Magalu Day 2019

Fred Trajano
CEO
Evolution of Magalu• last cycle

PAST PRESENT FUTURE

Traditional Omnichannel
Retailer Operation

We made Magalu digital…

Strategic Pillars – Digital Transformation

Multichannel Digital inclusion Digitalization of

physical stores

Digital culture Digital platform

 Company Overview

R$ 24 BN Total sales
(LTM)
50% E-commerce share in
sales
(Sep/19)

24 MM Active customer base

(Sep/19) +1,100 Stores
(2019)

20 MM App install base

Total - (Sep/19)
17 Distribution centers
(2019)
The right business model, with consistent execution

56% CAGR – Growth in

E-commerce Sales R$ 1,827 Accumulated
2016 - 2019 Net Profit
Jan/16 to Sep/19

24%
11% 11%
Company A Company B Company C

1,664 751 80
Company A Company B Company C
Magalu’s evolution • New cycle

PAST PRESENT FUTURE

Omnichannel Digital
Operation ecosystem for
Retail

…and now we will make

Brazil digital
 Expanding our total addressable market
TAM

R$ 1.2 6.0MM
trillion1 sellers

Other

Tech Insurances

Advertising

24BN
Fintech
R$
Other Retail categories
We are here Online & Physical Retail
Durable Goods

Note: 1 Considers total LTM GMV (Online and Offline)

New strategic drivers
New categories Faster delivery

2 4

1 3 5
Exponential growth Super MaaS
(3P) app

Best retail experience • Data-driven culture

• Sustainability and reputation
New pace of expansion
Physical Stores
40 years
Time to reach
E-commerce 1P
R$1 billion
in sales 10 years
Marketplace
2 years
Expo Magalu
Faster delivery

90%
of sales are delivered by
Luiza Network + Logbee

66%
delivered
within 2 days
Sports & Fashion
A market worth

R$140 bn
Combining high growth and profitability

300% Marketplace
growth
47% Total sales
growth
(3Q19) (3Q19)

96% E-commerce
growth 6.2% Adjusted EBITDA Margin
(3Q19)
(3Q19)

19% Physical store

growth 2.8% Adjusted Net Margin
(3Q19)
(3Q19)
 More growth, higher return
Peers

Online:
Growth DIGITAL ECOSYSTEM

Margin
Investment in infrastructure
Investment in
Investments technology

ROIC

Offline: MULTICHANNEL

MULTICHANNEL
Stronger to take a new leap

5bn
Follow-on
R$
R$0.6bn Adjusted Net Cash

Adjusted Net Cash

Sep/19
Magalu Day 2019
Fabrício Garcia
Operations & Commercial
Physical Stores
Exponential
growth
physical store
Store
Digitalization
Apps by Magalu
Experience

Mobile Sales Mobile Payments Credit Digitalization

From 40 minutes Convenience. Credit automation
to 2 minutes. (Card and Booklet).

Efficiency
Mobile Results Mobile Inventory Mobile
Management at Digital stock Deliveries
hand. management.

Mobile
Assembler
Mobile Cashier
Use of Mobile Cashier
% on eligible

48%
45%

28%

18%

aug/19 sep/19 oct/19 nov/19

Store
transformation
Store as Mini-DC
+450 stores with this
concept
1. Customer 2. Excellence in
relationship operations
Better customer Store prepared for
experience multichannel activities
1.Customer relationship
Better customer experience

Modern space with an inviting and practical layout

1.Cutomer relationship
Better customer experience

Resizing of the Deposit

and Sales areas.
Reorganization of
inventory:

Store inventory room, pickup at

store 1P and 3P, ship from store.
2.Excellence in operations
Creation of new processes

Digital
operations
 Digital Inventory

Ship From Store Pickup Store DC Digitalization Digital CDE Control and
Pickup Store 2 hours Incoming cargo Stock counting Management
Pickup Store Netshoes Digital ABA of Mobile
Pickup Store 3P (in dev) Phone IMEI
Pickup Store
DC Inventory multichannel E-commerce
activities at the product sales
store

Marketplace product sale

Pickup 3P
(Pilot with )
Ship from store
Launches

Waterproofing TV installation Air conditioner Tire change

installation
Evolution of NPS
in recent years

+10 p.p. 78
75
Highest NPS
68 in Retail

1Q18 4Q18 4Q19

at Physical
Stores
New Categories
Various product assortments
New Categories
Various product assortments

Tires
+ frequency
+ customers
• MAGALU Market (Washing powder, wipes,
shaver, fabric softener)
Panettone • Towels
• Books

Games and accessories

New Categories
Various product assortments
Expansion
Strategy
2019
new markets
Entering

(PA and MT states)

Opening

store #1000
Virtual stores in RS state
Expansion
2019
R$ 200MM
in renovations and
3,2k
New hires in
store openings 2019

+1,512
Temporary employees
412
Employees promoted to
hired manager in training
Enviar para a
house ajustar
Enviar para a
house ajustar
partnership
Kiosk model

300
stores opened
4
Kiosk Models
operation
mobile phones, accessories,
by May 2020 XS, S, M and L connected home, site pickup, and
digital and financial services
Kiosk model
This partnership allows us to include the physical catalogue in our
digital platform

Systems Digital platform

Logistics/ stores Orders Traffic

Inventory Freight Sales

Customer service Financial Magalu Deliveries

Exponential
growth
11 quarters outperforming the
market

Market
Stores
Luiza Card Evolution
Card Base Share
(Million) of Sales

4.9 Physical Store

4.0
3.2
42% 45%
34%

3Q17 3Q18 3Q19 3Q17 3Q18 3Q19

 Significant market share gains

Market Share 2.4 +8.7

Evolution
Stores (in p.p.) 3.7 p.p
1.7
0.9
in 4 years
All-time high
market share in
Nov/19
2015 2016 2017 2018 2019
Magalu Day 2019
Eduardo Galanternick
E-commerce
 All-time high Market Share
+15 p.p.

Market Revenue Market Share Magalu

Source: GMV ecommerce group Magalu (including Época and Netshoes Group) by Revenue eBit | Nielsen
Traffic
 Traffic growth (MM)

525

198%
375
93%

Source: SimilarWeb (Desk+M.Site) + AppAnnie (App), September 2019 (e-commerce Magalu + Netshoes)
 87% of the visits are mobile
+35.pp. from 1Q17
87%

52%

Source: Magalu internal data, September 2019 (e-commerce Magalu)

 Magalu SuperApp

50% +18p.p.
APP sales YoY growth

App retention is 36% higher than

in other devices

Source: Magalu internal data, November 2019

 Group with the highest share of
downloads in Brazil in the “Shopping” category

Source: App Annie, Jan/17 through Sep/19

sellers
 New seller onboarding
evolution 3,476
● Process automation
● Twice as many integrations

5.6x

620

Source: Internal Magalu data (including Netshoes and Época) Sep/19

 Active sellers 12,491

● Community engagement

6.2 x

2,031

Source: Internal Magalu data (including Netshoes and Época) Sep/19

 Sortimento
Assortment
 Catalogue offers
evolution
12.3
MM

7.4x

1.6
MM

Source: Magalu’s in-house data, November 2019

Sales
 Brazil’s largest 1P e-commerce

4x

Competitor 1 Competitor 2

Source: Competitors releases

 A fast-growing marketplace
+300% YoY 854
SSS: +122% YoY

4x

213

Marketplace Sales

Source: Magalu’s in-house data, September 2019

 50% share in Sep/19
(e-commerce share vs. total Magalu)

Online Sale Online Share

Source: Magalu’s in-house data, September 2019
 E-commerce active customer base
13 MM

125%
50% 8,7 MM

Source: Magalu’s in-house data, September 2019

 Network effect

from 60,000 to 12.3MM

PLATFORM

from 0 to 12,500 from 33MM to 125MM

(visits/month)

from R$ 2Bi to R$10.3Bi LTM

Source: Magalu’s in-house data, Jan/2016 to Sep/2019 71
 Greater opportunities in low-
penetration categories
% penetration of Market Size Difference
e-comm (R$B) Penetration Penetration with the USA

Fashion 7.5 4.0% 21.1% 17.1%

Beauty & personal care 3.0 2.8% 13.5% 10.7%
Electronics 32.2 23.6% 28.6% 5.0%
Furniture 5.4 8.8% 14.9% 6.1%
Drugstore 0.5 1.5% 11.6% 10.1%
Pet 0.5 2.6% 16.1% 13.5%
Food & Beverage 1.4 0.5% 1.4% 0.9%
Body care 0.6 1.7% 7.8% 6.1%
Toys 1.5 12.9% 23.6% 10.7%
Care at home 0.1 0.5% 2.6% 2.1%
Video games 0.3 18.9% 20.4% 1.5%

Source: Euromonitor
SuperApp
Creating new worlds

Netshoes Zattini Época

Market
 Magalu Market

2.5x 57%
more items per of orders come from
+322k
Skus
order Pickup Store

Source: Magalu’s in-house data, Jan/17 to Sep/19

Beauty
 The largest online beauty assortment
40,000 SKUs
+60% YoY growth (vs. 40% Cosmetics & Perfumery
online market)

Over 500 brands

Source: Magalu’s in-house data, September 2019

Sports & Fashion
All listed products (except for Nike)
262,000 SKUs

Netshoes Pickup Store

12 enabled Stores with 12,000 orders in

November

20 Stores will be rolled out until December

Lapa Branch Inventory- SP Source: Magalu’s in-house data, November 2019

VÍDEO UEFA
VÍDEO NFL
 11 quarters posting +50% growth

Market QoQ Growth Magalu QoQ Growth

Source:SimilarWeb
Fonte: Magalu’s in-house data 3Q19 and Ebit | Nielsen
+ AppAnnie
Magalu Day
Décio Sonohara
Logistics
Multichannel
A truly multichannel operation
Unique operational platform

Physical Stores Magazinevocê

Magazinevocê
Small trucking
carriers

Marketplace (3P) Mobile Mobile

Unique
DCs Backoffice

E-commerce
E-commerce (1P) (1P) Serving all Telesales
sales channels
Higher density
Higher density, higher speed and lower delivery cost

+66%
Orders delivered
17 Distribution Centers
(Nov/19) within 48h
(Nov/19)
1,100 Stores mini-DC
(Nov/19)
38%
+2,400 Delivery Partners
(Nov/19)
Pickup Store
(Nov/19)

Footprint
Logbee 77% of population
80% of total income
Distribution Network
Exclusive (Luiza Network)
• Exclusive network
Logbee • Asset Light Model
(light vehicles) • Complete Distribution
Luiza Network

Delivery
management
• Tracking
• Best service level
~90%
of total volume
of products
Partners • Faster delivery leaving our DCs 71%
of e-Com
• Lower cost
Magalu
Ship from store implemented in over 190 stores
Ship From Store Orders Growth

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Netshoes
Pickup Store & Home Delivery operating in the São Paulo Metropolitan Area

Pickup Store Home Delivery

Number of Orders

Sem 33--
Week Sem 44--
Week Sem 55--
Week Sem
Week11-
- Sem
Week22-
- Sem 3 -3- Sem
Week Week4 4-
-
OctOut OctOut Out
Oct Nov
Nov Nov
Nov Nov
Nov Nov
Nov
Magalu Delivery
1st Phase 2First
nd Phase
Mile Collect/
3rd Phase
Storage
Sharing Contract Cross-docking & fulfillment

72% of sellers 300 sellers Next

• 3P delivery time decreases • Increase conversion • Expand Take rate

• Service level improves • Enable pick-up store for • Potentialize Magalu fulfillment
marketplace
 DC automation

Magalu Netshoes Netshoes

Louveira (SP) Extrema (MG) Jaboatão (PE)
High capacity
and high flow when shipping products
Black Friday:
Post-Black Week Daily Maximum Service Level
Luiza Network orders
+ 3.7 MM + 600,000 delivered until Dec 4
products products

Brazil

+90%
Twitter
Magalu Day 2019
André Fatala
Luizalabs
People &Technology
Employees
1250

1196

1000

750

500 533

395

250

37 102
2 5 7 75
2011 2012 2013 2014 2015 2016 2017 2018 2019
Highlights

260 263 100%

Closed Meritocracy Qualified Leaders

Vacancies
Leadership
Development

19% of 125 ILPs Program - SL’s,

TL’s, PM’s and
internal utilization
Officers
 MaaS is Magalu’s platform which
digitalizes and interconnects Brazil’s
retail ecosystem.

#sellerVemSerFeliz
MaaS enables the iPDV
for Seller.
Super App
From App to a Super App

App 👉 Super App

Customized tool to
access products,
Customized services and
facilitate daily
Multichannel activities

Frictionless Magalu’s
ecosystem
connection means
Evolution
Our app has evolved throughout the year

Last version of 2018 02/03/2019 04/11/2019 07/23/2019 Current Version

12/28/2018 10/2019
Worlds
Customized experience by category
Geolocation
Product is closer to customer
Magalu Day
Roberto Bellissimo
CFO
Payment Institution

100%

LTDA

Digital
Account
 Our multichannel digital account
Fully integrated with Super App

Best experience and greater efficiency

MaaS

A huge opportunity ahead

}
3P GMV Factoring receivables
Cash
Interest rates up to:
(Sep/19)
1.49%monthly

3P GMV
Credit Card
(installments)
Average duration:
(Sep/19) 3.5 months

today tomorrow

Settlement in Reduction of
Key Services Payment Slip
digital account MDR costs
Magalu Day
Fred Trajano
CEO • Closing
 Shareholders

Academy Employees

Consumers
Governments XXI Century

Press
Communities

NGOs Suppliers
 Sustainability
Amendment to the bylaws

13,306 20h
button inclusion

180 into the

employees
answered a diversity survey
annually
of paid
app volunteering

100% 100%
NGOs in the app with
Analysis of suppliers
and risks map of

278
Movement reverse sale carbon footprint and
Builders generation of
waste mapping
categories
 26% 5mil 521
Sellers rejected SKUs Sellers
in onboarding withdrawn withdrawn

ENTRY OPERATION QUALITY WITHDRAWAL

CNPJ (corporate Sales invoices validation Removal of non- Low Service Level for a long
taxpayer’s ID) effective compliant products, period
for, at least, 6 months Service Level Indicators with brand positioning, The non-negotiables
(Cancelation, on-time suspicious products, with
Products sold without invoices
Tax and financial health delivery abusive prices.
under any circumstance
check (Sintegra - Contacts/complaints,
integrated information on end customer
Sale of fake products or
interstate operations with satisfaction)
contribute to hacking
goods and services,
Indebtedness, Protests)
Sale of products with illicit origin

Commercial validation
Illegal products and/or
prohibited by laws

Source: Magalu’s in-house data, 3Q19

Compliance Award
Cliente na Veia (Customer Inside)
Magalu: 1P + 3P E-commerce

7,5 7,4
6,6 6,6 6,5 6,3

5,2 5,2 5,1

Magalu Empresa
CompanyEmpresa
CompanyEmpresa
Company Empresa
Company Empresa EmpresaCompany
Company Company EmpresaCompany
Empresa
AA BB CC DD EE FF G
G HH

6 6meses
months
#OrgulhoDeSerMagalu (#Proud of being Magalu)

4th Best 21st

company to work for in Brazil Brazil’s top company

1st Best 1st

company to work for at retail Retail’s top company
Long-term Incentive (ILP)

339
Officers:
matching share
Vesting: 5 years

20MM
At each share acquired
Magalu grants three
shares
shares allocated

Other levels:

ILPS
restricted options

Vesting: 3 years
33% p.a. after 12 months
We not only retain, we add new talents

36 officers
(2018)

56 officers
(2019)