ConferenceConference CallCall 4Q094Q09

MarchMarch 8, 20108, 2010

Disclaimer

This presentation contains forward-looking statements regarding the prospects ofthe business, estimates for operating and financial results, and those regardingCia. Hering's growth prospects. These are merely projections and, as such, arebased exclusively on the expectations of Cia. Hering management concerningthe future of the business and its continued access to capital to fund theCompany’s business plan. Such forward-looking statements depend,substantially, on changes in market conditions, government regulations,competitive pressures, the performance of the Brazilian economy and theindustry, among other factors and risks disclosed in Cia. Hering’s filed disclosuredocuments and are, therefore, subject to change without prior notice.documents and are, therefore, subject to change without prior notice.

Highlights

OperationalPerformance

AGENDA

Performance

Economic-Financial

Performance

Outlooks

Highlights

MAIN INDICATORS

• 2009 total gross revenue: +39.4%, of which +44.5% in the domestic

market;

• EBITDA of R$ 154 MM and EBITDA Margin of 21.4% in 2009 (+4.0 p.p.);

• Hering Store Same-store sales: + 27.2% in 2009 and +32.6% in the 4Q09;

• Hering brand sales +50.6%, PUC +18.1% and dzarm. +34.9% in the 4Q09.• Hering brand sales +50.6%, PUC +18.1% and dzarm. +34.9% in the 4Q09.

OTHER HIGHLIGHTS

• Opening of 46 Hering Stores in 2009, 3 over the forecasted;

• Opening of15 PUC Stores, 10 in the 4Q09 (4 over the forecasted);

• Dzarm. repositiong plan execution shows its results with a 34.9% sales

growth in the 4Q09;

• The hybrid production model assured to attend production volumes over

the forecasted.4

Highlights

OperationalPerformance

AGENDA

Performance

Economic-FinancialPerformance

Outlooks

33.0

15.4

629.2

877.0

Gross Revenue (R$ million)

Sales Performance

44.5%

53.3%

39.4%

195.5 284.7

596.2

861.6

5.2

3.0 200.6 287.7

4Q08 4Q09 2008 2009

Foreign Market Domestic Market

45.7%

42.6%

43.4%

6

With na expressive 43.4% growth in the 4Q09, the gross revenuereached R$ 877.0 million in 2009 (+39.4%).

44.5%

Total

R$ 473.8 R$ 711.0

Sales Performance (cont.)

Domestic Market (R$ million)

2008 2009

+50.1%

R$ 61.9

R$ 47.6

83% 9%

6%

Highlight for the double digit growth of the three brands, speciallyfor Hering which represented 83% of the sales.

R$ 78.4

R$ 54.2

+26.5%

+14.0%

59

74

76

19

23

22

15

15

209248

311

365

416Evolution of the Distribution Network

Distribution network- Hering Store and PUC

Goal : 172

Goal: 57(+ 2 stores)

Goal: 224(+ 6 stores )

Goal: 70(+ 4 stores)

Goal: 273(+ 3 stores)

151181

230276

325394419

2006 2007 2008 2009 2010*

Abroad PUC Hering Store

8

Goal : 172(+ 9 stores)

(+ 6 stores )

In 2009, we opened 46 Hering Stores and 15 PUC Stores, reaching350 stores in Brasil; 7 over the forecasted (+3 HS and +4 PUC).

* estimated Total

Hering Store Network Performance

Hering Store Performance 4Q08 4Q09 Chg. 2008 2009 Chg.

Number of Stores 230 276 20.0% 230 276 20.0%

Franchise 193 236 22.3% 193 236 22.3%

Own 37 40 8.1% 37 40 8.1%

Sales (R$ thousand) (1) 169,028 257,956 52.6% 438,844 645,999 47.2%

Franchise 133,983 204,088 52.3% 352,371 512,777 45.5%

Own 35,045 53,868 53.7% 86,473 133,222 54.1%

Same Store Sales growth (2) 29.1% 32.6% 3.5 p.p. 32.4% 27.2% -5.2 p.p.

9

Highlight fot the SSS, +32.6% in the 4T09 and +27.2 in 2009, boostedmainly by the traffic increase in the stores.

Same Store Sales growth (2) 29.1% 32.6% 3.5 p.p. 32.4% 27.2% -5.2 p.p.

Sales Area (m²) 29,791 35,415 18.9% 29,791 35,415 18.9%

Sales (R$ per m²) 5,776 7,368 27.6% 16,256 19,864 22.2%

Check-Outs 2,040,928 3,001,915 47.1% 5,225,865 7,391,080 41.4%

Units 4,760,440 6,925,219 45.5% 12,222,332 16,851,285 37.9%

Average Sales Ticket (R$) 82.82 85.93 3.8% 83.98 87.40 4.1%

(2) Compared to the same period of the previous year

(1) The amounts reffered to the sales to final costumers. (sell out concept)

Highlights

OperationalPerformance

AGENDA

Performance

Economic-FinancialPerformance

Outlooks

Gross Profit (R$ million) and Gross Margin (%)

Gross Profit and Gross Margin

52.1%

51.0%

53.1% +2.8 p.p.

+1.1 p.p.46.3%

47.3%48.0%

48.6%

+1.1 p.p .

+0.6 p.p .

11

83.2123.8

238.5

340.9

4T08 4T09 2008 2009

Gross Profit Gross Margin Cash

50.3%

51.0%

Gross Margin

Highlight for the Gross Margin Cash, excluding depreciation, whichreached 53.1% in the 4Q09 and 48.6% in 2009.

4Q08 4Q09

EBITDA (R$ million) and EBITDA Margin (%) – Comparable B asis

EBITDA and EBITDA Margin

21.9%

26.2%+4.3 p.p.

17.4%

21.4%+4.0 p.p.

12

EBITDA reached R$ 154 million in 2009, with +71.9% growth in comparable basis, and EBITDA Margin of 21.4% (+4.0 p.p.).

35.862.2

89.6

154.0

4Q08 4Q09 2008 2009

Comparable EBITDA

21.9%

Comparable EBITDA Margin

14.6 20.2

23.5 3.1%

2.7%

3.3%

EBITDA and EBITDA Margin (cont.)

EBITDA (R$ million) and EBITDA Margin (%) – Annual Varia tion

EBITDA

2008

Non

Recurring

Result 2008

EBITDA

2008 - Base

Comparavel

Sales

Growth

Deduction -

Taxes and

AVP

Incentives

and

Subventions

CPV Dilution

and

Operating

Exp.

EBITDA

2009

105.4

15.8

89.6

35.3

14.6 20.2

154.0

EBITDA

Margin 2008

Non

Recurring

Result 2008

Margem

EBITDA 2008

- Base

Comparavel

Deduction -

Taxes and

AVP

Incentives

and

Subventions

CPV Dilution

and

Operating

Exp.

EBITDA

Margin 2009

20.5%

17.4%

2.0%2.7%

21.4%

13

Expansion of EBITDA and EBITDA Margin are explained mainly by (i) sales growth and (ii) dilution of cost of goods sold and expenses.

Net Profit

Net Profit (R$ million) and Net Margin (%)

20.4%

+14.7 p.p. 7.3%

15.9%+8.6 p.p.

80.0

100.0

120.0

140.0

14

Besides the EBITDA growth, the net profit was affected by the nonrecurring gain of R$ 24.8 million (Derivatives rev) and R$ 6.6 million(REFIS).

417.9%

203.7%5.7%

Net Margin

9.348.4

37.7

114.6

0.0

20.0

40.0

60.0

4Q08 4Q09 2008 2009

Net Profit

By activity (R$ million)

CapEx

12.8%

1.2

2.7

6.14.8

35.8

31.2

15

In 2009, we invested R$ 31.2 million, mainly on production, logisticsand store openings (3 HS and 1 PUC).

26.7%

2.20.5

13.09.36.6

3.8

15.5

14.4

0.41.9

1.21.4

4Q08 4Q09 2008 2009

Stores Industry IT Other

10.5 7.7

Cash Flow - Consolidated 4Q08 4Q09 Chg. 2008 2009 Chg.

EBITDA 51,534 62,209 10,675 105,358 154,013 48,655No cash items 3,940 24,813 20,873 4,594 26,757 22,163

Current IR&CS -10,971 -8,690 2,281 -22,798 -22,584 214

Cash Flow Capex -67,627 -54,394 13,233 -110,014 -45,213 64,801Increase in trade accounts receivable -34,341 -42,751 -8,410 -52,241 -45,710 6,531

Cash Flow

Free Cash Flow (R$ million)

Increase in trade accounts receivable -34,341 -42,751 -8,410 -52,241 -45,710 6,531

Increase in inventories 8,871 15,820 6,949 -19,337 -14,010 5,327

(Decrease) in deffered taxes - REFIS - 31,773 31,773 0 31,773 31,773Increase (decrease) in accounts payable to suppliers -16,102 -3,295 12,807 -12,477 36,372 48,849

Increase (decrease) in taxes payable -7,373 -34,434 -27,061 -13,437 -67,856 -54,419

Others -18,682 -21,507 -2,825 -12,522 14,218 26,740

CapEx -10,463 -7,670 2,793 -35,773 -31,189 4,584Free Cash Flow -33,587 16,268 49,855 -58,633 81,784 140,417

16

In this year, the Free Cash Flow reached R$ 81.8 million, due to theEBITDA growth and the better working capital management.

Indebteness Evolution Short Term x Long Term

Indebteness

201.3 184.6

4,6x3,5x Short

Long Term52%

* Last 12 months EBITDA

Total Debt = R$ 77.6 million

17

The management is focused on low leverage and new financing with lower interest rate and longer terms.

-33.411.0 -25.1

3,5x

-0,7x0,1x -0,2x

2005 2006 2007 2008 2009

Net Debt (R$ million) Net Debt/Ebitda*

Short Term48%

Highlights

OperationalPerformance

AGENDA

Performance

Economic-FinancePerformance

Outlooks

Expansion Plan – 2011 and 2012

New Expansion Plan - Hering Store Network

Location selection premises:

• Cities with > 100 thousand inhabitants• Total and Retail Consumption Potential - IPC

(Target) and POF (IBGE) • Actual and forecasted Shopping centers

analysis; • Benchmark with other franchise networks

+42

+38

151 181230

276325

367 405

2006 2007 2008 2009 2010* 2011* 2012*

* estimated

• Benchmark with other franchise networks• Evaluation of the Operational Potential

80 locations were selected which presented greater potential

19

The new expansion plan, consistenly elaborated, renew theperspectives for the Hering Store network growth.

Hering

• Hering Store Network: New expansion plan- 405 stores by 2012;

• Products with High Perceived Value and the concept “Retail is detail”;

• Continuity of the marketing campaign “eu uso Hering desde sempre”;

• Actions with the Hering Store Card and the Hering Webstore .

Outlooks

• Actions with the Hering Store Card and the Hering Webstore .

Research in the children market to evaluate the opportunities to better explorethe potential of the PUC and Hering Kids brands;

Continuity of the reposition plan for dzarm.: casual jeans concept, marketingcampaign and distribution channel qualification.

20

Investor Relation Team

Fabio Hering – CEO and IR DirectorFrederico de Aguiar Oldani – Finance DirectorKarina Koerich – IR ManagerGracila Camargo Lopes – IR Analyst

Tel. +55 (47) 3321-3469E-mail: ri@heringnet.com.br Website: www.ciahering.com.br/irWebsite: www.ciahering.com.br/ir

FIRB – Financial Investor Relations BrasilTel. +55 (11) 3897-6857

E-mail: ligia.montagnani@firb.com