2. Magazine Luiza At-a-Glance
More than 50 years of growing the Brazilian retail market
Leadership in the Brazilian market
Market Leadership
One of Brazil’s largest durable goods retail chains with 613* stores nation-wide
− Gross revenues of R$5.7 billion and EBITDA of R$320 million in 2010
− 21 thousand employees serving 23 million customers
Strong corporate culture and focus on people and innovation
Unique multi-channel model under a single brand
Physical stores, virtual stores, e-commerce website and telephone sales
Focus on Brazil’s fastest growing socioeconomic segment
The “C” (emerging middle class) represents 53% of Brazil’s population or more than 102 million people
History of successful organic growth and acquisitions
Opened more than 150 stores in the last 5 years
8 acquisitions in the last 8 years and recent entry in the high growth northeast market (Lojas Maia – 136 stores)
July 2011, conclusion of the acquisition of 121 stores of Baú da Felicidade
Pioneer in Financial Services for retail
First retail chain to establish JVs with financial institutions focusing on consumer credit
Financial discipline focused on results
* Not considering Baú da Felicidade stores.
2
3. Magazine Luiza At-a-Glance (cont.)
Broad geographic footprint with a balanced mix of sales
Geographic footprint covering Brazil’s main regions (75% of GDP) Balanced sales mix (1)
(% of stores by region) (% of sales, 2010)
Toys,
613* stores furnitures,
home Technology
appliances and 23%
Cabedelo other
24%
Simões Filho
Contagem
Ribeirão Preto
Ibiporã Loureira
Navegantes
Caxias South Northeast
25% 23%
Sound & image
23%
Central-
west Household
States with stores (604) appliances
2%
Distribution centers (8) 30%
Southeast
50%
Note: 1 Does not include Lojas Maia
* Not considering Baú da Felicidade stores.
3
4. Proven History of Strong Organic Growth and Successful
Acquisitions
Continuous growth throughout adverse economic scenarios
2011
121** stores
604*
455
444 Northeast:
Madol, Killar +136 stores
391
351 346
253 5.3
São Paulo (Capital):
Lojas Líder +46 stores
174
Rede
3.8
Santa Catarina:
Wanel 127 +100 stores 3.2
111
96 Rio Grande do Sul: 2.6
+51 stores 2.2
Campinas: 1.9
Upstate São Paulo: +20 stores 1.4
+5 stores
0.9
0.6 0.7
0.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Forex during Lehman Brothers
September 11 Start of sub-prime bankruptcy Stress in EU
election of Lula
Gross Revenues from Retail Operations (R$ billion) Total Stores
* Not including 9 stores opened in 1H11. ** Number of acquired stores.
4
5. Our Strategic Positioning
Additional stores with the acquisition of Lojas do Baú da Felicidade
Strategic retail locations covering a large part of the states of São Paulo and Paraná, situated so as to
attract the highest possible number of potential customers.
Total of 121 stores
São Paulo Paraná
40 stores 80 stores
Total sales Area ('ooo m²) 19.7 Total sales Area ('ooo m²) 26.1
Gross Revenue (R$ million) 200.6 Gross Revenue (R$ million) 209.5
Gross Revenue per Sales Area (R$ '000/m²) 10.2 Gross Revenue per Sales Area (R$ '000/m²) 8.0
Number of Stores 40 Number of Stores 80
Average Sales Area (m²/store) 493.1 Average Sales Area (m²/store) 325.8
* Revenue of R$4.5 million from the Minas Gerais store, giving total gross revenue of R$415 million in 2010.
•The above figures for 2010 are unaudited.
* Out of 121 stores, 1 store is located in Minas Gerais.
5
7. Unique Business Model
Differentiated positioning to capitalize on industry growth
Strong corporate culture, focused on valuing people
1
2 Integrated sales platform with multiple sales channels
Large customer base, with relationship management
3 targeting customer loyalty and retention
Broad, competitive portfolio of services and financial
4 products
7
8. Strong Corporate Culture: A Competitive Advantage
Assisted sales model supported by enthusiastic teams
Brazil’s only retail company among the best places to work Service and credit highly influential on purchasing decisions
Motivated and enthusiastic teams are
essential to enable a good purchase, thus
a good sale. Offered
Other
Brands
7.1%
Punctuality 3.2%
of Delivery
4.5%
Price
Product Variety
39.8%
8.4%
Service
/ Credit
37.0%
Source: ML Survey – 802 interviewees – Data Popular Feb. 2008
8
9. Strong Corporate Culture, Focused on Valuing People
Communication Transparency Empowerment Compensation
Values and beliefs, training, Availability of management Sales staff and managers All levels: variable
sales promotions, information have flexibility to negotiate compenstaion based on
motivation and recognition ̶ Monthly store P&L sales conditions within a targets and service quality
through official channels available on the range
̶ Luiza Radio1 intranet Sales staff: commissions
̶ Luiza TV2 Local marketing budgets based on gross profit,
̶ Town Halls2 Constant monitoring by financial margin and sales
̶ Website / Intranet1 employees (morning
meeting) Incentives for employee
participation in the IPO
Hotline to the President
Non-financial recognition.
Ex: Outdoor
1. Daily event
2. Weekly events
9
10. Strong Corporate Culture: Best Places to Work
14 years among the Best Places to Work Among 100 largest Companies in Brazil
Best Company for Women to Work in 2007
97% adhesion with the change of office to
Best Company for Executives to Work in 2008 São Paulo
Best Company to Work for in 2003
Best Company to “Speak” to the employees in 2010
Best Company to “Listen” to the employees in 2011
Brazil’s only retail company among the best places to work
10
11. Strong Corporate Culture: A Competitive Advantage
Magazine Luiza’s Services
Magazine Luiza
was elected 5th
best service in
an Exame/IBRC
study
(May/2011)
Source: Exame Magazine, May 4, 2011.
11
12. Exceptional Relationship Management Drives Customer Loyalty
Industry-leading marketing strategies
New market entry with a significant presence Fantastic Sale (Black Friday)
– 50 stores opened in one day in São Paulo − Largest sale in Brazil
– Acquisition of Lojas Arno: − Lines form 10 days before the event
51 stores in Rio Grande
− 10 days of revenues in one
do Sul
day
– Acquistion of Lojas Maia: Capacity to Enter
136 stores in the Northeast New Markets
High Impact
Campaigns
23 million
clients
Gold Clients More than 10 years of
Loyalty purchase and sales data
− Only program in the sector Programs
CRM Tools Statistical models of
− 949 thousand clients purchasing behavior and
− Gold clients spend 55% more price
CRM available at the stores
− Gold Day: stores opened exclusively for
(Boomerang)
program clients
− Telemarketing during downtime by
sales staff (4.7mm calls)
85% of the credit cards issued by Luizacred are active
12
13. Multi-channel: Many Buying Possibilities
To be where, when and how customers want us
Multi-channel strategy meets customer demands
Free-standing stores or in Small or mid-sized cities
malls Direct delivery
Physical showroom and in- No physical showroom or
store stock stock
Size: 700-1.000 m2 Size: 130 m2
Sales per m2 is double
conventional store
536 stores in 16 states 67 stores in 4 states
Same product mix as the 27.000 total SKU´s
Internet More than 10 million unique
Dedicates sales team visitors
75% growth in 2010
Trained Teams 70.5 million page views
13
15. Experienced Executives with Strong Corporate Governance
Industry expertise with proven growth and integration capacity
Executives with ample experience in the Brazilian retail industry Established corporate governance
Years with the Experience
Name / Post Controlling shareholders with more than 50 years in the industry
Company (years)
Board of Directors with independent members since 2005
Luiza Helena Trajano
40 40
President Audit Committee led by an independent member
Financial statements audited for the past 10 years by a “Big Four”
Marcelo Silva firm
2 33
CEO
Senior Management: retention plan (stock options)
Roberto Bellissimo
10 10
CFO
Fabrício Garcia
14 14
Chief Commercial Officer Shareholding by CIPEF - private equity fund of the Capital Group
Frederico Trajano
11 13 CIPEF
Chief Sales and Marketing Officer
− Five private equity funds with more than US$2.5 billion
Isabel Bonfim invested since 1997
29 29
Chief Management and Control
Officer A successful history of investments in Brazil and in other emerging
economies
Marcelo Barp (1) Abril S.A., Arcos Dorados, Constellation Overseas and
3 8 −
Luizacred
Grupo IBMEC
Luis Felipe (1)
5 20
Luizaseg
Note 1. Years of experience in the financial services industry
15
16. Corporate Structure
100% 40.55% 50% 100%
1 2
9.45%
Conclusion of the acquisition in July 2011.
(1) JV with Itaú Unibanco
(2) JV with Cardif
16
26. ConsolidatedOperating Expenses as % of Net Revenue
Selling: dilution explained by the increase in same stores sales and internet
G&A: increase explained by São Paulo’s office and Lojas Maia integration
-90bps -160bps
20,5% 21,4%
19,6% 19,8%
+70bps +80bps
4,4% 5,1% 4,3% 5,1%
2Q10 2Q11 1H10 1H11
Selling G&A
26
34. Luizacred – Portfolio (R$ million)
PORTFOLIO (R$ m illion) Jun/11 Mar/11 Dec/10 Jun/10
Total Portfolio 2,668.3 100.0% 2,424.2 100.0% 2,359.7 100.0% 1,873.5 100.0%
000 to 014 days A 2,020.5 75.7% 1,771.8 73.1% 1,825.4 77.4% 1,392.5 74.3%
015 to 030 days B 119.6 4.5% 128.1 5.3% 130.8 5.5% 102.1 5.4%
031 to 060 days C 75.4 2.8% 76.6 3.2% 87.2 3.7% 59.4 3.2%
061 to 090 days D 65.3 2.4% 72.4 3.0% 44.5 1.9% 51.8 2.8%
091 to 120 days E 55.3 2.1% 83.2 3.4% 36.9 1.6% 41.6 2.2%
121 to 150 days F 51.8 1.9% 63.3 2.6% 31.8 1.3% 38.9 2.1%
151 to 180 days G 64.6 2.4% 44.8 1.8% 29.3 1.2% 37.6 2.0%
180 to 360 days H 215.9 8.1% 184.0 7.6% 173.7 7.4% 149.7 8.0%
Overdue up to 90 da ys 260.2 9.8% 277.1 11.4% 262.6 11.1% 213.2 11.4%
Overdue a bove 90 da ys 387.6 14.5% 375.3 15.5% 271.7 11.5% 267.8 14.3%
Tota l Overdue 647.8 24.3% 652.4 26.9% 534.3 22.6% 481.0 25.7%
-140bps
Reduced Delinquency ratios
34
35. Investor Relations
ri@magazineluiza.com.br
www.magazineluiza.com.br/ri
Legal Disclaimer
Any statement made in this presentation referring to the Company’s business outlook, projections and financial and operating goals
represent beliefs, expectations about the future of the business, as well as assumptions of Magazine Luiza’s management and are
solely based on information currently available to the Company. Future considerations are not a guarantee of performance. These
involve risks, uncertainties and assumptions since they refer to forward-looking events and, therefore depend on circumstances that
may not occur. These forward-looking statements depend substantially on the approvals and other necessary procedures for the
projects, market conditions, and performance of the Brazilian economy, the sector and international markets and hence are subject to
change without prior notice. Thus, it is important to understand that such changes in conditions, as well as other operating factors
may affect the Company’s future results and lead to outcomes that may be materially different from those expressed in such future
considerations. This presentation also includes accounting data and non-accounting data such as operating, pro forma financial data
and projections based on the Management’s expectations. Non-accounting data has not been reviewed by the Company’s
independent auditors.
35
