Cia Hering : Notice to the Market - Clarifications on CVM/B3 Inquiries

NOTICE TO THE MARKET Clarifications on CVM/B3 Inquiries

(Ref. No. 314/2018/CVM/SEP/GEA-2)

We refer to Official Letter no. 314/2018 /CVM/SEP/GEA-2, transcribed in the annex, which requests clarification regarding news published on October 17, 2018 in the newspaper Valor Econômico under the title: "Hering test different formats of stores ", more specifically on the statement transcribed below:

✓ Thiago Hering, business director of The Hering Company, said that the goal at the beginning of the year was to remodel between 30 and 35 units. Until July, 10 units have been remodeled. Now, the company plans to remodel 70 stores by the beginning of 2019. According to The Hering Company, remodeled stores generate a sales growth of at least 12% higher than the performance of stores that operate on older models.

✓ The two store projects were presented yesterday to investors and market analysts in São Paulo. The company's actions have reacted positively to the company's plans. Yesterday, the shares rose 6.92%, closing the day quoted at R$ 19.78. In the accumulated of the month, the increase is 11.31%. Year-to-date, however, the shares still recorded a 20.84% drop. Ibovespa accumulated 12.19%

Regarding the first section that refers to the stores refurbishment, Cia. Hering ("Company") reaffirms the veracity of the information. This cycle of reforms had been previously disseminated to the market by the Company's Management in a broad, isonomic and simultaneous manner through theearnings release disclosed in 2Q18 (page 6) and published via Sistema Empresas Net on 07/26/2018.

Therefore, it is a fact that the information on the acceleration of the stores remodeling was subjected to market disclosure, are not estimates or projections and do not represent a significant impact on revenues or results in the short or medium term. Therefore, considering that currently the Company has 777 stores, and that only a small set of stores will be renovated until 2019, the Company understands that the news referred refers to the operational subject of its daily activity, not referring to object to material fact in terms of regulation, especially in view of the lack of materiality.

Regarding the second passage highlighted in the letter, which refers supposed presentation to investors and analysts, the Company clarifies that a meeting was held on October 16 with only market analysts (sell-side), to present the Company's new Management, object of disclosure to the Market via Sistema Empresas Net on 06/28/2018. The meeting took place near the newly reopened Hering Store at Morumbi Shopping, and for that reason only the visit was made, which was not a formal presentation of a business model, but only a visit to courtesy. It is important to note, however, that on this day no formal presentation was made by the Company to such analysts, which is why the hypothesis of article 30, item XIV, of CVM Instruction No. 480/09 was not set, and there were no materials to be submitted via Sistema Empresas Net.

Lastly, store refurbishment cycles are absolutely normal in the market in which the Company operates, without any impact on the capital market. In this sense, the comments made in this matter regarding the trading of the Company's shares on the stock exchange and its balance sheet figures are not directly or indirectly related to the facts reported at the meeting, being the exclusive initiative of the journalist.

Blumenau, October 18th, 2018.

Rafael Bossolani

CFO and Investor Relations Officer

Contact: Phone.: [phone]/4867 e-mail:[e-mail]

SECURITIES AND EXCHANGE COMMISSION

Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ - CEP: 20050-901 - Brasil - Tel.: [phone] Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP - CEP: 01333-010 -

Brasil - Tel.: [phone]

SCN Q.02 - Bl. A - Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF - CEP: 70712-900 - Brasil -Tel.:

(61) 3327- 2030/2031www.cvm.gov.br

Letter no. 314/2018 / CVM / SEP / GEA-2

Rio de Janeiro, October 17, 2018.

To Mr.

RAFAEL BOSSOLANI Investor Relations Officer of The Hering Company

Rua do Rócio, 430 - Vila Olímpia CEP: 04552-000

São Paulo - SP Tel.: [phone] Email:[e-mail]

C/C:[e-mail];[e-mail];[e-mail];[e-mail]

Subject: Request for clarification on news published in the media.

Dear Sir,

1. We refer to the news published in the newspaper Valor Econômico on the computer network titled "Hering tests different formats of stores", which includes the following information:

The Hering Company develops two store remodeling projects, with lower costs for franchisees and higher sales prospects over older store models.

A format began to be implemented this year, with an average cost of

R$ 1.3 thousand to R$ 1.4 thousand per square meter. The previous store model demanded an average cost of R$ 3,900. The new store model provides for fewer changes in the building. The changes are made in the furniture, to allow the display of more products to consumers, highlighting the areas of jeans and basic fashion.

Thiago Hering, business director of The Hering Company, said that the goal at the beginning of the year was to remodel between 30 and 35 units. Until July, 10 units have been remodeled. Now, the company plans to remodel 70 stores by the beginning of 2019. According to The Hering Company, remodeled stores generate a sales growth of at least 12% higher than the performance of stores that operate on older models. Of the 595 stores in the network, around 400 still operate with the old model, in which wood predominates. The new store uses more metal structures.

A second store model started being tested this month in a unit at Shopping Morumbi in the south zone of the city of São Paulo. It provides for the installation of technologies and services for customers. The store entrance has, for example, a camera attached to a facial recognition system, which identifies the consumer by sex and age. On screens, in the showcase, are shown suggestions of products, based on the characteristics of the client.

In the taster, the consumer has the collection available for viewing on a touch screen. The client may ask to try other pieces without leaving the fitting room. It is also possible to buy products online that are not in store stock using a kind of totem. The delivery can be done in the store itself or in the consumer's home.

The store also offers a custom t-shirt service. The consumer can choose sayings or prints, which are printed on the shirt there and then. "In the future, there will be other services such as monograms and mending of clothing," Hering said.

This new model, according to the executive, was developed in fewer than 30 days. Hering expects to adopt this more technological model in 50 large stores of the network from 2019.

The company also plans to deploy some of these technologies over the next two years in more units. "Each group of stores will adopt different technology packages, depending on their size and sales potential," said Hering.

The model began to be tested ten days ago. Rafael Bossolani, CFO and investor relations director of The Hering Company said that sales have been higher than sales in stores that have been remodeled this year.

In the executives' view, the more digital store model will allow Hering to move faster in integrating physical stores with e-commerce. Currently, only the Hering Store's own stores (57 in total) operate in an integrated way with e-commerce.

The internet accounts for about 3.5% of Hering's total sales revenue, following the trend of fashion retail. Bossolani said the company's online sales grew above the market average, which grows between 10% and 12% a year.

The executive added that in the future, the new online model will allow franchise stores to function as a distribution center for delivering products sold online.

The two store projects were presented yesterday to investors and market analysts in São Paulo. The company's actions have reacted positively to the company's plans. Yesterday, the shares rose 6.92%, closing the day quoted at R$ 19.78. In the accumulated of the month, the increase is 11.31%. Year-to-date, however, the shares still recorded a 20.84% drop. Ibovespa accumulated

12.19%

The Hering Store recorded gross revenue of R$ 590.8 million in the first half of the year, down 4.4% from the same period in 2017. The net revenue of The Hering Company reached R$ 706.1 million in the first half, a drop of 3.9%. Earnings before interest, taxes, depreciation and amortization (Ebitda) fell 10.6% to R$ 103.3 million. Net income fell 27.2% to R$ 91.6 million.

2.

In this regard, we request your statement as to the truthfulness of the statementsmade in the news, especially regarding the highlighted sections, and if so, inform the reasons why you understood that the matter of Relevant Fact, in accordance with Instruction CVM nº 358/02.

3. In addition, considering the provisions in caput and XIV of article 30 of CVM Instruction 480/09, which states that "the issuer registered in category A must send to the CVM, through an electronic system available on the CVM's website in the network (...) material presented at meetings with analysts and market agents, on the same day of the meeting or presentatio"

(emphasis added), we require you to clarify, in the case of veracity of the information provided, the reasons for the which the Company did not provide said presentation in the IPE Module of the Empresas.NET System on 10/16/2018 to analysts.

4. Such manifestation shall include a copy of this Official Letter and be sent to the IPE System, category "Notice to the Market", of the type "Clarifications on CVM / B3 Inquiries". Compliance with this request for manifestation by means of a Notice to the Market does not exempt the eventual determination of responsibility for the timely non-disclosure of Material Fact, pursuant to CVM Instruction 358/02.

5. We emphasize that, pursuant to article 3 of CVM Instruction 358/02, the Investor Relations Officer must disclose and communicate to the CVM and, if applicable, the stock exchange and organized over-the-counter market entity in which securities securities issued by the company are admitted to trading, any relevant act or fact occurring or related to its business, as well as to ensure its wide and immediate dissemination, simultaneously in all markets in which such securities are admitted to trading.

6. We also recall the obligation set forth in the sole paragraph of article 4 of CVM Instruction No. 358/02, to inquire of the Company's management and controlling shareholders, as well as all other persons with access to relevant acts or facts, in order to determine whether these are aware of information that should be disclosed to the market in order to determine if they would have knowledge of information that should be disclosed to the market.

7. According to the Superintendence of Relations with Companies (SEP), we warn that it will be up to this administrative authority, in the use of its legal attributions and, based on item II, of article 9, Law 6,385 / 1976, and article 7 c / CVM Instruction No. 452/2007, to determine the application of a fine in the amount of R $ 1,000.00 (one thousand BRL), without prejudice to other administrative sanctions, for failure to comply with this Official Letter, by the 18th of October 2018.

Regards,