Overview of the Brazilian retail sector. Industry report partial free sample. Sao Paulo, January Copyright Falke Information

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1 Overview of the ian retail sector Industry report partial free sample Sao Paulo, January 2018

2 In, retail sales were growing both in value and in share of GDP but the recent recession caused both to decelerate and stagnate Evolution of retail sales and share on the national GDP in Retail sales evolution 1) [BRL bn] Share on national GDP CAGR: 10.4% ,2% ,9% ) includes automotive vehicles, autoparts and excludes wholesale Source: IBGE (PAC), Ipeadata, FALKE Information analysis

3 Vehicles and autoparts hold a sizeable share of sales alongside the large supermarket chains and 70% of stores are located in the Southeast Main products and geographic breakdown of the ian retail Sales breakdown per product [BRL bn] Geographic breakdown of stores 1) Furniture & others Electronics & appliances Pharmacy & perfumery Construction materials Fashion & clothing ,780.7 CAGR 10,0% 6,3% 5,6% 15,7% 10,4% 10,5% North 78 stores (0.2%) Northeast 3,245 stores (8.6%) Fuels 8,9% Vehicles & autoparts Hyper & supermarkets ,6% 13,6% Centre-West 546 stores (1.4%) 37,738 stores in South 7,455 stores (19.8%) Southeast 26,414 stores (70.0%) 1) considered the top 120 retail companies in Source: IBGE (PAC), IBEVAR, FALKE Information analysis 3

4 The largest retail groups in have different backgrounds and vary considerably in size and in their level of profitability Main companies of ian retail in 2016 [BRL mn] Company Main segment Origin(s) Net revenue Stores Headcount EBITDA Grupo Carrefour France 49, , % GPA - Alimentar 44,969 1,135 91, % Grupo Walmart Brasil United States 29, ,000 - Via Varejo 22, , % Lojas Americanas Electronics & Furniture 21,401 1,127 34, % Raia Drogasil Drugstores & Pharmacies 11,828 1,420 28, % O Boticário Drugstores & Pharmacies 11,400 4,063 8, % Magazine Luiza Electronics & Furniture 11, , % Cencosud Brasil Chile 9, ,170 - Lojas Renner Fashion & Sports 8, , % Drogarias DP SP Drugstores & Pharmacies 8,300 1,175 25, % Makro Netherlands 8, , % Note: Contemplates the top 120 retail companies in Source: IBEVAR, Exame, Valor1000, companies, FALKE Information analysis 4

5 Books, magazines and home appliances concentrate more than 27% of online retail sales in and m-commerce has been growing Categorias de produtos e evolução do m-commerce no Brasil Main categories [volume] Share of m-commerce on sales Fashion & accessories 19% Home appliances Books & magazines 9% 10% Pharma & perfumery 18% Telecom Home & decoration 6% 6% IT & computers Electronics Sports & leisure 5% 5% 7% Toys & games 3% World Source: ebit, FALKE Information analysis 5

6 Supermarket chains account for about 48% of sales of the largest retail groups in the world but operate with low levels of profitability Sector breakdown of the top 250 retail companies in the world in 2016 Sales breakdown Average profitability 1) Hypermarket & supercentre Supermarket 22,3% 25,6% Hypermarket & supercentre Supermarket Discount store Drugstore & pharmacy Department store Home & decoration Clothing & shoes Cash & carry Electronics No-store Convenience stores Others 8,8% 5,9% 5,6% 5,3% 5,1% 4,8% 3,7% 3,4% 2,8% 6,6% Discount store Drugstore & pharmacy Department store Home & decoration Clothing & shoes Cash & carry Electronics No-store Convenience stores Others 1) considered the net margin of global retail groups Source: Global Powers of Retailing (Deloitte), FALKE Information analysis 6

7 DISCLAIMER The analysis and recommendations of Falke Information are supported by assumptions considered right and consistent based on the available information. Therefore, Falke Information will not be held responsible for the correctness of the resulting recommendations and analysis in this document. NOTE: Copying and handling over of this document is not allowed without prior written permission by Falke Information 7