2. DISCLAIMER
This presentation contains forward-looking statements regarding the
prospects of the business, estimates for operating and financial results, and
those regarding Cia. Hering's growth prospects. These are merely projections
and, as such, are based exclusively on the expectations of Cia. Hering
management concerning the future of the business and its continued access
to capital to fund the Company’s business Plan. Such forward-looking
statements depend, substantially, on changes in market conditions,
government regulations, competitive pressures, the performance of the
Brazilian economy and the industry, among other factors and risks disclosed
in Cia. Hering’s filed disclosure documents and are, therefore, subject to
change without prior notice.
5. 5
2Q13 HERING CAMPAINGS
Valentine´s DayMother´s Day
Positive SSS performance on the 1st
half of 2Q13
Good acceptance of the collection
SSS deceleration after Mother´s Day
Impact of uncertain social-economic scenario
Lower consumer flow
8. 8
GROSS PROFIT AND EBITDA
0.8 p.p. expansion in gross margin due to lower promotional activity in relation to 2Q12
compensated by higher profit sharing provisioning, not translating into EBITDA margin
Gross Profit and Gross Margin (R$ million) EBITDA and EBITDA Margin (R$ million )
173.1
200.6
15.9%
45.2%
46.0%
46.3% 47.0%
2Q12 2Q13
Gross Profit Gross Margin Cash Gross Margin
110.0 116.7
28.7%
26.8%
6.0%
2Q12 2Q13
EBITDA EBITDA Margin
9. 9
NET INCOME AND CAPEX
+4.3% growth in Net Income, as a result of EBITDA growth combined with higher
Income & Social Contribution Taxes. CapEx totalled R$ 16.6 million in 2Q13, with
highlight to IT infrastructure (R$ 5.7 million) due to the process of extending the SAP.
Net Income (R$ million) Capex (R$ million)
85.2 88.8
22.2%
20.4%
4.3%
2Q12 2Q13
Net Income Net Margin
6.2
8.5
4.4
5.7
0.5
0.2
1.2
2.2
12.3
16.6
35.0%
2Q12 2Q13
Industry IT Others Stores
10. 10
CASH FLOW
Reduction of R$ 7.3 million in cash flow generation in comparison to 2Q12, due to (i)
higher incidence of Income and Social Contribution taxes, (ii) increase in CapEx and
(iii) inventory building.
Cash Flow - Consolidated (R$ thousand) 2Q12 2Q13 Chg.
EBITDA 110.008 116.656 6.648
Non cash items 953 1.104 151
Current Income tax and Social Contribution (25.329) (32.386) (7.057)
Working Capital Investment 17.484 14.689 (2.795)
Decrease (Increase) in trade accounts receivable (38.824) (28.987) 9.837
Decrease (increase) in inventories 34.086 18.802 (15.284)
Increase (decrease) in accounts payable to suppliers (964) (2.565) (1.601)
Increase (decrease) in taxes payable 18.782 7.219 (11.563)
Others 4.404 20.220 15.816
CapEx (12.348) (16.643) (4.295)
Free Cash Flow 90.768 83.420 (7.348)
12. 12
OUTLOOK
2S13 initiates with caution due to uncertainties in the social-economic scenario.
Evolution in the organizational structure of the Company with higher focus on Brand
Management.
Hering and Hering Kids as the main growth avenue
Guidance of 77 new Hering Stores e 30 Hering Kids in the year
Hering Store project evolution with 1st pilot store under renovation in the Ibirapuera Shopping Mall
Gain of share in the multi-brand retail channel through qualification strategy
High growth potential in the Hering Kids network
Continuation of campaings and improvements in shopping experience to further exploring the
online retail.
Room for gross margin recovery, however PPR normalization allied to a scenario of high volatiliy
in exchange rates, should not reflect in operational margin expansion in the year
13. INVESTOR RELATIONS TEAM
Fabio Hering – CEO
Frederico Oldani – CFO and IRO
Patrícia Salem – IR Manager
Daniel Popovich – IR Analyst
Tel. +55 (11) 3371-4867
E-mail: ri@hering.com.br
Website: www.ciahering.com.br/ri