1 1 Company Overview
2 Brands
3 Growth Drivers
4 Financial Highlights
2 1 Company Overview
2 Brands
3 Growth Drivers
4 Financial Highlights
3 Who we are
The largest Brazilian footwear and apparel company in Latin America
Brands that lead markets with strong growth prospects
SANDALS SPORTING GOODS LUXURY APPAREL
Global business: - operations in Brazil, Argentina, Europe and the USA - exports to 85 countries
Flexible sourcing
Multi-channel distribution model
Consistent results and healthy capital structure
4 Business breakdown
Revenue by brand Revenue by region 2012: R$3.0 billion 2012: R$3.0 billion
Volume by product Volume by channel in Brazil 2012: 265,3 million pairs/units 2012: 226,6 million pairs/units
5 Attractive portfolio
6 Flexible sourcing
Installed Capacity
BRAZIL
Sandals: • 2012: 255 million pairs/year • 2014: 355 million pairs/year
Athletic footwear: • 13 million pairs/year
ARGENTINA
Athletic footwear: • 11 million pairs/year
VIETNAM, CHINA AND INDONESIA
Import of sporting apparel and footwear
7 Global distribution
Havaianas is sold in 85 countries Flagship stores (2012)
Number of Brazil Abroad Total stores Havaianas 281 101 382 Timberland 18 - 18 Topper - 12 12 Meggashop 19 - 19 Outlet -1717 Alpargatas Osklen 64 6 70 Total 382 136 518
Points of sale
BRAZIL ARGENTINA USA, EUROPE TOTAL AND EXPORTS
170,000 1,500 10,000 181,500
8 Lean management structure
CEO
Business Units Corporate Functions
Sandals Industrial
Sporting Goods Supply Chain
Luxury apparel Financial & IT
Argentina Human Resources
Legal
Strategic Planning
9 1 Company Overview
2 Brands
3 Growth Drivers
4 Financial Highlights
10 Brand Identity Products
Most well known Brazilian consumer brand worldwide
Among the 10 most valuable brands in the Brazilian retail market in 2013, according to Interbrand
50 years in 2012, with more than 4 billion pairs sold
International recognition:
55% of the Europeans know the brand 33% of the Americans 91% of the Australians
Media Coverage Distribution Channels
Vogue China San Francisco Macy’s Natalie Portman Flagship stores Brazil International 382
Own stores 2 12 14
Third-party operations (Franchises, concessions 279 89 368 Marie Claire and distributors) Vogue India Multi brand 150,000 10,000 (points of sale)
11 Stores in Brazil
Concept store in São Paulo Franchise store in São Paulo
Stores abroad
Barcelona Madrid London Milan
12 Franchises in Brazil (279) Franchises – general information
NORTH 4% Average monthly sales: US$34,000 h Average monthly volume: 3,000 units h NORTHEAST 12% h Average ticket: US$21 h h h h h Annual sales per sqm: US$20,000 h h h h h Same stores sales (2012x2011): h h volume: 4,5% h sales: 8,1% h h h hh h h h Fast growth in the number of franchises h CAGR = 42% h h h 09-13 MIDWEST 9% h h h h h hh h hh h h h h h h hh hh h hh h h hh hhh SOUTHEAST 70% h hh
SOUTH 5%
13 Brand Identity Products
Leading brand in running performance in Brazil
Wave: state of the art cushioning technology
Product categories: running, football, volley and judo
Licensed brand since 1996
Media Coverage Distribution Channels
Flagship stores Brazil
Own stores -
Third-party operations (Franchises, concessions - and distributors)
Multi brand 5,000 (points of sale)
14 Brand Identity Products
Most renowned football brand in Brazil
Leading sporting goods brand in Argentina
Product categories Brazil: football, casual, running and rugby
Product categories Argentina: football, tennis, casual, running, rugby, basketball and fitness & training
Media Coverage Distribution Channels
Flagship stores Brazil Argentina 382
Own stores - 12 14
Third-party operations (Franchises, concessions - - 368 and distributors)
Multi brand 5,500 1,500 (points of sale)
15 Brand Identity Products
Brazil’s pioneering sporting goods brand, with the first 100% Brazilian cushioning system
Product categories: running and casual
Media Coverage Distribution Channels
Flagship stores Brazil
Own stores -
Third-party operations Sneakers BR (Franchises, concessions - and distributors)
Multi brand 5,000 (points of sale)
16 Brand Identity Products
Global premium outdoor brand
Product categories: adventure and casual
Licensed brand since 1996
Media Coverage Distribution Channels
Flagship stores Brazil
Own stores 11
Third-party operations (Franchises, concessions 7 and distributors)
Multi brand 1,500 (points of sale)
17 Brand Identity Products
Most renowned Brazilian luxury apparel brand
Product categories: surfing, casual and collection
Reference in sustainability
Added to Alpargatas’ portfolio in March 2013
Media Coverage Distribution Channels
Flagship stores Brazil International 70
Own stores 38 6 44
Third-party operations (Franchises, concessions 26 - 26 Sting Madonna and distributors)
Multi brand 370 na (points of sale)
18 1 Company Overview
2 Brands
3 Growth Drivers
4 Financial Highlights
19 Sandals
How will we grow? Brazil’s sandals market (million of pairs)
Consolidating Havaianas as a dominant brand in Brazil: CAGR 12-14 = 6% - Innovation - Communication - Distribution - Brand extension
Expanding international presence: - New markets - Brand expansion - Exclusive stores
Increasing production capacity
Source: Kantar WorldPanel, GfK and Alpargatas’ estimates
20 New sandals plant
Location: Montes Claros, State of Minas Gerais Focus: higher value added sandals Inauguration: 2Q13 Capacity: 105 million pairs/year Cost saving: 10% to 15%
Technology Social and Environmental Projects
Automatic feeding and dosing systems Natural lightning and ventilation, capture and use Continuous production system of rain water, solar energy, waste recycling Automatic rubber cutting
Initiatives of the Alpargatas Institute and Advantages: Standardization, agility and inauguration of the Alpargatas Museum reduction of losses
21 Athletic footwear
How will we grow? Brazil’s athletic footwear market (million pairs) Consolidating leadership in Brazil: - Mizuno: running - Topper: football CAGR = 4.1% - Rainha: casual 12-14 - Timberland: adventure 131 125 CAGR12-14 Entering new categories: 121 - Topper: running and rugby - Mizuno: football and volley Running 7% - Rainha: volley
Football 27% Creating strong regional sporting brands: Casual - Topper: South America 6% - Mizuno: Argentina
Other -11% Expanding retail: new Mizuno Sports stores in Rio and Sao Paulo
Source: Kantar WorldPanel, GfK and Alpargatas’ estimates
22 Athletic footwear
23 1 Company Overview
2 Brands
3 Growth Drivers
4 Financial Highlights
24 Peer comparison
ALPARGATAS NIKE ADIDAS ASICS MIZUNO VF.Co Last balance sheet released 12/31/2012 5/31/2011 12/31/2012 3/31/2011 3/31/2011 12/31/2012
Net Revenue 1.5 24.1 19.6 3.1 2.0 10.9 (US$ billion)
Net Revenue CAGR 16% 6.7% 8.3% 2.3% (2.9%) 9.2% (last five years)
EBITDA 0.2 3.4 1.9 0.3 0.1 1.7 (US$ billion)
EBITDA CAGR 14% 5.8% 2.7% (0.7%) (7.1%) 11.3% (last five years)
EBITDA Margin 14% 14% 9.8% 10.2% 5.1% 15.3%
ROE 21.4% 22% 13.5% 10% 4.1% 22.5%
Source: Companies’ earnings releases
25 Net sales (R$ million)
CAGR 09-12= 16%
3,007
2,575 2,232 1,927
26 Sales volume (million units)
CAGR 09-12= 6.6%
265.3 249.6 244.0 218.9
27 Gross Profit (R$ million)
CAGR 09-12= 15%
1,273 1,154 1,018 831
Gross Margin
- Domestic 46% 48% 49% 45% - Havaianas International 56% 61% 50% 55% -Argentina 27% 28% 27% 25%
Consolidated 43% 46% 45% 42%
28 EBITDA (R$ million)
CAGR 09-12= 13%
414 401 405
290
EBITDA Margin
- Domestic 18% 21% 19% 16% - Havaianas International -6% 2% 0% 10% -Argentina 12% 13% 11% 6%
Consolidated 15% 18% 16% 14%
29 Cash net of debt (R$ million)
30 Shareholders’ compensation (R$ million)
Average in the Payout 24% 29% 26% 39% Brazilian consumer sector
Dividend Yield 0.6% 1.7% 1.5% 2.1% 1.4% (base March 31, 2013)
31 Stock performance
Average in the (March 31, 2013) Brazilian consumer sector P/E 18.5x 38.3x (base March 31, 2013)
32 Corporate structure
100% 100% 100% 18.7% 100% Alpargatas Alpargatas Alpargatas Tavex Cia. Brasileira Argentina USA Europe Corporation de Sandálias (Spain) (Brazil)
Common shares Preferred shares Market cap 199,676,488 189,124,980 388,801,468
Camargo Corrêa Silvio Tini Group Treasury Free Float 33 IR Team
José Roberto Lettiere – CFO and IRO [email protected] 55 11 3847-7406
José Sálvio Moraes – IR Manager [email protected] 55 11 3847-7397
Mariane Weger – IR [email protected] 55 11 3847-7672
Bruno Keinradl Monteiro – IR [email protected] 55 11 3847-7465
34 HISTORY OF GROWTH AND INNOVATION
Foundation GrowthGrowth andand LeadershipLeadership andand Global Footprint Foundation CreationCreation RecognitionRecognition Global Footprint
• Foundation in • With the launching • Alpargatas receives the Mauá • Havaianas, one of the 1907 of Conga and award, sponsored by the São most important Brazilian th • Begins production Bamba sneakers, Paulo Stock Exchange and brand of the 20 century, of Alpargatas Alpargatas initiates Jornal do Brasil, for its conquers store windows a new era in relationship with the capital Roda and worldwide footwear in Brazil market Encerados • Alpargatas expands its Locomotiva • Creation of • Elected the best in its sector retail business and ends brands in São Havaianas sandals by Exame Magazine 2010 with 212 stores in 4 Paulo • In 1970´s the • New factories are opened in countries • Driven by the Company launches Campina Grande, Santa Rita • Camargo Corrêa S.A. Brazilian Topper and acquires and João Pessoa, in Paraíba becomes the main economic growth, Rainha brand State, Northeast of Brazil shareholder of Alpargatas Alpargatas lists • Beginning of Havaianas • Several awards related to its shares on the turnaround with the marketing and brand São Paulo Stock launching of Havaianas Top recognition Exchange in 1913 • Licenses of Mizuno and • Startup of its own Timberland brands to the operations in Europe and Brazilian market in the United States • Havaianas sales hit an all- • Acquisition of Alpargatas time record: one hundred Argentina million pairs are sold • Creation of Alpargatas’ Institute, the social arm of the Company 1900s1900s 1950s1950s 1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s
35