2. Important Disclaimer
The information contained here may include forward-looking information and reflects the executive office’s current
perception and prospects for the macroeconomic environment, the industry situation, the Company's performance and
financial results. Any statements, expectations, capacities, plans and projections contained here which do not describe
historical facts, such as information about the dividend payment statement, the future course of operations, the
introduction of relevant financial strategies, the investment program and the factors or trends affecting the financial
condition, liquidity or the operating results are considered forward-looking information as defined by the “U.S. Securities
Litigation Reform Act” of 1995 and involve a number of risks and uncertainties. These results are not guaranteed to
materialize. These statements are based on several factors and expectations, including the economic and market
conditions, level of competition in the industry and operating factors. Any changes in these expectations and factors may
lead to real results materially different from the current expectations.
The consolidated financial information of Arezzo Indústria e Comércio S/A – Arezzo&Co presented here complies with the
International Financial Reporting Standards – IFRS, issued by the International Accounting Standards Board –
IASB, based on audited financial information. The non-financial information, as well as other operating information, was
not audited by the independent auditors.
2
3. 2Q11 Highlights
Net
Net revenues increased by 21.5% in 2Q11, amounting R$152.2 million
Revenues
Gross
0.4 p.p. in the gross margin of the quarter , reaching 43.2% growth
Margin
EBITDA EBITDA amounted to R$ 28.3 million, growing 22.9% over 2Q10 , with margin of 18.6%
Net Income Net income amounted to R$ 24.0 million with margin of 15.8%, up 43.3%
Distribution Arezzo&Co won two awards for excellence in franchise management: Franchising Excellence
Channel - Seal of ABF1 for the 8th consecutive time and Best Franchise Award in footwear, clothing, and
Franchises accessories sector from PEGN2 for the 7th time since 2004
(1) Brazilian Association of Franchises
(2) Pequenas Empresas & Grandes Negócios magazine
3
4. Company Growth
Gross Revenues – (R$ million)
24.4% 368.3
19.7
23.7% 296.0
23.1 -14.4%
193.9
156.8 9.9 27.7%
-15.9% 348.6
11.8
272.9
26.9% 184.0
145.0
2Q10 2Q11 1H10 1H11
Domestic Market External Market
The Company’s gross revenues amounted to R$193.9 million in second quarter 2011, a
23.7% year-over-year rise mainly driven by domestic market. In first half 2011 gross revenues
rose by 24.4% amounting to R$ 368.3 million
4
5. Gross Revenues Breakdown by Channel
Gross Revenues by channel – Domestic Market (R$ million)
27.7% 348.6
2.8
272.9 58.7
26.9%
1,7
43.3
184.0 35.6% 107.8
145.0 1.0 83.6
31.8 28.9%
0.8 33.2%
23.9
60.4
21.2%
49.8 24.3% 179.4
144.4
28.8% 90.8
70.5
2Q10 2Q11 1H10 1H11
1
Franchise Multi-brand Own Stores Other - DM²
SSS2 Owned Stores 29.0% 19.2% 25.8% 15.6%
Growth Franchise 32.4% 24.2% 42.4% 19.1%
Strong growth for all channels in both second quarter and first half of the year
(1) Other: Growth of 24.3% in 2Q11 and of 62.4% in 1H11.
(2) SSS Owned Stores (Sell Out); SSS Franchise (Sell In).
5
6. Gross Revenues Breakdown by Brand
Gross Revenues by brand – Domestic Market (R$ million)
27.7% 348.6
11.8
272.9
96.5
26.9% 28.4%
3.7
184.0 75.2
145.0 7.7
1.6 12.5% 50.4 23.8%
44.8 240.3
194.1
27.6% 125.9
98.6
2Q10 2Q11 1H10 1H11
Arezzo Schutz Other¹
Strong growth for the main brands in first half of the year
(1) Other: Alexandre Birman’s and Anacapri’s Domestic Market. Gross Revenue growth of 392.7% in 2Q11 and of 218.5% in 1H11.
6
7. Distribution Channel Expansion
Owned Stores and Franchises Expansion
13.6% 18.0
18.7% 15.8 Franchises 268
8.7% Owned Stores 11
13.3 300 Outlets 3
+27
12.2 273 Multi Brands¹ 775
+35 31
+17
238 25
221
15 Franchises 1
7
Owned Stores 10
Multimarcas¹ 1,124
269
248
214 223 Owned Stores 1
Multi Brands¹ 18
Owned Stores 6
Multi Brands¹ 499
2Q08 2Q09 2Q10 2Q11
Owned Stores Franchise Area
We ended 2Q11 with 300 stores and sales area expansion of 13.6% year-over-year
Note: area given in thousand m²
(1) Domestic Market 7
8. Gross Profit
Gross Profit (R$ million) and Gross Margin (%)
42.8% 43.2% 42.2% 42.0%
122.2
21.7%
100.4
22.6% 65.7
53.6
2Q10 2Q11 1H10 1H11
Gross Profit Gross Margin
In 2Q11, gross profit rose 22.6% with expansion of 0.4 percentage points in gross
margin, reflecting the increase of Owned Stores in sales channel mix
8
9. EBITDA
EBITDA (R$ million) and EBITDA Margin (%)
18.4% 18.6%
17.0% 16.9%
21.4% 49.0
40.4
22.9% 28.3
23.0
2Q10 2Q11 1H10 1H11
EBITDA EBITDA Margin
Strong growth in 2Q11 EBITDA, with expansion of 0.2 percentage points in EBITDA margin
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10. Net Income and Net Margin
Net Income (R$ million) and Net Margin (%)
15.8%
13.4% 13.3%
11.4%
38.8
42.8%
27.1
24.0
43.3%
16.8
2Q10 2Q11 1H10 1H11
Net Income Net Margin
Company’s Net Income rose by 43.3% in 2Q11, resulting in 2.4 percentage points of margin
expansion
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11. Cash Generation
Operating Cash Generation (R$ thousand)
Growth or Growth or
Cash flows from operating activities (R$'000) 2Q10 2Q11 1H10 1H11
Spread (%) Spread (%)
Income before income taxes 22,200 30,345 8,145 37,907 51,666 13,759
Depreciation and amortization 559 961 402 1,167 1,840 673
Other (45) (4,395) (4,350) 49 (6,263) (6,312)
Decrease (increase) in current assets / liabilities 11,848 22,814 10,966 (6,579) 10,747 17,326
Trade accounts receivable 41,805 42,262 457 21,742 23,896 2,154
Inventories (7,920) (3,114) 4,806 (17,190) (18,837) (1,647)
Suppliers (20,170) (13,629) 6,541 (2,065) 8,528 10,593
Change in other current assets and liabilities (1,867) (2,705) (838) (9,066) (2,840) 6,226
Change in other non current assets and liabilities (718) (907) (189) 1,880 (1,171) (3,051)
Tax and contributions (1,224) (5,974) (4,750) (2,080) (8,340) (6,260)
Net cash generated by operating activities 32,620 42,844 10,224 32,344 48,479 16,135
A significant portion of Company’s cash flow was generated by the decrease in accounts
receivable, since all balances from summer collection of the previous year and a significant
portion of the balances from winter collection are received during second quarter
11
12. Capital Expenditure (CAPEX) and
Indebtedness
CAPEX (R$ million) Indebtedness (R$ million)
12.3%
Cash Position and Indebtness 2Q10 1Q11 2Q11
7.3
6.5 Cash and cash equivalents 48,957 187,293 199,339
0.5
-10.0% Total Debt 42,677 33,586 32,276
1.0
47.1% 2.5
Short Term Debt 21,998 12,813 12,547
4.0 3.6 1.7 As % of Total Debt 51.5% 38.1% 38.9%
0.9 0.2 13.2% Long Term Debt 20,679 20,773 19,729
20.0%
1.0 1.2 As % of Total Debt 48.5% 61.9% 61.1%
3.8 4.3
0.0% Net Debt (6,280) (153,707) (167,063)
2.1 2.1
EBITDA LTM 79,178 98,930 104,200
2Q10 2Q11 1H10 1H11 Net Debt / EBITDA LTM -0.08x -1.55x -1.60x
Stores Corporate Others¹
In 1H11, Arezzo&Co invested R$ 7.3 million, of which R$ 4.3 million in stores. The
indebtedness policy remained conservative
(1) Other: reduction of 77.8% in 2Q11 compared to 2Q10, and of 50.0% in 1H11 compared to 1H10.
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13. Contacts
CFO and IR Officer
Thiago Borges
IR Manager
Daniel Maia
Phone: +55 11 2132-4300
ri@arezzoco.com.br
www.arezzoco.com.br
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