R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Arezzo&Co’s Investor Day

Supply chain management

Alexandre Birman

CEO

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Trends and style

Design Technical

design Engineering Samples Showroom

Logistics and distribution Store

Raw material price negotiation Agency services+ Negotiating with the manufacturer

1 2 3 4 5 6 7

Arezzo&Co adds value throughout its production chain, from the creation of its products until the moment it reaches the final consumer

Cost sheet

Engineering folder

Cost management efficiency

Quality standard guarantee

Efficient lead time

Flexibility

Arezzo&Co

Chemicals and

textiles

Raw material

Finished product

Coordinated management of the supply chain associated to Investment in product engineering: In-house know-how

Arezzo&Co’s sourcing process:

Components

SKU

MODEL

CONSTRUCTION

10%

35%

70%

Reuse between collections:

2

Sourcing Arezzo&Co Total control of the value chain

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

The Company has an extensive research and information source to ensure a rich fashion content in its collections

Sourcing Arezzo&Co Trends and style

Historical analysis (track-record)

Intensive search in collection

(more than 30 thousand

catalogued models)

Independent style team for each

brand

Constant research trips to the

world’s main fashion centers

Participation at major trend fairs

Constant street-style monitoring

3

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Qualified team of modelers and

technicians

State-of-the-art technological

resources

Wide physical infrastructure

Owned factory of samples

Strong integration between areas

Standardization of wear and quality

aspects

Each brand follows its own style, quickly adjusting the global fashion to the Brazilian consumer

Sourcing Arezzo&Co Engineering and Production of Samples

4

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Raw material negotiation is a fundamental part of the sourcing process

Pricing determined based on

cost

Quick re-engineering of models

to achieve market feasibility

Multi-disciplinary decision-

making process: Style,

Engineering and Sourcing

Strategic pre-negotiation of raw

materials

Internal development ensures

cost control

Sourcing Arezzo&Co Dynamic cost system

5

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Strategic geographic location

Strong industrial cluster

100 accredited manufacturers

Historical culture of female footwear

production

Sourcing model allows productive

flexibility in other centers

Quality standards

Efficient lead time

Process audit

Legal aspects

Supply agents dedicated to maintaining delivery quality and deadlines

Sourcing Arezzo&Co Agency services + Negotiating with manufacturers

6

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Constant investments in technology serve as benchmarking for our suppliers

Sourcing Arezzo&Co Owned factory

Factory qualified for small

productions

Fast track to produce reorders

High quality standard used as a

reference

Proximity of suppliers of raw

materials and machinery, enabling

extensive market knowledge

Transfer of know-how to suppliers

7

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

High cross docking capacity

Synchronized distribution to all stores in

Brazil, so that all store windows open at

the same time

Receiving: 100,000 units/day

Storage: 100,000 units/day

Separation: 150,000 units/day

Distribution: 200,000 units/day

Sourcing Arezzo&Co Logistics

With a distribution center located in the production chain and near the consumption center, Arezzo&Co distributes simultaneously on national scale

8

R:152

G:216

B:218

R:80

G:179

B:207

R:216

G:181

B:163

R:177

G:181

B:121

R:119

G:119

B:119

R:217

G:217

B:217

R:160

G:160

B:160

R:208

G:240

B:232

Brazil and Vale dos Sinos feature strong competitive advantage, gathering productive capacity, skilled labor and production flexibility

Source: Abicalçados, 2012 / ASSINTECAL / FAO / AICSUL.

Production (million pairs)

Work (thousands)

819

338

Production (million pairs)

Work (thousands)

270

138

Production (million pairs)

Work (thousands)

216

110

BRAZIL

SOUTHEAST REGION

VALE DOS SINOS

Vale dos Sinos: 26% of the Brazilian footwear production

Brazil is the world’s 3rd largest producer of shoes

The world's largest cattle herd: 13% of the

market

RS: A third (R$ 1 billion) of the Brazilian leather

industry revenue

Vale dos Sinos: one of the largest shoe

conglomerates in the world

Abundance of skilled and specialized labor

Productive flexibility: volume X variety X speed

1,700 manufacturers: components, footwear,

machinery, leather, and other professional

research and teaching associations and

institutions

Sourcing Arezzo&Co Region’s competitive advantages

9