Sector Analysis

Giovani Bellini Santoro

Maria Fernanda Rocha Almeida
Gabriel Mazironi Alves Ferreira
 Agenda
Key growth drivers
Market share
Global presence
Channels and supplies
Costumers
Growth ratings & Porter analysis
SWOT analysis

Confidencial
KeyClique para
Growth Drivers editar o título Mestre

Even in times of high inflation, the sector shows revenue Top 5 biggest producers in footwear industry
growth of 3,6%

Industry Revenue x Brazilian Inflation

1º 2º 3º 4º 5º
CAGR (last 10 Years): 3,6%

50 12, 0%
Increase in exports in the last years
10,7%
45

10,1% 10, 0%

40

35

8,0 %

26 27
30

24 25
6,4% 6,3% 23 23
5,9% 21 21
25 6,0 %

21 5,8%
20 5,6%
20
19 Source: World Footware 01/13/2023
4,3% 4,5%
15 3,8%
4,0 %

Footware Exports in Brazil (2019-2022) – millions of pairs

3,0%
141,9
123,7
10

2,0 %

113,5 115,2 *
5
93,8
0 0,0 %

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E

Industry Revenue (in R$ billions) Brazilian Inflation (IPCA)

2018 2019 2020 2021 2022

Source: Brazilian Association of Footwear Industries (Abicalçados); Worl Footware ; IBGE and COPOM * Results affected by the effects of the Covid-19 pandemic
 Clique
Arezzo: para
Market Shareeditar
Leadero
in título Mestre
Brazil and a Consolidated Brand

Clothing products with focus in footware and bags Flat Ebitda Margin in the last 5 Years, outperforming
competitors in 2022
Fashion & Casual & Action Sports 35,0%
Comfort
Luxury Democratic & Streetwear 30,0%

25,0%

20,0%
15,5%
15,0%
13,2%
10,0% 13,2%
5,0%

0,0%
2017 2018 2019 2020 2021 2022

2023 Market Share Expected Market Share*

(Luxury footware and bags) (Luxury footware and bags)

34,8% Source: Valor International 01/17/2023

50,0% 50,0%

65,2%
others
*Expected market share by the company
Sell Out: R$ 5Bi after acquiring Vincenza

Source: IR of Arezzo&CO; IR of Grandene and IR of Alpargatas

 Cliqueabroad
Operations para and
editar o títuloin Mestre
investments globally competition

Aquisition of Paris Texas, the first international brand in Arezzo’s

equity asset

An attempt not only to gain international market, but also to compete

with competitors Grandene and Alpargatas
(which have a more consolidated operation abroad)

Italy

In 2023, Gisele Bündchen, a world-famous top

model, returns to Arezzo campains

“Brazil has so many beautiful things to show the

world, Brazilian fashion has its own style and
others immense diversity. Brazil is a strong exporter of
footwear to the world and it is nice to see this
industry always innovating and growing. Arezzo is
a brand so loved by women and I am very happy
to be able to be in the brand's campaign again.‘’
– Gisele Bündchen
Arezzo: Places of Operation

*Vans: Arezzo has only the licensing for sale

Multichanneling and flexible sourcing

How does the distribution work? ! Highlights of distribution and supply

Model involving franchise stores and owned Revenue by Channel

stores, maximizing clients

Multichannel strategy: expansion of well-

working vectors

How about the supply chain?

Supply Chain structure
Scale gains and joint purchases: the large
number of products is “courtesy” of the
structure built by the company Using JOINT PURCHASE
strategy, the company
18% works with the local
Flexible sourcing: a model mixing 82% of productors to acquire
raw materials in a
outsourced production and 18% in
cheaper value,
owned factories
creating conditions to
Vale dos Sinos, RS state, do lower market prices
factory region with the
majority part of
High capability of storage and receptions 82% company’s production
1st (100k units/day each)

SOURCE: AREZZO&CO’S RELEASES 6

 Customers: a well constructed vertical

Channel of purchase Information about the base

The company has 85% of costumers buying in physical stores, while 15% purchase It’s impossible to make an analysis about Arezzo&Co and not talking about
on the e-commerce. Omnichannel represents a raising penetration of 9%, the “House of Brands” Culture. The company work with different brands and
considering total sales numbers. styles, having an impressive scope of clients. The majority of this base is
made of women of A/B socioeconomics tier.

ECOMMERCE
OMNI
Gross revenue per brand (% of total sales)
PHYSICAL

With this client base constructed with OTHERS

mastery, the company can explore
the digital presence. As a
demonstration of that, summing all
the brands, Arezzo&Co has more
than 18 million followers on Instagram

Arezzo has focus on the women

Going deeper in this profile of client,
costumers, while Schutz, Anacapri
Arezzo&Co perform focusing on
and A.B. are brands totally focused
women with the age of 12-40 years
on women products
SOURCE: AREZZO&CO’S RELEASES 7
Growth ratings: side to side with the sector + Porter

Sell Out Growth Rate Arezzo&Co’s Sell Out rate

is growing in faster terms
than the market, making E-commerce growth rate
it clear that the company
2022

+33% is upscaling with property.

+6%

2022
The Five Forces of Porter is
an analysis model made to
weight and compare pillars
of a company and their
2021 2021 impact in the sector market.
As highlights of this analysis
with Arezzo&Co: For giving
subsidized to Strong and
consolidated companies,
that covers the whole
AREZZO&CO SECTOR mode market, Arezzo&Co
has a huge market share,
Porter's Five Forces with efective production, of 2019 2020 2021 2022
almost 85% in outsourced
Rivalry among model, being a measurable GROWTH OF E-COMMERCE IN BRAZIL
existing competitors part of that subsidized.
Therefore, the company
has high standards of R&D, The company is matching the growth of E-commerce in
Threat of substitute Bargaining power of always setting new trends Brazil, representing that is capable to absorb the prognostic
products suppliers and making use of social numbers of this rising industry. Bringing that to numbers, the
media to act with bargain E-commerce in Brazil is reaching R$ 350 billions in 2027, and
power of costumers (being for comparison, nowadays numbers fluctuate around R$ 170
Threat of new Bargaining power of capable to rise the price billions, even with the recent expansion.
entrants buyers even on inflation or
recession times.
SOURCES: AREZZO&CO’S RELEASES; ABcomm 8
SWOT analysis of the company

STRENGHTS WEAKNESS OPPORTUNITIES THREATS

✓ Clients with high ✓ Highly dependent on ✓ Increasing market ✓ Strong internacional

buying power suppliers share with competitors
capacity ✓ Use of leather in most acquisitions ✓ Strong exportation
✓ Resilient in times of of its pieces ✓ Increasing competitors (Asia)
monetary contraction ✓ Banks’ distrust of the internacional ✓ Restric number of
✓ Diversification in brand retail sector relevance consumers in Brazil
portfolio ✓ Economic upturn
✓ Complete fashion after pandemic
offering ✓ Strong social media
✓ International footprint presence
✓ 49% of free float 7.887 Millions of shoes
✓ Ranked number one exported anually
Operational Revenue
in ESG norms

1.294
427 349 325

SOURCE: AREZZO&CO’S RELEASES 9

 Agenda
Thank you
for your attention!

Confidencial