24.953) (19.570) 27,5% (75.560) (61.476) 22,9%
Other operating revenues (expenses) (282) (1.526) (81,5%) (817) (1.830) (55,4%)
Depreciation and amortization (9.218) (6.500) 41,8% (22.630) (19.282) 17,4%
EBITDA 65.435 55.896 17,1% 151.783 123.226 23,2%
EBITDA margin 17,6% 16,1% 1,5 p.p 15,2% 13,7% 1,5 p.p
Net income 37.681 35.440 6,3% 99.126 80.332 23,4%
Net margin 10,2% 10,2% - 9,9% 8,9% 1,0 p.p
Working capital¹ - as % of revenues 23,5% 29,1% (5,6 p.p) 23,4% 29,1% (5,7 p.p)
Invested capital² - as % of revenues 38,8% 45,3% (6,5 p.p) 38,7% 45,3% (6,6 p.p)
Total debt 93.221 95.785 (2,7%) 110.847 95.785 15,7%
Net debt³ (125.033) (125.806) (0,6%) (199.268) (125.806) 58,4%
Net debt/EBITDA LTM -0,6x -0,7x - -0,7x -0,7x -
Key financial indicators
(1) Working Capital: current assets minus cash, cash equivalents and financial investments less from current liabilities minus loans and financing and dividends
payable.
(2) Invested Capital: working capital plus fixed assets and other long term assets less income tax and deferred social contributions.
(3) Net debt is equal to total interest bearing debt position at the end of a period less cash, cash equivalents and short-term financial investments.
39
History – Franchises and Owned Stores
A3Q16 4Q16 1Q17 2Q17 3Q17
Sales area 1,3- Total (m²) 37.687 38.828 38.623 38.930 39.351
Sales area - franchises (m²) 31.410 32.440 32.374 32.660 33.029
Sales area - ow ned stores² (m²) 6.278 6.387 6.249 6.270 6.322
Total number of domestic stores 537 558 555 560 569
# of franchises 492 510 509 513 520
Arezzo 365 369 368 369 369
Schutz 55 61 61 61 62
Anacapri 72 80 80 83 89
# of owned stores 45 48 46 47 49
Arezzo 15 15 15 14 15
Schutz 23 23 22 22 22
Alexandre Birman 2 3 3 3 4
Anacapri 4 4 4 4 4
Fiever 1 3 2 4 4
Total number of international stores 7 7 7 7 7
# of franchises 5 5 5 5 5
# of owned stores 2 2 2 2 2
(1) Include area in square meters of the seven stores abroad
(2) Includes eight outlet stores with a total area of 1,959 m²
(3) Includes areas in square meters of stores that were expanded
History of Stores
40
Balance Sheet - IFRS
AAssets 3Q17 2Q17 3Q16
Current assets 712.162 767.569 719.074
Cash and cash equivalents 4.920 7.695 7.155
Financial Investments 213.334 302.420 214.436
Trade accounts receivables 340.155 293.872 334.858
Inventory 116.783 123.048 124.019
Taxes recoverable 19.966 20.858 21.468
Other credits 17.004 19.676 17.138
Non-current assets 200.494 200.220 203.994
Long-term receivables 48.932 43.222 41.454
Trade accounts receivables 10.368 8.432 13.896
Deferred income and social contribution 16.907 14.049 10.004
Other credits 21.657 20.741 17.554
Investments 2.406 2.406 1.177
Property, plant and equipment 68.954 71.549 72.741
Intangible assets 80.202 83.043 88.622
Total Assets 912.656 967.789 923.068
Liabilities 3Q17 2Q17 3Q16
Current liabilities 252.460 256.977 230.221
Loans and financing 72.946 88.311 66.424
Suppliers 109.014 89.346 103.050
Other liabilities 70.500 79.320 60.747
Non-current liabilities 29.957 32.160 37.887
Loans and financing 20.275 22.536 29.361
Related parties 1.180 1.232 1.208
Other liabilities 8.502 8.392 7.318
Equity 630.239 678.652 654.960
Capital 330.375 330.375 310.008
Capital reserve 43.268 41.758 38.371
Income reserves 217.024 269.024 261.249
Equity Valuation Adjustments -1.182 -2.410 -1.850
Profit 40.754 39.905 47.182
Additional proposed dividend - - -
Total liabilities and shareholders' equity 912.656 967.789 923.068
41
Income Statement - IFRS
AIncome statement - IFRS 3Q17 3Q16 Var.% 9M17 9M16 Var.%
Net operating revenue 370.793 346.941 6,9% 996.873 900.240 10,7%
Cost of goods sold (200.974) (194.741) 3,2% (542.659) (504.180) 7,6%
Gross profit 169.819 152.200 11,6% 454.214 396.060 14,7%
Operating income (expenses): (113.602) (102.804) 10,5% (325.061) (292.116) 11,3%
Selling (86.311) (80.003) 7,9% (242.651) (223.320) 8,7%
Administrative and general expenses (27.009) (21.275) 27,0% (81.593) (66.966) 21,8%
Other operating income net (282) (1.526) -81,5% (817) (1.830) -55,4% ROL
LAIR
Income before financial result 56.217 49.396 13,8% 129.153 103.944 24,3% IRFinancial income 1.996 3.373 -40,8% 11.994 6.518 84,0% Alíquota
LLIncome before income taxes 58.213 52.769 10,3% 141.147 110.462 27,8% M. Líquida
Income tax and social contribution (20.532) (17.329) 18,5% (42.021) (30.130) 39,5%
Current (23.390) (20.079) 16,5% (50.523) (33.849) 49,3% ROL
Deferred 2.858 2.750 3,9% 8.502 3.719 128,6% LAIR
IRNet income for period 37.681 35.440 6,3% 99.126 80.332 23,4% Alíquota
42
Cash Flow Statement - IFRS
ACash Flow - IFRS 3Q17 3Q16 9M17 9M16
Operating activities
Income before income tax and social contribution 58.213 52.769 141.147 110.462
Adjustments to reconcile net income with cash from operational activities 6.293 5.620 18.359 (3.273)
Depreciation and amortization 9.218 6.500 22.630 19.282
Income from financial investments (6.485) (6.804) (21.351) (21.722)
Interest and exchange rate (1.301) 6.203 940 (5.427)
Other 4.861 (279) 16.140 4.594
Decrease (increase) in assets
Trade accounts receivables (50.078) (50.634) (30.567) (53.991)
Inventory 5.014 3.741 (9.794) (17.917)
Recoverable taxes 350 2.188 (8.148) (5.820)
Variation other current assets 4.015 3.405 (255) 6.813
Judicial deposits (1.281) (1.971) (3.835) (4.412)
Decrease (increase) in liabilities
Suppliers 19.670 21.930 42.575 38.169
Labor liabilities 8.726 6.045 12.234 10.744
Fiscal and social liabilities (2.803) (4.029) (5.860) (5.459)
Variation in other liabilities (1.873) (2.349) (5) (77)
Payment of income tax and social contribution (13.040) (10.672) (27.911) (19.209)
43
Cash Flow Statement - IFRS
ANet cash flow from operating activities 33.206 26.043 127.940 56.030
Investing activities
Sale of f ixed and intangible assets 637 2.745 674 2.745
Acquisitions of f ixed and intangible assets (5.084) (5.342) (13.944) (20.783)
Financial Investments (180.541) (228.192) (665.071) (560.956)
Redemption of f inancial investments 274.971 231.652 706.635 579.577
Net cash used in investing activities 89.983 863 28.294 583
Financing activities with third parties
Increase in loans 11.138 22.485 50.245 46.248
Payments of loans (26.238) (30.858) (62.531) (63.818)
Payments of Interest on loans (288) (140) (935) (1.321)
Net cash used in financing activities with third parties (15.388) (8.513) (13.221) (18.891)
Financing activities with shareholders
Interest on equity (21.540) (21.893) (21.540) (21.893)
Distribution of profits (88.832) 1 (141.807) (18.704)
Receivables (payables) w ith shareholders (52) 67 (34) (183)
Share Issuance - 950 20.367 1.931
Net cash used in financing activities (110.424) (20.875) (143.014) (38.849)
Increase (decrease) in cash and cash equivalents (2.623) (2.482) (1) (1.127)
Cash and cash equivalents
Foreign exchange effect on cash and cash equivalents (152) 30 (99) (540)
Cash and cash equivalents - Initial balance 7.695 9.607 7.155 8.822
Cash and cash equivalents - Closing balance 4.920 7.155 7.695 7.155
Increase (decrease) in cash and cash equivalents (2.623) (2.482) 639 (1.127)
Contacts
Telephone: +55 11 2132-4300
www.arezzoco.com.br
Daniel Levy
CFO and IR Officer
Aline Penna
IR Manager
Victoria Machado
IR Analyst
Guilherme de Biagi
IR Coordinator