Btg pactual conference presentation

BTG Pactual XIII CEO ConferenceFebruary – 2012

Agenda

� Overview– Magazine Luiza

� 2011 Main Events

� 2012 Expectations

2

Market Leadership

� One of Brazil’s largest durable goods retail chains with more than 728 stores nation-wide

− Gross revenues of R$5.3 billion and EBITDA of R$248 million in 9M11

− More than 20 thousand employees serving 23 million customers

Strong corporate culture and focus on people and innovation

Unique multi-channel model under a single brand

�Physical stores, virtual stores, e-commerce website and telephone sales

Overview – Magazine Luiza

3

Focus on Brazil’s fastest growing socioeconomic segment

�The “C” (emerging middle class) represents 53% of Brazil’s population or more than 102 million people

History of successful organic growth and acquisitions

�8 acquisitions in the last 10 years and recent entry in the high growth northeast market

� July 2011, conclusion of the acquisition of 121 stores of Baú da Felicidade

Pioneer in Financial Services for retail

�First retail chain to establish JVs with financial institutions focusing on consumer credit

Financial discipline focused on results

Proven History of Strong Organic Growth and Successful Acquisitions

5.3

604

253

351 346

391

455

444Northeast:

+136 storesMadol, Killar

São Paulo (Capital):

+121 stores


5.0+ 42%

728 *

4

0.5 0.6 0.70.9

1.4

1.92.2

2.6

3.2

3.8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

96111

127

174

São Paulo (Capital):

+46 storesLojas Líder

Santa Catarina:

+100 stores

Rio Grande do Sul:

+51 stores

Campinas:

+20 storesUpstate São Paulo:+5 stores

Rede Wanel

Gross Revenues from Retail Operations (R$ billion) Total Stores

9M11

3.5(9M10)

* Total of stores in december, 2011.


Cabedelo

Simões Filho

Geographic footprint covering Brazil’s main regions(75% of GDP)

728 stores

% of Stores per regions

Northeast20%

South30%

Central West

5

Distribution centers (8 + 1 cross docking)

States with stores

Simões Filho

ContagemRibeirão Preto

LoureiraIbiporã

Navegantes

Caxias

West2%

Southeast50%

Strong corporate culture, focused on valuing people1

2 Integrated sales platform with multiple sales channels

Unique Business Model

Differentiated positioning to capitalize on industry growth

6

Large customer base, with relationship management targeting customer loyalty and retention3

4Broad, competitive portfolio of services and financial products

Today’s

Consumer search for product’s information and reviews

Once decided, purchase takes place..

� Personalized virtual store using Social Network to sell any of Magazine Luiza’s products

� Permits users to receive reviews from contacts they trust

� More than 25.000 virtual stores opened after 3 weeks of the release

Focus on Innovation: Magazine Você

7

Now with Magazine Você

Consumer search for product’s information and reviews

Purchases straight from those contacts and connections

Corporate Structure

8

(1) JV with Itaú Unibanco

(2) JV with Cardif

1 2

100%50%40.55%100%

9.45%

100%

(To be incorporated in 2012)

(Incorporated in 2011)

Ownership Structure

Pre- IPO Post- IPO

LTD

Administração e

Part. S.A.

75.4%

Capital Int'l. Inc.

(Private Equity

Fund)

12.4%

LTD

Administração e

Capital Int'l. Inc.

(Private Equity

Fund)

Free Float

29.7%

9

186,494,467 shares150,000,000 shares

75.4%

Wagner Garcia

Part. S.A.

5.6%

Founding Family

Members

6.7%

12.4% Administração e

Part. S.A.

60.6%

Wagner Garcia

Part. S.A.

4.5%

Founding Family

Members

2.7%

Fund)

2.5%

Agenda

� Overview – Magazine Luiza



10

2011 Main Events

IPO Process

1Q11 2Q11 3Q11 4Q11

Consolidation of Sao Paulo Office

(Kick-off in Feb. and conclusion in Jun.)

Continuing the organic growth

11

Integration Process – Lojas Maia

Acquisition and Integration Lojas do Baú

Initiated the process of refurbishment and brand name transition

Initiated process of refurbishment, corporate and systemic integration

Opened 24 new stores and refurbished 50 stores

Investments – TI and Logistics

Investments to ensure the success of the integrations

IPO Process

1Q11 2Q11 3Q11 4Q11

Consolidation of the Office of Sao Paulo



2011 Main Events

12








IPO

Funds from the Offering(% of primary offering )

• Opening of new stores:

Lojas do Baú: 100 stores

Magazine Luiza: 18 stores

• Increase Working

Capital (Maia e Baú)

� Company listed on Novo Mercado

� Net amount of R$550 million

Work Capital /

13

Magazine Luiza: 18 stores

Lojas Maia: 6 stores

Total: 124 stores

• Magazine Luiza: 50 stores

• Lojas Maia: 39 stores

• Baú: 35 stores

• Total: 124 stores

Capital (Maia e Baú)

• Reduction of

product lines

• New distribution center in

Guarulhos

• Expansion of Louveira’s

distribution center

• Pilot project: own fleet (SP)

Opening Stores/ Acquisition

30%

Stores refurbishment20%

Technology andLogistics

20%

Work Capital / Decrease on debt

30%

IPO Process

1Q11 2Q11 3Q11 4Q11




2011 Main Events

14









3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Integration Process of Lojas Maia

Brand name transition

Metropolitan Region of Recife

Metropolitan Region of Maceió

Metropolitan Region of Fortaleza

14 stores (Out.)

9 stores (Dec.)

15 stores (Dec.)

15

Metropolitan Region of Salvador

Metropolitan Region of João Pessoa

Corporation Integration

Systemic Integration of stores

Benefits (synergies) from integration

15 stores

15 stores

2011 Main Events

IPO Process

1Q11 2Q11 3Q11 4Q11




16



Initiated the process of refurbishment and the brand name transition

Initiated process of refurbishment, corporate and systemic integration.




Integration Process – Lojas do Baú

3Q11 4Q11 1Q12 2Q12

Integration process of Lojas do Baú

Acquisition of 121* stores of Baú

Documentation for starting operations

Virtual Stores

Opening of the Virtual Stores

July 29, 2011 - R$80,3 millions

Most of the stores closed during the period

(7 months)

35 stores (Paraná)

17

Refurbishment of stores

Systemic Integration

Conventional Stores

Opening of the Conventional Stores

Refurbishment of stores

Systemic Integration

Benefits (synergies) from integration

69 stores (34 Paraná, 34 São Paulo, 1 Minas Gerais)

Change in storefront and uniform

End of February

Complete refurbishment of stores

End of December

* 13 stores were sold and four conventional stores were refurbished and attached to the already existing Magazine Luiza´s stores

Agenda

� Overview – Magazine Luiza



18

2012 Expectations

Sales Growth

� Growth trend mainly in the 2nd half of 2012 (inverse performance 2011 X 2010)

� Effect of minimum salary

� Decrease in interest rates (SELIC)

� Stability of employment rate

� Inflation under control

� Maturation of new stores and acquired stores

1Essential Projects

3

� Continue projects focused on:

� Satisfaction of customers and employees

� Sales Performance

� Commercial and operational management

19

Selling & Administrative Expenses2

� Conclusion of the integration process (Lojas Maia e Baú)

� Dilution of administrative expenses of São Paulo Office

� Focus on rationalizing costs and expenses:

� Store operations, marketing, logistics and consulting

� Stability of delinquency rates and maintenance of conservative provisions in Luizacred

Investments4

� Investments Reduction

� ML 10 to 15 new stores

� Maia 10 to 15 new stores

� Total 20 to 30 new stores

� Finish the expansion of Louveira distribution center (from 60 to 95 square meters)

Investor Relations

[email protected]/ri

20

Any statement made in this presentation referring to the Company’s business outlook, projections and financial and operating goals representbeliefs, expectations about the future of the business, as well as assumptions of Magazine Luiza’s management and are solely based oninformation currently available to the Company. Future considerations are not a guarantee of performance. These involve risks, uncertainties andassumptions since they refer to forward-looking events and, therefore depend on circumstances that may not occur. These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects, market conditions, and performance of theBrazilian economy, the sector and international markets and hence are subject to change without prior notice. Thus, it is important to understandthat such changes in conditions, as well as other operating factors may affect the Company’s future results and lead to outcomes that may bematerially different from those expressed in such future considerations. This presentation also includes accounting data and non-accounting datasuch as operating, pro forma financial data and projections based on the Management’s expectations. Non-accounting data has not beenreviewed by the Company’s independent auditors.

Legal Disclaimer

Financial Information – 3Q11/9M11

Appendix

21

Financial Information – 3Q11/9M11

Highlights for the Period (3Q11)

�Sales growth above market average (+34%)

� Same Store Sales growth (+20%)

� Internet expansion (+48%) and Innovation (“Magazine You”)

� Lojas Maia impressive performance (+58%)

� Effective brand name transition in Recife region

22

� Fastest administrative integration of Baú stores

� Success in the opening of Parana’s virtual stores

� Organic expansion: 11 stores till Sep/11 + 13 stores till Dec/11

� Luizacred’s credit card base expanded to 4,2 million

� Decrease in overdue portfolio

� Adjusted EBITDA margin of 5.7%

3.52

4.99

3.80

5.33

Gross Revenue (R$ billion)

Retail Total

+ 41.7%

+ 33.8%

+ 40.5%

23

1.03 1.18 1.32

1.59 1.64 1.77

3.52

1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

1.12 1.26

1.41 1.70 1.74

1.89

1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

+ 33.6%

+ 33.8%

26.3%

16.6%

26.8%

16.3%

30.0%

20.0%

31.2%

19.8%

SSS- Same Stores Sales (%)

24

16.3%

3Q10 3Q11 9M10 9M11

Same Physical Stores Sales Growth Same Stores Sales Growth

385

570

+ 48.0%

+ 48.2%

Internet (R$ million)

25

110 130

145 174 182

214

1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

Lojas Maia – Gross Revenue (R$ million)

426

734

+ 58.2%

+ 72.5%

26

127 145 154

253 237 244

1Q10 2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

Note: 2010 pro-forma figures, since Lojas Maia was acquired in Aug/10

Net Revenue and Gross Income (R$ million)

Consolidated Net Revenue Consolidated Gross Income

4,491 + 39.9% 1, 476

+ 31.7%

27

1,073 1,197 1,416 1,473 1,603

3,211

2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

+ 33.8%

368 413 470 483 524

1,121

2Q10 3Q10 1Q11 2Q11 3Q11 9M10 9M11

+ 26.8%

19.9% 20.0%20.9%

19.9%

+10bps -100bps

Operating Expenses (% NR)

28

5.2% 5.5% 4.6% 5.2%

3Q10 3Q11 9M10 9M11

Selling G&A

+30bps +60bps

Consolidated EBITDA (R$ million)

94

225

248

- 2.0%

+ 10.2%

29

9492

3Q10 3Q11 9M10 9M11

7.9% 5.8% 7.0 5.5%EBITDAMargin

Adjusted EBITDA (R$ million)

(=) EBITDA (reported) R$ 92.2 mm

(+) Pre-operation expenses at Baú stores R$ 14.1 mm

(+) Luizacred revenue recognition R$ 11.7 mm

(+) Sales at Lojas Maia R$ 4.0 mm

(+) Pre-operational expenses at new stores R$ 2.2 mm

(+) Consulting expenses at Magazine Luiza R$ 5.8 mm

30

(+) Consulting expenses at Magazine Luiza R$ 5.8 mm

(+) Pre-operational expenses at Consortium business R$ 1.6 mm

(-) Lojas Maia fiscal provision benefits R$ 32.6 mm

(-) Luizacred revenue from marketing selling structure R$ 21.4 mm

(+) Other expenses related to the network integration R$ 13.9 mm

(=) EBITDA (adjusted) R$ 91.5 mm

Financial Expenses (% NR)

3.2%

2.3%

2.9%2.8%

-90 bps

-10 bps

31

3Q10 3Q11 9M10 9M11

23

48

29

Consolidated Net Income (R$ million)

Adjusted Net Income*: R$18 millions / R$ 35 millions

(*) Adjusted by Income Tax and Social Contribution not accounted at Lojas Maia and Baú

32

23

12

3Q10 3Q11 9M10 9M11

1.9% 0.7% 1.5% 0.6%Net Margin

Financed Mix Sale (% total sales)

29% 29% 30%

23% 23%31% 36%

25%

33

35% 35% 29% 27% 34%

12% 13%

2% 0%

11%

38%37%

Total 3Q10 ML 3Q11 Maia 3Q11 Baú 3Q11 Total 3Q11

Luiza Card CDC Third Party Cards Cash Sales/ Down Payment

2,2712,642

3,9754,174

+ 58.0%

Cartão Luiza – Total Credit Card Base(‘000)

34

2,2712,642

2Q10 3Q10 2Q11 3Q11

PORTFOLIO (R$ million) Sep-11 Jun-11 Mar-11 Dec/10 Sep-10

Total Portfolio 3,011.7 100.0% 2,668.3 100.0% 2,424.2 100.0% 2,359.7 100.0% 1,994.9 100.0%

000 to 014 days A 2,309.5 76.7% 2,020.5 75.7% 1,771.8 73.1% 1,825.4 77.4% 1,554.3 77.9%

015 to 030 days B 80.5 2.7% 119.6 4.5% 128.1 5.3% 130.8 5.5% 88.2 4.4%

031 to 060 days C 71.6 2.4% 75.4 2.8% 76.6 3.2% 87.2 3.7% 51.2 2.6%

061 to 090 days D 73.8 2.4% 65.3 2.4% 72.4 3.0% 44.5 1.9% 38.9 2.0%

091 to 120 days E 67.8 2.3% 55.3 2.1% 83.2 3.4% 36.9 1.6% 35.3 1.8%

121 to 150 days F 53.6 1.8% 51.8 1.9% 63.3 2.6% 31.8 1.3% 32.2 1.6%

Portfolio Luizacred (R$ million)

35

151 to 180 days G 53.6 1.8% 64.6 2.4% 44.8 1.8% 29.3 1.2% 30.8 1.5%

180 to 360 days H 301.3 10.0% 215.9 8.1% 184.0 7.6% 173.7 7.4% 163.9 8.2%

Overdue up to 90 days 225.9 7.5% 260.2 9.8% 277.1 11.4% 262.6 11.1% 178.3 8.9%

Overdue above 90 days 476.3 15.8% 387.6 14.5% 375.3 15.5% 271.7 11.5% 262.3 13.1%

Total Overdue 702.2 23.3% 647.8 24.3% 652.4 26.9% 534.3 22.6% 440.6 22.1%

-100 bps

Documents

Btg pactual conference presentation