MAGAZINE LUIZA S.A. December 10, 2015 3704/2015-SAE
Magazine Luiza S.A.
Mr. Roberto Bellissimo Rodrigues Investor Relations Officer
In reference to: Request for clarifications of news article
Dear Sirs,
The news article published by Agência Estado - Broadcast, on December 10, 2015, says, among other information, that this company:
has the intention of keeping 2015 gross margin level into 2016;
expects to make lower investments in expansion during 2016 with lower real estate costs.
We have not identified any of these pieces of information among the documents the company delivered to us through the Empresas.NET System. Should this information have already been provided, please inform us which document and pages it can be found, as well as the date on which it was delivered.
It is worth emphasizing that the company must disclose periodical and non-recurring information, as well as any other information of the market's interest, through the Empresas.NET System. This ensures the immediate and broad disclosure of information and the equal treatment given to company's investors and other market participants.
Accordingly, we require that the company provides us with clarifications of the above mentioned items up to December 11, 2015, whether confirming or denying this information, as well as other information deemed important.
The file to be sent need to include a transcription of the consultation content above placed before the company's answer.
This request is under the Cooperation Agreement entered into between the CVM and the BM&FBOVESPA on December 13, 2011. Should this not be responded, the company may be subject to injunctive fine by CVM's Company Relations Department (SEP), in compliance with CVM Rule 452/07.
Sincerely,
Nelson Barroso Ortega Company Monitoring Department
Copy to: Brazilian Securities and Exchange Commission (CVM) Mr. Fernando Soares Vieira - Company Relations Officer
Mr. Waldir de Jesus Nobre - Market and Agents Relations Officer
The company's answer must be sent exclusively through the IPE module, by selecting either Material Fact or Notice to the Market as Category, Clarifications on CVM/Bovespa consultations as Type, and News article published by the press as Subject. Thus, the file will be transmitted simultaneously to the BM&FBOVESPA and the CVM.
December 10, 2015 12:00:29 - AE NEWS
São Paulo, December 10, 2015 - Magazine Luiza is "considering with great discipline" the opening of new stores in 2016, said the company's CEO, Frederico Trajano. In São Paulo, he affirmed to journalists that the chain expects to reduce investments in new stores because of the reduction in "real estate rents."
"We are not paying any key money anymore, and we are committed to open stores only in places that offer lower rents per square meter," he said.
He stated that the company may opt to close some stores in 2016, but only stores located in places where the rents cannot be renegotiated. According to him, however, the balance between store closing and store opening must be positive, that is, the company expects that the number of stores opened exceeds the number of stores closed.
Mr. Trajano also commented on the company's gross margin. The main competitor, Via Varejo, has been informing that it expects lower margin for the next year. Mr. Trajano, however, affirmed that the company has the intention of keeping 2015 gross margin level into the next year. But he reiterated that the margins will depend on competition scenario. (Dayanne Sousa - dayanne.sousa@estadao.com)
São Paulo, December 11, 2015
To
BM&FBOVESPA S.A. - Securities, Commodities and Futures ExchangeIssuer Monitoring Management Attn.: Mr. Nelson Barroso Ortega Copy to:
Brazilian Securities and Exchange Commission (CVM)Company Relations Department
Market and Agents Relations Department
Attn.: Mr. Fernando Soares Vieira
Attn.: Mr. Waldir de Jesus Nobre
Dear Sirs,
MAGAZINE LUIZA S.A., publicly held company with head office at Rua Voluntários da Franca, 1465, in the city of Franca, state of São Paulo, inscribed in the roll of corporate taxpayers (CNPJ/MF) under number 47.960.950/0001-21, represented herein according to its Bylaws ("Company"), in compliance with the Official Letter, hereby provides clarifications of news article published by Agência Estado - Broadcast on December 10, 2015 entitled "Magazine Luiza expects lower investments in expansion for 2016 with lower real estate costs" ("News Article").
The Company believes that the News Article was extracted from the clarifications provided by the Company's management at the annual meeting held on December 10, 2015 ("ML Day"). During this event, the Company's main executives meet market analysts and key investors to present the changes in its main economic indicators throughout the year, and the participants have the opportunity to understand in details the policies and measures adopted by the Company.
For the event, the Company prepared a presentation (available on its website, under section "Investors", named "ML Day Presentation") that shows the business growth in its diverse areas of operations. It is worth emphasizing that both the aforementioned written presentation and the Company's executive speeches show the Company's concern to disclose concrete, true and precise figures.
The News Article, object of this clarification, includes the following sentence: "the company has the intention of keeping 2015 gross margin level into 2016." However, it is a personal expectation of the Company's Chief Executive Officer, Mr. Frederico Trajano, based on 2015 historical comparison figures, and it indicates that the Company does not intend to succumb to Brazil's evident economic recession. He also reiterated that the behavior of margins will depend on competition scenario.
Based on the Company's historical figures, according to its Reference Form, the gross margin has remained generally stable over the past three years, varying around 0.5% at maximum per year. So Mr. Frederico Trajano's quote saying that the company has the intention of "keeping the level" simply reflects the Company's performance over the years, which is consistent with the levels already practiced in the current year.
In addition, the News Article affirms that the Company "expects to reduce investments in new stores because of the reduction in real estate rents." This is also a personal opinion of Mr. Frederico Trajano, considering Brazil's current adverse economic scenario, mainly with regard to real estate market. Thus, this must not be considered a Company's projection, because it is only a possible trend in the real estate sector.
Accordingly, the quote saying that "the balance between store closing and store opening must be positive, that is, the company expects that the number of stores opened exceeds the number of stores closed" also reflects a personal opinion based on the Company's organic growth over the past years. According to historical data included in the Reference Form, the number of stores has continuously grown, from 743 in 2012 and 744 in 2014 to 756 in 2014.
These personal expectations neither are, and must not be considered or understood by investors as, a Company's concrete outlook (guidance) for the gross margin or investments in expansion for 2016, nor be considered by investors as the basis of concrete expectation of future results.
It is worth emphasizing that the Company does not present any estimated goals or growth expectation for the following years, since it follows the policy of not presenting projections to the market, according to the Company's Reference Form made available to this Commission.
Thus, the Company reinforces its commitment to disclose precisely and correctly its information to the market, and that it has never made, and does not intend to make, any projections. Should the Company decide to make such projections someday in the future, it will take the required normative measures.
We remain at your disposal for further clarifications.
Sincerely,
Name: Roberto Bellissimo Rodrigues |
Position: Chief Financial and Investor Relations Officer |
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