October, 2012 BTG Pactual LatAm CEO Conference New York 2012
October 2012
BTG Pactual LatAm CEO Conference New York 2012
2
Overview of the Brazilian Market
Magazine Luiza
3
Brazilian GDP has grown 11 annual rate over the last 9 years
Source LCA IBGE 2009 Estimativas 2012 LCA
44474143
3770
323930322661
236921471941
GDP (R$ Billion)
11
57
3240
6152
-03
75
2715
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
1700
Real Growth()Nominal GDP (R$)
4
and the country has reached the full employment for the 1st time recently
working-age population
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGENew formal jobs creation
Number of jobs created (MM)
09
1918 19
25
18 18
29
19
10
5
6
7
8
9
10
11
12
13
14
0
05
1
15
2
25
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
Unemployment rate
5
389 390 379407
451477
512542
581603
638
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200240 260
300350
380415
465510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Growth 211
Growth 64
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
2
Overview of the Brazilian Market
Magazine Luiza
3
Brazilian GDP has grown 11 annual rate over the last 9 years
Source LCA IBGE 2009 Estimativas 2012 LCA
44474143
3770
323930322661
236921471941
GDP (R$ Billion)
11
57
3240
6152
-03
75
2715
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
1700
Real Growth()Nominal GDP (R$)
4
and the country has reached the full employment for the 1st time recently
working-age population
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGENew formal jobs creation
Number of jobs created (MM)
09
1918 19
25
18 18
29
19
10
5
6
7
8
9
10
11
12
13
14
0
05
1
15
2
25
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
Unemployment rate
5
389 390 379407
451477
512542
581603
638
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200240 260
300350
380415
465510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Growth 211
Growth 64
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
3
Brazilian GDP has grown 11 annual rate over the last 9 years
Source LCA IBGE 2009 Estimativas 2012 LCA
44474143
3770
323930322661
236921471941
GDP (R$ Billion)
11
57
3240
6152
-03
75
2715
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
1700
Real Growth()Nominal GDP (R$)
4
and the country has reached the full employment for the 1st time recently
working-age population
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGENew formal jobs creation
Number of jobs created (MM)
09
1918 19
25
18 18
29
19
10
5
6
7
8
9
10
11
12
13
14
0
05
1
15
2
25
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
Unemployment rate
5
389 390 379407
451477
512542
581603
638
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200240 260
300350
380415
465510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Growth 211
Growth 64
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
4
and the country has reached the full employment for the 1st time recently
working-age population
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGENew formal jobs creation
Number of jobs created (MM)
09
1918 19
25
18 18
29
19
10
5
6
7
8
9
10
11
12
13
14
0
05
1
15
2
25
3
2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
Unemployment rate
5
389 390 379407
451477
512542
581603
638
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200240 260
300350
380415
465510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Growth 211
Growth 64
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
5
389 390 379407
451477
512542
581603
638
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E
Minimum Wage (R$)
Middle Class Total Wage (R$ Bn)
200240 260
300350
380415
465510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The real income growth makes us a powerful consumer nation
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Growth 211
Growth 64
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
6
driven by the mid class which already stood for 493 of the total residences in 2011
A Class
B Class
C Class
D Class
E Class
45 41
175 307
309
338
132
493
151
08
1998 2011
Social classes composition - of total residences
Source IPC TARGET
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
7
Consumer credit has been considered the turbine of growth
1) Total credit operations over GDP2) Data referred to June12
Credit Operations Balance (R$ Bn)
GDPTotal Operations
28 31 35 40 44 45 51 sup2
1
384 418499
607733
936
1227
1414
1706
20302168
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H2012
26 25 26 49
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
8
0
5
10
15
20
25
30
35
40
45
jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
with stable compromised monthly income with debt services despite the constant increase of family indebtedness
1) Debt burden in of disposable incomeSource BACEN
Debt Burdensup1
Household Indebtedness
155176 177 180 186 197 197
222 219184
220
249
296322
358
395
425 434
mai12
Debt Burden
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
9
The drop of the income rate has begun to effect the credit takers maintaining the confidence of Brazilian consumers
Source BCB Fecomeacutercio
0
5
10
15
20
25
90
110
130
150
170
190
jan02 jan03 jan04 jan05 jan06 jan07 jan08 jan09 jan10 jan11 jan12
0102030405060708090
100
Average Debt Interests x SELIC ( per year)
Indebtedness average term (months)
Brazilianrsquos Consumer Confidence
Goods acquisitions except vehicles TotalNatural Person Interest SELIC
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
10
In order to reach a satisfactory housing shortage level it is expected that 235 million new houses be built from 2010 to 2022
4 7 11 12 1833
5670
6 9 14 21 2347
76 80
2004 2005 2006 2007 2008 2009 2010 2011
Disbursed Contracted
CEFrsquos Housing Credit (R$ Bn)
Housing Projection (R$ MM) and Housing Shortage ()
113
82
50
15000
200
400
600
800
1000
1200
020406080
100
2010 2014E 2018E 2022E
633690 743
795
CohabitantsUnsuitable Suitable
Source LCA (Construbusiness 2010 - FGV) Caixa Econocircmica Federal1) Includes estimative of new families ndash 1326 million per year 2) of families in the housing shortage
Housing Shortage
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
11
Household appliances (MM units)1 Electronics (MM units)2
Computers (MM units) Mobiles (MM units)
More houses and credit availability are an opportunity to increase sales of durable goodshellip
133163
210 198228
130
2007 2008 2009 2010 2011 1S2012
1) Includes refrigerator wash machine stove microwave air conditioner and freezer 2) LCD LED Plasma 3D DVD Home Theater Mini-system and auto sound systemSource GFK Retail
199220
198220
256
98
2007 2008 2009 2010 2011 1S2012
54 62 63 7196
51
2007 2008 2009 2010 2011 1S2012
308
429 414478
572
273
2007 2008 2009 2010 2011 1S2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
12
and also to increase the penetration of these products in ldquoC classrdquo still considered very low
12
13
35
68
50
93
Air Conditioner
Thin TV Screen
Smartphone
Wash Machine
Computer
2 Door Refrigerator
Percentage ()
Total population
6
7
19
61
39
37
ldquoC classrdquo
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1) Nielsen - Consumidor Moacutevel 2011
1
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
13
7186
97118
147
173196
225247
2003 2004 2005 2006 2007 2008 2009 2010 2011
Through products financing the retail market is usually responsable for the ldquoC classrdquo access to financial services
1) Number of store cards ndash total of the populationSource CETELEM (PesquisaObservador 2012 December 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
AB Classes C Class DE Classes
With Access Without Access
Access to current account Number of store cards (MM)1
CAGR 169 per year
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
14
Overview of the Brazilian Market
Magazine Luiza
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
15
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
16
Besides the retail segment Magazine Luiza has two JVrsquos ndash partners on financial and insurance sectors ndash and the Luiza Consortium
bull Joint Venture with Itauacute Unibanco
bull Financial institution established in 2001
bull Productso Co-branded card (Mastercard)o Direct Credit(CDC)o Consigned loano Personal loan
bull Joint Venture with Cardifestablished in 2005
bull Productso Extended warranty(The other insurances belong tothe operational agreementbetween Magazine Luiza andCardif)
bull Established in 1992
bull Household appliances furniture
services and vehicle consortium
bull 55 thousand actives clients
bull 220 thousand goods delivered
Free FloatControllers
50 10050
679 321
bull Retail chain with focus on durable goods only one brand (Lojas do Bauacute and Lojas Maia -corporate integration concluded
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
17
Currently 32 of the companyrsquos stocks are in the free float the remaining belong directly to the family and to the LTD holding
Pre ndash IPO Afterndash IPO
754
Controllers
Capital Intrsquol Inc (Private Equity Fund)
879
321
Controllers
Free Float (includes Capital Intrsquol Inc)
186494467 stocks150000000 stocks
124
876
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
18
Name PostYears with the
CompanyExperience
(years)
Corporate Governance
Executives with a wide experience in the Brazilian retail industry
Controlling shareholders with more than 50 years in the
industry
Board of Directors with independent members since 2005
Audit Committee led by an independent member
Financial statements audited for the past 10 years by a ldquoBig
Fourrdquo firm
Senior Management retention plan (stock options)
Fiscal council established in 2012
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Managemente and Control Officer
gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
Experienced executives with strong corporate governance
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
19
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
06 07 0914
19 22 2632
38
53
71
39
111 127174
253
351 346391
444 455
604
728 731
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
Interior de SP+5 stores
Rede Wanel
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+104 stores
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
20
Broad geographic footprint including in the Northeast of Brazil
Distribuition Center(8)States with stores
of stores per region (1H2012)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic Footprint
31
24
731 stores
Gross Revenue evolution ndash Northeast
R$ MM
3238 328
4907 5014
597
1H10 2H10 1H11 2H11 1H12
84
30South
2
Mid-West
20
Northeast
48Southeast
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
21
Ranked the 23th most valuable brand in Brazil
1) Source Istoeacute Dinheiro Milward BrownBrandanalytics
1 Petrobras
2 Bradesco
3 Itauacute
4 SKOL
5 Banco do Brasil
First 5
most valuable
21 ndash 35 most valuable
36 ndash 50 most valuable brands
6 ndash 20 most valuable
6 Natura
7 Brahma
8 Vale
9 Sadia
10 Antartica
11 Vivo
12 Perdigatildeo
13 Lojas Americanas
14 Bohemia
15 Ipiranga
16 OI
17 Casas Bahia
18 Totvs
19 TAM
20 Cielo
21 Multiplus
22 Porto Seguro
23 Magazine Luiza24 GOL
25 Redecard
26 Net
27 Extra
28 BMampF
29 Banrisul
30 Hering
36 Anhanguera
37 Amil
38 Lojas Renner
39 MRV
40 Marisa
31 Iguatemi
32 Odontoprev
33 Patildeo de Accediluacutecar
34 Uniatildeo
35 Embratel
41 Durafloor
42 Arezzo
43 Gerdau
44 Drogasil
45 Swift
46 Havaianas
47 Deca
48 PDG
49 Localiza
50 Riachuelo
Ranking published by Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brands values USD 479 MM
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
22
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
23
High influence of service and credit on purchasing decision
15 years among the Best Place to Work
Luiza Consortium for the last 2 years among the best companies to work (small and medium sized companies)
Communication Luiza TV Radio Luiza Town Halls
Transparency availability of management information and frequently alignment
Empowerment sales staff and managers have flexibility to negotiate sales conditions within a range
Compensation based on gross profit financial margin and sales
Strong corporate culture assisted by a sales model that is supported by enthusiastic teams
Price398
370
ServiceCredit
84Product Variety
45
Punctuality of Delivery
32
Offered Brands
71
Others
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
24
Supported by robust CRM tools the exceptional relationship management drives customers loyalty
CRM available to all stores telemarketing tool based in propensity to buy
Boomerang telemarketing incentive campaign
Telemarketing during sales downtime ndash average of 500 thousand callsmonthsup1
Return average 5
Telemarketing represents 30 of total income in some stores
Buyback and loyalty increase
CRM Tool
Unique program in the sector recognition and benefits to the most loyal clients
Over 1 million clients 5 of total 20 of total income
Golden clients usually spend 50 more than regular ones
Golden day stores opened exclusively for program clients with memorable experiences and purchasing differentials
Golden Client
1) Data referrers to 2012
bull Base 30 million clients ndash 30 actives
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
25
Magazine Luiza clients are mainly from ldquoC D and E classesrdquo
Millions of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacute and Lojas Maia database
+20
20112010200920082007
CDE ClassesAB Classes
14
10
10
909086
86
14
14
86
108
132
160
189
222
CAGR
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
26
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
27
Trained Teams
624 stores in 16 states 106 stores in 4 states
82 million page views
Free-standing stores or in malls
Physical showroom and in-store
stock
Size
bull Free-standing 700msup2
bull Shopping 1000msup2
Small or mid-sized cities
Direct delivery
No physical showroom or stock
Size 150 m2
Sales per m2 is double
conventional store
30000 total SKU s
More than 8 million unique visitors
Constant growth
Same product mix as the Internet
Dedicates sales team
Magazine Luiza is the only truly multi-channel retailer in Brazil
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
28
Gross revenue growth for conventional and virtual stores was 29 annual rate over the last 4 years
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Convencional StoresVirtual Stores
1H2012
32
3402
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
29
and the e-commerce is growing above market average influenced by the increase of products mix on the website
CAGR
Gross Revenue (R$ MM)
2395
20112008
1576
20092007 2010
3249
5687
8211
+51
1H2012
5120
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
30
Magazine Luizarsquos growth was significantly greater than the market growth in general turning into relevant market-share gains
412 14
19
28
GDP Retail Furniture amp Home Appliance Furniture amp Home Appliance NE Magazine Luiza
330 311 300243 256
144200
101159 130
21
10
05
2224
1411
1512 11
00
05
10
15
20
25
30
00
50
100
150
200
250
300
350
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
InflationSame-store sales
CAGR 2002-2011 Market x Magazine Luiza
Same-store Sales Magazine Luiza vs IPCA
sup1
1) Gross Revenue CAGR of retail operations do not include Luizacred Luizaseg and Consortium revenues
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
32
CDC Third-party Card Cash Sales Down PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull Financial institution established in 2001 resulted from the partnership between Magazine Luiza and Unibanco (nowadays Itauacute-Unibanco)
bull Consumer finance operations available in every Magazine Luiza store
bull Luizacred finances approximately 50 of Magazine Luizarsquos total sales
bull Credit card base 42 million (2Q12)
bull Products co-branded card (Mastercard) direct credit(CDC) loans and other financial services
bull Another important tool to enhance customer loyalty
bull Itauacute-Unibanco responsible for credit-scoring and funding
Comments50 of sales are made through Luizacred
49
3017 13 11 16
1
1934 39
34 23
25 2427 26
3031
25 27 22 22 25 30
2007 2008 2009 2010 2011 1H2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
33
hellip and Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull Joint venture with Cardif since 2005 operates in the massif insurance segment and features on the extended warranty distribution
bull Luizaseg has a complete structure toward client support with staff in stores customer service department exclusive team to take care of customer damages and a wide network of technical assistance for the extended warranty insurances
bull Over 3 thousand accredited workplaces distributed all over the country
bull Featured among the best retailrsquos insurers
bull In 2011 48 million new issued insurances Equivalent to R$ 220 million in prizes 15 growth over the year before
bull R$ 53 million distributed in prizes
bull Over 2 million extended warranty insurances
bull Operation with high cash flow generation and low damage
Comments
Products
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
34
bull Through the letter of credit system consortium is based on the union between natural or artificial person aiming to participate in a common activity or to pool their resources for achieving a common goal
bull Luiza Consortium distributes furniture household appliance vehicle and service consortium
bull Available in every Magazine Luizarsquos store
bull Over 85 thousand active clients
bull More than 60 authorized commercial representatives
bull Over 220 thousand goods delivered
Comments
hellip and Luiza Consortium
Products
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
35
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
36
Focus on the best product mix
Mix of sales 1H2012
31
24
20
15
10
Household Appliances
Sound amp Image
Tecnology
Furniture amp Kitchen appliance
Others
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
37
to support changes in consumer behavior (14)
TelevisionSouth Southeast and Mid-west
Units sold ()
91
2011
9
2007
93
7
1) LCD Plasma LED 3D
TelevisionNortheast
Units sold ()
CRTFlat TV 1
R$ 783 R$ 1406
Weighed average ticket
R$ 636 R$ 1007
67
2011
33
2007
95
5
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
38
to support changes in consumer behavior (24)
ComputerSouth Southeast and Mid-west
Units sold ()
84
30
2011
70
2007
16
ComputerNortheast
Units sold ()
NotebookDesktop
R$ 1364 R$ 1124
Weighed average ticket
R$ 909 R$ 818
88
47
2011
53
2007
12
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
39
to support changes in consumer behavior (34)
Washing MachineSouth Southeast and Mid-west
Units sold ()
52
73
2011
27
2007
48
Washing MachineNortheast
Units sold ()
ldquoTanquinhordquoWashing Machine
R$ 701 R$ 884
Weighed average ticket
R$ 581 R$ 586
43 48
2011
52
2007
57
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
40
to support changes in consumer behavior (44)
RefrigeratorSouth Southeast and Mid-west
Units sold ()
40
20
2011
80
2007
60
RefrigeratorNortheast
Units sold ()
With freezerWithout freezer
R$ 1323 R$ 1501
Weighed average ticket
R$ 1139 R$ 1142
64
35
2011
65
2007
36
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
41
Evolution of plans and interest rates have also supported those changes
TV LCD 32 Notebook Washing Machine
Year 2007 2011 2007 2011 2007 2011
Price (R$) 2947 1187 2002 1246 1159 1046
Installments (R$) 29300 9936 19945 10430 11547 8756
InstallmentClass C Minimum Wage
257 61 175 64 101 54
1) Analysis March to June 2007 April 2011Source Flyer Magazine Luiza
Interest Rate 550
Form 0+15
2007
299
2011
Minimum Wage (R$) 38000 54500
Main changesbull Interest rates became more attractive through Luiza Card financingbull Purchase power increased while risk decreased
Class C Minimum Wage (R$) 1140 1635
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
42
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunities of growth
Multi-channel model under the same brand
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
43
Magazine Vocecirc leading our multi-channel strategy to the highest degree
bullBrazil fourth-largest market
ndash Revenue (2010) R$ 26 bn
bull274 million direct sellers
Source Ibope Ebit Forrester research Magazine Luiza
bull 23 million buyers
bull 465 from ldquoC class
bull Revenue (2011) R$ 20 bn
bull 85 claim to be in a social network
ndash Facebook 30 MM usersndashOrkut 29MM users
bullThe user creates its own store with up to 60 products from Magazine Luiza website (magazineluizacombr) and share the products with its friendsthrough Facebook and Orkut
bull Comission goes from 25 to 45 per product sold in the store
bull No initial investment is required
bullMagazine Luiza is responsible for logistics and payment
Direct Sales E-commerce in Brazil Social Networks
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
44
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple opportunitiesof growth
Multi-channel model under the same brand
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
45
Source IBGE Company
Excellent organic growth potential
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model with broad geographic reach gives Magazine Luizaadvantage to spot new stores opportunities
Around 240 priority cities for new Magazine Luizastores
240 priority cities for new Magazine Luiza stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
46
hellip and multiples opportunities to grow all over the country
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 33 of the stores have
not reached their
maturity
bull Remodel to increase
same store sales
Industry Consolidation
bull MampA potential with high
industry fragmentation ndash
more than 50 of the
industry is in the hands of
small companies
Relevant Growth of Virtual
Channels
bull Amount of virtual store and
internet sales above market
growthIncrease Share of Financial
Products
bull Over 4 million clients
have a Luiza credit card ndash
fidelity potential
bull Penetration of Luizacred
in Lojas Maia sales
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
47
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash2Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commerce in Brazil
Multiple growth opportunities
Multi-channel model under the same brand
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
48
Key Financial Indicators - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest release ndash 2Q12
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
49
Net Income Evolution (R$ million)
849 987
1105
1501 1309 1368
1477
1780 1659 1643
93
95 100
108
117 116
135
161
158 167
14
1415
16
1617
18
18
18 21
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
941
1073
1197
1596
14161473
1603
19281805 1802
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
50
Gross Profit Evolution (R$ million)
261297
339
451388 403 430
549
457 469
8181
84
88
94 94108
135
132146
1313
14
15
15 1517
17
1719
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
339368
413
521
470 483524
668
574603
360 343 345 326 332 328 327 347 318 335
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Gross Margin
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
51
Adjusted EBITDA Evolution (R$ million)
54 62
71
92 77
64 76
111
60 73
10
13
27
9
9
9
26
2
-12
5
2
3
2 2
2
2
2
2
2
2
-5 -8 -6 -8 -9 -8 -8 -9
-8
-8
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
64 66 79 59 56 45 59 55 24 41
61
70
9495
7967
94
74
107
43
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company EBITDA Margin
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
52
Adjusted Net Profit Evolution (R$ million)
22 60 52
132 87
10
190
267
(103)
95 59
79
163 52
46
62
135
(16)
(83)
19 13
16
16
17
15
18
21
20
26
25
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12
93
159
231205
149
88
338
277
148
-154
10 15 19 13 06 01 12 14 -06 05
LuizaCredRetail LuizaSeg Consortium Eliminations Inter-Company Net Margin
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
53
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
54
Integration Process ndash Lojas do Bauacute
3Q11 4Q11 1Q12 2Q12
Lojas do Bauacute integration process
Acquisition of 121sup1 stores from Lojas do Bauacute
Documentation to start operating
Virtual Stores
Virtual stores opening
Stores renovation
Systemic and corporate integration
Conventional Stores
Conventional stores opening
Stores renovation
Systemic integration
Integration benefits (synergy)
July 29 2011 - R$803 million
Most of the closed stores were closed during this period
69 stores (34 Paranaacute 34 Satildeo Paulo 1 Minas Gerais)
Uniforms and storefront changes
End of feb2012
(7 months)
35 stores (Paranaacute)
Complete stores renovation
End of dec2011
1) 13 stores were alienated and 4 conventional stores were renovated and attached to other existent Magazine Luiza1 store
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
55
Integration Process ndash Lojas Maia
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
Lojas Maia integration process
Brand change ndash Magazine Luiza
Metropolitan area of Recife
Metropolitan area of Maceioacute
Metropolitan area of Fortaleza
Other Regions
Corporate integration
Stores systemic integration
Integration benefits (synergy)
14 stores (Oct)
9 stores (Dec)
15 stores (Dec)
Apr2012
Conclusion Oct2012
1) The front end integration had been carried in 2010 which considers sales force training product range mix financial services and small stores renovation
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
56
Key Financial Indicator - Historical Evolution
Integration Process ndash Lojas do Bauacute and Lojas Maia
Latest Release ndash 2Q12
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
57
2T12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
58
Highlights of 2Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 2Q11bull Total sales growth of 216bull Same store sales growth of 130
o E-commerce growth of 450 o Physical stores sales growth of 90
Sustainable growthbull Consolidated gross margin evolution ndash 335 over net
revenueso Increased by 07pp over 2Q11 o Increased by 17pp over 1Q12
bull Financial discipline ( limited sales with no interest)bull Conservative credit approval rate
Continuation of Lojas Maia integration processbull Corporate merger ndash April 30th
bull Systems integration ndash began in 2Q12
Reduction and Rationalization of Costs and Expensesbull Rationalization of costs and expenses program ndash
Companyrsquos main focus in 2012bull 06pp reduction on SGampA expenses of retail segment
o 247 of net revenues versus 253 in 2Q11
Investments in infrastructure and expansionbull Total investments R$351 million
o 1 new conventional store inaugurated in the Northeast
o Stores remodelingo Investments in IT and Logistics (concluded the
expansion of Louveira distribution center)
Extraordinary expenses - integrationbull Totaled only R$33 million (as expected)
Luizacred resultsbull Improved overdue indicatorsbull Maintenance of conservative approach
o Reduction of credit approval rateo Substantial provisions for loan losses
bull Participation in the rationalization of costs and expenses program
Magazine Luiza resultsbull Results in line with budget despite the slowdown in
the economy activityo Sustainable growtho Program of rationalization of costs and expenses
bull Positive results ndash retail and consolidated business
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
59
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
60
Gross Revenues (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1H12
39
2Q12
20
1Q12
20
1H112Q11
16
1Q11
16
32
bull 197 growth in the retail segment versus 2Q11 and 130 same store sales growth driven by
mdash Stores maturation
mdash Increased productivity in renovated stores
mdash Accelerated growth in the Northeast (R$301 million ndash 154 of total retail sales)
bull 223 growth in the retail segment versus 1H11
bull 216 growth in the consolidated gross revenues versus 2Q11
mdash 445 growth in revenues from the consumer financing segment (chiefly influenced by the increase in service revenues direct credit to consumer and personal loans at Luizacred)
bull Increase in store count ndash from 613 in the end of 2Q11 to 731 stores in the end of 2Q12
Comments
223197
of growth over the same half of 2011
1H12
43
2Q12
21
1Q12
21
1H11
34
2Q11
17
1Q11
17
236216
250
257
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
61
Gross Revenues ndash Internet (R$ million)
1H12
5120
2Q12
2635
1Q12
2485
1H11
3557
2Q11
1817
1Q11
1740
bull Internet sales climbed 450 in 2Q12 versus2Q11 and 439 versus 1H11 influenced by
mdash Increase in product mix
mdash Innovations in content
mdash Multi-channel approach infrastructure shared with other channels
CommentsInternet
439450
of growth over the same quarter of 2011 of growth over the same half of 2011
428
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
62
Net Revenues and Gross Profit (R$ billion)
332 328 330 318 335
Gross Margin ()
bull Strong growth due to advancement of gross revenues (retail segment and consumer finance)
bull Net revenues growth outpaced gross revenues growth ndash higher volume of products subject to tax substitution (booked under COGS)
CommentsNet Revenues - Consolidated
bull Improve of 07 of gross margin in 2Q12 versus 2Q11 and 17 versus 1Q12 due to
mdash Increase in gross margin from the consumer finance (Luizacred)
mdash Slight decrease in retail segment margin (higher share of Internet sales integration of Lojas Maia and AVP adjustments)
bull Gross margin in the Northeast from 212 in 1Q12 to 250 in 2Q12
Comments
327
Gross Profit - Consolidated
1H12
36
2Q12
18
1Q12
18
1H11
29
2Q11
15
1Q11
14
249223
1H12
12
2Q12
06
1Q12
06
1H112Q11
1005
1Q11
05
237250
of growth over the same quarter of 2011 of growth over the same half of 2011
275
224
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
63
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull Reduction of 05 on Sales General and Administrative Expenses versus 2Q11
mdash Adjustments made to storesrsquo expenses in order to increase productivity
mdash Result of the integration of the offices of Bauacute stores and of rationalization of expenses
bull Provisions for Loan Losses
mdash Substantial provisions (Luizacred conservative approach)
bull Other Operating Expenses (Revenues)
mdash See next slide
Comments
-260 -36
Net Revenue
Total
4107
Other Oper
Expenses (Revenues)
243
Provisions
527
SGampA
3824
2Q11
SGampA
884
Total
5313
Other Oper
Expenses (Revenues)
161
Provisions
4590
2Q12
-27917 -255 -49 -29509
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
64
Other Operating Expenses (Revenues) ndash Consolidated
Other Operating Expenses (Revenues) (R$ MM)
bull Other Operating Expenses (Revenues)
mdash Deferred revenues
o Reduction in the booking of deferred revenues (straight-line method)
o In 2Q12 other deferred revenues of R$180 million (R$105 million from the retail segment and R$75 million from Luizacred) ndash renewal of the Agreement with Cardif
mdash Non-recurring expenses with the integration of the store chains of R$33 million
mdash Change in the booking of personal loans which are now recognized under financial intermediation result thereby reducing revenues from profit sharing from R$175 million to R$41 million
mdash Expenses with the introduction of chips in Luiza cards totaled R$54 million in 2Q12
Comments
17555 243
124
TotalOthersIntroduction of chips in
Luiza Cards
Personal Loans
Integration Expenses
Booking of Deferred Revenues
2Q11
161
238
TotalOthers
32
Introduction of chips in
Luiza Cards
54
Personal Loans
41
Integration Expenses
33
Booking of Deferred Revenues
2Q12
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
65
bull EBITDA impacted by
mdash Sales and gross profit growth
mdash Non-recurring costs revenues and expenses
mdash Higher provisions for loan losses
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
Comments
59 49 54 05 40
EBITDA
23
Adjusted EBITDA
2Q11 2Q12
1H12
812
2Q12
719
1Q12
93
1H11
1559
2Q11
719
1Q11
840
665719
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Costs
00
Current
740719
Adjusted EBITDA
Deferred Revenues
88
Extraord Expenses
33
Extraord Costs
75
Current
49 45 40 41
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
66
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Decline from 29 of net revenue in 2Q11 to 25 in 2Q12
o Positively impacted by the reduction in CDI rate
o Partially offset by the increase in working capital requirements
o Change in the estimated discount rate used in the adjustment to present value of extended warranty operations
o Change in the appropriation of the costs of prepayment of receivables on third-party cards which is now recognized on the date of the discount operation
Comments
2Q12
454
2Q11
424
Financial Expenses
-29 -25
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
67
Adjusted Net Income
Net Income and Adjusted Net Income (R$ million)
2Q11 2Q12
Net Income
09 03 06 -23 12
bull Net Income impacted by
mdash Non-recurring costs revenues and expenses
mdash Change in the appropriation of the costs of prepayment of receivables
mdash Changes in accounting practices in the financial result
mdash Non-recurring tax credits
Comments
-05
Net Margin ()
1H11
407
1H12
188
2Q12
219
1Q12
169
2Q11
46
1Q11
123
10
46
Extraord Fin
Results
00
Extraord Ops
Results
54
Net Income Adjusted Income
Tax Credits
00
ExtraordTaxes
1895
20721219
ExtraordTaxes
Adjusted Income
Extraord Fin
Results
Tax Credits
43106
Extraord Ops
Results
Net Income
03 01 12 05
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
68
Working Capital (R$ millions)
10068
4700
5368
Mar-12
8899
4222
4677
Dec-11
7483
3073
4410
Sep-11
Jun-12
6909
3460
3449
Jun-11
5597
2411
3186
58
Working CapitalAccounts receivable
53
58
40
76013
over Gross Revenue of last 12 monthsGross Revenue of last 12 months (R$ MM)
8036667513 72288
36 48
47
48
84133
64
56
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
69
Investments (R$ millions)
115
289184 180
151
193
378
11081
75
75
251
65
39
51351
1Q12
432
73
4Q11
976
58
3Q11 2Q12
502
118
2Q11
400
19
154
bull Stores remodeling
bull New stores (inaugurated and to be) ndash 1 new conventional store inaugurated in the Northeast
bull Other investments include the conclusion of expansion of the Louveira distribution center and other investments in logistics which totaled R$96 million in 2Q12
CommentsInvestments
OthersInfrastructureStore RefitNew Stores
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
70
Net Debt (R$ millions)
Net Debt adjusted EBITDA
20
12
80
82
88
60
18
40
81
19
1291
7055
6094
42003851
Net Debt ndash Long Term
Net Debt ndash Short Term
04x 11x 12x 20x
Jun-11 Mar-12Sep-11 Dec-11 Jun-12
22x
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
71
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
72
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
69
69103 106 106
111
1
2Q12
731
624
1
1Q12
730
623
4Q11
728
624
3Q11
684
614
2Q11
613
543
Conventional StoresVirtual Stores
2Q11
394
144113
2Q12
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
19713090
Average Age ndash Stores
More than 3 years453
2 to 3 years6
1 to 2 years158
Up to 1 year
114
+ 118 stores
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
73
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenues (R$ MM)
293
923 1297
150
2085
2Q12
215
450
45
2Q11
1716
572
71
CDC
Personal Loan
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
11
18
32
23 28
30
37
2Q12
100
22
2Q11
100
Luiza Card
CDC
Third Party Credit Card
Cash SalesDown Payment
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
74
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
42434442
40
4Q113Q112Q11 2Q121Q12
376
661
2655
2Q12
3442
2668
+29
2292
2Q11
126
CDC Credit cardPersonal Loans
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
75
Luizacred Portfolio ( of portfolio)
bull Differently from the market in general the portfoliorsquos overdue indicators continue to improve both in relation to the previous year and the previous quarter due to
mdash Conservative approach in the credit approval rate
mdash Constant control of delinquency per store
bull Coverage index increased in 2Q12
bull Provisions should be proportionally lower in 2H12
CommentsPortfolio Overdue
116
10
20
Jun-12
159174
127
47
Dec-11
168
124
44
Sep-11
177
136
41
Jun-11
192
125
67
Mar-12
43
Overdue above 90 daysOverdue 15-90 days Total overdue
112 111 114 111 117
Coverage Ratio()
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
76
MLrsquos versus Brazilrsquos Default Rate
2
5
8
11
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
2
5
8
11
14
17
20
23
26
jan10 apr10 jul10 oct10 jan11 apr11 jul11 oct11 jan12 apr12
217 220192
245225
209
177 168 174 159
123 129 125133 128 125136 124 127 116
94 91
67
11297 84
41 44 47 43
94 91
67
112
97
84
41 44
4743
53
67
6359 55 53
64 6068 64
Magazine Luizarsquos Default Rates
Magazine Luizarsquos x Brazilrsquos Default Rates 15 to 90 days
Fonte BCBBrazil 15 to 90 dayssup1 ML 15 to 90 daysML above 90 daysML total
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
77
2Q12 Highlights
Financial Performance
Operational Performance
Expectations for the Next Quarters
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
78
Expectations for the next quarters
Sales Growth
Consistent sales growth
bull Maturation of new stores
bull Northeast stores growth
bull Internet
bull Better performance by the Brazilian economy especially in 4Q12
Lojas Maia Integration Process
Integration of Lojas Maiarsquos systems ndash conclusion oct12
Fully integrated management ndash 2013
bull Dilution of administrative and logistics expenses
bull Benefits to working capital and price management ndash increasing the gross margin
Investments
Investments in technology logistics and store remodeling which includes changing the Lojas Maia brand to Magazine Luiza
The Company plans the organic opening of 17 more stores in 2H12 10 of them in the Northeast
Results
Continuality of cost and expense reduction and rationalization program
Capture of synergies from the integration of Lojas do Bauacute and Lojas Maia
Better productivity indicators and positive results in 2012
1
2
3
4
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
79
Investor Relationsrimagazineluizacombrwwwmagazineluizacombrir
Any statement made in this presentation referring to the Companyrsquos business outlook projections and financial and operating goals representbeliefs expectations about the future of the business as well as assumptions of Magazine Luizarsquos management and are solely based oninformation currently available to the Company Future considerations are not a guarantee of performance These involve risks uncertainties andassumptions since they refer to forward-looking events and therefore depend on circumstances that may not occur These forward-lookingstatements depend substantially on the approvals and other necessary procedures for the projects market conditions and performance of theBrazilian economy the sector and international markets and hence are subject to change without prior notice Thus it is important to understandthat such changes in conditions as well as other operating factors may affect the Companyrsquos future results and lead to outcomes that may bematerially different from those expressed in such future considerations This presentation also includes accounting data and non-accounting datasuch as operating pro forma financial data and projections based on the Managementrsquos expectations Non-accounting data has not beenreviewed by the Companyrsquos independent auditors
Legal Disclaimer
80October 2012
BTG Pactual LatAm CEO Conference New York 2012
80October 2012
BTG Pactual LatAm CEO Conference New York 2012