Magazine Luiza S A : Earnings Document

Earnings Release

2Q22

2Q22: Total cash position R$9 billion. Operating cash flow R$ 1.3 billion. Marketplace grows to 200,000 sellers.

Magalu ended the quarter with a total cash position of R$9 billion, around R$500 million higher than in March this year, due

to cash generation during the quarter.

During the quarter, operating cash flow reached R$1.3 billion, mainly reflecting the evolution of working capital, with a sequential reduction in inventory levels and an increase in supplier balance.

During the second quarter, the Magalu marketplace reached the mark of 200,000 sellers and 73 million offers available for sale. In one year, more than 118,000 new sellers entered the platform, most of them connected via Partner Magalu, which is being turbocharged by Caravan Magalu.

A truly multi-channel Marketplace. More than 18,000 sellers are already using Agency Magalu to drop-off their items. 17% of Marketplace orders are being picked up at one of Magalu's more than 1,100 pick-upenabled stores.

40% of 3P deliveries were made within 48 hours. Magalu launched its fulfillment operation, fully integrated with it's first- party (1P) operation, leveraging its existing logistics infrastructure. Marketplace sellers will be able to accelerate the speed of their deliveries, combining a high level of service with lower costs.

Magalu's total sales reached R$14 billion in 2Q22, a growth of 1% compared to 2021. Over the last three years --excluding pandemic-relatedoscilations to the comparison base-- the average annual growth rate was 34%.

E-commerce reached more than R$10 billion in sales during the quarter, increasing by 2%, with an average annual growth rate of 61% over the last three years.

Marketplace sales totaled around R$3.6 billion during the quarter, a growth of 22% compared to the same period last year, and represented 36% of online sales. Over the last three years, the Magalu Marketplace has shown an average annual growth rate of 84%.

The expansion of the marketplace is even more impressive when measured by new categories. During the second quarter of 2022, sales of items in new categories, such as fashion, home, garden, sports, beauty, and automotive accessories, grew more than double the rate of the traditional categories. In the marketplace, the Fashion and Beauty categories grew 88% and 75% respectively, during the quarter.

In physical stores, sales were R$4 billion during the quarter, stable versus 2Q21, yielding an average annual growth rate of 5% over the last three years.

There was also significant strengthening of operating margins during the quarter. The adjusted EBITDA margin was 5.7%,

representing an increase of 0.7 p.p. compared to the same quarter the previous year and 3.2 p.p. higher than in the fourth quarter of 2021. This is the highest quarterly EBITDA margin since 2020.

During the second quarter, Magalu Ads revenue doubled compared to the same period in 2021. Other highlights include the launch of new features such as self-service campaign creation and the display of sponsored product ads during search queries on the SuperApp.

Magalu's Fintech operation grew 67% during the quarter to R$22 billion in TPV. One highlight was the 42% growth in credit card TPV, which reached the highest quarterly revenue level in the Company's history with around R$14 billion in 2Q22.

There are now over 7 million credit cards issued and the credit portfolio is approximately R$20 billion.

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Earnings Release

2Q22

2Q22 in numbers

Principal consolidated numbers from the Magalu Ecosystem

R$14 billion	R$10 billion	7.3 million
Total sales	E-commerce sales	Credit Cards
+1% compared to 2Q21	+2% compared to 2Q21	Luiza Card and Magalu Card
+34% three-year CAGR	+61% three-year CAGR
38 million MAU	R$ 1.3 billion	R$22 billion
Operating Cash Generation	TPV
(Monthly Active Users)
(Adjusted)	+67% compared to 2Q21
37 million	1,429 Physical Stores	269 DCs and Cross-Docking
Active customers	in 21 Brazilian states	Stations

Marketplace: We passed the 200,000 seller mark

R$3.6 billion marketplace sales

+22% compared to 2Q21

+84% three-year CAGR

80% of marketplace orders pass through Magalu Entregas

40% delivered in up to 48 hours

200k sellers

More than 100k of whom were originated by the local physical store teams

36% of total online sales

More Sellers, greater assortment, faster delivery

Caravan Magalu: In each city that we visited, thousands of local entrepreneurs were introduced to a complete solution, designed specifically for their needs, that opens the door to the digital world through Magalu's marketplace platform.

MGLU3: R$ 3.04 per share	Conference Call	Investor Relations
Aug 12,2022 (Friday)	[phone]
Total Shares: 6,748,926,848
09:00 AM in US (EST)/ 10:00 AM in Brazil	www.magazineluiza.com.br/ri
Market Cap: R$ 20.5 billion
Conference Call Access	[e-mail]
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Earnings Release

2Q22

| LETTER TO SHAREHOLDERS

During the second quarter of 2022, Magalu surpassed the mark of 200,000 formal sellers connected to the marketplace. More important than the number of sellers is the speed with which we have been adding new sellers. A little less than a year ago, we celebrated the 100,000 seller mark. Now, in less than a year, the seller base of the marketplace has doubled.

This pace has only been possible due to the Partner Magalu strategy which enables us to grow while helping analog retailers become digital. The role of the local physical stores in attracting new, analog sellers has been extraordinary. To date, around 100,000 sellers, representing half of our total seller base, were connected to the platform through hunting carried out by the local physical store teams.

One of Magalu's most important new initiatives is Caravan Magalu. For the last three months, the company's top management has been crisscrossing the country, attracting, integrating and promoting the digitalization of thousands of analog retailers. Recent stops have included the cities of Sorocaba; Piracicaba; Limeira; São José dos Campos, Maceió and João Pessoa. Magalu arrived in these regions armed with a sense of purpose and all of the tools necessary to help these entrepreneurs digitalize their businesses. The response surpassed our wildest expectations. In each of the cities where the Caravan passed, within one month of the event, the number of new sellers integrated into the marketplace grew by an average of 500%.

Caravan Magalu has turbocharged the Partner Magalu initiative, yielding a higher seller base, greater geographic diversification and a wider assortment. Today, 25% of our total seller base is located in the Northeast, North and Midwest regions of Brazil, up from only 11% two years ago.

We believe that the future lies in using technology to match local buyers with local sellers within the shortest possible distance. This is what we refer to as hyperlocal, a feature of our model that contributes critically to reducing costs; accelerating delivery speeds and increasing customer satisfaction, and that will eventually enable the delivery of low-ticket items in an economically feasible way.

None of this would be possible without the ability to leverage Magalu's local physical stores. It is this multichannel model which permits Magalu's marketplace to offer the highest level of service at the lowest cost. 463 of the Company's physical stores and 35 of the Company's cross-docking stations already operate as postal agencies, receiving and shipping products sold by more than 18,000 sellers. They are also convenient pick-up points for consumers. Currently, 17% of orders placed on the marketplace are picked up by consumers at their local Magalu store, up from only 4% during the same period in 2021.

Magalu Entregas is increasingly becoming the logistics option of choice for sellers in our marketplace: 80% of 3P orders currently pass through our platform. This percentage includes all 3P collection and delivery modalities offered by Magalu, including Agência Magalu, cross-docking,ship-from-seller and the recently launched fulfillment and collection of heavy products initiatives.

Of the total marketplace orders delivered by Magalu Entregas, 40% reach the customer within 48 hours (a year ago, it was only 19%). Expanding our logistics services is the key to increasing the competitiveness and sales conversion of our platform, whether for small sellers, with hyperlocality, or for larger sellers, with fulfillment.

Fulfillment Magalu is also multichannel and already has more than 100 participating sellers on the platform. All of our economies of scale are now shared with our marketplace partners thanks to the full integration of our 3P fulfillment operation with our 1P business and existing logistics infrastructure. This applies to both sellers who sell light items or heavy products, a segment in which Magalu has great expertise in storage and delivery.

The second quarter was marked by growth in marketplace sales, driven by the expansion of new categories

Sales during the quarter totaled R$14 billion, R$10 billion from e-commerce and R$4 billion from the physical stores. Compared to the same period in 2021, Magalu's total sales grew 1%. Taken from the perspective of the last three years, Magalu's total sales grew an average of 34% per year.

Even with a strong comparison base, Magalu's e-commerce business grew 2% during the second quarter, compared to a 3% decline in the size of the e-commerce market as a whole, according to Neotrust. Among other things, this reflects the fact that Magalu continues to gain market share. Over the last three years, Magalu's e-commerce business grew an average of 61% per year and the Company's market share online has grown by 11 percentage points.

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Earnings Release

2Q22

Marketplace sales grew 22% compared to the same period last year, reaching R$3.6 billion. Over the last three years, the average annual growth rate of the Magalu marketplace was an astonishing 84%.

The expansion of the marketplace is even more impressive when measured by new category growth. During the second quarter of 2022, sales of items in new categories, such as fashion, home, garden, sports, beauty, and automotive accessories, grew more than double the rate of the traditional categories. In the marketplace, the Fashion and Beauty categories grew 88% and 75% respectively, during the quarter.

Strong generation of cash and growth of operating margins

The company's main objective during the first half of 2022 was to increase its operating margins, without prejudicing market share and customer service. We did this while continuing to invest in new ways to help analogue retailers digitalize their businesses. During the second quarter in particular, Magalu accelerated the work of expanding margins that had already begun during the previous quarter.

Various cost cutting measures were implemented, including efforts to pass along costs related to higher inflation and interest rates. But this was just one of the steps taken to ensure healthy margins. In recent months, Magalu has also worked tirelessly to reduce expenses. It renegotiated contracts, optimized investments in marketing and logistics routes and adapted the capacity of its operation. These efforts were complemented by a growth in service revenues and the overall growth of the marketplace which improved the Company's financial margins.

Thus, we reached the end of the second quarter with an adjusted EBITDA margin of 5.7%, an increase of 0.7 p.p. compared to the previous quarter and 3.2 p.p. higher than the margin reported during the fourth quarter of 2021. This is the highest quarterly EBITDA margin since 2020, a step towards resuming pre-pandemic operating margin levels.

One of the most important highlights of the quarter was the strong generation of operating cash, which reached R$1.3 billion between April and June this year. This is, in large part, the result of an improvement in working capital, driven by reducing inventory levels and increasing the supplier balance. In June, Magalu's inventory position was already below the level of a year ago.

Operating cash flow in the second quarter strengthened an already solid capital structure. At the end of June, the company's total cash position was R$9 billion - almost R$500 million higher than the balance recorded in March of this year.

Magalu Ecosystem: Significant progress in the diversification of revenue sources

The Magalu Ecosystem is the engine powering our revenue diversification strategy and providing new sources of monetization. The companies that have joined forces with us in recent years have grown consistently, with positive results.

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Earnings Release

2Q22

Netshoes, for example, sold more than R$1 billion during the quarter, with R$30 million in profits and strong cash generation. Sporting goods growth remains at the double-digit level and we increased our share of the online market in this category by 2.5 p.p. compared to the second quarter of 2021. In the fashion category, sales at Magalu and Zattini grew 37% during the quarter, with a gain of 2.8 p.p. in online market share, reaching R$1.6 billion reais in annualized terms. Época Cosméticos was ranked #1 in the EBIT Top of Mind survey in online cosmetics and perfumery, and continues to grow with positive results. Newcomer Kabum generated more than R$150 million in cash during the quarter. AiQFome is now present in 815 cities, with an annualized GMV of R$1.4 billion during the second quarter of this year, presenting double digit growth with positive results.

In the fintech business, TPV reached R$22 billion during the second quarter. This was another quarter of important deliveries, with solutions that are ready to scale. MagaluPay reached the mark of 5.7 million open accounts and is now totally integrated with Hub Fintech's proprietary technology. In addition, MagaluPay took an important step towards its goal of powering the ecosystem, and is now available for use with the AiQFome mini-app. Other important deliveries which occurred during the quarter include: the launch of personal loans via our digital account (available to millions of SuperApp users) and a credit card for marketplace sellers, using Bit55's proprietary technology.

Credit card TPV continues to grow rapidly. In the period from April to June, TPV rose 42% to R$13 billion and the credit portfolio is now R$20 billion. Credit delinquency indicators also remain below historical levels. Non-performing loans (over 90 days) were just 7.7% at the end of the quarter. Luizacred's historically conservative credit approval model and the participation of physical stores in the collection process played a fundamental role in maintaining delinquency at below market rates.

In June, our cardholder base reached 7.3 million accounts, one of the largest in Brazil. Our credit card operation-Luiza Card and Magalu Card-continues to be our principal focus with an emphasis on people who are already in the Magalu and Itaú databases, have good credit profiles and are already pre-approved. Using this strategy, we were able to profitably expand the share of our proprietary means of credit, increasing sales with less default risk. In addition, we launched a new payroll-deductible loan program and an FGTS (social security) withdrawal initiative in the physical stores.

In Ads, we doubled our revenue during the second quarter compared to the same period in 2021. Magalu Ads launched a sponsored product service, offering Magalu marketplace sellers the opportunity to create their own sponsored product campaigns, displaying ads to SuperApp customers while they are conducting searches, via a self-service platform.

This week Magalu's virtual influencer, Lu, appeared on an electronic billboard in Times Square in an advertising campaign developed by Magalu Ads for Samsung. Lu also won a Golden Lion award at the 2022 Cannes Film Festival, surpassing Barbie to become the world's most popular virtual influencer, with 31.2 million fans on social media. In addition to being a brand ambassador, Lu helps establish a relationship of empathy with consumers, bringing much needed human warmth to the digital realm, and offering myriad monetization opportunities.

The second half of 2022 is distinct from the first half in the sense that the comparison base for annual sales for the durables category will be much smaller than the comparison base of previous quarters. The second half of 2022 is also distinguished by the presence of three key events which may influence retail sales: the Soccer World Cup, Black Friday, and the launch of 5G operations in Brazil.

Magalu is a broadcast sponsor of the 2022 World Cup. As such, the Company is entitled to thousands of ads on broadcast and cable television during the games as well as the Globo Network's digital channels. The goal is to bring Magalu's brands and offers to the screens of millions of Brazilians; highlight the Company's ecosystem and educate consumers on the breadth of Magalu's offerings from televisions and smart phones to sports, grocery and fashion items. This will be the #TemNoMagalu (#TheyHaveItAtMagalu) Cup!

We are confident about the second half of 2022. The measures that we implemented to combat the unfavorable macroeconomic environment are showing signs of success and we are redoubling our emphasis on discipline and rationality. We believe in the superiority of our hyperlocal, multichannel model; the continuous growth of our marketplace and the gradual resumption of sales in our traditional categories and are excited for the future!

Once again, we would like to thank our customers, employees, suppliers, sellers and investors for their continued trust and support.

EXECUTIVE MANAGEMENT TEAM

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