3Q17 ResultsConference Call

October 27th, 2017 – 12:00 pm (BrT)10:00 am (NY)/ 3:00 pm (London)

3Q17 Results

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.

• Financial Performance

• Outlook

• Q&A

2

FINANCIAL PERFORMANCE

GROSS REVENUES AND BREAKDOWN BY BRAND

R$ MILLION

GROSS REVENUES BREAKDOWN PER CHANNEL

DOMESTIC MARKET EX-OTHER REVENUES

3Q17, R$ MILLION – CHANGE 3Q17 X 3Q16

Gross Revenue of R$ 433.7 million in 3Q17, influenced by own stores,

webstores and foreign market’s performance

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3Q17 3Q16 Chg. 9M17 9M16 Chg.

433.7 412.8 5.1% 1,304.0 1,233.3 5.7%

305.2 294.2 3.8% 923.1 885.8 4.2%

59.4 54.4 9.1% 180.4 153.8 17.3%

30.4 31.7 -3.9% 88.0 86.9 1.3%

17.2 16.3 5.4% 52.4 49.0 7.0%

12.8 9.0 41.7% 35.7 31.9 12.0%InternationalMarket

* Cia. Hering total sales also includes ‘Other Revenues’: 2nd quality products, raw materials, among others.

HERING STORE NETWORK

GROSS SALES

SELL-OUT, R$ MILLION

Gross revenues of R$ 299.4 million (+3.6%), influenced by SSS

resumption (+3.5%) and better operational execution

¹ Change in store count over the last 12 months.

HERING STORE REFURBISHMENT PLAN

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Shopping Iguatemi Florianópolis – Santa Catarina State

• Renovated points of sale coupled with best practices

has favored its performance

• Company will reinforce initiatives adhesion, by the

network, favoring inventory turnover and minimizing

the negative effects caused by stockout and

leftovers

FINANCIAL PERFORMANCE

EBITDA of R$ 63.8 million, 310 bp of margin expansion

due to sales growth and gross margin increase, partially

offset by higher operating expenses (includ. bonus)

Gross margin gain (+590 bp) due to the exclusion of ICMS from the PIS

and Cofins calculation basis, lower volume of past-season items, mix

of channels and fixed costs dilution

GROSS PROFIT

R$ MILLION

EBITDA

R$ MILLION

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FINANCIAL PERFORMANCE

NET INCOME

R$ MILLION

CAPEX

R$ MILLION

Net income of R$ 51.9 million (-9.8%), due to financial income retraction

explained by a gain from a lawsuit, in 3Q16, impacting comparison basis

and higher Income Tax and Social Contribution effective rate

It stands out the new wave of the sorter implementation and

investments in technology for omnichannel initiatives and

sales systems’ integration

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0.2

FINANCIAL PERFORMANCE

Cash flow of R$ 27.9 million, similar to 3Q16.

Company’s higher profitability (EBITDA) was offset by greater need of working capital, mainly in

inventories, explained by manufacture anticipation of the High Summer collection aiming at

optmizing Company’s manufacturing process

CASH FLOWS

R$ MILLION

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Cash Flow - Consolidated (R$ thousand) 3Q17 3Q16 Chg. 9M17 9M16 Chg.

EBITDA 63,817 48 ,751 15 ,066 179,434 146,618 32,816

Non cash items 3,871 (5,475) 9,346 15,553 (3,409) 18,962

APV (Adjustment to Present Value) - Clients and Suppliers 6,821 3,858 2,963 17,585 14,715 2,870

Current Income tax and Social Contribution (7,591) (4,365) (3,226) (18,974) (6,010) (12,964)

Working Capital Capex (25,587) (10,636) (14,951) (49,448) 74 ,142 (123,590)

(Increase) decrease in trade accounts receivable 19,989 7,102 12,887 54,829 99,824 (44,995)

(Increase) decrease in inventories (50,075) (32,013) (18,062) (108,060) (19,443) (88,617)

Increase (decrease) in accounts payable to suppliers (8,814) 25,329 (34,143) (25,810) 12,581 (38,391)

(Decrease) in taxes payable 1,672 (4,418) 6,090 (8,104) (21,043) 12,939

Refurbishment Project - Franchisee Financing 3,144 (6,117) 9,261 9,146 (8,612) 17,758

Others 8,497 (519) 9,016 28,551 10,835 17,716

CapEx (13,386) (4 ,303) (9 ,083) (34,682) (14,258) (20,424)

Free Cash Flow 27,945 27 ,830 115 109,468 211,798 (102,330)

FINANCIAL PERFORMANCE

ROIC

R$ MILLION

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ROIC of 16.7%, 130 bp higher compared to 3Q16, mainly due to the recovery

in Company’s operating result

Return on Invested Capital (ROIC) - R$ thousands 3Q17 2Q17Chg.

3Q17 / 2Q173Q16

Chg.

3Q17 / 3Q16

EBITDA 240,385 225,319 6.7% 240,967 -0.2%

(-) Depretiation and Amortization (59,244) (58,151) 1.9% (54,183) 9.3%

(+) Amortization - Right of use properties ¹ 6,371 5,726 11.3% 4,199 51.7%

(+) Financial Results - Adjust to Present Value ² 23,105 20,120 14.8% 19,692 17.3%

(-) IR&CS - Nominal Rate (34%) ³ (81,553) (82,646) -1.3% (83,554) -2.4%

(+) IR&CS - IOC Tax Benefit ³ 43,517 28,898 50.6% 25,932 67.8%

Operating Income 172,581 139,266 23.9% 153,053 12.8%

Fixed Assets 419,365 418,760 0.1% 427,448 -1.9%

Accumulated amortization - Right of use properties 40,045 38,452 4.1% 34,367 16.5%

Working capital 571,489 547,967 4.3% 534,545 6.9%

Average Invested Capital* 1,030,899 1,005,179 2.6% 996,360 3.5%

ROIC 16.7% 13.9% 280 bp 15.4% 130 bp

Notes to the financial statements: (1) Nr. 15; (2) Nr. 33; (3) Nr. 34

(*) Last 4 quarters average

OUTLOOK

• Economic scenario improvements, although high volatility in sales remains in the 4Q

• Opportunity to reduce inventory levels in the coming periods

• Hering Store Refurbishments shows that the best results are derived by the combination of the point of sales’

renovation with store improvement initiatives

• Start of the 2018 budget process with business environment recovery premises due to the maturation of

initiatives implemented in the last quarters related to Product and Store fronts (P&S)

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INVESTOR RELATIONS TEAM

Fabio Hering – CEORafael Bossolani– CFO and IROBruno Salem Brasil – IR ManagerCaroline Luccarini – IR Analyst

www.ciahering.com.br/ir+55 (11) 3371 – 4867/4805ri@hering.com.br