Comentrio De Desempenho
LOJAS AMERICANAS S.A. Comments on Company Performance – 1st Quarter 2006
Rio de Janeiro, May 10th, 2006 – Lojas Americanas S.A. (BOVESPA: LAME3-ON; LAME4-PN), presents the consolidated results for the first quarter of 2006, except where otherwise indicated, on a consolidated basis in Reais, in accordance with Brazilian Corporate Legislation.
Lojas Americanas operates in the Brazilian retail sector. The Company has 200 stores (as of publication date), in 19 states in Brazil, plus the Federal District, and operates in electronic commerce, represented by Americanas.com and Shoptime - which also offers the option of catalogue sales and purchases through the TV channel - and acts as an agent in financing agreements for a financial institution through Americanas Taií. Financial Highlights Consolidated Results – First Quarter
Gross Revenue (R$ million) Executive Summary (Compared with the First Quarter of 2005) 1100 970.9
814.9 800 9 Consolidated Gross Revenue Growth of 19.1%. 572.9
500 451.4 408.4 353.6 9 Gross Margin Gross Profit of R$ 224.2 million or 200 evolution of 1.2 p.p. 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
9 Operating Income Gross Margin (% NR) R$ 55.5 million, growth of 7.4%. 35 32.0 31.2 30.5 9 EBITDA 29.3 30 28.0 R$ 75.1 million, growth of 12.6%. 27.3 25 9 Revenue per Associate Increase of 7.9% in productivity. 20 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 9 Americanas.com and Shoptime Increase of 110% in consolidated gross Operating Income (R$ million)* revenue.
70 Index 55.5 51.7 General Matters ...... 2 40 35.8 Panorama of Consolidated Result ...... 3 18.1 19.7 Consolidated Gross Revenue 3 Consolidated Net Revenue 3 10 Gross Revenue per Associate 4 Gross Margin 4 (6.4) -20 Operating Expenses 5 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06 Operating Income 6 EBITDA 6 EBITDA (R$ million) Sales by Form of Payment 7 Financial Result 7 90 75.1 Net Income 8 66.7 Indebtedness 8 60 Americanas Taií ...... 9 47.8 Americanas.com and Shoptime ...... 9 26.8 29.5 30 Investments and Expansion...... 10 Appendixes ...... 13 2.2 0 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
• * Operating Income before Financial Income and Equity Accounting. • Graphs – key “1Q” means results for the first quarter of each year.
LOJAS AMERICANAS 1st Quarter 2006
General Matters
To the Stockholders,
We present comments on the performance of Lojas Americanas S.A and its subsidiaries for the first quarter of 2006. It is important to mention that, in 2006, Easter fell on April 16, whereas last year it fell in the first quarter. Accordingly, there is a gap between the Company's sales, margins and expenses, produced by this important event when comparing the first quarters of 2005 and 2006.
In the first quarter of 2006 (1Q06), the company achieved growth of 19.1% in consolidated gross revenue compared to the same period of 2005 and EBITDA increased by 12.6% in the period, reaching R$ 75.1 million, or 10.2% of net revenue.
The consolidated gross revenue of Americanas.com and Shoptime increased by 110% compared with the first quarter of 2005.
FAI (Financeira Americanas Itaú), or Americanas Taií, launched the Private Label card at the beginning of May, and now offers another payment option for our customers.
We inaugurated eight new stores between January 2006 and the date of publication of this report, while one store in São Paulo was deactivated at the end of April, taking the store chain to a total of 200 units. In addition to the stores opened to date, a further 21 inaugurations are scheduled by the end of this year. In view of the total number of new stores, together with those that are in the final stages of contracting and negotiation, we are optimistic that the record of 37 new stores achieved last year will be surpassed. Details of the timetable for store inaugurations are provided in the “ Investments and Expansion” section of these comments.
Evolution of Sales Area x Number of stores Position at March 31
336 296 200 store s 263 233 236 240 159 store s 105
98 Stores of N° store s 125 94 store s store s store s Sales Area (thousand m²) (thousand Area Sales
1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
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LOJAS AMERICANAS 1st Quarter 2006
Panorama of Consolidated Result
Consolidated Gross Revenue
In the first quarter of 2006, the Company recorded total consolidated gross revenue of R$ 970.9 million, against R$ 814.9 million in the same period of 2005, growth of 19.1%. In the “same store sales” concept, that is, excluding new stores inaugurated less than a year ago and not including Americanas.com and Shoptime, there was a decrease of 9.4% in relation to the first quarter of 2005. This decrease was due to the gap between the dates of the Easter campaigns.
Gross Revenue (R$ million) Quarter 1200 1050 970.9 CAGR=22.4% 900 814.9 750 572.9 600 451.4 450 408.4 353.6 300 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
Consolidated Net Revenue In the first quarter of 2006, the Company recorded total consolidated net revenue of R$ 734.8 million, against R$ 620.6 million for the same period of 2005, growth of 18.4%.
Net Revenue - Parent Company (January to April)
Exceptionally, we provide the information that, as the Easter campaign fell in the second quarter, the "same number of stores" growth (net revenue) in the period January to April 2006 was 12.1% in relation to the same period of last year.
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LOJAS AMERICANAS 1st Quarter 2006
Gross Revenue per Associate
The gross revenue per associate in the first quarter of 2006 increased by 7.9% compared with the same period of the previous year. Comparison of this important measure of productivity for the first quarters of 2005 and 2006 was affected by the gap between the Easter campaign sales.
Gross Revenue per Associate (R$ thousand) Quarter 120
100 CAGR= 25.0% 91.7 85.0 80 65.4 60 45.8 48.5 40 30.0 20 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
Gross Margin
In the first quarter of 2006 (1Q06), Lojas Americanas recorded consolidated gross profit of R$224.2 million, an increase of 23.1% in relation to the R$ 182.1 million recorded in the first quarter of the previous year (1Q05). Analyzing the gross margin for 1Q06, we note an increase of 1.2 p.p. in relation to 1Q05.
Gross Margin (%NR) Quarter 35 32.0 31.2 30.5 30 29.3 28.0 27.3
25
20 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
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LOJAS AMERICANAS 1st Quarter 2006
Operating Expenses
Selling Expenses
In the first quarter of 2006 (1Q06), selling expenses totaled R$ 131.1 million, or 17.8% of net revenue (NR), an increase of 1.8 p.p. compared with the first quarter of 2005 (1Q05). This increase relates to the gap in the Easter sales, which in 2005 were concentrated in the first quarter, thereby diluting the selling expenses in relation to NR. The opening of 41 stores in the last four quarters and the growth in the consolidated gross revenue of Americanas.com and Shoptime (growth of 110% in 1Q06) should also be taken into account in this analysis.
Selling Expenses (%NR) Quarter 30 260 25 22.6 220 19.5 18.1 17.8 200 20 16.9 16.0 159 stores 180 15 125 stores 98 105 stores 94 140 10 stores stores stores 5 100
0 60 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
General and Administrative Expenses
General and administrative expenses totaled R$ 18.0 million in the first quarter of 2006, or 2.4% of NR, resulting in a reduction of 0.2 p.p. in relation to the same period of 2005. It is important to remember that the general and administrative expenses for the first quarter of 2006 include the expenses of Shoptime, which was acquired in September 2005.
G&A Expenses (%NR) Quarter
6 5 4.6 3.8 4 3.2 3 2.7 2.6 2.4 2 1 0 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
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LOJAS AMERICANAS 1st Quarter 2006
Operating Income
In the first quarter of 2006, operating income before financial income and equity accounting increased by 7.4%, totaling R$ 55.5 million, against R$ 51.7 million in the same period of 2005.
Operating Income (R$ million) Quarter 70 55.5 51.7
40 35.8
18.1 19.7 10
(6.4) -20 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
EBITDA
In the first quarter of 2006, EBITDA totaled R$ 75.1 million, representing growth of 12.6% in relation to the same period of 2005.
The EBITDA margin in 1Q06 was 10.2% of net revenue, compared to the 10.7% of NR recorded in the first three months of 2005 (1Q05). It is important to remember that operating cash generation in 1Q05 was influenced by the contribution of the Easter sales.
EBITDA (R$ million and %NR) Quarter 100 30%
CAGR= 102.6% 80 75.1 25% 66.7 20% 60 47.8 15% 10.2% 40 29.5 26.8 10% 10.4% 10.7% 8.7% 20 7.3% 5% 2.2 0.8% 0 0% 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
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LOJAS AMERICANAS 1st Quarter 2006
Sales by Form of Payment
The table below shows the breakdown of sales by form of payment (Parent Company and Consolidated) in the first quarters of 2005 and 2006:
Sales by Form of Payment
Parent Company Consolidated Form of Payment 1Q06 1Q05 VAR. 1Q06 1Q05 VAR. Cash 57% 58% - 1 p.p. 47% 48% - 1 p.p. Credit Card 41% 40% + 1 p.p. 52% 50% +2 p.p. Check 2% 2% - 1% 2% - 1 p.p.
Financial Result
The net financial result for the first quarter of 2006 was R$ 49.5 million, compared to R$ 34.8 million in the same period of 2005.
The negative variation of R$ 14.7 million in the consolidated financial result for the first quarter of 2006, in relation to the same quarter of the previous year, was caused by the increase in taxes and contributions on financial operations, an increase in the expense of loan interest and restatement of tax liabilities. The legality of these tax liabilities is being challenged in the courts. Additionally, the impact of the acquisition of Shoptime, which did not apply in the previous year, was also felt in the quarter.
The Company continues to maintain its commitment to the conservative cash investment policy, by taking a hedge position in US dollars to protect it against exchange variations, for both its financial liabilities and its total cash position.
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LOJAS AMERICANAS 1st Quarter 2006
Net Income
The consolidated net income in the first quarter of 2006 was R$ 3.4 million, compared with R$ 10.8 million in the same period of 2005. We emphasize that the net income recorded in the first quarter of 2005 includes the effects of Easter.
Net Income (R$ million) Quarter
15 12.5 10.8 7.8 5.0 3.4 5
-5
(10.6) -15 1Q01 1Q02 1Q03 1Q04 1Q05 1Q06
Indebtedness
The consolidated short and long-term loans of Lojas Americanas as of March 31, 2006 amounted to R$ 1,145.0 million. Subtracting the cash position (cash + money market investments + credit card accounts receivable) from the total loans, indebtedness amounts to R$ 221.1 million. In the same period of last year, the net indebtedness was R$ 67.3 million.
In comparing the net cash/indebtedness positions, it should be borne in mind that the position as of March 31, 2006 includes the merger of Shoptime's debt, but does not take into account all the revenue from the Easter campaign.
Consolidated Indebtedness 03/31/2006 03/31/2005 Loans and financing 416.6 254.2 Short-term debentures 8.5 8.2 Short-term indebtedness 425.1 262.4 Loans and financing 520.0 478.9 Long-term debentures 199.9 199.9 Long-term indebtedness 719.9 678.8 Gross indebtedness 1.145.0 941.2 Cash and banks 118.6 35.2 Money market investments 730.0 424.6 Credit cards (receivable from customers) 75.3 414.1 Total cash available 923.9 873.9 (Indebtedness) / Net Cash (221.1) (67.3)
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LOJAS AMERICANAS 1st Quarter 2006
Americanas Taií
The process of regulation of Financeira Americanas Itaú (FAI), better known as Americanas Taií, resulting from the partnership between Lojas Americanas and Banco Itaú, in the Brazilian Central Bank was finalized in the first quarter of 2006. The Private Label card was launched at the beginning of May, providing another payment option for Lojas Americanas customers.
The next product to be launched by FAI is the Personal Loan card. This new product will allow customers with or without bank accounts access to personal loans using the Americanas Taií card.
Americanas.com and Shoptime
Lojas Americanas holds 81% of Americanas.com, the leading e-commerce company in sales volume and purchase destination in Latin America.
The figures for the first quarter of 2006 reflect the consolidated results of Americanas.com, including the results of Shoptime's operations.
In the first quarter of this year, the consolidated gross revenue of Americanas.com reached R$ 316.4 million, 110% higher than in the same period of 2005.
Americanas.com and Shoptime operate through a number of sales channels - two Internet sites (www.americanas.com.br and www.shoptime.com.br), telesales, a TV channel and a catalogue - and offer over 200 thousand items, in various product categories, to six million customers.
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LOJAS AMERICANAS 1st Quarter 2006
Investments and Expansion
Our objective is to create value for our stockholders, in accordance with our motto “We Always Want More”. The Lojas Americanas expansion project is concentrated on five main fronts: Traditional stores, Express stores, Americanas.com, Shoptime and Americanas Taií.
Taking the last four quarters and the period from April 2005 to March 2006 into account, we completed 41 store inaugurations, showing that the Company is committed to its expansion process.
Seven stores were inaugurated in the first quarter of 2006, four in the traditional model and three express model stores. After closing the quarter, we inaugurated another traditional store and decided to deactivate the store located in the Itaim Bibi district of São Paulo, as its profitability rating was below the result targets established by the Company.
Stores inaugurated in the 1st Quarter 2006: RETAIL FLOOR STORES INAUGURATION DATE SPACE
Express Shopping Boa Vista – Recife – PE 436 m² 02/09/2006
Express Rua Augusta – São Paulo – SP 448 m² 03/08/2006
Express Rua São Clemente – Rio de Janeiro – RJ 573 m² 03/09/2006
Natal Shopping – Natal – RN 1,242 m² 03/10/2006
Shopping do Vale do Aço – Ipatinga – MG 1,212 m² 03/23/2006
Viashopping Barreiro – Barreiro – MG 893 m² 03/23/2006
Shopping Total Curitiba – Curitiba – PR 1,027 m² 03/23/2006
Store inaugurated after the 1st Quarter 2006: RETAIL FLOOR STORE INAUGURATION DATE SPACE
Suzano Shopping Center – Suzano – SP 893 m² 04/05/2006
Store deactivated after the closing of the 1st Quarter 2006: RETAIL FLOOR STORE DEACTIVATION DATE SPACE
Rua João Cachoeira – Itaim Bibi – São Paulo – SP 1,406 m² 04/27/2006
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LOJAS AMERICANAS 1st Quarter 2006
The table below shows the 21 stores already contracted and with inauguration scheduled for 2006:
SCHEDULED INAUGURATION STORES RETAIL FLOOR SPACE DATE
Shopping Capital – São Paulo – SP 1,103 m² May 2006
Shopping Avenida Center – Dourados – MS 1,240 m² May 2006
Shopping Royal Plaza – Londrina – SC 977 m² May 2006
Shopping Conquista Sul – Vitória da Conquista – BA 1,011 m² June 2006
Express Av. Paulista – São Paulo – SP 573 m² June 2006
Av. Marechal Floriano – Curitiba – PR 1,602 m² June 2006
Shopping Center 3 Américas – Cuiabá – MT 1,061 m² June 2006
Maracanaú Shopping – Maracanaú – CE 1,070 m² June 2006
Express Av. Liberdade – São Paulo – SP 656 m² July 2006
Criciúma Shopping Center – Criciúma – SC 1,100 m² July 2006
Express Rua do Arouche – São Paulo – SP 340 m² July 2006
Av. Passos – Feira de Santana – BA 1,358 m² July 2006
Express Itaipu – Niterói – RJ 515 m² July 2006
Express Visc. de Pirajá – Rio de Janeiro – RJ 430 m² September 2006
Farol Shopping Center – Tubarão – SC 1,393 m² October 2006
Taubaté Shopping Center – Taubaté – SP 1,000 m² October 2006
São Luis Shopping Center – São Luís – MA 1,216 m² October 2006
Express Executive Trade Center– Recife – PE 460 m² October 2006
Terra Parque Shopping – Divinópolis – MG 1,100 m² November 2006
Shopping Center Jaracati – São Luis – MA 1,400 m² November 2006
Shopping Center Sta Úrsula – Ribeirão Preto – SP 748 m² November 2006
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LOJAS AMERICANAS 1st Quarter 2006
Consolidated Investments
Lojas Americanas invested R$ 30.7 million between January and March 2006. We estimate that around R$ 158.1 million will have been invested by the end of this year.
1st Quarter 2006
• Refurbishment and inaugurations - R$ 15.9 million
• Technological updating - R$ 9.7 million
• Distribution and logistics - R$ 2.9 million
• Other projects - R$ 2.2 million
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LOJAS AMERICANAS 1st Quarter 2006
Appendixes
LOJAS AMERICANAS S.A. CONSOLIDATED INCOME STATEMENT QUARTER ENDED March 31 In million of reais, except net income per one thousand shares
Quarter 1Q06 1Q05 Var. (%)
GROSS SALES AND SERVICES REVENUE 970.9 814.9 19.1% Taxes, returns and discounts on sales (236.1) (194.3) 21.5%
NET SALES AND SERVICE REVENUE 734.8 620.6 18.4% Cost of goods and services sold (510.6) (438.5) 16.4%
GROSS PROFIT 224.2 182.1 23.1% Gross Margin 30.5% 29.3% +1.2 pp
OPERATING REVENUE (EXPENSES) Sales (131.1) (99.3) 32.0% General and administrative (18.0) (16.1) 11.8% Depreciation/Amortization and Others (19.6) (15.0) 30.7% (168.7) (130.4) 29.3% Operating Expenses (% of Net Revenue) 23.0% 21.0% +2.0 pp
OPERATING INCOME 55.5 51.7 7.4% Operating Margin 7.6% 8.3% -0.7 pp
Financial Result - Net (49.5) (34.8) 42.2% Non-Operating Income 1.7 (0.1) - Participations / Income Tax and Social Contrib. (4.3) (6.0) -28.3%
NET INCOME FOR THE QUARTER 3.4 10.8 -68.5% Net Margin 0.5% 1.7% -1.2 pp
EBITDA 75.1 66.7 12.6% EBITDA Margin 10.2% 10.7% - 0.5 pp
Total shares (million) 68,569 67,958 0.9% Shares in treasury (million) 1,770 1,502 17.8% Total outstanding shares (million) 66,800 66,456 0.5%
Net income per one thousand shares at the end of the quarter R$ 0.05 R$ 0.16
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LOJAS AMERICANAS 1st Quarter 2006
LOJAS AMERICANAS S.A BALANCE SHEETS AT MARCH 31 - CONDOLIDATED In thousand of Reais March 06 March 05 ASSETS 2,455,220 1,992,192 CURRENT ASSETS Cash and banks 118,559 35,168 Money market investments 702,386 424,634 Accounts receivable - clients 124,191 472,516 Inventories 590,083 444,118 Recoverable taxes 76,755 77,033 Deferred income tax and social contribution 11,817 10,925 Prepaid expenses 45,007 14,870 Other accounts receivable 14,322 18,607 1,683,120 1,497,871 LONG-TERM ASSETS Money market investments 27,664 Loans and advances from subsidiary - Accounts receivable from stockholders - Share option plan 29,330 29,568 Deferred income tax and social contribution 170,520 131,643 Judicial deposits 45,014 41,862 Prepaid expenses 3,923 1,961 276,451 205,034 PERMANENT Investments 170,269 42,520 Property and equipment 211,191 162,470 Deferred charges 114,189 84.297 495,649 289.287
LIABILITIES AND STOCKHOLDERS' EQUITY 2,455,220 1,992,192 CURRENT LIABILITIES Suppliers 545,425 491,437 Loans and financing 416,642 254,211 Debentures 8,472 8,207 Salaries and social security contributions 22,152 21,307 Taxes and contributions 55,216 58,872 Dividends and interest on capital payable 66,250 185 Third party's fees 3,873 2,699 Provision for contingencies 12,134 7,401 Other accounts payable 64,545 54,418 1,194,709 898,737 LONG-TERM LIABILITIES Loans and financing 520,003 478,889 Debentures 199,934 199,934 Taxes and contributions 254,226 193,758 Provision for contingencies 33,314 12,038 1,007,477 884,619
MINORITY INTEREST 16,289 9,975
STOCKHOLDERS' EQUITY Capital 183,114 152,882 Revenue reserves 103,463 75,636 Treasury stock (53,220) (40,458) Net Income for the period 3,388 10,801 236,745 198,861
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LOJAS AMERICANAS 1st Quarter 2006
Development in the number of stores, associates and retail floor space – Lojas Americanas Nº of Stores Retail floor space Nº of Associates 03/31/05 159 295,753 m² 8,483 Opened 34 Closed - 12/31/05 193 330,140 m² 9,282 Opened 7 Closed - 03/31/06 200 335,978 m² 9,383
Statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of Lojas Americanas, eventually expressed in this release, are merely projections and, as such, are based exclusively on the expectations of Lojas Americanas’ management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and are, therefore, subject to change without prior notice.
MSCI Logo: The use of Morgan Stanley Capital International Inc.´s ("MSCI") trademarks and index names does not constitute a sponsorship, endorsement or promotion by MSCI, any of its affiliates, any of its information providers or any other third party involved in, or related to, compiling, computing or creating any MSCI index. The MSCI indexes are trademarks of MSCI or its affliates and have been lincensed for use for certain purposes by Lojas Americanas S.A.
Investor Relations: Murilo Corrêa – Investor Relations Manager Telephone: (+55 21) 2206-6505 FAX: (+55 21) 2206-6898 E-mail: [email protected]
Internet address: http://ir.lasa.com.br
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