I N S T I T U T I O N AL P R E S E N TAT I O N 3 Q 1 9
1. Centauro at a Glance
Centauro at a glance Leading sporting goods Omnichannel retailer in Latin America with a solid digital platform and a countrywide • Revenue breakdown 9M19 presence through 196 well-located stores Accessories 17% 31% 17.5% 82.5% % of Net revenues Apparel 3Q19 Omnichannel sales 11.7% as a % of 1P sales 52% 3Q19 Footwear Customer-centric Our numbers approach in all we do 83.0% Gross revenue LTM¹: R$ 3,036 million Expressive NPS +5.6 p.p YoY evolution as of 9M18 Recurring EBITDA LTM : R$ 282.8 million 1,3 • NPS considered as a KPI for performance Recurring EBITDA margin² LTM : 11.7% 1,3 and bonuses Source: Company and Euromonitor Note: The results presented are based on figures excluding the effect of IFRS 16. (1) LTM as of September 2019; (2) Margin over net revenues; (3) Figures excluding the effect of PIS/COFINS. Considering the effect of PIS/COFINS EBITDA LTM was R$362 million and EBITDA Margin LTM was 3 14.9%.
Customer-centric strategy An outside-inside approach to design our services, stores and products Sports Environment Lifestyle Health Entertainment Training Social Tournament PRODUCTS, COMMUNITY TO SERVE SERVICES, ATHLETES, COACHES, INFORMATION SPORTS FANS, CLIENTS, HEALTH AND EXPERIENCE PROFESSIONALS, GIFTS 4
Financial Performance – 9M19 +9.9% gross revenues 50.1% gross margin Growth in 9M19 +0.8 p.p vs. 9M18 3.6% SSS B&M +25.4% GMV¹ Sales +29.9% SSS ex-World Cup³ +6.7% SSS ex-World Cup³ +77.2% vs. 9M17 +15.2% vs. 9M17 15.9% EBITDA margin² +60.1% EBITDA² +5.0 p.p vs. 9M18 Growth in 9M19 4 4 11.2% EBITDA margin ex-non-recurrent events +13.2% EBITDA ex-non-recurrent events Source: Company Note: The results presented are based on figures excluding the effect of IFRS 16. (1)Considers marketplace revenues; (2) Accounting figures. Growth in 2018 for Adjusted EBITDA was: 32% / margin increase in 2018 for adjusted EBITDA was 150 bps vs 2017; (3) Ex -World Cup eliminates the effects of sales products related to Brazilian soccer team and other teams, as well as official soccer balls, in the periods; (4) Figures excluding the effect of non-recurrent events such gains with the reversal of the labor claim and PIS/COFINS 5
2. Investment Highlights
Investment highlights Centauro: the preference in sporting goods Sporting goods: highly attractive segment Fast-growing and profitable omnichannel platform 1 Customer-centric strategy 2 3 Highly experienced management team 4 Significant opportunities for top-line growth and profitability improvement 5 7
Sporting goods is an attractive retail 1 segment… Sporting goods retail beats out general merchandise across all key aspects Highly attractive market General Sporting goods merchandise/electronics Categories Replacement cycle 3-4 months 36-72 months¹ Gross margin 40-50% 20-30% Exposure to Low High pricing war Exposure to Low High weight / Volume Capacity to use / leverage High Low stores as DCs Source: Companies information, Euromonitor and, eMarketer, Wall Street Research, Consumer Technology Association, American Enterprise Institute, Claims Page 8 (1) For the purposes of this calculation, excluding cellular
…with compelling levers of growth 1 Shopping malls predominance Attractive e-commerce environment Highly fragmented market Still low penetration in Brazil… Unique position to expand… Room for growth in e-commerce 2017 GLA penetration (sqm per 1,000 inhab.) 2017E Retail e-commerce Sales Share (%) 1 st 19.1% 23.1% 2.7% 2,180 75 9.0% … in a highly fragmented market Market share 1 Retail E-commerce sales had posted significant figures recently and Brazil has just started its movement toward 19% digitalization Contribution of shopping malls Others Brazilian market is expanding to retail sales in Brazil 5.2% in a fast pace 94.8% 16-17 YoY Digital Shoppers Growth (%) …and intrinsic to Brazilian Culture 7.0% 2.8% Safety is still a major concern Market Size (R$ bn) 1.9% Further comfort and 3 rd largest environment 34,8 convenience to retailers and 93mm 33,2 shoppers …and is growing faster than countries such as US and UK 2017 2018 Source: Euromonitor, eMarketer, ABRASCE and International Council of Shopping Centers (ICSC) 9 (1) Market share of Sporting goods retail considering only physical stores
Omnichannel as the backbone of 2 Centauro’s strategy Brick-and-mortar countrywide presence to support e-commerce through the omnichannel strategy Omnichannel Platform 196 Stores 2 Distribution OMS integrated operating centers Inventory as mini DCs 2 9 2 3 Present in 24 states and in the 97 most relevant 3 2 cities 6 1 1 Reaches 39% of Brazilian population and 52% 3 1 2 8 2 of national income 7 Same day delivery and standard delivery carriers developed 7 18 and integrated to omnichannel systems 3 2 59 Omnichannel integration providing 8x increase 26 11 in inventory available to digital costumers 8 Resulting in a broad solutions portfolio 10 Ship from Buy Distribution Center store Click and Online - Mega Loja (standard collect Exchange in and express) store # Stores / mini DCs 10 Source: Company
2 Omnichannel results and initiatives Omnichannel as a % of 1P Sales 12% Digital P&L 11% 40-50% margin business Reduced Freight Costs 10% 1.9% -Click & Collect: no cost 3.5% 0.8% -Ship from Store: Paid by costumer 9% -Returns through stores 8% 0.4% Low Marketing cost 0.2% -84% brand awareness -Emails collected in store 6% Channel Reinforcement Digital sale increase with stores 9% 9% openings 8% 8% 8% Click & Collect leads to impulse buying 3% at stores 3% 6% OMNI Initiatives 2% 3% Website with Geolocation 1% 3% 1% 2% RFID 1% 1% Private fleet 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Digital Platform Brick-&-Mortar stores 11 Source: Company
2 Enhanced Customer Journey New B&M model bringing Omnichannel platform to the store and focusing on the customer experience vs Renewed Experience (G5) G5 Store Old Generation Store 62% of our current stores were not refurbished in the last 8 years Previous format stores have presented historical sales increase post remodeling Design based on the customer journey: find, choose, try, pay ~72% of CAPEX sponsored by malls and suppliers in 2018 4 refurbishments and 7 new G5 stores in 9M19 27 G5 stores out of 196 stores Source: Company 12
3 Customer-centric strategy Changing internal culture and behavior, improving analytics and bringing data and services to enhance client experience in the sports environment Experiences / Inovation Area dedicated to Innovation Innovation Mindset Data Science Big Data and Interviews with Personal Trainer BI 2018 internal areas looking for Innovation opportunities Clients Eficiency People Experimentation through Dynamic pricing on Retail as a service products from our digital investment in technology platform Reduction of inventory rupture Agility in the implementation of through Data Science Assistance improvement projects Optimization of our CRM Data Base 13 Source: Company
3 Customer-centric strategy (Cont’d) Constantly innovating to offer the assortment and partnerships our customers want Partnerships and Initiatives for a Differentiated Assortment Exclusive Assortment Partnerships Private label Marketplace and Segmentation¹ Strategically complementary to First sporting goods retailer ever (2 nd most sold brand) our portfolio with to offer FCB licensed products sport-related products and other partnerships with and categories soccer teams, as exclusive B&M authorized retailer that we do not offer +Several other models and exclusive products ✓ ✓ ✓ 315 sellers offering Gathering women and sports 120 thousand SKUs through exclusive collections and Competitors in 2018 other partnerships such as Lauf, ✗ ✗ ✗ Main Memo, Vestem, Colcci Fitness Gains in scale and Differentiated assortment Take rate of 22.1% making Centauro more relevant strategic relevance in 2018 Several exclusive niche brands on Google Search results such as Brooks, and others Source: Company 14 (1) Exclusivity when comparing to other retailers. Does not consider brand stores
4 Experienced management team Management team aligned to the company’s new cycle of growth Top-notch management team Long-term incentives based on stock option plan Team committed and aligned with the company’s future Thoroughly organized and goal-oriented management system Years at Years of Previous Board of directors Centauro Experience Experience Sebastião Bomfim Pedro Zemel Chairman 6 15 CEO José Salazar 3 31 German Quiroga Luiz Alberto Quinta Finance & IR (B2W Founder, (BRMalls Board Cnova Co-CEO member) and Board member) Cláudio Assis 29 29 Products & Logistics João Junqueira Márcio Utsch (MD of GP Investments) (ex-Alpargatas CEO) Gustavo Furtado 6 16 Growth Fersen Lambranho Larissa Bomfim (GP Investments Olivia Gryschek Co-CEO) - 15 People & Management Bomfim family GP Investments Independent Thiago Rebelo 4 17 Store Operations 15 Source: Company
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