Magazine Luiza : 2Q17 Presentation Results Aug, 01 2017

Magazine Luiza 2Q17 Conference Call

August, 1th 2017

Sales E-commerce

• Sales growth of 26% reaching R$3.2 billion

• SSS growth of 24% (+15% bricks and mortar)

• Market-share gains (versus +5% market growth)

• Growth of 55% versus market growth of 12% (E-bit)

• Share of 28% in total sales

Gross Profit Operational Expenses EBITDA Net Profit Working Capital Leverage

• Gross profit grew 22%, reaching R$ 835 million

• Solid sales growth with flat margins per channel

• Dilution in 210bps to 23% of net revenue

• Expenses growth of 15% versus sales growth of 26%

• Operational Leverage, e-commerce growth, ZBB e EMM

• Evolution of EBITDA from 45% to R$ 236 million (8,7% margin)

• Evolution of net income to R$ 72 million (ROE of 40%)

• Improvement in adjusted working capital need of R$ 516 million

• Adjusted net debt reduction of R$587 million to R$268 million

• Adjusted net debt/adjusted EBITDA down from 1.5x to 0.3x

  Luizacred

  • Reduction of NPL 90 by 330bps with Luiza Card growth

  • Net income of R$ 27 million with ROE of 19%

    2

    Number of Stores

    Capex

    # stores R$ million

    +27 stores 78

    15

    19

    39

    787	791	800	804	814
    1114	1115	120 1	120 1	123 1
    672	675	679	683	690
    2Q16	3Q16	4Q16	1Q17	2Q17

    4250

    1

    27 4 13

    1

    14

    6 26

    1421

    5 2 103

    0 1 1 2

    2Q16 2Q17 1H16 1H17

    Conventional Stores Site Virtual Stores

    New Stores

    Remodeling

    IT Logistics Other

    Average Age - Stores

    Comments

    694

    18

    28

    14

    25

    35

    • Opened 27 new stores in the last 12 months

    • Around 15% of our stores are in maturation process

    • Capex of R$42 million on 2Q17, and 49% of total investments went to IT projects due to our digital transformation strategy

      More than 5 years	Up to 1 year	Up to 2 years
      Up to 3 years	Up to 4 years	Up to 5 years

      3

      Gross Revenue - Consolidated

      Gross Revenue - Internet

      R$ billion R$ million

      2.6% 4.8% 3.6% 23.0% 25.6%

      24.3%

      27.8% 33.6% 30.6% 56.2% 55.4% 55.8%

      2.6

      5.3

      2.7

      3.4

      3.2

      6.6

      605

      572

      1,177 945

      889

      1,834

      1Q 2Q 1H 1Q 2Q 1H

      1Q 2Q 1H 1Q 2Q 1H

      2016 2017 2016 2017

      Same-Store Sales Growth

      Comments

      33.6%	55.4%
      23.7%	25.6%
      14.5	%
      2.4%	4.7%
      -4.3%	2Q16	2Q17
      Same Physical Store Sales Growth Ecommerce Growth SameStoreSales Growth Total Retail Sales Growth

      • Market share gains in main categories

      • SSS in brick and mortar stores (+15%) in 2Q17

      • E-commerce accounted for 28% of total sales (from23%)

      • Market sales of furniture and domestic appliances

        +5% (PMC/IBGE)

      • E-commerce market growth of +12%

Growth over the same period of last year

4