4Q13 Results

Conference Call February 21, 2014

DISCLAIMER

This presentation contains forward-looking statements regarding the

prospects of the business, estimates for operating and financial results, and

those regarding Cia. Hering's growth prospects. These are merely projections

and, as such, are based exclusively on the expectations of Cia. Hering

management concerning the future of the business and its continued access

to capital to fund the Company’s business Plan. Such forward-looking

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 risks disclosed

in Cia. Hering’s filed disclosure documents and are, therefore, subject to

change without prior notice.

AGENDA

Highlights

4Q13 Operating

Performance

Outlook

4

HIGHLIGHTS 4Q13 AND 2013

Gross Revenues growth of 10.2% in the quarter and 12.6% in 2013;

EBITDA of R$137.7 million if 4Q13, 3.5% growth, and R$ 439.0 million in 2013, 7.8% growth;

Net income of R$ 101.7 million (+0.7%) in 4Q13 and R$ 318.2 million in 2013 (+2.3%);

Hering Store Network:

Addition of 77 stores to the network, ending the year with 592 stores;

10.1% sales growth in the quarter and in the year, reaching R$ 584.0 million and R$1,572.0

million respectively

70 stores openings guidance – 662 until the end of 2014

Hering Kids:

Stores network expansion, with 43 openings in 2013

Stores openings guidance of 30 stores – 100 until the end of 2014

5

4Q13 OVERVIEW

Revenues per Brand (R$ million)

EBITDA (R$ million) Distribution Network

Revenues per Channel (R$ million)

R$ 1,335.3

R$ 141.5

R$ 97.0

R$ 1,495.7

R$ 156.9

R$ 101.8

+12.0%

R$ 158.5 R$ 199.1 +25.5%

+10.9%

+5.0%

2012 2013

*Domestic Market

Channel 2012 2013 % Domestic

Market 2013 % Growth

Multi-brand

Retail

17,119

clients

17,898

clients 47.6% 11.6%

Franchises 556

Stores

672

Stores 39.3% 17.7%

Webstore 3 stores 3 stores 1.2% 16.8%

Own Stores 65 stores 71 stores 11.9% 2.6%

407.4 439.0

27.3% 26.1%

7.8%

2012 2013EBITDA EBITDA Margin

834.1 930.8

652.1 767.5

19.5

22.7 226.6

232.5

2012 2013

Multibrand Retail Franchise Webstore Own Stores

16.8

2.6%

11.6

17.7

16.8%

2.6%

11.6%

17.7%

2011 2012 2013

432515

592

5

27

70

76

78

80

1

1

1

16

17

17

Hering Store Hering Kids PUC dzarm. Total Foreign Market

6

STORES NETWORKS

In the domestic market, the Company ended 2013 with 592 Hering Stores, 80 PUC, 70

Hering Kids and 1 dzarm store.

530

638

760 Stores Evolution

7

HERING STORE NETWORK PERFORMANCE

Hering Store Network (Sell Out R$ Millions) Promotional Campaigns

SSS growth acceleration to +1.1% in 4Q13, ending the year with a 0.6% in comparison to

2012. In the quarter was promoted the “Anticipate your Christmas” campaign, stimulating

sales both before and after christmas.

1,428.1 135 135 1,572.0

+77 stores

2012 Expansão SSS 2013

+10.1%

-0.6%

Expansion

AGENDA

Highlights

4Q13 Operating

Performance

Outlook

9

SALES PERFORMANCE

Gross Revenues reached R$ 2.0 billion in 2013, with growth of 10.2% and 12.6% in

4Q13 and in the year, respectively.

545.6 600.4

1,766.61,987.6

7.28.5

27.1

31.8

552.8608.9

1,793.7

2,019.4

10.2%

12.6%

18.1%

17.3%

10.0%

12.5%

4Q12 4Q13 2012 2013

Domestic Market Foreign Market

10

GROSS PROFIT AND GROSS MARGIN

Gross margins of 45.2% (0.3 p.p.) in 2013 and 44.9% (-1.4 p.p.) in 4Q13, due to higher

costs pressure, lower level of fiscal incentives and challenging sales scenario.

212.1 225.9

679.2758.5

6.5%

11.7%

46.3%44.9%

45.5% 45.2%

47.3%45.9%

46.7% 46.2%

4Q12 4Q13 2012 2013

Gross Profit Gross Margin Cash Gross Margin

11

EBITDA AND EBITDA MARGIN

EBITDA of R$ 137.7 million in 4Q13, totalling R$ 439.0 million in the year with EBITDA

margin of 26.1% (-1.2 p.p.), mainly due to the drop in gross margin.

133.0 137.7

407.4439.0

29.0%

27.4% 27.3%26.1%

3.5%

7.8%

4Q12 4Q13 2012 2013

EBITDA EBITDA Margin

NET INCOME AND NET MARGIN

Net income of R$ 318.2 million (+2.3%) with net margin of 18.9% (-2.0 p.p.) in the year,

as a consequence of the reduction in EBITDA margin and higher income and social

contribution taxes.

101.0 101.7

311.0 318.2

22.1%20.2% 20.9%

18.9%

0.7%

2.3%

4Q12 4Q13 2012 2013

Net Income Net Margin

13

CAPEX

CAPEX in 2013 totalled R$ 72.2 million, with a 13.7% growth in the year, mainly due to

the increase in IT investments.

12.3 10.0

33.4 34.68.8

7.8

22.326.6

0.31.3

1.8

2.6

2.52.6

6.0

8.4

23.921.7

63.5

72.2

-9.2%

13.7%

4Q12 4Q13 2012 2013

Industry IT Others Stores

Per Activity ( R$ millions)

14

CASH FLOW

Free cash flow in the year reached R$ 123.7 million, a decrease of R$ 85 million in

comparison to 2012, as a function of the increase in EBITDA compensated by the

increases in inventory levels and higher income and social contribution taxes increase.

Cash Flow - Consolidated (R$ thousand) 4Q12 4Q13 Chg. 2012 2013 Chg.

EBITDA 132,982 137,666 4,684 407,396 438,994 31,598

Non cash items 1,680 1,214 (466) 4,236 4,701 465

Current Income tax and Social Contribution (33,340) (34,752) (1,412) (95,911) (116,654) (20,743)

Working Capital Investment (95,442) (110,814) (15,372) (43,506) (131,139) (87,633)

(Increase) in trade accounts receivable (106,716) (104,859) 1,857 (67,615) (48,805) 18,810

(Increase) decrease in inventories 7,352 10,956 3,604 6,361 (84,573) (90,934)

Increase (decrease) in accounts payable to suppliers 5,627 (18,411) (24,038) 30,130 (1,550) (31,680)

Increase (decrease) in taxes payable (248) 16,204 16,452 (16,895) (1,132) 15,763

Others (1,457) (14,704) (13,247) 4,513 4,921 408

CapEx (23,893) (21,691) 2,202 (63,489) (72,217) (8,728)

Free Cash Flow (18,013) (28,377) (10,364) 208,726 123,685 (85,041)

* Dividends distribution: R$ 49.9 million were destined as a proposal to be distributed through the approval of the General Shareholders

Meeting.

15

DIVIDENDS

34,558

82,446

171,602

261,921

138,504

0.64

0.84

1.05

1.59

0.84

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

-

50000.0

100000.0

150000.0

200000.0

250000.0

300000.0

2009 2010 2011 2012 2013*

Dividends (R$ Thousands) $/Share

*Considering the amount of R$ 49,993 thousand destined to be approved by the

General Shareholder´s Meeting in 04/24/2014 as dividends payment

The dividends and interest on capital payments proposed for 2013 totalled R$ 138.5 million, in

line with the year´s free cash flow.

AGENDA

Highlights

4Q13 Operating

Performance

Outlook

17

OUTLOOK

Challenging scenario in 1H14, both in sales and margins

Hering brand:

New strategy should begin generating results starting in 2H14

Opening of 70 Hering Stores in 2014

Market share increase in the multi-brand retail and in the north and northeast regions

Hering For You – Launching in the winter collection and opening of the first store in the 1st semester

Children Market – Focus on the Hering Kids network expansions (30 openings in 2014)

New dzarm.´s business plan under development

Besides the short term challenges, we remain optimistic with the potential of our brands and the new

management structure should allow us to accelerate growth in our current brands as well as

developing new growth platforms

INVESTOR RELATIONS TEAM

Fabio Hering – CEO

Frederico Oldani – CFO and IRO

Daniel Popovich – IR Analyst

Tel. +55 (11) 3371-4867

E-mail: ri@hering.com.br

Website: www.ciahering.com.br/ri