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Brazilian Retail News

Year 10 - Issue # 385 - São Paulo, May, 02th, 2011

Phone: (5511) 3405-6666

Brazilian retail attracts foreign brands

US supermarket chain HEB, with 300 stores in the United States, said it plans to focus the Latin American market
as has good expectations, specially for Brazil. The company is the latest in a long list of retailers aiming the country for
growth, a trend that became stronger three years ago, when many US and European companies started focusing Brazil
due to the global financial crisis. According to a Faap survey, today around 50% of the Brazilian retailers listed in São
Paulo Stock Exchange (Bovespa) have in some extent a share owned of foreign investors, and last year the presence of
these investors rose 17.2%.

BR Partners purchases largest Burger King

BR Partners investment bank purchased a majority share
of BGK, Burger King’s largest franchisee in Brazil, with 63
stores (40 of them in São Paulo state). The deal gives BGK
the conditions to fulfill its plan to build a 200-store chain in
the country.

Walmart reports record Easter sales

Easter sales reached record levels this year in the Walmart Brazilian stores. The company, the country’s third-largest
supermarketer, said sales of codfish rose 35% and olive oil and Easter eggs had a demand 20% higher than in the same
period in 2010.

Magazine Luiza raises R$ 925 milion in IPO

Magazine Luiza, Brazil’s third-largest electronics retailer,
raised R$ 925.8 million (US$ 557.7 million) in its much
awaited (and for several times postponed) initial public offer.
Each paper was sold by R$ 16 (US$ 9.64), in the minimum
figure expected by the retailer. Considering the volume
raised, Magazine Luiza was evaluated by the market in R$
3.18 billion (US$ 1.92 billion).

Online sales to rise 20% on Mother’s Day

Online retail sales are expected to grow by 20% on Mother’s Day over the same period last year, to R$ 750 million
(US$ 451.8 million) according to e-Bit consulting, who said the growth shall be leveraged by the segment’s increasing
competition, as the players have been more aggressive in their promotions to attract new consumers.

Brazilian Retail News 1 02/05/2011

Brazilian Retail News
Year 10 - Issue # 385 - São Paulo, May, 02th, 2011
Phone: (5511) 3405-6666

Easter egg sales rose 9%

Sales of Easter eggs surpassed expectations, rising
9% year-on-year to 27.8 million tons, according to the São
Paulo State Supermarket Association (Apas). Smaller eggs
led sales, as they are more affordable. Even so, bigger eggs
had a good demand and inventory levels ended below last
year, according to the trade group.

Giraffas increase sales by 22.5% in Q1

Giraffas, Brazil’s fourth-largest fast food chain, said its sales rose 22.5% year-on-year in Q1, to R$ 140 million (US$
84.34 million), and will speed up its expansion by opening 17 stores in May alone. Today, the chain runs 347 stores in 25
states and in the Federal District.

Plastic bags to be banned in São Paulo this

A deal to become official this month between São Paulo
state government and the state’s supermarket association
Apas points to the end of the distribution of plastic bags until
the end of the year. The deal is not a law, but supermarketers
are expected to take part on the initiative, as the top three
companies (GPA, Carrefour and Walmart) have positioned
themselves favourably. The plastic bags will be replaced by
ecobags, made from corn starch, that decompose in two
months and will be sold by R$ 0.19 (US$ 0.11) each.

Chilean Cencosud to focus expansion in Brazil

Chilean retail group Cencosud shall continue focusing its expansion in the Brazilian market, through acquisitions, and
does not plan to open operations in new countries, according to The Wall Street Journal. In 2010, the company invested
US$ 800 in expansion, specially in the purchase of Minas Gerais state supermarket chain Bretas. Today, Brazil accounts
for only 12% of Cencosud’s sales.

US pizza chain Papa John’s looks for

investor in Brasil
US pizza chain Papa John’s, the world’s third-largest,
is studying the Brazilian market to open restaurants in
the country in 2013. Discussions on the Brazilian venture
started in 2009 and this year the company’s headquarters
greenlighted the analysis of potential local investors. The
plan calls for a small number of private-owned stores and
then to franchise the business through this local investor.

Brazilian Retail News 2 02/05/2011

Brazilian Retail News
Year 10 - Issue # 385 - São Paulo, May, 02th, 2011
Phone: (5511) 3405-6666

E-commerce speeds up expansion
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

Online retail sales are expected to grow 19.4% per year in the 2010-2013 period, jumping from US$ 572 billion to more than
US$ 1 trillion, according to a JP Morgan study. This growth, however, will be uneven: in the US, sales will go up 12.4%, while
in Europe will rise by 13.2%. The fastest-growing markets will be Asia, with 27.5%, and the “rest of the world” will see sales go
up 29.2% per year.

In Brazil, using the figures of e-Bit’s Webshoppers report, sales went up 40% in 2010 year-on-year, to R$ 14.8 billion (US$
9.25 billion). A GS&MD – Gouvêa de Souza study on the Neoconsumer (the global, multichannel and digital consumers) pointed
out that, of the new global consumers, the Brazilians are specially impacted by the digital media and has been particularly prone
to try and use them. And the positive economic scenario leverages this behavior.

Online retail sales have been growing worldwide, and studies forecast this year they may rise to US$ 680.6 billion, more than
doubling from the US$ 273.05 billion five years ago.

In this same period, in the US, the number of online shoppers have gone up from 130 million in 2006 to around 176 million
this year, indicating the consumer base has been growing slower, but average sales have been going up. Total online sales have
gone up from US$ 126 billion in 2006 to US$ 204 billion.

And all this process may be boosted once again, as the use of the web for shopping becomes more usual, due to the mobility.
Specially in Brazil, where in many residences there are only mobile phones and no fixed lines, stimulating a more intense
browsing in the mobile environment.

In Brazil, the fact that some of the top retailers, as Casas Bahia, Walmart and Carrefour, only started their online operations
recently, made internet shopper base and average sales rise faster, as positive shopping experiences strengthen a more frequent
use of the internet for purchasing goods and, specially, services. The fact that in the country there’s a lower store per person
rate, when compared to more mature markets, as the US and Europe, shall bring a strong boost to keep internet sales rising
faster than the world average.

In the Brazilian reality, the number of e-consumers reached 23 million in 2010, from 17.6 million one year earlier. This growth
was leveraged by the new e-commerce concepts, specially Social Shopping and Purchase Clubs, and by the growing presence
of the midclass consumers, who rose from 36% of the market in 2006 to 53% last year.

In Brazil, seasonal dates, as Christmas, Mother’s Day and Father’s Day, have been the moments in which consumers increase
their purchases, leading average sales to R$ 373 (US$ 224.70). close to Valentine’s Day this figure rises to the R$ 400 (US$
240.96) range.

It’s important to notice the growing presence of the industry, directly reaching consumers and changing behaviors, as in Brazil
as worldwide. The opening of new shopping and relationship channels by suppliers is another element to create options and
opportunities for e-consumers to shop.

The expansion of e-commerce, online or via mobile, will be in the next years the fastest-growing sales channel, and the
e-consumers shopping experience stimulates the growth of businesses, average sales and frequency of shopping. The
e-commerce figures in Brazil and worldwide will be the biggest factor to make retailers and industries devote growing attention
to this channel, creating a new universe of experiences and relationships, in a digital environment.

Brazilian Retail News (BRN) is a weekly newsletter published by GS&MD - Gouvêa de Souza with the most important news
on the Brazilian retailing. The content can be freely used, once the source is quoted. If you want any information on BRN or our
services, please send an email to publicacoes@gsmd.com.br or access GS&MD - Gouvêa de Souza at www.gsmd.com.br.

Gouvêa de Souza & MD Desenvolvimento Empresarial Ltda.

Av. Paulista, 171 - 10º floor
Paraíso – São Paulo – Brazil – Zip Code: 01311-904
Phone: (5511) 3405-6666 – Fax: (5511) 3263-0066

Brazilian Retail News 3 02/05/2011