LOJAS RENNER S.A.

Transcription

LOJAS RENNER S.A.
LOJAS RENNER S.A.
Citigroup
14th Annual Latin America Conference
COMPLETE PRESENTATION
REGARDING 4Q05 AND FY2005
RESULTS
New York - March 22-23, 2006
1
Forward Looking Statement
Any statements made during this presentation referring to the Company’s business
outlook, projections and financial and operating goals represent beliefs and
assumptions of the Management of Lojas Renner S.A and are based on information
currently available to the Company.
Future considerations are not a guarantee of performance. These involve risks,
uncertainties and assumptions since referring to future events and, therefore depend on
circumstances that may not occur.
The audience should understand that general economic and industry conditions, as well
as, other operating factors may affect the Company’s future results and lead to
outcomes that may be materially different from those expressed in such future
considerations.
2
• Lojas Renner S.A.
• 2005 Results
• Expansion Plan and Perspectives
3
Company Overview
•
One of the three largest apparel department stores in Brazil (average store size: 2,300 m2)
•
66 stores in the South, Southeast and Mid-West regions of Brazil (80% pf the “PCI” (1))
–
90% of stores located in shopping malls
•
Strategy of brands and products based on the Lifestyle concept
•
Targets on women between 18 and 39 years (high consumption potential and purchasing decision)
•
History of sales growth and solid operating results
–
Net Revenues CAGR 2000 -2005: 16.4% and EBITDA CAGR 2000-2005: 29.3%*
•
Renner Card – customer loyalty and opportunity in financial products
•
Differentiated corporate culture - mission of customer “enchantment”
•
Experienced management team aligned with shareholders’ interests
•
New benchmark for Corporate Governance in Brazil (Corporation)
(1)
Potential Consumption Index “PCI” – Source: Target Marketing - 2004
* EBITDA excluding the IPO expenses in 2005.
4
History of Expansion
Number of Stores
66
62
58
54
49
+28 stores
R
AG
C
05
0
2
5199
35
21
11
1995
13
1996
54
%
9.6
1
=
16
1997
1998
1999
2000
2001
2002
2003
2004
2005
5
Infrastructure in Place to Support Growth
1. Site Selection
Model
7. Expertise in
Logistics
2. Customer
Database
Centralized
Infrastructure
6. Relationship with
Real Estate Developers
3. Store Deployment
4. Back-Office
Systems
5. Employment
Training and
Development
6
Logistics Process
Location:
São Bernardo - SP and Porto Alegre - RS
Total Area: 25,000 m2
Employees: 360 people (hired and outsourced)
MT
DF
GO
Duration of the Logistics Process (weighted average):
From supplier to distribution center: 1,500 km / 24 hours
From distribution center to store: 1,500 km / 24 hours
MG
MS
SP
supply chain is
Store
Process
SC
RS
RJ
42% of the total
supply chain is
located in the
Southeast region
located in the
Production Cycle: 50 days (maximum)
Logistics
Process
PR
52% of the total
ES
South region
Product
Sale
Distribution centers totally automated, no manual process.
Products are delivered at the distribution centers totally
wrapped, with hangers and tags in order to guarantee the
process efficiency.
POSITIVE IMPACT ON THE
BALANCE SHEET
Inventory turnover = 7x per year
LOWER FREIGHT COSTS
A new unit will be inaugurated in the Northeast region to support
the logistics operation in the region.
HIGHER PROCESS SPEED
7
Lifestyle Concept
Each brand represents the lifestyle of a group of clients based on attitudes, individual
interests, values and personalities.
Advantages for clients:
– Facilitate product choice
– Take better advantage of shopping time
– One-stop shop for the entire family
– Availability of accessories to complement
each Lifestyle
TEENAGERS
CHILDREN
Advantages for Renner:
– Increase cross-selling opportunities
– Higher inventory turnover
FASHION
Lifestyle
Concept
CONTEMPORARY
CASUAL
SPORTS
NEO
TRADITIONAL
– Less mark-downs
– Opportunity for higher mark-up
8
Corporate Culture
Lifestyle
Concept
Focus on
Client
“Enchanting the Client”
Attractive
Layout
Convenient
Locations
9
Corporate Governance
Shareholders’
Meeting
•
Independent Board Members
•
Chairman and CEO are different executives
•
Fiscal Council
•
Remuneration Committee
Board of Directors
Chairman
Francisco
Gros
Vice
Chairman
Egon
Handel
Board
Member
José L.
Osório
Board
Member
José
Galló
Board
Member
Glória
Kalil
Senior Management
•
Full tag along right (100%)
•
100% of shares outstanding
•
100% of ordinary shares
•
Special mechanisms in the By-Law to protect all
shareholders
CFO e IR
José C.
Hruby
CEO
José
Galló
Operation
Operation
Luis Elísio
de Melo
Purchase
Sylvio
Mandel
Group of Executives
•
Bovespa’s Novo Mercado - Differentiated Corporate
Governance Level
10
• Lojas Renner S.A.
• 2005 Results
• Expansion Plan and Perspectives
11
Operating Highlights
Net Revenues
Net Revenues per m2
In R$ MM
In R$ thousand
+ 19.1%
+12.2%
1,136.4
+ 15.8%
+9.0%
7.7
953.8
823.9
+ 12.7%
+ 23.1%
291.2
328.0
4Q03
4Q04
8.1%
4Q04/4Q03
6.3
6.9
403.9
4Q05
18.5%
4Q05/4Q04
2003
10.4%
2004 / 2003
2004
2005
2.2
2.3
2.7
4Q03
4Q04
4Q05
2003
2004
2005
14.5%
2005 / 2004
Same Store Sales Growth
12
Store Operations
Sales Area and Number of Stores
Stores Inaugurated in 2005
2
In thousand m
+5.7%
April:
Shopping Center Eldorado – Campo Grande, MS
Catuaí Shopping Center – Londrina, PR
October:
Supershopping Osasco – Osasco, SP
November: Shopping Bourbon - São Leopoldo, RS
150.7
+6.1%
142.6
134.5
58
stores
2003
62
stores
2004
Geographical Distribution
66
stores
MT
1
2005
Stores
Distribution Centers
DF
GO 3
MG
1
MS
5 ES
1 SP
RJ 1
PR 25
8
5
SC4
RS
12
13
Gross Profit and Gross Margin
A less favorable winter when compared to previous years has caused a slight decrease
in gross margin compared to last year
Gross Profit and Gross Margin
In R$ MM
518.0
436.0
367.1
181.3
129.8
146.8
44.6%
44.7%
44.9%
44.6%
45.7%
45.6%
4Q03
4Q04
4Q05
2003
2004
2005
Gross Profit
Gross Margin
14
SG&A Expenses
Selling Expenses
290.7
In R$ MM
251.4
• Selling Expenses dropped to 25.6% of
net revenues from 26.4% in the previous
year. Due to ongoing efforts to improve
control processes and rationalize costs.
213.5
89.4
65.5
77.0
22.5%
23.5%
25.9%
4Q03
4Q04
26.4%
25.6%
22.1%
4Q05
Selling Expenses
Selling Expenses / Net Revenues
2003
2004
2005
G&A Expenses
In R$ MM
+ 27.2%
+ 17.3%
82.3
+ 34.6%
70.2
+ 35.7%
20.6
4Q03
27.9
4Q04
104.7
37.6
4Q05
2003
2004
• The
increase
in
General
and
Administrative Expenses was due to the
adjustments made in the structure to
support the expansion process (mainly in
the administrative and purchasing areas,
as well as the IT department).
2005
15
Other Operating Revenues, Net
Other Operating Revenues (Expenses) Breakdown
Em R$ MM
Credit Recovering Revenues (1)
Credit Loses, Net (2)
Premium for Early Payments (3)
4Q03
4Q04
4Q05
2003
2004
2005
9.7
14.2
17.4
36.3
47.9
62.3
(11.3)
(9.9)
(15.1)
(29.8)
(32.2)
(38.9)
1.7
1.2
2.1
3.3
3.7
5.8
-
3.0
-
-
3.4
Services Revenue From Financed Sales (4)
-
Other Revenues (5)
1.1
0.9
1.0
2.2
1.4
2.8
Total
1.2
6.4
8.4
12.0
20.8
35.4
0.4%
1.9%
2.1%
1.5%
2.2%
3.1%
% of Net Revenues
(1) Revenues generated with the charge of past due credits;
(2) Losses net from credit recoveries after 180 days;
(3) Premium for advances to suppliers;
(4) Revenues generated with the 8 installments condition (0+8);
(5) Includes mobile handset sales.
16
EBITDA and EBITDA Margin
EBITDA
32.0%
In R$ MM
142.0**
14.3%
122.9*
48.4%
107.5
43.0%
34.2%
30.1
10.3%
4Q03
72.4
57.8
40.4
12.3%
4Q04
EBITDA
14.3%
8.8%
4Q05
2003
11.3%
10.8%
2004
2005
12.5%
2005
EBITDA margin
* Includes Extraordinary Expenses related to the Public Offering of Shares
** Does not include the Extraordinary Expenses related to the Public Offering of Shares
17
Financial Result
Financial Result, Net
In R$ MM
33.1
20.6
11.9
6.8
2.9
4Q03
4Q04
4Q05
2003
-1.3
2004
• Net Financial Result was positive in R$
20.6 million, was principally the result of
the reduction in financial liabilities as well
as the investment of proceeds from the
IPO.
2005
Net Cash / Net Debt
In R$ MM
2003
2004
2005
85.2
99.8
276.5
Short-Term Borrowing and Financing
(51.4)
(58.3)
(63.2)
Long-Term Borrowing and Financing
(231.1)
(212.4)
0.0
Total Borrowing and Financing
(282.5)
(270.7)
(63.2)
Net Cash / Net Debt
(197.3)
(170.9)
213.3
Cash-Cash Equivalents
18
Net Income
Net Income Evolution
77.4%
In R$ MM
93.0**
53.1%
80.3*
21.7%
56.5
52.5
45.7
37.5
24.4
11.4%
11.3%
8.4%
4Q03
4Q04
Net Income
4Q05
6.9%
5.5%
2003
2004
7.1%
8.1%
2005
2005
Net Margin
* Includes Extraordinary Expenses related to the Public Offering of Shares
** Does not include the Extraordinary Expenses related to the Public Offering of Shares
19
Capital Expenditures
Capex Breakdown
Capex Evolution
In R$ MM
• R$ 23.4 million in new stores
• R$ 17.4 million in remodeling of installations
• R$ 8.8 million in technology systems and
hardware
55.9
• R$ 6.3 million in other capital expenditures
45.6
43.2
2003
2004
32.4
12.9
16.1
4Q03
4Q04
4Q05
2005
Capital Expenditures Program for 2006
R$ 105 - R$ 110 Million
20
Renner Card
Cards Issued
Sales Breakdown
In R$ MM
+ 14.6%
+ 14.3%
4th Quarter 2005
8.7
7.6
Renner Card 8 Payments
5.5%
6.7
Renner Card
(0+5)
68.7%
Cash
Payments
16.5%
Other Credit Cards
9.3%
2003
2004
2005
Average Ticket
In R$
+13.1%
+10.8%
88.19
77.96
74.7%
Year of 2005
97.70
Renner Card 8 Payments
2.3%
74.4%
73.8%
Cash Payment
16.4%
Renner Card
(0+5)
71.5%
Other Credit Cards
9.8%
2003
Renner Card Sales
2004
2005
Average Ticket
21
Dividend Payment
Form
Date of
Approvement
Accumulated
Total
R$
per Share
Interest on Equity
11/16/2005
R$ 22.3 MM
R$ 0.92
Interest on Equity
12/28/2005
R$ 8.0 MM
R$ 0.33
Dividends
not defined
R$ 35.3 MM
R$ 1.454152
TOTAL
n.d
R$ 65.7 MM
R$ 2.70
Dividend Yield
3.6%
Dividend per Share
Share Price*
Pay-Out
100%
Dividend Paid
Adjusted Net Income**
* Dividend Yield calculation was based on a share price of R$ 74.99 as of 12/29/2005
** After deductions of past accumulated losses.
22
• Lojas Renner S.A.
• 2005 Results
• Expansion Plan and Perspectives
23
Grotwth Opportunities
Offer of Financial
Produtcts
Renner Growth Opportunities
5
Geographical
Expansion
4
Strengthen Presence
in Current Markets
3
Enhance Store
Productivity
2
Growth of Retail
Sector
1
24
Expansion Plan
Apparel Retailing in Brazil: High Growth Potential
• The Northeast region
represents a very
interesting potential market
• Attractive demographics:
Brazil’s population is
young and
fashion-conscious
• 55% of population is
below 29 years-old
• Comprises 28% of
Brazilian Population
DF
1
3
GO
• Highly fragmented sector
1
MG
MS
• Shopping malls - growing
share in Brazil’s retail
sector
• 15% of the Potential
Consumption Index (1)
MT
5
1
SP
25
• 37 shopping malls
with sales area of
949,000 m2 (2)
ES
1
8 RJ
PR 5
SC
RS
4
12
(1)
(2)
Source: Target Marketing - 2004
Source: ABRASCE
25
Existing Markets
Maturation process of the stores opened
more recently in the Southeast region
Sales
capacity
100%
75%
Sales Growth
Potential
50%
PHASE 1
PHASE 2
25%
Years of existence
Store
Inauguration
1
2
3
•
15 new stores in the next 4 years.
•
Cities with more than 400,000 inhabitants.
•
Stores located primarily in shopping malls.
•
23 stores will be remodeled in the next years.
4
5
6
7
8
Sales capacity based on the performance of the more mature stores
with good performance in the South region of Brazil.
26
New Markets
Maturation process expected to the new stores which
are going to be inaugurated in the Northeast Region
Sales
capacity
100%
75%
Faster
Maturation
Process
50%
NORTHEAST
SOUTHEAST
25%
Years of existence
Store
Inauguration
1
2
3
4
5
6
7
8
•
Fiscal benefits are attracting companies to this region.
•
Europeans are bringing capital resources to the Northeast, mainly through the tourism.
•
Fashion-conscious people, open to new brands.
•
People accept to spend more money and contract more debt.
•
Percentage of apparel expenses are higher than the Brazilian average.
Sales capacity based on the performance of the more mature stores
with good performance in the South region of Brazil.
27
Perspectives
Disposable Income
YEAR 2006
•
GDP growth
•
Decrease in the inflation rates
•
Decrease in the interest rates
•
Good condition in the economic scenario
3.3% employees hired
1.7% income growth
%
•
Presidential and other elections
•
Increase in the minimum wages
•
Good perspectives for the cost of living adjustments
5.0
5.0
2005
2006
3.6
2.1
(1.7)
(3.4)
(5.2)
(6.7)
1999
2000
2001
2002
2003
2004
= INCREASE IN THE DISPOSABLE INCOME
= INCREASE IN THE CONSUMER CONFIDENCE LEVEL
The improvements in the disposable income should have a positive impact in
sectors such as apparel, drinks and grocery segments.
Source: Valor Econômico
28
LOJAS RENNER S.A.
José Carlos Hruby
CFO and IR Officer
Paula Picinini
IR Manager
invest@lojasrenner.com.br
+55 51 2121-7044
29