SUSTAINABILITY AND ANNUAL REPORT 2016 - B2W · com won the e-Bit Award in the "Favorite Diamond Store" category (popular vote) and Submarino won for the third time in the "Best Diamond

SUSTAINABILITY AND

ANNUAL REPORT 2016

MESSAGE FROM MANAGEMENT

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The year of 2016 presented a challenging political/economic context with an increased tax burden, raising the cost of products to end consumers, increasing household debt and tightening credit, combined with unremitting and aggressive competition.

In the face of this scenario, the Company took swift action, making the internal adjustments neces-sary to assure the continuity of its growth path.

We ended 2016 with record sales and a gain of 0.7 p.p. of market share, reaching 26.2%, with total GMV of R$ 12.5 billion (up 11%) and adjusted EBITDA of R$ 688 million (13% growth). [G4-9]

It was a year that was important for the transition of our e-commerce operating business model to a digital platform (combination of e-commerce, Marketplace and services). Only two years in existence, the Marketplace reached R$ 2.2 billion in GMV in 2016, an increase of 154% and a 17.5% share of total GMV. Another significant change was the higher number of accesses through smartphones, which now account for 50% of our traffic, reflecting a change in client behavior.

The B2W Digital Platform speeds up our virtuous cycle of value creation, connects more suppliers and sellers, expands the product mix and number of offers and increasingly attracts more clients.

Our priority is to offer the best shopping experience for our clients, who once again recognized our brands as the most esteemed on the Brazilian internet. For the fourth consecutive year, Americanas.-com won the e-Bit Award in the "Favorite Diamond Store" category (popular vote) and Submarino won for the third time in the "Best Diamond Store" (technical criterion) category.

Based on its five-year strategic plan (2016-2020), in order to generate value for its shareholders B2W Digital will continue attracting and developing top talent, investing in its digital platform, trans-forming its processes and maximizing its business fronts.

THE MANAGEMENT [G4-1; G4-2]

PROFILE

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ORGANIZATIONAL PROFILE

B2W DIGITAL is a leader in Latin America, whose goal is to CONNECT PEOPLE, BUSINESSES, PRODUCTS AND SERVICES ON A SINGLE DIGITAL PLATFORM.

The Company features the largest and most esteemed brands on the Internet (Americanas.com, Submarino, Shoptime, and Sou Barato) and operates the rapidly growing Marketplace. Methodically constructed over the past several years, the platform allows B2W to also offer technology, logistics, distribution, customer service, and consumer financing services. [G4-3, G4-6]

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As part of its five-year strategic plan (2016-2020), B2W will continue to invest in building this digital platform, maximizing all of its business segments with the aim of generating value for the Company’s shareholders.

With a 62.16% stake, Lojas Americanas is B2W DIGITAL’s controlling shareholder. The Company is headquartered in Rio de Janeiro and its BTOW3 ticker symbol shares are traded on the BM&FBO-VESPA’s Novo Mercado listing segment, which bears the highest rating for corporate governance in Brazil. [G4-5, G4-7, G4-8]

THE LARGEST AND MOST ESTEEMED INTERNET BRANDS

B2W DIGITAL has the most complete portfolio of e-commerce brands, which have low consumer overlap. Americanas.com, Submarino, Shoptime, and Sou Barato have different consumer profiles, which together represent almost all of the population. [G4-4] [G4-8] [G4-9]

The largest store. The lowest prices.

With over 2.5 million items available in over 40 categories, Americanas.com is the largest online Brazilian store. Voted by consumers as No. 1 in customer service and the most esteemed store on the internet, Americanas.com offers the best prices and great sales all year round. The brand is democratic, inclusive and present in the daily lives of Brazilians. In addition to the site, customers can do their shopping via apps and at kiosks installed in

The products you enjoy and the best service on the internet.

Submarino is a Gen Y/Z brand that’s 100% digital (pure player) and a benchmark for technology, entertainment, culture, and innovation. The site brings customers the latest trends, allowing them to explore a wide range of specially selected products. The brand objective is to increasingly empower its customers, providing them with tools and content that enhance their freedom of choice. This translates into agile and personalized site browsing across multiple devices, with various delivery options available and a high level of service. The online store

also offers Submarino Prime, a loyalty program in which clients can buy more than 100,000 items with unlimited free shipping and fast delivery. Prime members also have access to exclusive offers and dedicated customer service.

Lojas Americanas stores across the country.

MARKETPLACE (3P)

B2W Marketplace offers sellers the finest value proposition to access internet brands with the best reputation and outstanding traffic to boost their sales. Sellers also have the support of B2W’s technology services, logistics, and distribution platform, which delivers the best customer shopping experience.

CIn only two years since its launch, the Marketplace has already reached R$ 2.2 billion in GMV in 2016, a 154% increase and a 17.5% share of total GMV. Over the course of the past year, 2,200 new sellers connected to the Marketplace, practicably doubling the base to 4,700 sellers.

As a result, the number of items offered to customers grew by 200% compared to 2015, reaching more than 2 million products.

Being a relevant component of the Company’s strategy, the Marketplace will contribute greatly to its growth and profitability.

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Unique products and live demonstrations.

Shoptime is the largest home shopping channel in Latin America. Broadcasting 24/7, its entertaining content specializes in live, product demonstrations. Shoptime offers unique items and practical, day-to-day solutions via its own brands – Casa & Conforto (bed, bath, and table), Fun Kitchen (small appliances), La Cuisine (housewares), and Life Zone (sports and leisure).

The internet’s largest outlet.

Sou Barato, the online outlet store for Americanas.com, offers repackaged, certified pre-owned goods, across a variety of categories, which are in perfect condition and available for discounts of up to 70%. All products undergo rigorous screening by specialized technicians and are sold with warranties.

BIT SERVICES: TECHNOLOGY SERVICES

BIT Services, which resulted from the acquisition of ten “best in class” technology companies, offers complete solutions in different vertical technologies to support B2W’s e-commerce operations (1P) and Marketplace sellers (3P).

B2W FULLFILMENT: LOGISTICS AND DISTRIBUTION

In 2013 and 2014, B2W DIGITAL acquired Brazil’s two major carriers specializing in e-commerce (Click-Rodo and Direct). In 2016, an operating agreement was established with Vialog, the leading e-commerce delivery carrier in the nation’s South region. As a result of these activities, B2W created B2W Fulfillment (storage, distribution, and customer service). The platform is responsible for delivering orders and serving customers of B2W DIGITAL sites, as well as providing services for Marketplace sellers and Brazilian market companies. At the close of 2016, B2W Fulfillment was handling 95% of all deliveries made by the Company.

B2W DIGITAL operates 11 distribution centers, which are located in states of Minas Gerais, Pernambuco, Rio de Janeiro, Santa Catarina, and São Paulo, with total storage space of over 500,000 square meters. The Company also has 185 strategically-situated operating centers (transit points). [G4-5, G4-8]

CONSUMER FINANCING

With an aim towards becoming the best means of payment for Submarino, evolving the customer shopping experience, and promoting sales growth, Submarino Finance was created in 2006 through a joint venture with Banco Cetelem.

A pioneer in providing online credit approvals, in just a few years’ time, the Submarino card has secured a significant share of site sales, high customer base activation rates, and elevated profitability on accounts receivable.

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In 2014, B2W expanded its operations by also creating Digital Finance, which began offering cards and financial products to Americanas.com, Shoptime, and Sou Barato customers.

Via a 100% digital application and approval process, B2W cards offer customers exclusive discounts, the best installment payment options, loyalty programs, higher credit limits for site purchases, and personal loans. Among the advantages for B2W are lower cost of commission (MDR), greater customer loyalty (purchase frequency 2.2 times higher), and 20% higher average tickets.

The volume of transactions approved by Submarino Finance credit card operations (Submarino card) and Digital Finance (Americanas.com, Shoptime, and Sou Barato cards) reached R$ 2.8 billion in 2016, an 11% growth compared to 2015. At the close of 2016, operations had a base of 2.2 million cards issued – 1.6 million in Submarino Finance and 656,000 in Digital Finance.

GREEN COMPANY

Economic development, respect for the environment and human rights are guideposts for B2W. A commitment to the promotion of best environmental practices orients the activities of the Company, which considers the adoption of this responsible attitude as a major channel of influence for customer purchases and, in the global arena, a decisive factor for investors.

Since 2007, B2W has been strengthening its sustainability culture through the implementation of social and environmental activities, always under the supervision of its multidisciplinary “Green Company” committee. In 2016, Green Company, which included the participation of a member of the Board of Directors, met weekly to monitor the development of proposed initiatives related to best environmental practices. In the Socio-Environmental Management chapter, the Company highlights several initiatives carried out throughout the past year, such as saving natural resources, greenhouse gas emission reductions, and investments in cultural projects. [G4-34]

CORPORATE SUSTAINABILITY INDEX (ISE)

B2W DIGITAL was the first e-commerce company to be included in BM&FBOVESPA’s Sustainability Index (ISE). In 2016, for the third consecutive year, it continued to be a part of the ISE portfolio, being announced on November 25. ISE takes into account a company’s level of commitment to sustainable development in the social, financial, and environmental arenas.

AWARDS AND RECOGNITION - 2016

The time and effort that the B2W DIGITAL team has put into offering an increasingly unique shopping experience for customers has been recognized over the years with a number of awards. Below is a list of those most relevant to B2W and its brands:

CONSUMER FINANCING

With an aim towards becoming the best means of payment for Submarino, evolving the customer shopping experience, and promoting sales growth, Submarino Finance was created in 2006 through a joint venture with Banco Cetelem.

A pioneer in providing online credit approvals, in just a few years’ time, the Submarino card has secured a significant share of site sales, high customer base activation rates, and elevated profitability on accounts receivable.

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In 2014, B2W expanded its operations by also creating Digital Finance, which began offering cards and financial products to Americanas.com, Shoptime, and Sou Barato customers.

Via a 100% digital application and approval process, B2W cards offer customers exclusive discounts, the best installment payment options, loyalty programs, higher credit limits for site purchases, and personal loans. Among the advantages for B2W are lower cost of commission (MDR), greater customer loyalty (purchase frequency 2.2 times higher), and 20% higher average tickets.

The volume of transactions approved by Submarino Finance credit card operations (Submarino card) and Digital Finance (Americanas.com, Shoptime, and Sou Barato cards) reached R$ 2.8 billion in 2016, an 11% growth compared to 2015. At the close of 2016, operations had a base of 2.2 million cards issued – 1.6 million in Submarino Finance and 656,000 in Digital Finance.

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PERSONNEL

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THE BEST AND LARGEST DIGITAL TEAM IN LATIN AMERICA

TALENT THAT’S PREPARED TO GROWR

To cope with the accelerated growth of the digital market in Latin America, B2W Digital increasingly invests in processes to improve the attractiveness, retention and development of talent, as well as in the strengthening of its organizational culture and corporate identity. We understand that only with clear direction and a well-prepared team will we ensure appropriate execution of our strategic plan and the sustainability of our business.

In 2016, the Company improved its recruitment and selection programs, as well as training and skills development initiatives. Faced with the growing demand to secure qualified professionals to operate in the digital marketplace, B2W Digital seeks to enhance and empower its internal team as a means to increasingly leverage results.

As job creation and the promotion of local territorial development in the regions where it operates are essential goals for the Company, B2W Digital maintains a strategy of prioritizing the hiring of local labor. Almost 100% of its technicians, who work in operational divisions, live near the Company’s distribution centers, which are located in the states of São Paulo, Minas Gerais, Rio de Janeiro, Santa Catarina, and Pernambuco. [G4-10]

PROFESSIONAL PROFILE

At the close of the year, our professional staff was comprised of 12,903 associates, of which 6,018 were women (46.64%) and 6,885 were men (53.36%). To promote gender equality and eliminating any possibility of discrimination, we rely on meritocracy as the sole basis for career development. Within their respective professional categories, all new associates enter the Company with probationary contracts of no more than ninety (90) days’ length.

Following this period and a performance evaluation, these professionals may have their contracts extended indefinitely. The Company is continually adopting new workplace diversity and equal opportunity practices.

As per the Company’s Code of Ethics, all associates, at all hierarchical levels, are hired, solely and exclusively, on the basis of their professional skills and background, regardless of color, gender, political, religious or sexual orientation. [G4-9, G4-10, G4-11, G4-56, G4-LA12, G4-LA13]

THE BEST AND LARGEST DIGITAL TEAM IN LATIN AMERICA

TALENT THAT’S PREPARED TO GROWR

To cope with the accelerated growth of the digital market in Latin America, B2W Digital increasingly invests in processes to improve the attractiveness, retention and development of talent, as well as in the strengthening of its organizational culture and corporate identity. We understand that only with clear direction and a well-prepared team will we ensure appropriate execution of our strategic plan and the sustainability of our business.

In 2016, the Company improved its recruitment and selection programs, as well as training and skills development initiatives. Faced with the growing demand to secure qualified professionals to operate in the digital marketplace, B2W Digital seeks to enhance and empower its internal team as a means to increasingly leverage results.

As job creation and the promotion of local territorial development in the regions where it operates are essential goals for the Company, B2W Digital maintains a strategy of prioritizing the hiring of local labor. Almost 100% of its technicians, who work in operational divisions, live near the Company’s distribution centers, which are located in the states of São Paulo, Minas Gerais, Rio de Janeiro, Santa Catarina, and Pernambuco. [G4-10]

PROFESSIONAL PROFILE

At the close of the year, our professional staff was comprised of 12,903 associates, of which 6,018 were women (46.64%) and 6,885 were men (53.36%). To promote gender equality and eliminating any possibility of discrimination, we rely on meritocracy as the sole basis for career development. Within their respective professional categories, all new associates enter the Company with probationary contracts of no more than ninety (90) days’ length.

Following this period and a performance evaluation, these professionals may have their contracts extended indefinitely. The Company is continually adopting new workplace diversity and equal opportunity practices.

ATTRACTING TALENT

To fill employee roles, B2W Digital has developed a bold plan to identify, not only the best talent in the marketplace, but those who have an entrepreneurial profile, as well as values and principles that are aligned with the Company. Through the main gateways into the Company – the Internship, Trainee, and New Talent programs – we recruit university students and new graduates who identify with “B2W Way.” Through our MBA Initiative, we recruit professionals who have achieved academic excellence in the national and international arenas, and have strong experience.

MBA Initiative

Identifying and recruiting talent from the world’s leading business schools is the goal of the MBA Initiative, which was launched in 2012. It has since selected and trained Company leaders over the course of these few, short years. These professionals get their start at B2W Digital by being responsible for specific projects, with direct oversight from executive officers.

International Summer Internship

B2W Digital launched its International Summer Internship program in 2015, recruiting students from top-tier U.S. universities to participate in innovative projects.

Trainee Program

With a 12-month duration, the B2W Digital Trainee Program follows the job rotation line practice,

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As per the Company’s Code of Ethics, all associates, at all hierarchical levels, are hired, solely and exclusively, on the basis of their professional skills and background, regardless of color, gender, political, religious or sexual orientation. [G4-9, G4-10, G4-11, G4-56, G4-LA12, G4-LA13]

which maximizes trainee utilization and learning curves within the Company. Thus, trainees are assigned to several different areas of the Company as a means of becoming acquainted with the processes, activities and specific aspects of the business. The program also offers on-the-job training to identify and develop potential talent who might then occupy prominent positions in the business in the future.

The Company received a total of over 18,000 registrations from all over Brazil from which seven trainees were selected and hired in January 2016. During the process, individual characteristics, such as initiative, capacity for execution and analysis, dynamism, ability to relate to people, and enjoyment of challenges were evaluated.

New Talent Program

The New Talent Program was created to fast track newly trained professionals to be future leaders of the Company. Upon joining B2W Digital, these new talents are assigned directly to their areas of expertise to begin on-the-job development. They also attend lectures, such as “Corporate Overview,” where they exchange experiences with managers from different divisions and conduct technical visits to certain units. Thus, they acquire a macro view of the business.

HackPUC (PUC-Rio)

As a stimulus to the development of entrepreneurial technological projects, we sponsored the HackPUC event at the Pontifical Catholic University of Rio de Janeiro (PUC-Rio), where important initiatives were developed through a hackathon (programming marathon).

Starting Together Program: Young Apprentice

B2W Digital’s “Getting Started Together, Hand in Hand with a Young Apprentice” program, offers young people an opportunity to develop their skills through their first experience in the job market. The initiative provides professional and interpersonal training for these young people, through participation in face-to-face instruction, online e-learning, and other tools. The Company is proud to contribute to the formation of citizens and not merely the development of the professional skills of these young people. In 2016, the Getting Started Together program initiated job rotation and immersion projects in several divisions of the Company, which enabled these young apprentices to gain a more comprehensive knowledge of B2W Digital’s business.

Somar Program: Inclusion of People with Disabilities (PWD)

Becoming an ever more inclusive company is part of our value system. To this end, B2W Digital has expanded its promotion of existing vacancies through institutional channels, as well as through partnerships with municipal departments and specialized consulting firms.

Therefore, identifying talent and promoting the training of persons with disabilities in our business units has been a great challenge, considering the rapid growth of the sector.

TALENT DEVELOPMENT

In line with the Company’s principles, policies, and values, our development programs are focused on three areas – people, methods, and results. In seeking the continuous improvement of all of our professionals and to contribute to excellence in our corporate human resource management processes, we offer specific training tailored to each associate’s profile and the challenges they face.

All associates who identify with the Company’s culture, enjoy technology/the internet, and want to develop to their full potential will discover numerous opportunities within B2W Digital. Proof of this

can be found in the significant amount of training offered in 2016 – 92,000 hours (an average of 7.6 hours per associate), which represents a 33% increase in total training hours over 2015. This includes awareness, technical and behavioral training. Training sessions are carried out at the Company’s headquarters, at its two innovation and technology centers (BITs: B2W Innovation and Technology), and its distribution centers throughout the country. [G4-LA9, G4-LA10]

B2W Fellows: Scholarship Program

This study program is designed for associates who have been with the Company for at least two years. They are designated by their immediate superiors based on their performance in the exercise of their duties. The goal of the program is to promote academic training for its participants, improving their qualifications, and increasing their chances of career growth. The Company offers participating associates scholarships for undergraduate and postgraduate level classroom courses.

Digital Lab

Continuing the activities of its Digital LABs – collaborative initiatives in partnership with two of the world’s most renowned education and research institutions (Massachusetts Institute of Technology-MIT and Harvard University) – in 2015, B2W Digital established an advanced research and innovation office at MIT in Boston, USA. Its objective is to develop disruptive projects and bring the Company in closer contact with global centers of excellence in digital technology. In 2016, we entered into partnerships with the universities of North Carolina and Stanford, from which we welcomed two students, each of whom completed a one-month internship at our facilities.

Leadership Development Program

In 2016, we implemented PDG.com, the Management Development Program, whose goal is to assist leaders in career transitions by seeking to better understand their roles, the impact their actions have had on those they have led and, consequently, on the organization. The program has been applied at all levels of management, which has contributed to improved preparation of the entire corporate team.

In addition, in 2016, we continued the Leadership and Business Academy (LBA) program in partnership with the Harvard Business School (HBS) to improve our leadership.

CAREER ADVANCEMENT

Due to the Company’s accelerated growth, B2W Digital registered more than 2,028 career promotions of its associates at all levels of the business. As regards management positions, 35.2% of these were promoted to “Leader,” 20.7% to “Supervisor,” 34.7% to “Coordinator,” and 9.3% to “Manager.”

When it comes to hiring criteria and promoting its professionals, the Company focuses on the development potential of its personnel. Promotions are based on performance evaluations carried out for all associates and are performed without regard to race, age, years of service, or point of entry into the Company. [G4-LA11]

OCCUPATIONAL HEALTH AND SAFETY

There is an Internal Committee for Health, Safety, and Accident Prevention (CIPA) in all B2W establishments with more than 19 associates, which, per current legislation, represents 100% of our workforce. [G4-LA-5]

CIPA members are appointed by the employer and work to ensure actions are taken to prevent

accidents and illnesses that may arise from workplace environments and facilities. Steps are take to ensure that pertinent solutions are developed to address issues identified within the Company regarding workplace health and safety. Workplace Safety teams act on behalf of the Company in an ongoing effort to achieve a zero-accident rate. In addition to those individuals who are designated by the Company, there is also a group whose members are elected by the associates.

B2W encourages its associates to participate in educational, awareness-raising, and disease prevention campaigns and themed events that focus on health, well-being, and recreation, such as “Pink October” and the 4km/8km “Todo Mundo Vai” (Everybody’s Going) Race. In addition, the Company encourages responsible use of natural resources, such as proper waste disposal and the conscious use of energy and water.

BENEFITS

B2W Digital offers its associates benefits such as transportation vouchers, life and health insurance, meal vouchers or meals in Company cafeterias, and discounts on products sold through the Americanas.com, Submarino.com, and Shoptime sites, as well as Lojas Americanas brick-and-mortar stores.

The Company also offers discounts at universities, language schools, gyms, and restaurants, among others. [G4-LA2] In addition, as regards all associates, the Company is in full compliance with practices set forth in Brazil’s Labor Relations Code (CLT), such as maternity and paternity leave, advance notice of dismissal, among others. [G4-LA3, G4-LA4]

INTERNAL CHANNEL FOR COMPLAINTS

Lojas Americanas makes available to all of its professionals, regardless of whether they serve on Company committees or not, “Disk-Alert,” an internal communications channel through which associates can send questions, suggestions, or criticisms. Everything that arrives through this channel is analyzed and, on a case-by-case basis, the ombudsman may take action, accept suggestions, or address concerns and questions related to issues reported by associates. Throughout 2016, the Company handled all complaints received through the Disk-Alert channel and took appropriate follow-up measures. [G4-57, G4-58, G4-LA16, G4-HR3]

ATTRACTING TALENT


MBA Initiative




Trainee Program


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New Talent Program


HackPUC (PUC-Rio)







TALENT DEVELOPMENT






Digital Lab





CAREER ADVANCEMENT








BENEFITS





ATTRACTING TALENT


MBA Initiative




Trainee Program




New Talent Program


HackPUC (PUC-Rio)







TALENT DEVELOPMENT



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Digital Lab





CAREER ADVANCEMENT








BENEFITS





ATTRACTING TALENT


MBA Initiative




Trainee Program




New Talent Program


HackPUC (PUC-Rio)







TALENT DEVELOPMENT






Digital Lab





CAREER ADVANCEMENT






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BENEFITS





GOVERNANCE

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TRANSPARENCY AND COMMITMENT TO STAKEHOLDERS

B2W Digital is the largest e-commerce company in Latin America. The company was incorporated in 2006 under the rules established by the São Paulo Stock Exchange (BM&FBOVESPA) and the Novo Mercado, which require an ownership structure exclusively comprised of common shares and the election of independent members to the Board of Directors.

Composition of shareholders

B2W Digital’s shares are listed on the BM&FBOVESPA and traded under the ticker symbol BTOW3. On December 31, 2016, the control stock in Lojas Americanas consisted of 62.16% of the Company’s shares. [G4-7]

Dividend policy

The Company’s Bylaws, in conformity with the principles of current legislation, set the minimum value for dividends at 25% of net profit for any given fiscal year, adjusted in accordance with legislation in force. In 2016, B2W Digital did not distribute dividends to its shareholders. [G4-EC1]

Shares

The Company’s common shares are part of the Special Tag-Along Stock Index (ITAG). This indicator which consists of the stocks of companies that offer the same conditions to minority shareholders in the event of a change of control.

Adherence to the Arbitration Panel

B2W Digital chose mediation as a means of resolving conflicts of interest between shareholders and directors, and between both of these and the Company. In the absence of an agreement, the Company, its shareholders, and the directors are obliged to seek resolution, through arbitration, of any and all disputes or controversies that may arise between these parties. These controversies or disputes may relate to or be derived from, in particular, the application, validity, effectiveness,

interpretation, violation, and purposes of the provisions contained in the Bylaws, the provisions of Brazilian Law No. 6,404/76, the rules issued by the National Monetary Council, the Central Bank of Brazil, and the Securities and Exchange Commission of Brazil, as well as other rules applicable to the operation of the securities market in general and those contained in the Listing Rules of the Novo Mercado, the Novo Mercado Participation Agreement, the Arbitration Rules of the Market Arbitration Board and, especially, the Voting Agreement and Assumption of Liabilities (“Termo de Voto”), which was entered into on December 13, 2006 and is on file at the Company’s headquarters.

The Company is also bound to the Market Arbitration Board. In accordance with this Board’s rules, any claim may be considered by this BM&FBOVESPA-instituted entity. Under Chapter 12 of these rules, parties may opt, by mutual agreement, to have their disputes resolved by another body or arbitration panel. [G4-41]

Independent auditors

In accordance with CVM Instruction No. 381, the Company affirms that its independent auditors did not provide, during the fiscal year ended December 31, 2016, other services unrelated to the external audit.

The Company’s policy for contracting independent auditors for services other than an external audit ensures that there will be no conflict of interest, loss of independence or objectivity on the part of these professionals. [G4-41]

GOVERNANCE STRUCTURE

Board of Directors and Executive Board

B2W Digital’s Board of Directors consists of seven members. It has adopted a series of initiatives that go beyond Novo Mercado requirements, such as the participation of more independent members on the Board of Directors than the minimum number required.

The performance of the directors is assessed against financial and operational targets established during the previous year. Every year, the Board meets quarterly, as well as whenever the Board chair considers it necessary to convene additional meetings.

The Executive Board, as a collegial body, shall exercise the duties that the law, the bylaws, and the Board of Directors give it to perform as acts necessary for the regular operation of the Company. [G4-34, G4-35, G4-42, G4-45, G4-47]

Independent members

Luiz Carlos Di Sessa FilippettiMauro Muratorio NotPaulo Antunes Veras

Representatives of the controlling shareholder and members of the Board of Directors

Celso Alves Ferreira LouroJorge Felipe LemannMiguel Gomes Pereira Sarmiento GutierrezAndré Street de Aguiar

B2W Digital Executive Management

Anna Christina Ramos Saicali – President/CEOCarlos Eduardo Rosalba Padilha – COOCarlos Henrique de Lucca Fortes Gatto – COOFlávio de Almeida Serapião – COOFábio da Silva Abrate – CFO/IROJean Pierre Lessa e Santos Ferreira – COOJosé Timotheo Barros – COOMarcelo da Silva Nunes – CFOMarcio Cruz Meirelles – Commercial OfficerThiago Mendes Barreira – Commercial Officer

THE ROLE OF THE COMMITTEES

Audit Committee

Among the committee’s several functions, it is responsible for reviewing the quarterly and annual financial statements, and reporting its findings, on a quarterly, to the Board of Directors.

The Audit Committee consists of three members appointed by the Board of Directors, who are selec-ted exclusively from among the independent directors. They are eligible for re-election and their terms coincide with those of members of the Board of Directors.

Nominating Committee

The Nominating Committee is responsible for the nomination of candidates to the Board of Direc-tors, whose names are subsequently submitted to the Company’s General Shareholder’s Meeting.

The committee is composed of four members of the Board of Directors, where at least two of these must be independent members. They are eligible for re-election and their terms coincide with those of members of the Board of Directors.

Sustainability Committee

Over the past nine years, the Sustainability Committee, known as Green Company, has promulgated a corporate sustainability culture based on viable economic growth pillars, which are tied to the adop-tion of best social and environmental practices throughout B2W Digital’s value chain. Composed of Executive Board members and executives from different divisions, the committee also includes the participation of a member of the Board of Directors in its meetings, and brings a multidisciplinary approach to the Company. The committee’s goal is to foster best management practices, which are based on the balance between the economic, environmental and social concerns. [G4-53]

For the third consecutive year, the Company was selected to be part of BM&FBOVESPA’s Corporate Sustainability Index (ISE), which once again reflects the organization’s commitment to harmonize the achievement of financial results with sustainable development. Also for the third consecutive year, B2W Digital received the “Green Seal - Chico Mendes Award” in the “Responsible Socio-Environmen-tal Management” category. [G4-46]

POLICIES AND REGULATIONS

Throughout 2016, B2W Digital has maintained its commitment to fighting corruption and promoting ethics in its relationships with all of its stakeholders. In addition to the Company’s Code of Ethics and Conduct, which was approved by the Board of Directors and the Executive Board, B2W Digital has a Policy for Compliance and Combating Corruption that is available on the firm’s Green Company website (www.companhiaverde.com.br). Upon their hiring, all employees receive a copy of the Code

of Ethics and Conduct, and sign an awareness and agreement statement.

B2W Digital values principled, transparent, and cooperative behavior. Since 2014, the Company has adhered to the guidelines of Brazil’s Anti-Corruption Law (12.846/13), which brought about new approaches to corporate responsibility that address harmful conduct in relation to public administration. Several policies improve the governance process, including the Disclosure and Use of Information Policy. The Company’s policies establish strict rules and harsh punishments for offenders, as well as those who engage in fraudulent acts.

As a signatory to the United Nations Global Compact since 2013, the Company has worked to strengthen internal processes related to sustainability management, as well those that exist throughout its supply chain. The Global Compact is an initiative that brings together thousands of companies around the world, which are committed to best corporate practices that respect human rights, particularly those in relation to labor issues, as well as the environment and business ethics.

To this end, B2W Digital promotes and endorses the promulgation of principles that protect and value human rights. In its trade agreements, the Company highlights these aspects through, for example, the inclusion of specific, punitive clauses, which impose fines and immediate disqualification of violators found to have engaged in irregular behavior(s). These measures are intended to assist in the eradication of forced labor and to combat any practice that disregards the principle of human dignity in the value production chain. We also support a number of initiatives in the public and private sectors that seek to identify the risks and potential impacts of human rights violations associated with their activities. [G4-LA14, G4-LA15, G4-HR4, G4-HR5, G4-HR6, G4-SO3, G4-SO4]





Dividend policy


Shares




15











Independent members







Audit Committee



















Dividend policy


Shares














Independent members





16



Audit Committee



















Dividend policy


Shares














Independent members







Audit Committee











17





RESULTS OVERVIEW

18

GENERAL CONSIDERATIONS

The financial information serving as the basis for the comments below, presented in Brazilian reais (R$), are in accordance with international financial reporting standards (IFRS), with the standards issued by the Brazilian Securities Commission (CVM) as well as the Novo Mercado listing rules. The analyses below refer to the consolidated results and comparisons are with regard to the fourth quarter of 2016 (4Q16) and the year 2016, except where otherwise indicated.

RESULTS

GMV

In 4Q16, the Gross Merchandise Volume (GMV) was R$ 4,436 million. Compared to the R$ 3,749.4 million recorded in 4Q15, represented an increase of 18.3%. In 2016, the GMV was R$ 12,457.7 million that, compared to the R$ 11,266.4 million recorded in 2015, represented an increase of 10.6%. [G4-9, G4-EC1]

Gross revenue

In 4Q16, gross revenue totaled R$ 3,666.3 million which, compared to the R$ 3,434.5 million recorded in 4Q15, represented an increase of 6.7%. In 2016, gross revenue totaled R$ 10,520.4

million, up from R$ 10.509.6 million recorded in 2015. [G4-9]

Net earnings

In 4Q16, net revenue totaled R$ 3,024.7 million, 4% more than the R$ 2,907.8 million recorded in 4Q15. In 2016, net revenue totaled R$ 8,601.3 million, compared to R$ 9,013.8 million registered in 2015. [G4-9]

The reduction in net revenue compared to gross revenue growth - difference of 2.7 percentage points (p.p.) in 4Q16 - related to tax changes in the country, valid since January 2016.

Adjusted gross income

In 4Q16, the adjusted gross income totaled R$ 715.7 million, 13.5% higher than the R$ 630.7 million recorded in 4Q15. As a result, the adjusted gross margin increased by 2.0 p.p., from 21.7% in 4Q15 to 23.7% in 4Q16. In 2016, the adjusted gross income was R$ 2,077.2 million, which represents a change of -1.6% compared to R$ 2,111.1 million registered in 2015. As a result, the adjusted gross margin expanded by 0.7 p.p., from 23.4% in 2015 to 24.1% in 2016.

Adjusted selling, general and administrative expenses (SG&A)

In 4Q16, adjusted SG&A expenses totaled R$ 454.6 million, representing 15% of net revenue, a 0.6 p.p. change compared to 4Q15, when the adjusted SG&A expenses represented 14.4% of net revenue. In 2016, adjusted SG&A expenses totaled R$ 1.389 million, representing 16.1% of net revenue, down 0.5 p.p. compared to 2015, when adjusted SG&A accounted for 16.7% of net revenue.

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

In 4Q16, Adjusted EBITDA reached R$ 261.1 million, 22.9% growth over the R$ 212.5 million recorded in 4Q15. During this period, the Adjusted EBITDA margin increased by 1.3 p.p., going from 7.3% in 4Q15 to 8.6% in 4Q16. In 2016, Adjusted EBITDA reached R$ 688.2 million, an increase of 12.8% compared to the R$ 610.2 million recorded in 2015. During this period, the Adjusted EBITDA margin increased by 1.2 p.p., going from 6.8% in 2015 to 8.0% in 2016.

Net financial income

In 4Q16, the net financial income was R$ -324.1 million, a 20.1% increase compared to the R$ -269.8 million in 4Q15. In 2016, the net financial income was R$ -1,084.3 million, representing a 32.5% change compared to R$ -818.3 million in 2015.

Net income

In 4Q16, net income was R$ -102.3 million, compared to R$ -161.1 million in 4Q15. In 2016, net income was R$ -485.9 million, compared to R$ -418.4 million achieved in 2015.

CASH MANAGEMENT

Working capital

The net working capital varied by 27 days (2016 vs. 2015) due to the increase in inventories to meet 1Q17's sales (at the end of 2015 inventories were below adequate levels) and the accelerated growth

seen in the Marketplace, whose credit card transactions are approved on the B2W Digital platform and make up the gross balance of receivables. The Marketplace does not require working capital (B2W is an intermediary and receives a commission on sales).

Capex

Regarding cash generation, B2W Digital prioritizes investments that present optimal returns for shareholders. Thus, in 4Q16, the consolidated investments in plant, property and equipment and intangibles (website and systems development) totaled R$ 129.4 million, or 3% of total GMV, a reduction of 6.0 p.p. compared to 4Q15, when Capex represented 9% of the total GMV. Thus, the Adjusted EBITDA in 4Q16 covered 202% of the Capex for the period, compared with a 64% coverage ratio in 4Q15.

In 2016, Capex totaled R$ 459.9 million, a decrease of 43% compared to 2015. Capex in 2016 represented 4% of GMV, a reduction of 3 p.p. compared to 2015 when Capex was 7% of GMV. Thus, 2016's EBITDA covered 150% of the year's Capex, compared with a 76% coverage ratio in 2015.

Debt

On December 31, 2016, B2W Digital’s cash, excluding the consolidation of the FIDC, totaled R$ 1,939.4 million, 3.7x the Company's short-term debt, which totaled R$ 526.9 million. On December 31, 2016, the leverage ratio (defined as net debt/Adjusted LTM EBITDA) was 2.5x, compared to 3.2x as at September 30, 2016. [G4-9]



RESULTS

19

GMV


Gross revenue



Net earnings











Net income


CASH MANAGEMENT

Working capital



Capex



Debt




RESULTS

GMV


Gross revenue



Net earnings











Net income


CASH MANAGEMENT

Working capital


20


Capex



Debt


Accounts receivable are mainly composed of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts receivable is demonstrated in the following table:

CAPITAL INCREASE

On May 13, 2016, the Board of Directors met to discuss the proposal to increase the Company's share capital in the amount of R$ 823,000,000.00 (eight hundred twenty-three million reais) through the private issue of 82,300,000 new common shares, without par value, at an issue price of R$ 10.00 (ten reais) per share. After approval, the capital increase was submitted to the Extraordinary Shareholders Meeting.

The capital increase aims to strengthen cash and improve the Company's capital structure. It will allow the Company to continue to invest in its digital platform, accelerate the growth of Marketplace and consolidate its leading position in the market, aiming to better serve its clients.

The capital increase was approved by majority vote at the Extraordinary Shareholder's Meeting held on May 31, 2016. Thus, from June 1 to 30, 2016 the shareholders were able to exercise their right of preference to subscribe to the new shares in proportion to their shareholdings in the Company's capital until the close of stock market trading on May 31, 2016.

Throughout the preemptive right exercise period, 55,087,727 common shares were subscribed, totaling R$ 550,877,270.00 (five hundred and fifty million, eight hundred seventy-seven thousand, two hundred and seventy reais).

Between July 6 and July 22, 27,212,273 common shares under the first and second apportionment of unsubscribed shares were subscribed, totaling R$ 272,122,730.00 (two hundred seventy-two million, one hundred and twenty-two thousand and seven hundred and thirty reais). Thus, once the period of the two allotments ended, all of the shares to be issued by the Company under the share capital increase were fully subscribed by the shareholders.

On August 1, 2016, B2W Digital's Board of Directors approved the Company's capital increase.

21

Accounts receivable are mainly composed of credit card receivables, net of the discounted value, which have immediate liquidity and can be considered as cash. The breakdown of B2W’s accounts receivable is demonstrated in the following table:

CAPITAL INCREASE

On May 13, 2016, the Board of Directors met to discuss the proposal to increase the Company's share capital in the amount of R$ 823,000,000.00 (eight hundred twenty-three million reais) through the private issue of 82,300,000 new common shares, without par value, at an issue price of R$ 10.00 (ten reais) per share. After approval, the capital increase was submitted to the Extraordinary Shareholders Meeting.

The capital increase aims to strengthen cash and improve the Company's capital structure. It will allow the Company to continue to invest in its digital platform, accelerate the growth of Marketplace and consolidate its leading position in the market, aiming to better serve its clients.

The capital increase was approved by majority vote at the Extraordinary Shareholder's Meeting held on May 31, 2016. Thus, from June 1 to 30, 2016 the shareholders were able to exercise their right of preference to subscribe to the new shares in proportion to their shareholdings in the Company's capital until the close of stock market trading on May 31, 2016.

Throughout the preemptive right exercise period, 55,087,727 common shares were subscribed, totaling R$ 550,877,270.00 (five hundred and fifty million, eight hundred seventy-seven thousand, two hundred and seventy reais).

Between July 6 and July 22, 27,212,273 common shares under the first and second apportionment of unsubscribed shares were subscribed, totaling R$ 272,122,730.00 (two hundred seventy-two million, one hundred and twenty-two thousand and seven hundred and thirty reais). Thus, once the period of the two allotments ended, all of the shares to be issued by the Company under the share capital increase were fully subscribed by the shareholders.

On August 1, 2016, B2W Digital's Board of Directors approved the Company's capital increase.

22

ARKET SHARE EVOLUTION

INCOME STATEMENT

Excluding the effects of the consolidation os B2W Digital’s transportation subsidiaries.

No excluding the effects of the consolidation of B2W's subsidiaries

INCOME STATEMENT NOT ADJUSTED

NOTES TO THE INCOME STATEMENT

Effects of the consolidation of B2W Digital's transportation subsidiaries

Click-Rodo and Direct, B2W Digital subsidiaries, provide merchandise distribution services to the Company, generating an elimination effect on the consolidated gross revenue and general and administrative expenses (distribution expenses), pursuant to current accounting rules.

The consolidated gross profit is reduced in an amount equal to the increase observed in the selling, general and administrative expenses, but with no effect on Adjusted EBITDA and the Adjusted EBITDA Margin.

Adjusted EBITDA

On October 4th, 2012, Brazilian Securities Exchange Commission (CVM) enacted Instruction 527/12, regarding the voluntary disclosure of non-accounting information such as EBITDA. The Instruction aims to standardize the disclosure, in order to improve the understanding of this information and make it comparable among publicly listed companies.

23

To keep consistency and comparability with the previous periods, we present the EBITDA reconciliation below.

In 4Q16, Adjusted EBITDA was R$ 261.1 million. Including other operating income and expenses, EBITDA, according to CVM Instruction 527/12, would be R$ 251 million in 4Q16, representing 8.3% of net revenue.

DEFINITIONS

Adjusted EBITDA

Operational earnings before interest, taxes, depreciation and amortization and excluding other operational revenues/expenses and equity accounting.

Adjusted general and administrative expenses (SG&A)

SG&A, excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.

Adjusted Gross Profit

Gross profit excluding the effects of the consolidation of B2W Digital’s transportation subsidiaries.

GMV (Gross Merchandise Volume)

Sales of own merchandise, sales realized on the Marketplace, and other revenues (excluding commissions from Marketplace sales), after returns and including taxes.


SG&A excluding the effects of the consolidation of B2W Digital's transportation subsidiaries.

Market share

Total sales on B2W sites, including those made on the Marketplace, divided by total market sales (source: e-Bit).

Marketplace Participation

Marketplace sales as a percentage of total consolidated GMV.

Market share

Total sales on B2W Digital’s sites, including those made on the Marketplace, divided by total market sales (source: e-Bit).

Net Debt (Cash)

Calculated as the sum of short-term and long-term indebtedness, less the sum of cash & equivalents and credit card accounts receivables (net of the discounted balance).

New Customers

Increase in active customer base during the trailing 12 months.

Working Capital

Calculated as the sum of accounts receivable days (using GMV as the base) and inventory days, less accounts payable days; considering GMV and COGS over the past 12 months.





Adjusted EBITDA


24



DEFINITIONS

Adjusted EBITDA










Market share




Market share


Net Debt (Cash)


New Customers


Working Capital


ENVIRONMENTAL MANAGEMENT

26

SUSTAINABILITY TO GROW

B2W Digital has increasingly sought to engage with its associates and maintain constant dialogue with clients, investors and suppliers, to contribute in a multidisciplinary manner to the Company's sustainable development. For B2W, a sustainable business involves the adoption of good management practices in the economic, social and environmental dimensions. Created in 2007 with the purpose of ensuring that financial performance is in step with social responsibility actions and improvements to reduce the environmental impacts of all our business units, the Board of Directors formalized the Green Company Committee in 2010. In 2012, the Department of Sustainability, which reports directly to the Presidency, was created, featuring a team dedicated exclusively to the Company's sustainable development. In 2015, a member of the Company 's Board of Directors became part of the committee and has advised the management on the economic, environmental and social impacts on decision-making. [G4-34]

We believe that all its stakeholders should be encouraged and engaged to participate in the sustainable development of the Company and society. For this reason, clients, shareholders, suppliers, government, non-governmental organizations and communities are also continuously invited to participate and contribute to the evolution of our social and environmental practices. [G4-24, G4-25]

In addition, the company signed a strategic partnership with the MIT Sloan Sustainability Initiative to assess the maturity of the sustainability practices of B2W Digital, through benchmarking with other large companies.

The guidelines, policies and main actions in the field of Sustainability are available on the website: www.companhiaverde.com.br. For more information, those interested can send an email to [email protected]. [G4-31]

CORPORATE CITIZENSHIP

The implementation of social responsibility actions for internal and external audiences, combined with the adoption of good sustainable management practices, has led to benefits for both the

Company and for society in general. In this context, in 2016 B2W continued to implemented a sponsorship agenda involving cultural and social projects based on sports, education, digital inclusion and the dissemination of Brazilian culture, always valuing diversity.

Alongside the initiatives to mobilize its associates in a number of the campaigns, the Company has contributed to promote well-being, leisure and healthier consumption habits. For the third consecutive year, the Company has been raising awareness about and offering products and actions for initiatives such as the “Todo mundo vai” (Everyone's Going) running and walking circuit in partnership with Lojas Americanas.

Grael Project

Americanas.com, in partnership with Lojas Americanas, sponsored the Grael Project in 2016. The sponsorship strengthens the support of sport and healthy lifestyles by encouraging another project focused on inclusion, education and democratization through the practice of sports.

Over the past 18 years, the Grael Project has helped approximately 16,000 young people. Created by the brothers and sailing champions Lars and Torben Grael, the institution offers free sailing, swimming and Hawaiian canoeing classes. In addition, woodworking, fiberglass, electronics, carpentry, mechanics and upholstering workshops are offered. In 2016, some 400 youths participated in free sailing courses and nautical sector training workshops.

Social and Environmental Exchange

We met the goal for the development of ten social projects focused on education, vocational trainingh and income generation, through the Institute's Social-Environmental Exchange (BVSA). All projects are aligned with the United Nations' Sustainable Development Objectives.

Digital Education

B2W Digital reaffirmed its partnership with the Recode NGO (the former Committee for the Democratization of Information Technology- CDI), which is a point of reference in technological knowledge, and the State Education Secretariat of Rio de Janeiro (Seeduc) in the TecEscola project. In 2016, the project offered online courses to train 1,500 students in technology, 150 students in web design and over 50 students in Jav. Furthermore, it trained 150 teachers from 50 teaching units of the state of Rio de Janeiro. The 50 schools were selected primarily from Center-North Zone axis of the city of Rio de Janeiro. The "TecEscola" also trained also 157 professionals known as "technology intermediaries" to multiply the methodology across the Rio school system, which also has the support of the directors of the participating schools. Throughout the year, various training events and co-creating technology solutions with the teachers were organized. Altogether, in 2016, teachers received eight hours of monthly training in the methodology, which corresponded to 50% of the monthly 16-hour period scheduled for the state of Rio.

Books in the Public Squares

The "Books in the Public Squares" project, also known as " Library Bus," continued reaping the fruits of great results in 2016. In partnership with Lojas Americanas, Americanas.com has renewed sponsorship of the project. In 2016, 14 communities benefited from the project by offering a varied collection of works for children, youths and adult audiences, impacting about 20,000 people a year.

Grafitarte

Three communities of Rio de Janeiro, located in Santo Cristo, Saúde and Providência, were under benefited through the Grafitarte program. The urban intervention cultural project aims to promote artistic interaction in spaces and/or objects in the communities through art workshops and drawing

(graphite) activities for young people from public schools who live in a social vulnerability situation.

In the communities, the students of the Vicente Licínio Cardoso (Saúde), Benjamin Constant (Santo Cristo) and Colégio Estadual Reverendo Hugh Clarence Tucker (Providência) municipal schools painted graffiti-style mural art on three walls under the orientation of renowned graffiti artists Rafa Monteiro, Piá, Smael and visiting artist Toz. Overall, 75 students between 12 and 18 years of age were directly impacted by the project.

"King and Queen of the Sea"

Sponsored by Lojas Americanas and Americanas.com, the cities of Salvador and Rio de Janeiro hosted the biggest beach sports festival in the country, featuring sand races, sprints, classic and challenge (swimming in the sea), beach biathlon (swimming in the sea and running in the sand) and a stand-up paddle race. The event brought together some 10,000 participants in the stages in Bahia and Rio de Janeiro, and with the latter city's competitions taking place on the Recreio and Copacabana beaches.

"Happily Married"

Lojas Americanas brought to Rio de Janeiro state the “Bem Casados”(Happily Married) feature film starring actors Camila Morgado and Alexandre Borges. The movie was screened at the Arena Carioca Jovelina Pérola Negra in the Rio de Janeiro neighborhood of Pavuna in Madureira Park, and the Crystal Palace plaza in the municipality of Petrópolis. More than 2,500 people attended the showings, with the right to popcorn and soft drinks to accompany the film.

“São Sebastião do Rio de Janeiro”

About 1,000 public school students watched the "São Sebastião do Rio de Janeiro" documentary film. The film is part of a social and educational action and recounts the history of the city. The students were from 18 schools in school 15 districts of Rio de Janeiro. Eight free sessions were organized in the Ita˙ Cinema Space and the students helped themselves to popcorn and soft drinks.

“5x Chico”

The documentary "“5x Chico - O Velho e Sua Gente” (5x Chico - The Old Man and His People) was screened for the populations of the cities where the filming had taken place. Approximately of 3,000 people in PiaÁabuÁu (AL), Piranhas (AL), Bom Jesus da Lapa (BA), Barra (BA), Pirapora (MG) and†Janu·ria (MG) watched the movie and got popcorn and soft drinks.

Toy donations

To assure a happier Christmas for hundreds of children, B2W Digital, in partnership with Lojas Americanas, promoted a campaign to collect toys for the Sonhar Acordado (Daydreaming) NGO Daydreaming, in Rio de Janeiro.

A Christmas tree was dressed with letters from more than 240 children with requests for Santa Claus, at the company's headquarters. With the engagement of associates, these children were able to see their dreams come true with donations of over 240 toys.

CUSTOMER SERVICE

To ensure quality service, B2W DIGITAL invests in product delivery that is aimed at implementing excellent, faster and more reliable responses. In 2016, the company acted to satisfy clients in their on-line purchases and resolve situations of post-sale dissatisfaction.

As a result of its initiatives, B2W DIGITAL was again the champion in the most important categories

of the Época Reclame Aqui 2016 (Complain Here Website) Award. Americanas.com won for the fourth consecutive year in the "E-commerce-Electronics" category; the Submarino Card won for the third time in a row in the "Banks and Financial Services – Retail/Cards" category; and Direct was first time winner in the "Transport and Logistics" category.

The company's Customer Service (SAC) hotline during the year was contacted 7,019,865 times, 54% by telephone and 46% by e-mail. The company did not register any cases of data breach or customer privacy violations in the on-line shopping process, strengthening its commitment to the confidentiality of the data and the total safety in the purchase process. [G4-PR5, G4-PR8]

Black Friday

B2W Digital innovated in 2016 and granted discounts of up to 80% in various categories throughout the Black Friday period, with the programming of Shoptime, the largest TV sales channel, broadcast live for more than 60 hours. Important for e-commerce, Black Friday was fundamental to the company as a way to further enhance its customer service processes. The entire SAC team met in advance of the event for the presentation of the key indicators and targets and the company was fully committed to ensuring that clients received excellent service when making their purchases, monitoring and responding to all contacts received.

WORKPLACE SAFETY EXCELLENCE

B2W Digital's concern about workplace safety for all associates and collaborators is constant. The Company monitors the use of personal protective equipment (Ppe) for the functions as required by law. The monitoring is supervised by the Accident Prevention Commission (CIPA).

All 94 participants of the CIPA are trained permanently through courses, such as Fire Prevention and Fighting, as determined the Ministry of Labor. The training is carried out by the Health, Safety and Occupational Medicine department (SESMT) and aimed at the workplace safety technicians and CIPA members.

Over the course of 2016, the Company organized 2016 mandatory safety and improvement training courses for all CIPA members, totaling over 300 hours of training for associates. [G4-LA-5]

ENVIRONMENTAL CAMPAIGNS

World Environment Day

On June 5, when it celebrates World Environment Day, the Company sent out environmental education messages to encourage positive attitudes among its associates and clients. All were invited to reflect on the need for water and energy savings by means of informational leaflets distributed in stores and in-company announcements. B2W also implemented other initiatives such as the support, beginning in 2013, for the the "Earth Hour" campaign promoted by the WWF NGO, underscoring electric energy savings programs.

World Health Day

A campaign for associates was run on April 7 about the importance of sports and preventive health care. In addition, all business units were decontaminated as a way to combat the dengue fever, chikungunya and zika mosquito.

Pink October

In 2016, the Americanas.com, Submarino and Shoptime brands continued to draw the attention of their clients to breast cancer prevention and care. All brands introduced actions on the subject on

their websites, calling attention to the campaign. Americanas.com and Submarino put up special hotsites to raise awareness regarding the date. Known worldwide as "Pink October," the event mobilized more than 15,000 people who accessed the hotsites.

World Water Day

In celebration of World Water Day, March 22 Submarino.com launched the "Aqua" hotsite featuring various water savings solutions and tips. For example, the client could learn about shower-heads that use about 65% less energy and water, or dishwasher options that draw 80% less water, compared to washing by hand.

Green Architecture

In 2016, B2W Digital's units continued implementing increasingly sustainable models. Similar to what occurs in their Distribution Centers, ever since the its Innovation and Technology Building (BIT) was inaugurated in 2013 the Company has promoted initiatives to reduce the environmental footprint of its facilities and logistics operations.

Designed to be a sustainable unit, the BIT was built with recycled materials and efficient of water and electricity systems. Associates have access to a bike rack, installed as a way to encourage physical activities in the workforce and conscious transportation.

It was the first Brazilian digital company to receive the Brazilian digital certification for Leadership in Energy and Environmental Design (LEED), Silver category, awarded by the United States Green Building Council (GBC), the highest worldwide recognition of sustainability in construction. The building of São Paulo, already certified by LEED and that received investments in 2014 to align the Group's sustainability strategy, features energy-saving light bulbs and CO2 sensors in areas that control air quality inside the facility.

Green architecture brings other benefits: air conditioning using R410A gas, efficient lighting, recycling on every floor, sign posting on reforested MDF boards, use of paints with low VOC (volatile organic compounds) content, replacing the cleaning process with common products for a non-polluting system, installation of automatic lighting shutdown sensors and real time energy consumption meters, as well as the construction of a water tank to capture rainwater for use in the building.

Conscious consumption of natural resources

B2W Digital constantly strives to reduce its consumption of natural resources and inputs. The Company considers awareness actions to be its allies, and encourages its associates to use electric power responsibly and to avoid losses in the use of hygiene materials, for example.

Energy consumption

B2W Digital continued initiatives during 2016 to avoid waste and reduce energy consumption. The actions covered the Company's administrative units and the Distribution Centers and involved the exchange of generators for more efficient models with less environmental impact, the modernization of light installations and substitution of fluorescent lamps for LED models.

Selective waste collection

B2W Digital uses and encourages selective waste collection. Through partnerships with non-governmental organizations, it disposes and recycles cardboard deriving from the selective waste collection carried out in its administrative units. At the Distribution Centers, 100% of the waste generated is properly disposed and its collection companies' have the appropriate

environmental in accordance with current legislation.

GHG emissions inventory

In compliance with its sustainability policy, B2W Digital annually calculates and monitors its greenhouse gas (GHG) emissions. Since 2010, the company seeks to reduce and minimize the environmental impacts generated by your operation using the methodology of the Brazilian GHG Protocol program, which aims to encourage companies to quantify and report their GHG inventories. The members of the Green Company, trained to use this international tool, are responsible for the work.

In 2016, there was a reduction of 30% in total emissions in comparison with the previous year. Acting in accordance with the guidelines from Lojas Americanas, its parent company, B2W Digital focused on optimizing its processes and improving its production chain, which led to reductions in all scopes, and in particular, Scope 3 (indirect emissions).

In Scope 1, which represents the Company's direct emissions, there was a 31% reduction in proportion to the growth of net revenue, which was 4%. This occurred because the emissions index fell 27%.

With respect to direct emissions (Scope 2), which are from energy consumption, B2W Digital achieved a 22% reduction as a result of continued efforts to improve efficiency and to conserve this resource in its operations. This also led to a 49% drop in electric energy purchases compared to the previous year. As seen in the following chart, the total sum of the GHG emissions generated by Scopes 1 and 2 was 33,119 tCO2e. [G4-EN15]

Indirect emissions - Scope 3

Regarding the indirect emissions of atmospheric gases due to business trips, the Company reported a reduction in relation to the previous year, on the order of 57%. [G4-EN17]

In addition to efforts to optimize corporate travel, the Company no longer uses plastic materials in the packaging used to deliver its products, reducing the environmental impact of the operation. This initiative has contributed to a 100% reduction in the Scope 3 emissions of this type of source, as detailed in the chart below. [G4 - EN19]

The big advance in the management of greenhouse emissions for the company was the contracting of outside verification for the validation of the data of its of CO2 emissions inventory in 2016. In this way, we believe we are taking a further step towards the sustainable development of B2W and data transparency.

27










Grael Project





Digital Education




Grafitarte






"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE





Black Friday









World Health Day


Pink October



World Water Day


Green Architecture







Energy consumption























Grael Project





Digital Education




Grafitarte


28





"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE





Black Friday









World Health Day


Pink October



World Water Day


Green Architecture







Energy consumption























Grael Project





Digital Education




Grafitarte






"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE



29



Black Friday









World Health Day


Pink October



World Water Day


Green Architecture







Energy consumption























Grael Project





Digital Education




Grafitarte






"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE





Black Friday









World Health Day


Pink October


30


World Water Day


Green Architecture







Energy consumption























Grael Project





Digital Education




Grafitarte






"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE





Black Friday









World Health Day


Pink October



World Water Day


Green Architecture







Energy consumption




31




















Grael Project





Digital Education




Grafitarte






"Happily Married"




“5x Chico”


Toy donations



CUSTOMER SERVICE





Black Friday









World Health Day


Pink October



World Water Day


Green Architecture







Energy consumption













32


STRATEGY AND INVESTMENT

33

ECONOMIC SCENARIO

In 2016, despite the macroeconomic challenges – inflation of 6.29%¹ and expectation of 3.5% drop in GDP² – e-commerce, according to e-Bit data, posted a turnover of R$ 44.4 billion, 7.4% higher growth than in 2015. The progress of the market is driven by the constant expansion of the internet user base and higher numbers of e-consumers.

B2W reiterates its confidence in and positive prospects regarding the future, both in relation to the development of the country and the internet growth opportunities, the greater penetration of e-commerce on total retail sector and other business opportunities. [G4-2]

¹ Accrued rate measured by the IPCA (Broad National Consumer Price Index)² GDP: Gross Domestic Product - expectation of the Central Bank of BrazilSources: Brazilian Institute of Geography and Statistics, the Central Bank of Brazil and eBit.

STRATEGY

During the three-year strategic plan period (2013-2015), the company invested heavily in the main pillars of the business to cope with the challenges of e-commerce in Latin America (Logistics, Distribution and Technology).

B2W Digital's investments prepared it for a cycle of even greater growth and value creation.

The five-year strategic plan (2016-2020) accelerates the process of transition of the e-commerce business model to the digital platform that connects people, business, products and services.

Having the client as the central focus of the strategy, the business model combines e-commerce (1P) and the Marketplace (3P), providing an increasingly wider selection of products and, as well, offers the brands with the best reputation on the internet and the best customer service.

To support the development of the B2W Digital platform, the Company relies on an innovative culture and the best team in Latin America, including more than 1,000 internet/technology engineers.

STRATEGIC INITIATIVES TO LEVERAGE THE DIGITAL PLATFORM

Sales and marketing

In the main event of the year, B2W Digital reached a new record of sales and dominance of internet traffic, with an increase of 6.0 percentage points (p.p.) in share of site visits when compared to 2015. The Americanas.com brand led the search for terms related to Black Friday on the main internet search engines, as well as having the most-downloaded e-commerce app from the App Store. This result came about from investments in technology, logistics and distribution platforms, coupled with strict commercial planning and excellent execution by the B2W Digital team.

Since the beginning of the investment plan, B2W Digital's market share expanded by 8.5 p.p., from 19.9% in the first half of 2012 to 28.4% in the fourth quarter of 2016.

This evolution is a consequence of operational excellence and management of commercial variables. Success in sales depends on a series of factors, such as the type of product desired by the client, adequate levels of inventory, conditions and forms of payment and delivery deadlines, among others. Below, we highlight some indicators for the fourth quarter of 2016:

Inventory management: B2W Digital operates with a stock-out index of less than 10% and registered evolution of 1.1 percentage point in this indicator in the fourth quarter of 2016, compared with the fourth quarter of 2015.

Increased diversity of products offered: +119% over the fourth quarter of 2015, driven by the marketplace.

Efficiency in delivery time: productivity gains in distribution centers (DCs) of 10% over the previous year, due to process enhancements and implementation of automated billing lines, coupled with continuous improvement of procedures that lead to faster client deliveries.

Submarino Prime expanded the service to two state capitals, Rio de Janeiro and Belo Horizonte, registering an increase of 60% in the amount of monthly subscriptions. The program celebrated the one-year mark as a pilot project and the buying behavior of subscribers shows positive evolution, reaching three times higher purchase frequency and greater profitability than from non-subscribers. Through Submarino Prime, clients can purchase more than 100,000 items with unlimited free shipping and fast delivery along with access to exclusive offers and dedicated customer service.

Evolution of the marketplace

The marketplace continues its rapid growth, having connected more than 2,200 new sellers in 2016, going from a base of 2,500 by the end of 2015 to more than 4,700 at the end of the 2016.

In the fourth quarter of 2016, the marketplace grew to 140.8% reaching a GMV of R$ 862 million, representing a 19.4% share of total GMV.

At the end of the 4Q16, the number of items offered by sellers increased by 150% in comparison with the end of the 4Q15, reaching more than 2.2 million items.

In line with B2W Digital's strategy to bring in retailers of various sizes and sectors, the B2W Marketplace signed partnerships with major stores like Electrolux (Home Appliances, Electronics), Som Livre (Entertainment), Rayban and Chilli Beans (Fashion), Technos (Watches and Presents), Estrela (Toys) and Petz (Petshop).

B2W inaugurated the Digital Marketplace University, born with the mission to empower sellers to

sell more, growing in a sustainable manner. B2W University Marketplace's team is focused on offering content that optimizes the performance of the sellers. Recently, a YouTube channel was launched where sellers have access to several videos to help them in their business decisions.

Logistics and operations

B2W Digital operates a total of 11 Distribution Centers throughout Brazil, totaling storage area exceeding 500,000 square meters.

At the end of 4Q16, B2W Digital operated 185 operational centers (transit points) strategically positioned to support the Company's distribution system, 30% more than in the 4Q15. B2W Digital's Operating Centers are load consolidation hubs and bases, facilitating the distribution of deliveries to clients.

In 2013 and 2014, B2W Digital acquired the two main transportation companies specialized in e-commerce in Brazil (Click-Rodo and Direct), resulting in the creation of the B2W Digital Distribution Unit.

Over the fourth quarter of 2016, the participation of the B2W Digital Distribution Unit reached 95% of the total number of deliveries made by the Company, compared to 59% in the same period in 2015.

In the fourth quarter of 2016, the revenues from external clients represented 26% of the total turnover of the B2W Distribution Unit (UND). During this period, the UND began making deliveries on behalf of 19 new clients, including important marketplace sellers Jequiti, Corujamix and Onofre Eletro.

In October, B2W Digital established an operating agreement with Vialog, the leading e-commerce delivery carrier in the southern region of the country. With the agreement, B2W Digital takes over the operation (through Direct) of the Vialog parcel delivery operation that includes the use of 40 hubs.

The vertical integration of distribution allowed the creation in 2014 of the Shipping Menu (Menu de Frete), a service that offers up to six delivery options throughout the country: Same Day, Next Day, Rapid, Economical, Scheduled Delivery and In-store Delivery.

In 4Q16, the number of Next Day option daily deliveries through the Shipping Menu increased nine times over the previous year, due to the expansion of coverage for new cities (Rio de Janeiro and Belo Horizonte) and increased weight limit for orders of up to 30 kg.

The fast delivery option offers a deadline 35% faster than the market practices. This option is available for 100% of the product mix and in all states of the country, boosting its share in deliveries from 6% in 2015, to 10% at the end of 2016.

The In-Store Delivery option is currently available in 269 stores, compared to 120 by the end of 2015. Its use, which has increased by four times over the same period, was facilitated by the implementation of an interactive map on the site, making it easier to locate Lojas Americanas' stores, making it more convenient for the client.

The Shipping Menu has become very successful with clients, who receive the products more quickly. On the other hand, it allows the company to boost its freight coverage index (collection of monies for deliveries divided by the shipping expense).

Mobile and technology

Over 2016, traffic through mobile devices accounted for more than half of the total, reaching 51.4%, growth of 12.7 percentage points compared to 2015.

In the fourth quarter of 2016, a new site presenting Americanas.com and Submarino brands was launched. The implementation reduced the site's loading time by 26% and boosted by 10% the conversion of access by mobile devices.

B2W Digital's four apps (Americanas.com, Submarino, Shoptime and Sou Barato) registered more than 5.7 million downloads over the course of the year, an increase of 105%.

Digital Services

Result of the acquisition of 12 companies (ten best-in-class technology companies and the two major transportation carriers that specialize in e-commerce in Brazil), B2W Services offers complete solutions in vertical technology and logistics to support the operations of the marketplace sellers and the on-line operations of major brands, including the [B] Seller (ERP webstore and services) and [BFF] B2W Fullfilment (storage, distribution and customer service).

Since the acquisition of the Sieve Group in July 2015, we expanded the level of cross-selling of B2W Services (cross-sell: using more than one service of B2W Digital's portfolio by the same partner) by more than 65%.

Over 2016, the solutions offered by B2W Services' companies were hired by several major brands, as we highlight below:

Sieve (Online Price Intelligence): Drugaria Pacheco, Cadence and Britânia[B] Seller (ERP Webstore and Services): Claro, Onofre Eletro and Icatu SegurosInfoprice (Offline Price Integration): Am/Pm and AtKearneyAdmatic (Digital Marketing): NET and Drogaria São PauloSkyhub (Marketplace Integration): Electrolux and Beleza na Web

B2W Digital launched the B2W Entrega delivery service, a partnership with Correios (the Brazilian Postal Service), which offers small and medium-sized businesses a new freight option, using the B2W's Digital technology platform. The service optimizes and standardizes the posting process by increasing levels of control and tracing of goods and reducing the delivery costs.

Financial services

In 4T16, the credit card operations of B2W Digital (Submarino Finance and Digital Finance) recorded a volume of R$ 924 million in approved transactions, representing an increase of 22% compared to the same period in 2015. In 2016, the volume registered in approved transactions totaled R$ 2.8 billion.

In the same period, the portfolio of receivables for these operations was R$ 1.1 billion, growth of 6% compared to 2015.

On December 31, 2016, 2.2 million cards were issued (1.57 million by Submarino Finance and 656,000 by Digital Finance, which includes the Americanas.com, Shoptime and Sou Barato brands).

The advantages for clients who have of B2W Digital's credit cards are: exclusive discounts, reward programs and special credit limit for purchases on the websites. On the other hand, the advantages to B2W Digital are: lower merchant discount rate (MDR) for the cards, greater client loyalty (frequency

of purchase 2.2 times higher) and increased average ticket (20% higher).

The Insurance and Services portfolio continues to post strong growth, mainly due to the 31.4% average ticket increase. This performance is the result of expansion of the mix in recent years to include new services and insurance, including Theft and Accidental Breakage Coverage and installation of televisions, home theaters, washing and drying machines, among others.

Client Service [G4-PR5]

B2W Digital's main brands are considered customer service benchmarks, with the highest levels of evaluation on the Reclame Aqui (Complain Here) watchdog website.

The average rating given by Reclame Aqui by clients of B2W Digital's brands is 7.2, while the brands of major competitors have achieved an average grade of 3.7.

Some 78% of the clients who posted complaints through Reclame Aqui have indicated they intend to once again purchase B2W Digital's brands, while only 38% of clients indicated they intend to buy from competitors' sites.

The average resolution index for B2W Digital is 89% on the Reclame Aqui website, while the average for competitors is of 58%.

These achievements are the result of the Company's commitment to optimize the quality of service and care it offers clients.

As a result of the excellence in customer service, B2W Digital won the main E-bi Prize categories for the fourth time in a row. Americanas.com won for the e-Bit Prize in the category "Most Esteemed Diamond Store" (popular vote) for the 4th consecutive time and Submarino won for the third time in the "Best Diamond Store" (technical criteria) category.

INVESTMENT

As part of its strategy, B2W Digital continues to invest in its existing digital platform to facilitate the growth and improvement of its operations. In 2016, R$ 459.9 million was invested, particularly in technology and innovation, focusing on the development of the marketplace and sales platforms for mobile devices.

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INVESTMENT


GRI CONTENT

38

ABOUT THIS REPORT

For the third consecutive year, B2W announces its consolidated Annual Sustainability Report based on the G4 guidelines of the Global Reporting Initiative (GRI) which has its focus on material issues, making the reporting more relevant and reliable. This content refers to the Company's financial performance and social and environmental themes for the period from January 1 to December 31, 2016. [G4-17; G4-28]

B2W Digital demonstrates the Company's commitment to present, with greater transparency, the importance of sustainability to its business by preparing a single document that communicates the initiatives in support of environmental protection, social activities and economic results to all stakeholders. B2W Digital understands that the continuity of its operations increasingly is linked to the good sustainable management practices that can generate even more value for shareholders. [G4-29; G4-30]

We are commemorating, for the third consecutive year, the Company's entry into the BM&FBOVESPA's Corporate Sustainability Index (ISE). This presence on the ISE is a source of pride for all of our associates, who remain dedicated for the purpose of improving our management indicators, observing their economic, social and environmental impacts.

The reports of B2W Digital's sustainability actions once again adopted the Essential Option of the GRI G4 version. The application of each indicator carefully observed the information gathered from the various corporate areas, extensive research and the collection of data from the quarterly earnings reports to the market, internal and external communication and information available on the website. [G4-18; G4-32]

The engagement of executive managers in the process of calculating the data was critical to the production of this content. The CEO approved the final document and the Executive Board was involved in the process. A survey of internal and external Company stakeholders was conducted to obtain the eight topics most material to B2W Digital's business. The result led to the creation of a materiality matrix, which is presented next. Contact can be made via e-mail: [email protected]. [G4-31]

APPLICATION LEVEL

To meet the GRI, G4 Essential requirements, we responded to the general G4-1 to G4-34, and G4-56, content, specified in the GRI Index and marked in brackets in the corresponding texts. Similarly, in relation to specific content for each material aspect we have correlated responses to our indicators, also detailed in the GRI table.

MATERIALITY AS A GUIDELINE

The Materiality Principle is one of the most important guidelines disseminated by the GRI and AccountAbility organizations, considered international corporate sustainability benchmarks. This tool assists in the identification of the most relevant issues related to the Company’s business. As this tool assists in the identification of the most relevant issues from the point of view of its main stakeholders, we decided to maintain our Materiality Matrix to guide this 3rd Consolidated Annual and Sustainability Report. [G4-18]

In 2016, we had the opportunity to widen the debate on the subject with our stakeholders, with a view to the consultation of experts in electronic commerce and sustainability. This was the second survey conducted by B2W Digital; the first was carried out in 2013. Based on the most recent study, we produced the map for the 2nd Materiality Matrix that establishes the set of indicators as of this report.

To progress the survey of the perceptions of society about our efforts on behalf of sustainability and the definition of strategic topics for the business, we conducted an online survey of clients, suppliers and associates. We also we carried out telephone interviews with specialists and live interviews with executives from the following institutions: Instituto Akatu, São Paulo Supermaket Association (Apas) and the Getúlio Vargas Foundation's Center for Retail Excellence (GVcev). [G4-21; G4-24; G4-25; G4-26].

Also analyzed were internal Company documents as well as sectorial national and international studies prepared by recognized organizations, such as AccountAbility, Apas, the Dom Cabral and the Akatu Institute. The GRI-G4 guidelines, combined with international standards of AccountAbility (AA1000) focused on stakeholder engagement, also were key elements to the process.

The following are the eight most important themes for B2W Digital's business, from the point of view of internal and external audiences that were consulted. The results of the identification and prioritization of issues considered to be strategic were analyzed and compared to generate the materiality matrix, also shown below in this chapter. [G4-19; G4-20; G4-21; G4-27].

The 2016 Matrix involved these themes: "Quality of Client Relations"; "Care Taken with Client Information"; "Compliance with Laws and Regulations"; "Innovative Solutions and Technologies"; "Culture of Ethical Behavior and Combat of Corruption"; "Product Quality Safety and Control"; "Associates Training and Development"; and "Associates Workplace Conditions, Health and Safety".

The result shows that while issues such as conscientious consumption and reverse logistics are relevant to retailers, companies in the industry and society are not yet ready to recognize them as very important. Three new themes stand out: "Innovative Solutions and Technologies"; "Product Quality Safety and Control" and "Culture of Ethical Behavior and Combat of Corruption", being the first two considered fundamental to the operation. For its part, the third theme demonstrates the current relevance for organizations of topics related to risk management and compliance.

ABOUT THIS REPORT

For the third consecutive year, B2W announces its consolidated Annual Sustainability Report based on the G4 guidelines of the Global Reporting Initiative (GRI) which has its focus on material issues, making the reporting more relevant and reliable. This content refers to the Company's financial performance and social and environmental themes for the period from January 1 to December 31, 2016. [G4-17; G4-28]

B2W Digital demonstrates the Company's commitment to present, with greater transparency, the importance of sustainability to its business by preparing a single document that communicates the initiatives in support of environmental protection, social activities and economic results to all stakeholders. B2W Digital understands that the continuity of its operations increasingly is linked to the good sustainable management practices that can generate even more value for shareholders. [G4-29; G4-30]

We are commemorating, for the third consecutive year, the Company's entry into the BM&FBOVESPA's Corporate Sustainability Index (ISE). This presence on the ISE is a source of pride for all of our associates, who remain dedicated for the purpose of improving our management indicators, observing their economic, social and environmental impacts.

The reports of B2W Digital's sustainability actions once again adopted the Essential Option of the GRI G4 version. The application of each indicator carefully observed the information gathered from the various corporate areas, extensive research and the collection of data from the quarterly earnings reports to the market, internal and external communication and information available on the website. [G4-18; G4-32]

The engagement of executive managers in the process of calculating the data was critical to the production of this content. The CEO approved the final document and the Executive Board was involved in the process. A survey of internal and external Company stakeholders was conducted to obtain the eight topics most material to B2W Digital's business. The result led to the creation of a materiality matrix, which is presented next. Contact can be made via e-mail: [email protected]. [G4-31]

39

APPLICATION LEVEL

To meet the GRI, G4 Essential requirements, we responded to the general G4-1 to G4-34, and G4-56, content, specified in the GRI Index and marked in brackets in the corresponding texts. Similarly, in relation to specific content for each material aspect we have correlated responses to our indicators, also detailed in the GRI table.

MATERIALITY AS A GUIDELINE

The Materiality Principle is one of the most important guidelines disseminated by the GRI and AccountAbility organizations, considered international corporate sustainability benchmarks. This tool assists in the identification of the most relevant issues related to the Company’s business. As this tool assists in the identification of the most relevant issues from the point of view of its main stakeholders, we decided to maintain our Materiality Matrix to guide this 3rd Consolidated Annual and Sustainability Report. [G4-18]

In 2016, we had the opportunity to widen the debate on the subject with our stakeholders, with a view to the consultation of experts in electronic commerce and sustainability. This was the second survey conducted by B2W Digital; the first was carried out in 2013. Based on the most recent study, we produced the map for the 2nd Materiality Matrix that establishes the set of indicators as of this report.

To progress the survey of the perceptions of society about our efforts on behalf of sustainability and the definition of strategic topics for the business, we conducted an online survey of clients, suppliers and associates. We also we carried out telephone interviews with specialists and live interviews with executives from the following institutions: Instituto Akatu, São Paulo Supermaket Association (Apas) and the Getúlio Vargas Foundation's Center for Retail Excellence (GVcev). [G4-21; G4-24; G4-25; G4-26].

Also analyzed were internal Company documents as well as sectorial national and international studies prepared by recognized organizations, such as AccountAbility, Apas, the Dom Cabral and the Akatu Institute. The GRI-G4 guidelines, combined with international standards of AccountAbility (AA1000) focused on stakeholder engagement, also were key elements to the process.

The following are the eight most important themes for B2W Digital's business, from the point of view of internal and external audiences that were consulted. The results of the identification and prioritization of issues considered to be strategic were analyzed and compared to generate the materiality matrix, also shown below in this chapter. [G4-19; G4-20; G4-21; G4-27].

The 2016 Matrix involved these themes: "Quality of Client Relations"; "Care Taken with Client Information"; "Compliance with Laws and Regulations"; "Innovative Solutions and Technologies"; "Culture of Ethical Behavior and Combat of Corruption"; "Product Quality Safety and Control"; "Associates Training and Development"; and "Associates Workplace Conditions, Health and Safety".

The result shows that while issues such as conscientious consumption and reverse logistics are relevant to retailers, companies in the industry and society are not yet ready to recognize them as very important. Three new themes stand out: "Innovative Solutions and Technologies"; "Product Quality Safety and Control" and "Culture of Ethical Behavior and Combat of Corruption", being the first two considered fundamental to the operation. For its part, the third theme demonstrates the current relevance for organizations of topics related to risk management and compliance.

440

41

42

43

44

45





Adjusted EBITDA




DEFINITIONS

Adjusted EBITDA










Market share




Market share


Net Debt (Cash)


New Customers


25

Working Capital


Documents

SUSTAINABILITY AND ANNUAL REPORT 2016 - B2W · com won the e-Bit Award in the "Favorite Diamond Store" category (popular vote) and Submarino won for the third time in the "Best Diamond