7th annual lat am ceo conference ny
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TRANSCRIPT
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
2
Overview of the Brazilian market
Magazine Luiza
3
Brazilian GDP has grown 13 annual rate over the last 8 years
Source LCA IBGE 2009 ndash Estimativas 2010 e 2011 LCA
+13
2011E
4143
2010E
3250
2009
3022
2008
3032
2007
2883
2006
2718
2005
2614
2004
1769
2003
1556
GDP (R$ Trillion)
GDP CAGR
4
working-age population
117123
115
98100
93
79 81
67
60
0
05
1
15
2
25
3
5
6
7
8
9
10
11
12
13
14
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The country has reached full employment recently
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGE
Unemployment rate ( of working age population) Ndeg of formal jobs created
Ndeg of jobs created (MM)
5
200
240260
300
350380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real income growth has helped to boost consumption in the internal market
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Minimum Wage (R$)
Growth of 211 ndash 2012 over 2002
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
2
Overview of the Brazilian market
Magazine Luiza
3
Brazilian GDP has grown 13 annual rate over the last 8 years
Source LCA IBGE 2009 ndash Estimativas 2010 e 2011 LCA
+13
2011E
4143
2010E
3250
2009
3022
2008
3032
2007
2883
2006
2718
2005
2614
2004
1769
2003
1556
GDP (R$ Trillion)
GDP CAGR
4
working-age population
117123
115
98100
93
79 81
67
60
0
05
1
15
2
25
3
5
6
7
8
9
10
11
12
13
14
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The country has reached full employment recently
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGE
Unemployment rate ( of working age population) Ndeg of formal jobs created
Ndeg of jobs created (MM)
5
200
240260
300
350380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real income growth has helped to boost consumption in the internal market
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Minimum Wage (R$)
Growth of 211 ndash 2012 over 2002
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
3
Brazilian GDP has grown 13 annual rate over the last 8 years
Source LCA IBGE 2009 ndash Estimativas 2010 e 2011 LCA
+13
2011E
4143
2010E
3250
2009
3022
2008
3032
2007
2883
2006
2718
2005
2614
2004
1769
2003
1556
GDP (R$ Trillion)
GDP CAGR
4
working-age population
117123
115
98100
93
79 81
67
60
0
05
1
15
2
25
3
5
6
7
8
9
10
11
12
13
14
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The country has reached full employment recently
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGE
Unemployment rate ( of working age population) Ndeg of formal jobs created
Ndeg of jobs created (MM)
5
200
240260
300
350380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real income growth has helped to boost consumption in the internal market
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Minimum Wage (R$)
Growth of 211 ndash 2012 over 2002
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
4
working-age population
117123
115
98100
93
79 81
67
60
0
05
1
15
2
25
3
5
6
7
8
9
10
11
12
13
14
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The country has reached full employment recently
Source MTE (Ministeacuterio do Trabalho e Emprego) IBGE
Unemployment rate ( of working age population) Ndeg of formal jobs created
Ndeg of jobs created (MM)
5
200
240260
300
350380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real income growth has helped to boost consumption in the internal market
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Minimum Wage (R$)
Growth of 211 ndash 2012 over 2002
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
5
200
240260
300
350380
415
465
510
545
622
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Real income growth has helped to boost consumption in the internal market
Source DIEESE (Depto Intersindical de Estatiacutesticas e Estudos Socioeconocircmicos) BACEN
Minimum Wage (R$)
Growth of 211 ndash 2012 over 2002
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
6
Middle class corresponded to 493 of the total domicile in 2011
Class A
Class B
Class C
Class D
Class E
45 41
175 307
309
338
132
493
151
08
1998 2011
Social Class Distribution - of total domiciles
New middle class represented 57 million domiciles in 2011
Source IPC TARGET
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
7
711 860
975 1183
1467
1728 1965
2253 2474
2003 2004 2005 2006 2007 2008 2009 2010 2011
Retail segment is usually responsible for the entrance of class C in the financial service
1) Number of Private label cards ndash total populationSource CETELEM (PesquisaObservador 2012 Dezembro 2011 ndash IPSOS) ABECS (Associaccedilatildeo Brasileira das Empresas de Cartatildeo de Creacutedito e Serviccedilos)
61
37
15
39
63
85
Class AB Class C Class DE
With access Without access
Account access Private Label cards (MM)1
CAGR 169 annual rate
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
8
607733
936
12271414
1706
2030
2005 2006 2007 2008 2009 2010 2011
Consumer credit has been considered the turbine of growth with stable compromised montly income with debt services
1) Total credit operations over GDPSource BACEN
Credit operations (R$ bn)Compromised montly income
with debt services
GDPTotal Operations
28 31 35 40 44 45 49
176186
176185
196 194
222
2005 2006 2007 2008 2009 2010 2011
debt services1
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
9
Healthier consumer credit when compared with other countries due to a combination of longer duration and lower rates
1) Federal bankSource CAIXA ECONOcircMICA FEDERAL
4 47
11 1218
33
56
70
4 69
1421 23
47
7680
2003 2004 2005 2006 2007 2008 2009 2010 2011
Housing credit ndash Caixa Econocircmica Federal1 (R$ Bn)
Disbursed Contracted
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
10
Households 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 goods
133163
210 198228
2007 2008 2009 2010 2011
1) Include refrigerator freezer washing machine tanquinho stove microwave ar conditionar 2) LCD LED Plasma 3D DVD Home Theather Mini systemSource GFK Retail
199220
198220
256
2007 2008 2009 2010 2011
5462 63
71
96
2007 2008 2009 2010 2011
308
429 414478
572
2007 2008 2009 2010 2011
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
11
Despite the growth middle class penetration is still low
12
13
35
68
50
93
Air conditioner
Flat TV
Smartphone
Washing Machine
Computer
Refrigerator (with freezer)
Percentage ()
Total Population
6
7
19
61
39
37
Class C
Source PNAD 2009 (Pesquisa Nacional por amostra de domiciacutelios) IBGE1)Nielsen - Consumidor Moacutevel 2011
1
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
12
Overview of the Brazilian market
Magazine Luiza
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
13
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
14
Corporate structure
1 2
(1) JV with Itauacute Unibanco(2) JV with Cardif(3) Corporate integration of both companies concluded
100504055100 100
33
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
15
Ownership structure
Pre ndash IPO Post ndash IPO
754
56
67
124
LTD Administraccedilatildeo e Part SA
Wagner Garcia Part SA
Founding Family Members
Capital Intrsquol Inc (Private Equity Fund)
2527
45
606
297
Capital Intrsquol Inc (Private Equity Fund)
Founding Family Members
Wagner Garcia Part SA
LTD Administraccedilatildeo e Part SA
Free Float
186494467 shares150000000 shares
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
16
Name PostYears with the
CompanyExperience
(years)
Shareholding by CIPEF - private equity fund of the Capital Group
Established corporate governanceExecutives with ample experience in the Brazilian retail industry
Experienced executives with strong corporate governance
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)
CIPEF
minus Five private equity funds with more than US$25 billion invested since 1997
A successful history of investments in Brazil and in other emerging economies
minus Abril SA Arcos Dorados Constellation Overseas and Grupo IBMEC
Luiza Helena TrajanoPresident
gt40 gt40
Marcelo SilvaCEO
3 34
Roberto BellissimoCFO
gt10 gt10
Fabriacutecio GarciaChief Commercial Officer
gt10 gt10
Frederico TrajanoChief Sales and Marketing Officer
gt10 gt10
Isabel BonfimChief Management and Control Officer gt30 gt30
Marcelo Barp (1)
Luizacred4 9
Luis Felipe (1)
Luizaseg6 gt20
Note 1 Years of experience in the financial services industry
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
17
Proven history of strong organic growth and successful aquisition even throughout adverse economic scenarios
05 06 07 09 14 19 22 2632
38
53
71
96 111 127 174253
351 346391
444 455
604
728
-300
-100
100
300
500
700
900
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Upstate SP+5 stores
Rede Wanel
September 11th
Currency crisis ndashPresident Lularsquos
election
Lojas Liacuteder
Campinas+20 stores
Rio Grande Sul+51 stores
Madol Killar
Santa Catarina+100 stores
Satildeo Paulo (Capital)+46 stores
Nordeste+136 stores
Beginning of Sub-prime crisis
Lehman Brothersrsquo
bankruptcyPIGSrsquo crisis
Gross Revenue ndash Retail Operation (R$ Billion) Number of Stores
Bauacute+ 104 stores
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
18
Broad geographic footprint including in the Northeast of Brazil
Distribution Center (8)States with Stores
of stores per region (2011)
Cabedelo
Simotildees Filho
ContagemRibeiratildeo Preto
LoureiraIbiporatilde
NavegantesCaxias
Geographic footprint
31
2430South
2
Mid-West
20
Northeast
48Southeast
728 stores
Gross Revenue evolution ndash Northeast
R$ MM
6518
9921
2010 2011
52
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
19
Ranked the 23th most valuable brand in Brazil
1) Source Ranking 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 on Istoeacute Dinheiro Magazine ndash May 2012
Magazine Luiza brand values USD 479 MM
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
20
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
21
High influence of service and credit on purchasing decision
13 years among the Best Places to Work
Communication Luiza TV Radio Luiza Town Halls
Transparency Availability of management information and frequently alingment ndash Monthly store PampL avaliable on the internet
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 brands71
Others
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
22
Exceptional relationship management drives customer loyalty
30 million customers registered
More than 10 years of purchase and sales data
CRM tool available to all stores - Boomerang
Telemarketing during sales staff downtime (73 million calls on 20112)
Statistical models of purchasing behavior and price
CRM Tool
Only program in the sector
More than 1 million clients
Golden Day stores opened exclusively for program clients
Golden clients usually spend 55 more than regular clients
Golden Clients
1) Only Magazine Luiza stores
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
23
Client database mainly composed by clients from classes CDE
Million of clients ndash South Southeast and Mid-West1
1) Do not include Lojas do Bauacutersquos client database
+20
20112010200920082007
Class CDEClass AB
14
10
10
909086
86
14
14
86
108
132
160
189
222
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
24
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
25
Unique retail chain truly multi-channel in Brazil
Free-standing stores or in malls
Physical showroom and in-store stock
Size 700-1000 m2
Small or mid-sized cities Direct delivery No physical showroom or
stock Size 130 m2
Sales per m2 is double conventional store
27000 total SKU s More than 10 million
unique visitors 75 growth in 2010
Same product mix as the Internet
Dedicates sales team
624 stores in 16 states
Multi-channel strategy meets customer demands
103 stores in 4 states
More than 70MM page views
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
26
Gross revenue growth for Conventional and Virtual stores
CAGR
Gross Revenue (R$ Bn)
+29
2011
63
60
03
2010
48
45
02
2009
35
33
02
2008
30
28
02
Conventional StoresVirtual Stores
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
27
and e-commerce above the market average
CAGR
Gross Revenue (R$ MM)
+51
2008
8211
2009
5687
2010
3249
2011
2395
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
28
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
29
CDC Third-party Cards Cash SalesDown PaymentLuiza Card
Pioneer in the financial services through Luizacred
bull JV with Itauacute-Unibanco (5050) since October 2001
bull Important tool to enhance customer loyalty
bull Itauacute Unibanco credit and funding management
bull Magazine Luiza sales force management and customer acquisition process
Comments
50 of sales are made through Luizacred
49
3017 13 13
1
1934 39 35
25 2427 26 28
25 27 22 22 24
2007 2008 2009 2010 2011
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
30
hellipand Luizaseg Joint Ventures
Luizaseg significant growth in insurance product sales
bull JV (5050) with Cardif established in 2006
Extended warranty
Broker for life home health dental and card insurance
Guaranteed exchange
CommentsProducts
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
31
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
Focus on the best product mix
Pioneer in the retail financial service
Magazine LuizaFirst social e-commercein Brazil
Multiple growth opportunities
Multi-channel model under the same brand
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
32
Focus on the best product mix
Mix of sales 2011
31
24
20
15
10Household Appliances
Sound amp Image
Technology
Furniture amp Kitchen Appliance
Others
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
33
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
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
34
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
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
35
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
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
36
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
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
37
Evolution of plans and interest rates 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
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
38
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
39
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 Class C
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
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
40
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
41
Source IBGE Company
Excellent organic growth potentialhellip
South
109
Southeast
Mid-West
Northeast
North
Multi-channel model and large geographic footprint gives Magazine Luiza an advantage in identifying new stores opportunities
240 priority cities for new Magazine Luiza stores
Together priority cities would support more than400 new stores
minus 30 will be opened with the Virtual Store Concept
18
56
30
28
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
42
hellip and multiple growth opportunities throughout Brazil
Organic Growth
bull Increase presence where
currently operating
especially the northeast
and Greater Satildeo Paulo
bull 39 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 Only 43 million of
current 30 million
customers have a Luiza
credit card ndash significant
growth potential
bull Penetration of Luizacred
in Lojas Maia sales
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
43
Growing for more than 50 years in the Brazilian Retail Market
Strong corporate culture focus on valuing people
and customers
Company
Financial Information ndash1Q12
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
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
44
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
45
Highlights of 1Q12
Initiatives and Achievements Impacts on Financial Results
Significant sales growth versus 1Q11bull Sales growth of 257bull Same store sales growth of 159bull E-commerce growth of 428
Sustainable growthbull Gross margin in line with projected levelbull Financial discipline (sales with no interest)bull Results were in line with the projection for 1Q12
Conclusion of Lojas do Bauacute integrationbull System integration concludedbull Storesrsquo maturation process has just startedbull Capture of synergies initiated
Continuation of Lojas Maia integration processbull Corporate integration ndash April 30th
bull System integration scheduled for 2Q12
Rationalization of costs and expensesbull Rationalization of costs and expenses throughout
the company ndash most initiatives were already implemented in January and February 2012 benefits for upcoming quarters
Extraordinary expenses R$335 millionbull Magazine Luiza and Bauacutersquo store R$203 millionbull Maiarsquo stores R$132 million
Investments in infrastructure and expansionbull 7 new stores inauguratedbull 5 Bauacutersquo store were closedbull Total investments R$432 million
o Logistics R$125 million (Louveirarsquos DC expansion concluded)
Luizacred resultsbull Maintenance of conservative approach in the 1Q12 bull Reduction of credit approval ratebull Participation in the rationalization of costs and
expenses project
Magazine Luiza resultsbull The majority of non-recurring expenses planned for
2012 were incurred in January and Februarybull March 2012 operational expenses were
significantly lower and below projection generating positive results for the Company
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
46
Expectations for the next quarters
Significant Sales Growth
Sustainable growth
bull Maturation of new stores
bull Internet
bull Positive outlook of the Brazilian market (noteworthy reduction in the basic interest rate to its lowest level ever)
Lojas Maia Integration Process
System integration ndash expected to 3Q12
Fully integrated management ndash 4Q12
bull Dilution of administrative and logistics expenses
bull Working capital and price management contributing to the increase of Lojas Maiarsquos gross margin
Results ndash Luizacred
Stability of credit approval rate
Increase in its profitability during the 2S12
Portfoliorsquos maturation and expensesrsquo dilution
Dilution of operating expenses and proportional reduction of provisions thanks to the improved quality of the overdue loan portfolio
Results ndash Magazine Luiza
Continuing with the rationalization of costs and expenses project
Improvements of profitability ndash quarter versus quarter
Better productivity indicators and significantly positive results in 2012
1
2
3
4
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
47
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
48
Gross Revenue (R$ billion)
Retail
Consolidated
11
of growth over the same quarter of 2011
1Q12
20
2011
71
4Q11
21
3Q11
18
2Q11
16
1Q11
16
21
1Q122011
76
4Q11
23
3Q11
19
2Q11
17
1Q11
17
bull Gross revenue of the Retail segment increased 250 versus 1Q11
bull Same store sales growth of 159 driven by
mdash Stores maturation
mdash ldquoFantastic Salesrdquo
bull Increase in the number of stores from 604 in the end of 1Q11 to 730 stores in the end of 1Q12
bull Consolidated gross revenue increased 257 versus o 1Q11
mdash Growth of the retail segment
mdash Growth of the consumer financial service revenue of 347 (influenced by servicersquos revenues and personal loans ndash recorded under Luizacred)
Comments250
257
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
49
Gross Revenue ndash Internet (R$ million)
1Q12
2485
2011
8211
4Q11
2509
3Q11
2144
2Q11
1817
1Q11
1740
bull 428 increase over 1Q11 boosted by
mdash Multi-channel approach infrastructure shared with other channels
mdash Increase in the number of SKUs (long tail) and improvements in product mix
mdash Innovation in content
mdash Investments in systems and logistics to guarantee the best customer service (Magazine Luiza is considered diamond by e-bit)
CommentsInternet428
of growth over the same quarter of 2011
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
50
1Q12
06
2011
21
4Q11
07
3Q11
05
2Q11
05
1Q11
05
of growth over the same quarter of 2011
Net Revenue and Gross Profit (R$ billion)
332 328 327 347 334
Gross Margin ()
1Q12
18
2011
64
4Q11
19
3Q11
16
2Q11
15
1Q11
14
bull Strong growth due to the increase of the gross revenues (retail segment and consumer financial service)
bull Net revenue growth outpaced gross revenue growth basically due to the higher volume of products subject to tax substitution which is booked under COGS
Comments Net Revenue - Consolidated275
bull Retail
mdash Strong grow due to Fantastic Sales in January
mdash Increase in the Internet participation
mdash Integration of Bauacute stores
mdash Low gross margin at Lojas Maia
o Clearance bull Consumer Financing
mdash Reduction of CDI rate
Comments
318
Gross Profit - Consolidated224
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
51
Operating Expenses ndash Consolidated (R$ million)
Operating Expenses (R$ MM)
bull SGampA Expenses
mdash Impact of the extraordinary expenses with new stores integration of Bauacute and review of people cost expenditures
mdash Captures of synergies initiated as a result of office integration (Bauacutersquo stores and expenses rationalization
bull Provisions
mdash Robust provisions (Luizacred conservatism)
bull Other operational expenses
mdash Impact of extraordinary expenses and personal loans
bull Extraordinary Expenses
mdash R$335 million being R$203 million at Magazine Luiza and Bauacute and R$132 million at Maia
Comments
262 10
Net Revenue
263 50
38581443714
TotalProvisions amp other oper revenues
SGampA
1Q11
5656906
4750
TotalProvisions amp other oper Revenues
SGampA
1Q12
313272
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
52
Financial Expenses ndash Consolidated (R$ million)
Financial Expenses (R$ MM)
Net Revenue
bull Financial Results
mdash Financial expenses declined from 32 of net revenue in 1Q11 to 22 in 1Q12 impacted by the reduction in net debt and loer CDI rate in the period
mdash Stable pre-paid Luiza card receivables R$62 million at 1Q11 and 1Q12 (03 consolidated net revenue)
mdash Minimaze interest-free sales on Luiza card as well as limit the share of third-party credit cards in total sales encouraging Luizacred sales
Comments
1Q12
392
1Q11
457
Financial Expenses
32 22
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
53
EBITDA and Adjusted EBITDA (R$ million)
Margin EBITDA ()
bull EBITDA impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Increase in provisions for loan losses
Comments
1Q12
93
2011
3006
4Q11
525
3Q11
922
2Q11
719
1Q11
840
59 49 58 27 47
EBITDA
05
Adjusted EBITDA
428260
75
Adjusted EBITDA
Deferred Revenues
00
Extraord Expenses
Extraord Revenues
Current
93
1Q11
05 24
1Q12
787
840
Adjusted EBITDA
Deferred Revenues
54
Extraord Expenses
00
Extraord Revenues
00
Current
59 56
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
54
Adjusted Net Income
123
54 87
Adjusted Income
Tax credits not recorded
00
Taxes
18
Extraordinary Result
Net Income
Net Income and Adjusted Net Income (R$ million)
Adjusted Income
-103
Tax credits not recorded
83
Taxes
-114
Extraordinary Result
335
Net Income
-407
1Q11 1Q1209 06 -23 -06
Net Income
1Q12
-407
2011
117
4Q11
169
3Q11
117
2Q11
46
1Q11
123
09 03 07 -09 02
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
-23
Net Margin ()
bull Net income impacted by
mdash Gross margin reduction at Lojas Maia
mdash Extraordinary expenses including pre operational expenses of new stores and integration process
mdash Deferred taxes were not accountable due to Lojas Maia losses (R$83 million)
Comments
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
55
Investiments (R$ million)
115
289184100
151
193
378
110
60
75
75
251
65
23154
1Q12
432
73
4Q11
976
58
3Q11
502
118
2Q11
400
19
1Q11
225
42
bull 7 new stores inaugurated (4 conventional stores in the Northeast and 3 virtual stores in Paranaacute)
bull Other investments include the conclusion of the expansion of the Louveira distribution center and other investments in logistics which totaled R$125 million in 1Q12
CommentsInvestiments
OthersInfrastructureStore RefitNew Stores
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
56
Highlights of 1Q12 and Expectations for the Next Quarters
Financial Performance
Operational Performance
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
57
Operational Performance ndash Stores
Number of Stores (unit) Same Store Sales Growth ()
67 69
69103 106
11
11
1Q12
730
623
1
4Q11
728
624
3Q11
684
614
2Q11
613
543
1Q11
604
536
Conventional StoresVirtual StoresSite
1Q11
547
256217
1Q12
250159126
Average Age ndash Stores
122
More than 3 years447
2 to 3 years
11
1 to 2 years150
Up to 1 year
+ 126 stores
Same Stores Sale Growth - Physical StoresSame Store Sales Growth (includes e-commerce)
Total Retail Growth
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
58
Operational Performance ndash Luizacred
Financed Mix Sales () Luizacredrsquos Revenue (R$ MM)
237
715
127
1Q12
+3759
139568
486
1911
1Q11
1141
475
Luiza Card - Inside Luiza Stores
Luiza Card - Outside Luiza Stores
CDC
Personal Loan
1014
3230
2632
1Q11
100
33
1Q12
24
100
Cash Sales Down payment
Luiza CardThird Party Credit Card
CDC
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
59
Operational Performance ndash Portfoliorsquos composition
Luiza Card ndash Total Credit Card Base (MM) Portfolio (R$ MM)
434442
40
35
1Q124Q113Q112Q111Q11
371
537
+38
1Q12
3334
2656
141
1Q11
2424
2053
Personal Loans CDC Credit card
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
60
Portfolio Overdue Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011
Total Portfolio (R$ MM) 33341 1000 33342 1000 30117 1000 26683 1000 24242 1000
000 to 014 days 27544 826 27738 832 24782 823 21554 808 18901 780
015 a 030 days 529 16 432 13 342 11 788 30 966 40
031 a 060 days 478 14 395 12 362 12 519 19 597 25
061 a 090 days 568 17 644 19 527 18 484 18 637 26
091 a 120 days 465 14 532 16 540 18 453 17 662 27
121 a 150 days 443 13 464 14 488 16 473 18 516 21
151 a 180 days 544 16 419 13 518 17 512 19 335 14
180 a 360 days 2771 83 2718 82 2557 85 1900 71 1628 67
Overdue from 15-90 days 1575 47 1470 44 1232 41 1791 67 2199 91
Overdue above 90 days 4222 127 4133 124 4103 136 3338 125 3142 130
Total Overdue 5797 174 5604 168 5335 177 5129 192 5341 220
Allowance for doubtful
accounts in IFRS 4675 140 4695 141 4557 151 3729 140 3334 138
Coverage () 111 114 111 112 106
Luizacred Portfolio (R$ million)
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
61
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
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th
7th Annual LatAm CEO Conference ndash Magazine Luiza
May 16th and 17th