4Q11 Results

Conference Call March 02, 2012

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

4Q11 Operating

Performance

Outlook

4

4Q11 HIGHLIGHTS

Gross revenue of up 22.6% in the quarter and 33.4% in 2011;

Double-digit sales growth for all brands; with highlight to the performance of Hering (+20.9% in 4Q11

and +31.8% in 2011)

EBITDA of R$ 394.5 million, with EBITDA margin of 29.1% in 2011;

Net Profit of R$ 297.3 million (+40.2%).

Hering Store Chain:

85 store openings and 31 remodelings in 2011, with a network of 432 stores at the end of the year

Total sales of R$ 1,235.0 million in the year (+33.4% overall growth and 12.7% SSS growth);

New guidance for store openings - 507 by the end of 2012

Hering Kids:

Launch of the expansion of the Hering Kids network, with guidance of 20 stores openings

throughout 2012

AGENDA

Highlights

4Q11 Operating

Performance

Outlook

4Q10 4Q11 12M10 12M11

403.6 496.1

1,214.0

1,625.9

3.8 3.2

21.2

21.4

407.4 499.3

1,235.1

1,647.3

6

SALES PERFORMANCE

Gross sales reached R$ 1.6 billion in 2011, with sales growth of 22.6% and 33.4% in

the quarter and year, respectively.

Gross Revenue ( R$ million)

22.9%

-15.7%

22.6% 33.9%

1.0%

33.4%

Domestic Market Foreign Market Total

7

SALES PERFORMANCE (cont.)

Double-digit sales growth in all brands, in 4Q11 and 2011, with highlight to the

performance of the Hering brand (+20.9% and +31.8%).

Domestic Market ( R$ million)

R$ 1,240.5

R$ 124.7

R$ 98.0

+31.8%

R$ 116.4 +41.6%

+26.3%

+42.2%

2011 2010

Hering 76%

Hering Kids 7%

PUC 8%

dzarm. 6% Other

3%

R$ 941.1

R$ 98.8

R$ 68.9

R$ 82.2

2007 2008 2009 2010 2011

181 230

276

347

432

2

5

44

59

74

78

76

1

1

23

22

15

15

16

8

STORES CHAIN EVOLUTION

In the domestic market, the Company ended 2011 with 432 Hering Stores, 76 PUC, 5

Hering Kids and 1 dzarm. store.

248 311

365

443

530

Goal: 224

(+6 stores)

Goal: 273

(+3 stores)

Goal: 325

(+22 stores)

Goal: 418

(+14 stores)

Total Hering Store Hering Kids PUC dzarm. Foreign - Franchised

Hering Store Chain Performance 4Q09 4Q10 Chg. 12M10 12M11 Chg.

Number of Stores 347 432 24.5% 347 432 24.5%

Franchise 304 384 26.3% 304 384 26.3%

Owned 43 48 11.6% 43 48 11.6%

Sales (R$ thousand) (1) 366,403 461,680 26.0% 926,021 1,234,956 33.4%

Franchise 298,393 388,183 30.1% 751,722 1,033,495 37.5%

Owned 68,010 73,496 8.1% 174,299 201,461 15.6%

Same Store Sales growth (2) 20.8% 8.2% -12.5 p.p. 24.4% 12.7% -11.7 p.p

Sales Area (m²) 44,815 57,507 28.3% 44,815 57,507 28.3%

Sales (R$ per m²) 8,410 8,200 -2.5% 23,638 24,361 3.1%

Check-Outs (thousand) 4,098 4,773 16.5% 10,324 12,647 22.5%

Units (thousand) 9,237 10,164 10.0% 23,029 26,912 16.9%

Units per Check-Out 2.25 2.13 -5.5% 2.23 2.13 -4.6%

Average Sales Price (R$) 39.67 45.42 14.5% 40.21 45.89 14.1%

Average Sales Ticket (R$) 89.41 96.72 8.2% 89.69 97.65 8.9%(1) The amounts referred to the sales to final costumers. (sell out concept)(2) Compared to the same period of the previous year

9

HERING STORE CHAIN PERFORMANCE

SSS growth decelerated to 12.7% in 2011 vs the previous year due to a more

challenging environment as well as high comparison basis, and it was mainly driven by

the increase in average sales ticket.

10

GROSS PROFIT AND GROSS MARGIN

Gross margin declined by 1.1 p.p. in the year because of raw material price pressures.

51.5% 51.0%

52.6% 51.9%

-0.5 p.p.

-0.7 p.p.

Cash Gross Margin (%) Gross Margin (%)

49.5% 48.5%

50.6% 49.5%

-1.0p.p.

-1.1 p.p.

Gross Profit (R$ Million)

22.1%

30.7%

4Q10 4Q11 12M10 12M11

170.5 208.2

501.9

655.9

4Q10 4Q11 12M10 12M11

102.9 133.8

276.5

394.5

27.3% 29.1%

11

EBITDA AND EBITDA MARGIN

The high operational leverage and strict expense management led to a 1.9 p.p.

EBITDA margin expansion.

+1.7 p.p.

+1.9 p.p.

EBITDA Margin (%) EBITDA (R$ Million)

30.0%

42.7%

31.1% 32.8%

20.9% 22.0%

30.5% 25.8%

12

NET PROFIT

Net profit growth due to better operating performance, adjustment to present value

(AVP) and lower income tax as a result of the constitution of grants for investment.

- 4.7 p.p.

+1.0 p.p.

Net Margin (%) Net Profit (R$ Million)

40.2%

4.4%

4Q10 4Q11 12M10 12M11

100.8 105.2

212.0

297.3

13

CAPEX

Capex in 2011 totaled R$ 47.5 million of which R$ 22.3 million was aimed at the

industrial area, R$ 13.4 million at IT and R$ 10.1 million was invested in stores.

By Activity ( R$ million)

4Q10 4Q11 12M10 12M11

11.6 7.2

48.6

22.3 2.6 7.3

8.1

13.4

0.6 1.2

2.2

1.7

2.7 2.8

12.1

10.1

Industry IT Others Stores

17.6 18.6

71.0

47.5

5.9%

-33.1%

14

CASH FLOW

Increase of R$ 111.4 million in free cash flow, mostly due to EBITDA growth,

and lower investments and working capital needs.

Cash Flow - Consolidated (R$ thousand) 4Q10 4Q11 Chg. 12M10 12M11 Chg.

EBITDA 102,896 133,808 30,912 276,500 394,464 117,964

No cash items 1,833 680 (1,153) 3,086 2,322 (764)

Current Income tax and Social Contribution (4,553) (35,814) (31,261) (49,332) (100,840) (51,508)

Working Capital Capex (76,421) (21,162) 55,259 (82,027) (58,470) 23,557

(Increase) in trade accounts receivable (68,472) (71,447) (2,975) (79,965) (66,445) 13,520

(Increase) decrease in inventories (43,106) 5,747 48,853 (100,374) (26,965) 73,409

Increase in accounts payable to suppliers 20,299 13,118 (7,181) 68,400 2,088 (66,312)

Increase (decrease) in taxes payable (6,211) 20,884 27,095 10,827 36,911 26,084

Others 21,069 10,536 (10,533) 19,085 (4,059) (23,144)

CapEx (17,585) (18,606) (1,021) (69,629) (47,501) 22,128

Free Cash Flow 6,170 58,906 52,736 78,598 189,975 111,377

Reconciliation from accounting Cash flow to adjusted Cash flow (R$ thousand) 4Q10 4Q11 Chg. 12M10 12M11 Chg.

DFC - Cash provided by operating activities 28,435 87,629 59,194 157,763 267,341 109,578

Adjustment – Financial items allocated to operating cash (4,680) (10,117) (5,437) (9,536) (29,865) (20,329)

Unrealized exchange and monetary variation (1,595) (966) 629 (6,308) (4,679) 1,629

Financial Result (4,526) (10,193) (5,667) (10,111) (29,696) (19,585)

Interest paid on loans 1,441 1,042 (399) 6,883 4,510 (2,373)

DFC - Cash flows from investing activities (17,585) (18,606) (1,021) (69,629) (47,501) 22,128

Free Cash Flow 6,170 58,906 52,736 78,598 189,975 111,377

* Dividend distribution: R$106.2 million have been destined to a proposed account to be distributed upon General

Shareholders’ Meeting approval.

Gross Debt = R$ 34.9 million

15

INDEBTEDNESS

* Last 12 months EBITDA

Net Debt/ EBITDA*

Due to the increased operating cash flow, Cia. Hering increased its net cash

position by R$ 104.0 million in 2011 and reduced its debt by R$ 6.6 million.

Net Debt ( R$ million) Short Term x Long Term

2005 2006 2007 2008 2009 2010 2011

201.3 184.6

-33.4

11.0

-25.1-61.9 -165.9

4.6

3.5

-0.70.1

-0.2 -0.2 -0.4

Short Term

33.8%

Long Term

66.2%

AGENDA

Highlights

4Q11 Operating

Performance

Outlook

17

Positive perspectives for 2012, despite more challenging scenario for short term.

Organic growth potential

Reduction of raw material costs

Hering Brand still with high growth potential, although not in the same levels that it has

been posting during the last few years:

Stores opening (guidance of 75 in 2012) and SSS growth in Hering Store chain

Multibrand retail channel: continuous market share increase in existing clients

through distribution specialization.

Children’s market:

Share increase in the multibrand channel with Hering Kids and PUC brands.

Expansion of the Hering Kids format – potential of 200 to 250 stores with a size

of 60 m2 and initial plan of opening 20 stores in 2012

Adjustments in PUC chain, with discontinuation of a few other operations.

Maintenance of the dzarm. Strategy, investing in the brand though the opening of more

flagship stores and marketing.

New technological and logistical infrastructures for online sales

Re-launch of the webstores

OUTLOOK

INVESTOR RELATIONS TEAM

Fabio Hering – CEO

Frederico Oldani – CFO and IRO

Patrícia Salem – IR Manager

Tel. +55 (11) 3371-4867

E-mail: ri@hering.com.br

Website: www.ciahering.com.br/ri