LOJAS AMERICANAS S.A. MANAGEMENT REPORT 2008 · Ecommerce, TV, Telephone Sales, Catalogues and...

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ANANANNUNUNUALALAL RR REPEPEPORORORTTT

LOJAS AMERICANAS S.A.MANAGEMENT REPORT 2008

In compliance with legal requirements and current Brazilian corporate law, Lojas Americanas S.A. is presenting its Management Report containing consolidated financial and operating results for the fiscal year ending December 31, 2008. The Company has made the adjustments that are applicable to the financial statements, as regulated by the Brazilian Securities Commission (CVM) and in conformity with the requirements as published by the Accounting Pronouncements Committee (CPC), appro-priately adjusting 2008’s results to Law 11.638/07. However, for the effects of comparison between the years, the financial information that is presented in this report is pro-forma, not taking into consideration the adjustments of Law 11.638/07 and it is not audited. The changes stemming from the adjustments of the application of Law 11.638/07 are reflected in the reconcilia-tion chart presented along with the disclosure of the results. At the end of this report, in the Results Overview (Topic 5), we are presenting the pro-forma results and the results that were published, which take into consideration the adjustments required under Law 11.638/07.

We are also presenting in this report information regarding our B2W – Companhia Global do Varejo subsidiary, which offers products and services via the Internet, television, telephone, catalogs and kiosks, and FAI – Financeira Americanas Itaú, which offers financial products. Lojas Americanas owns 56.61% and 50% of the capital of B2W and FAI, respectively.

Lojas Americanas and B2W shares are listed on the BOVESPA through ticker symbols LAME3 (common), LAME4 (preferred), and BTOW3, respectively. It also should be mentioned that B2W has issued only common shares and is part of the Novo Mer-cado (New Market), the highest corporate governance standard in Brazil.

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1. CORPORATE PROFILE

“Multi-channel Retail” Structure

Lojas Americanas operates through a multichannel service structure. In addition to the bricks-and-mortar store chain, the Com-pany reaches customers with a wide range of products sold via Internet, telephone, TV, catalogues and kiosks.

Multi-channel Retailer

Brick-and-Mortar Financial Products

Participation: 50%Results Consolidation: 50%

Participation: 56.61%Results Consolidation: 100%

Ecommerce, TV, Telephone Sales,Catalogues and kiosks.

Lojas Americanas S.A.Lojas Americanas was founded in 1929, in Niterói (RJ), and is presently in all of the regions of the country (22 states plus the Federal District), with 468 stores– 268 in the Traditional, 193 in the Express and 7 in the BLOCKBUSTER® format – equivalent to 491,000 square meters of selling space.

The traditional stores present an average sales area of 1,500 square meters, they have daily fulfillment and offer approximately 60,000 items. The Express model follows the smaller store concept, with an average size of 400 square meters, just-in-time replenishment, and selected product range of about 15,000 items, appropriate for the location and client profile of these stores.The company guarantees its clients prices that are competitive with regard to those of the competition, while offering quality products presented in Home, Leisure, Beauty, Children’s, Clothing and Convenience Foods Worlds.

Moreover, Lojas Americanas operates three distribution centers located in São Paulo/SP, Rio de Janeiro/RJ and Recife/PE.

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Distribution Map of Lojas Americanas (12/31/2008)

BLOCKBUSTER® In January 2007, Lojas Americanas acquired BWU, the company that held the BLOCKBUSTER® trademark license in the coun-try, adding 127 stores to its chain as well as the movie rental service to the Company’s product assortment. In addition, the Company now holds the BLOCKBUSTER® trademark license in Brazil for a 20-year period.

Based on the convenience concept, Lojas Americanas combined the product mix of the Traditional and Express stores with BLOCKBUSTER®’s service quality.

At the end of 2008, besides the stores acquired in January 2007, the BLOCKBUSTER® trademark was implemented in another 104 traditional and express Lojas Americanas stores.

These actions reinforce the Company’s commitment to increase the supply of new products and services in the stores, creating value for our clients and shareholders.

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B2W B2W operates through a multi-channel structure: the Internet, telesales, television, catalogs and kiosks.

B2W owns the Americanas.com, Shoptime, Submarino and Blockbuster Online trademarks. The license to use the Blockbuster Online trademark was acquired in 2007 by the Company for Internet operations in Brazil. The Company also has three subsid-iaries: B2W Viagens, Ingresso.com and Submarino Finance.

VIAGENS

VIAGENS

Americanas.comAmericanas.com (www.americanas.com.br), which initiated its activities in November 1999, offers 36 product categories through the Internet, telesales and through 400 kiosks, with access to the site, installed in Lojas Americanas stores offering clients more than 500,000 items in the categories of electronics, CDs, DVDs, computers/IT, home appliances, telecom, books, games, toys, stationery, fragrances, wines, among others. Americanas.com also operates a travel service through Americanas Viagens (www.americanasviagens.com), and a ticket service through Ingresso.com (www.ingresso.com) besides digital ser-vices, such as photo printing, wedding lists, pre-paid mobile phone credit, among others.

Americanas.com also offers logistics expertise, as well as its technology platform, to major business groups in Brazil and abroad, in order to carry out the distribution of products on behalf of its clients.

SubmarinoSubmarino (www.sumarino.com.br), which began operations in 1999, is a leader in technology innovation, having implemented CRM (Customer Relationship Management), a tool which customizes webpages in accordance with client profile. Submarino offers 28 product categories through its sales channels: Internet, telesales and catalogues, with a strong emphasis on the sale of books, CDs, DVDs, electronics, computers/IT, videogames and online services. Submarino also operates travel services through Submarino Viagens (www.submarinoviagens.com.br), and ticket services through Ingresso.com (www.ingresso.com). Besides B2C services, Submarino offers B2B services regarding the e-commerce for major business groups.

Bimonthly Submarino’s customers receive printed catalogues, with a distribution of hundreds of thousands units, listing prod-ucts and special offers. The website also offers a highly attractive loyalty program, in partnership with Submarino Finance.

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B2W launched in 2008 the new Submarino website, bringing innovative concepts to the Brazilian internet. The new Submarino was entirely designed to enhance navigation, promote broader interaction with clients and simplify the purchasing process. An interactive menu was created, not only to allow more accurate search for products but also to permit customization in accor-dance with each client’s preferences. It is possible to create special lists, check main promotions using RSS or mobile phone, and classify products by price, importance and sales. The new Submarino website is another B2W’s innovation maintaining the Company one step ahead in Brazil e-commerce.

ShoptimeShoptime (www.shoptime.com.br), created in 1995, was the first home shopping channel (sales via TV) and operates via Internet, telesales and catalogue. The TV channel reaches more than 20 million Brazilian homes, of which more than 5 million are Pay-TV subscribers (channels SKY 19, Net 31, Neo TV) and more than 18 million via parabolic antennas (Vertical 5B), with interactive transmission up to 11 hours of live programming, seven days a week. The website receives more than 500,000 visits a day and, in 2007, began to transmit TV channel programming 24 hours a day, providing clients speed and interactivity for their purchases. The catalogue is distributed seven times a year, throughout Brazil, up to 400,000 units.

Currently, Shoptime offers 20 categories of products and has more than 3.5 million customers. The emphasis of Shoptime’s assortment is on home appliances, bed and bath products, computers/IT, as well as an exclusive line of portable home appli-ances, Fun Kitchen. In addition to this, it also operates travel services through Shoptime Viagens (www.shoptimeviagens.com).

Shoptime launched its new website in 2008, with a much more efficient navigation, organized design and features that enhance the view of the products. More space to show TV and catalogues promotions combined with the utilization of presenters im-age, promotes a synergy gain between channels. The launch of the new website opened to Shoptime not only the possibility of modernizing the brand but also improving the conversion rate, transforming the internet into a faster and easier instrument for shopping.

B2W ViagensB2W Viagens operates through the Americanas Viagens, Submarino Viagens and Shoptime Viagens brands, offering services such as tourist packages, airline tickets, online hotel reservations, cruises, travel insurance and rent a car service, in Brazil and abroad. The Company reaches its clients via Internet, telesales, television and kiosks, and has been making efforts to increase its range of products.

The objective of B2W Viagens is to build a platform which allows its clients to plan and purchase their trips in a fast and pleas-ant way, establishing a leadership position in online travel in Brazil, through innovation, quality of service, differentiated prod-ucts and competitive prices.

Ingresso.comIngresso.com offers technology on ticket purchasing services via Internet for cinemas, theatres, shows, soccer games, parks and cultural events. With over 1 million registered customers, Ingresso.com is the largest online cinemas throughout the coun-try. This company also offers online seat selection in the cinemas.

Another operation area is the sale of its ticketing software in Brazil and abroad. Currently, Ingresso.com is responsible for the computerizing of a number of cinemas, theaters, sports stadiums and show halls.

Ingresso.com consolidated it’s positioning as a big International concerts seller, offering during 2008 tickets to concerts of great artists and bands, like Elton John, R.E.M., Queen, Iron Maiden and Radiohead, among others.

Submarino FinanceSubmarino Finance, the result of a joint venture with Cetelem, offers a Submarino credit card, which allows financing in up to

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24 installments, with interest, the purchase of products on the Submarino website, as well as an exclusive rewards program and special promotions, such as discounts on products and points on the company’s loyalty program, named Léguas Subma-rinas.

For B2W the private card represents opportunities to increase Submarino website sales, especially of high ticket items, to re-duce expenses with interchange fee and securitization of receivables and to take gains on the consumer credit market. In 2008, more than 360 thousand of cards were issued and more than 20% of Submarino’s Sales were made through our private card.

BLOCKBUSTER® - OnlineB2W has acquired the rights to use the BLOCKBUSTER® trademark on the Internet in Brazil and has implemented a service of online DVD rentals through its website (www.blockbuster.com.br). Blockbuster Online allows its clients choose their movies online, making desire lists and receiving DVDs in their houses. It offers plans without limited returning time and with no delay penalties. Presently Blockbuster Online has the biggest collection of titles in Brazil, with more than 12 thousand different mov-ies, delivering in 55 cities around 5 states, including Sundays and same day delivery service for Rio de Janeiro and São Paulo.

FAI – Financeira Americanas ItaúFinanceira Americanas Itaú (FAI) is dedicated to the financing of purchases via private label and Visa and Mastercard credit cards (co-branded), the supply of personal credit and other financial products and services.

It operates through 463 points of sale in Lojas Americanas, the Internet (Americanas.com and Shoptime) and through the Shoptime TV channel.

Cards began to be supplied in May 2006. By the end of 2008, FAI had already issued about 2.2 million cards, of which 1.6 mil-lion are private label, 152,000 are for personal loans and 415,000 are co-branded.

The FAI cards (private label and co-branded) was above 12.0% of the Parent Company’s revenues by the end of 2008.

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2. MESSAGE FROM THE MANAGEMENT

T O O U R C L I E N T S , S H A R E H O L D E R S , A S S O C I A T E S A N D S U P P L I E R S :

In 2008, we opened 58 new stores and grew our main operating indicators.

In this context, our Annual Consolidated Gross Revenue, which includes the Brick-and-Mortar Stores, the subsidiaries B2W – Companhia Global do Varejo and FAI – Financeira Americanas Itaú, rose 23.4%, totaling R$ 9.53 Billion. EBITDA was R$ 945.2 Million, which represents a 31.4% increase, with an EBITDA margin of 13.2%, up 0.6 pp in comparasion with 2007. Net income for the period was R$ 111.7 Million, an increase of 8.4%.

In the brick-and-mortar retail network, Gross Revenues increased by 20.3%, totaling R$ 4.95 Billion, whereas Net Revenues were up 24.3% for the period, with the difference in growth due to the introduction of the ICMS Tax Substitution Regime (ST) in some of the Brazilian states. In the “same stores” concept, net revenue increased 15.3% over 2007.

B2W – the subsidiary that offers products and services via the Internet, television, telephone, catalogs and kiosks, reached consolidated sales of R$ 4.7 Billion, a growth of 30.2%, with an EBITDA margin close to 15%, an increase of 1.0 p.p. The net income posted during the period by B2W was R$ 87.9 Million, representing an increase of 41.3%.

We believe that the year of 2009 will require greater caution by the companies, although at the same time, we understand that there are many opportunities to be exploited in the retail segment. Therefore, for this year, as in previous years, “we will continue to pursue our learning path and to overcome obstacles, and this makes us enthusiastic since it will enable us to achieve new levels of results, always seeking to better meet our customer’s needs.”

Moreover, during 2009 we will be celebrating, with immense pride and delight, the anniversary of the 80 years of LOJAS AMERICANAS S.A.

Finally, we would like to thank our associates for their dedication and efforts and our suppliers, customers and shareholders for their trust and support.

THE MANAGEMENT“We always want more”

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3. ECONOMIC SITUATION

According to IBGE data for 2008, inflation in Brazil as measured by the Wide National Consumer Price Index (IPCA) was 5.90%, thus higher than the 4.46% recorded in 2007. During the year, the dollar appreciated against the real by 31.9%. The economy’s base interest rate (SELIC) closed the year of 2008 at 13.75%, which was higher than the 11.25% rate at the close of 2007.

In the first half of 2008, Brazil achieved the long-desired investment-grade rating from international agencies and during the year the country’s GDP rose 5.1% over 2007.Nevertheless, the second half of 2008 was characterized by instability on the international scene, which impacted the local economic environment, resulting in financial market volatility and a higher exchange rate and bank spreads.

We believe that 2009 will require much more caution on the part of the companies; but at the same time, we understand that there are a many opportunities to be exploited in the retail segment. Therefore, we are reaffirming our confidence in the eco-nomic development of the country.

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4. STRATEGY AND CAPITAL EXPENDITURES

In 2008, Lojas Americanas reported R$ 9.527 billion in consolidated net revenues, the equivalent of a 23.4% increase over the previous year. Of this total, R$ 4.952 billion represented the performance of the Parent Company (brick-and-mortar stores), with sales up 20.3% over 2007.

In the “same stores” concept, that is excluding the stores that were inaugurated less than a year ago, the increase in accumulated net sales in 2008 was 15.3%.

Over the past seven years, Lojas Americanas expanded its store network by almost five times through its organic expansion program and the acquisition of BWU, the company that held the BLOCKBUSTER® trademark in the country. In 2008, the Company set a new record, with the inauguration of 58 stores — 38 in the Traditional model and 24 Express stores — while also refurbishing 22 stores. Moreover, we reformed and expanded our three distribution centers located in São Paulo/SP, Rio de Janeiro/RJ and Recife/PE. The idea was to boost the capacity and improve our logistical operations. Similarly, B2W is now in the final phase of construction of a new distribution center, designed to centralize the operation of its brands.

These accomplishments demonstrate what the company can achieve in a single year.

35Stores

37Stores

45Stores

50Stores

58Stores

Store Openings

7Stores

16Stores

35Stores

37Stores

45Stores

50Stores

58Stores

2002 2003 2004 2005 2006 2007 2008

Store Openings

7Stores

16Stores

35Stores

37Stores

45Stores

50Stores

58Stores

2002 2003 2004 2005 2006 2007 2008

Store Openings

At the end of the year, Lojas Americanas had 468 stores, divided into the following formats:

Format Number of stores %

Traditional 268 57%

Express 193 41%BWU/BLOCKBUSTER® 7 2%

TOTAL 468 100%

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443.0

491.0

468²)

Sales Area x Number of storesPosition as of December 31

243.0259.1

293.7330.1

372.1

443.0

491.0

105stores

121 156193stores

237stores

413stores

468stores

Num

ber

of S

tore

s

ales

Are

a (t

hous

and

m²)


243.0259.1

293.7330.1

372.1

443.0

491.0

105stores

121stores

156stores

193stores

237stores

413stores

468stores

2002 2003 2004 2005 2006 2007 2008

Num

ber

of S

tore

s

Sale

s Ar

ea (

thou

sand

m²)


The following table details the profiles of the stores that were inaugurated during 2008:

Region Format Number of stores

Sales Areathousand m²

Averagethousand m²

As of 12/31/2007 413 443.0 1.1Southeast Traditional 12 11.7 1.0

Express 23 9.9 0.4Northeast Traditional 8 8.8 1.1

Express 1 0.6 0.6South Traditional 6 6.1 1.0

Express 0 0.0 0.0North Traditional 5 8.0 1.6

Express 0 0.0 0.0Midwest Traditional 3 3.1 1.0

Express 0 0.0 0.0Total Traditional 34 37.7 1.1

Express 24 10.5 0.4Deactivation/Remodel* (3) (0.2)

As of 12/31/2008 468 491.0 1.1

From the Parent Company point of view, the company also invested in technological modernization and improvements in operating processes and logistics in order to assure operational efficiencies. The following table shows the distribution of

Lojas Americanas’ capital expenditures in 2008.

R$ Millions %Openings and Remodeling 230.2 84.0%Technological upgrade 23.0 8.4%Operations and other projects 20.8 7.6%TOTAL 274.0 100.0%

Stores

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FAI – Financeira Americanas ItaúFinanceira Americanas Itaú’s (FAI) strategy has emphasized expanding the offer of credit and financial services to Lojas Americanas’ clients and to facilitate the form of payment inside the brick-and-mortar stores, through Americanas.com and Shoptime, representing another client relationship and loyalty instrument.

FAI issues three types of cards: private label, co-branded and personal loans. Private label cards offer different payment means, no annual fee or issuance charge and can be used to finance purchases immediately after they have been issued.

Co-branded cards are FAI partnerships with the Mastercard and Visa brands, and are issued in National, International and Gold versions.

The private label bill collection service through Lojas Americanas’ cashier stations, which was set up during the second half of 2008, achieved a 52% share of the total volume of bills paid as of December/08. Of the total number of clients who paid their bills inside a Lojas Americanas store, 42% made new purchases during the month.

As of the close of 2008, FAI posted receivables equivalent to R$ 512.6 million, representing 100% of the total portfolio volume. This amount represented a 91% increase over the close of 2007. The consolidation of FAI’s operations by Lojas Americanas is proportional to its ownership stake, which is 50% of the total.

13% 12% 15%500

Cobranded and Private Label - New Accounts (thousand) and % in Parent Company s Gross Revenue

Private Label Cobranded In LASA s Revenue

92 121 143 148 117184

277 30327

2227 42 68

108

137 912% 3% 3% 3% 4%

8%

13% 12%

(10%)

(5%)

0%

5%

10%

15%

50100150200250300350400450500



92 121 143 148 117184

277 30327

2227 42 68

108

137 912% 3% 3% 3% 4%

8%

13% 12%

(15%)

(10%)

(5%)

0%

5%

10%

15%

-50

100150200250300350400450500

1T/07 2T/07 3T/07 4T/07 1T/08 2T/08 3T/08 4T/08



The change in the focus of personal loan products for private label and co-branded cards and the incentive for using them inside LASA for the acquisition of consumer products helped to lower the payment default rate and drive strong growth in sales volumes (new accounts, transactions).

In 2009, the focus will continue to be on consumption products through the offer of private label and co-branded cards. The strategy includes expanding sales of insurance products and extended guarantees, both on the Internet as well as in the brick-and-mortar stores, coupled with strong cost controls.

AssociatesWith the opening of 58 new stores during 2008 and an increase in the number of associates, Lojas Americanas intensified its recruitment, training, qualification and integration programs. These programs made it possible for associates to advance

within the Company through an in-house promotion policy and a meritocracy system.

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8 491 9,28210,281

13,25213,459

Parent Company

7,633 7,822 8,491 9,28210,281

13,25213,459

2002 2003 2004 2005 2006 2007 2008

Parent Company

7,633 7,822 8,491 9,28210,281

13,25213,459

2002 2003 2004 2005 2006 2007 2008

Parent Company

CDA – Americanas Development CenterNow in its second year of operation, the Americanas Development Center (CDA) served to consolidate the training timetable that had been defined the previous year. In 2008, we more than doubled the number of training man/hours, with more than 37,000 associates/training hours. We offered the first Lojas Americanas Retail Management Training class (TGV) during the year and initiated a new TGV version designed for B2W - Companhia Global do Varejo. We expanded partnerships with renowned institutions and augmented projects designed to improve our purchase processes. Our emphasis on the training of our associates and their internal development includes the establishment of increasingly challenging targets and culminates in our slogan: “We always want more.”

Talent RecruitmentLojas Americanas’ policy is to train its human talent in-house as of the moment an Associate is hired through the intern and trainee programs or for operating positions in stores. Thus, we concentrate on recruiting university students from the best institutions in the country, who are given specific training designed to prepare them for the challenges of the retail segment,

immersing them in the Company’s organizational culture.

Intern ProgramInitiated more than 10 years ago, the Intern Program is designed to recruit university students who demonstrate an entrepreneurial spirit. This allows us to select young people with a profile that is compatible with a results-based team. During the program, the interns are taught the work routines in a number of areas, including Headquarters, Stores and Distribution Centers. Monthly training modules are run that give the interns the opportunity to incorporate the vision, mission and corporate values, the main characteristics of the individual departments, the Company itself and the technical tools necessary to work in each area of activity. The nationwide program has had great success with the young professionals.

Trainee ProgramThe objective of the Trainee Program is to select recently graduated university students with a profile that indicates they could fill an executive position within the Company. During the course of the program, trainees undergo specific instruction in the Americanas Development Center (CDA) and are presented to each one of the Company’s areas through their main executives. Next, they are allocated in one of these areas, giving them the chance to prepare and develop challenging professional

projects right at the start of their careers.

Social AspectsLojas Americanas’ Program for the Handicapped (PPD) seeks to hire physically challenged individuals and foster their social inclusion, including opening doors to them in the job market.

The Young Apprentice Project is run in partnership with the National Commercial Apprenticeship Service (SENAC) or other

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equivalent entities in cities where Lojas Americanas has units. The Program seeks to prepare young students for the job market. They are offered a firm contract and, in counterpart, each youth must commit to enrolling in and attending grade school on a regular basis.

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5. EARNINGS HIGHLIGHTS

2008 2007 Var. (%) Financial Highlights (R$ mm) 2008 2007 Var. (%)

9,527.4 7,722.4 23.4% Gross Revenue 4,952.0 4,115.3 20.3%

7,168.0 5,731.3 25.1% Net Revenue 3,988.3 3,209.6 24.3%

2,280.9 1,831.9 24.5% Gross Profit 1,198.9 966.1 24.1%

31.8% 32.0% -0.2 pp Gross Margin (%NR) 30.1% 30.1% -945.2 719.5 31.4% EBITDA 514.8 393.4 30.9%

13.2% 12.6% +0.6 pp EBITDA Margin (%NR) 12.9% 12.3% +0.6 pp111.7 103.0 8.4% Net Income 111.7 103.0 8.4%

1.6% 1.8% -0.2 pp Net Margin (%NR) 2.8% 3.2% -0.4 pp

Parent CompanyConsolidated

Gross RevenueThe Company’s consolidated gross revenue for the cumulative period of January through December 2008 totaled R$ 9.527 billion, an amount 23.4% higher than R$ 7.722 billion posted in 2007.

In the Parent Company view, cumulative gross revenue totaled R$ 4.952 billion, an amount 20.3% higher than R$ 4.115 billion recorded in 2007.

3 640

5.020

7.722

9.527

CAGR = 30.6%

Consolidated Gross Revenue (R$ billion)

2.4652.738

3.374

4.115

4.952

CAGR = 19.3%

Parent Company Gross Revenue (R$ billion)

1.918 2.3252.949

3.640

5.020

7.722

9.527

2002 2003 2004 2005 2006 2007 2008

CAGR = 30.6%


1.7212.012

2.4652.738

3.374

4.115

4.952

2002 2003 2004 2005 2006 2007 2008

CAGR = 19.3%


1.918 2.3252.949

3.640

5.020

7.722

9.527

2002 2003 2004 2005 2006 2007 2008

CAGR = 30.6%


1.7212.012

2.4652.738

3.374

4.115

4.952

2002 2003 2004 2005 2006 2007 2008

CAGR = 19.3%


Net RevenueIn 2008, the consolidated net revenue of Lojas Americanas and its subsidiaries totaled R$ 7.168 billion, 25.1% higher than the previous year.

In the Parent Company, net revenue in 2008 totaled R$ 3.988 billion, the equivalent of a 24.3% growth over 2007.

In the “same store” concept — that is, excluding new stores inaugurated less than one year ago — the growth in net revenue for the year of 2008 was 15.3% compared to 2007. The growth of “same store” sales during the fourth quarter of 2008 was 13.3%.

Consolidated Gross Revenue per AssociateThe Company’s consolidated gross revenue per associate in 2008 was R$ 594,000, the equivalent to an increase of 27.7%

over 2007.

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229 266309 344

432 465

594

Consolidated Gross Revenueper Associate (R$ thousand)

229 266309 344

432 465

594

2002 2003 2004 2005 2006 2007 2008

Consolidated Gross Revenueper Associate (R$ thousand)

Gross MarginConsolidated gross profit for 2008 reached R$ 2,280.9 million, an increase of 24.5% over the previous year. The consolidated gross margin for 2008 was 31.8% of net revenue (NR), compared to a gross margin of 32.0% posted in 2007.

For the parent company, the accumulated gross margin for 2008 was 30.1% of NR, in line with the one recorded in 2007. The gross profit in the parent company point of view totaled R$ 1,198.9 million for the year, 24.1% higher than the accumulated amount for the previous year.

It is important to mention, in order to analyze the margins as a percentage of the Company’s net revenues (NR), that the ICMS Tax Substitution Regimen (ST) entered into effect in some Brazilian states, mainly the state of São Paulo – where most of our suppliers are located and where we have approximately 180 stores. The ST, which changes the way in which the ICMS is collected on some product segments, records this tax under the Cost of Merchandise Sold (CMV) line item and the sales tax line item has been eliminated.

464 8 585.1 704.2 839.71,167.2

1,831.9

2,280.9

Consolidated Gross Profit (R$ Million)

410.0 496.2580.5 646.9

795.8966.1

1,198.9

Parent Company Gross Profit (R$ Million)

464.8 585.1 704.2 839.71,167.2

1,831.9

2,280.9

2002 2003 2004 2005 2006 2007 2008


410.0 496.2580.5 646.9

795.8966.1

1,198.9

2002 2003 2004 2005 2006 2007 2008


29.5 30.2 30.9 30.3 30.8 32.0 31.8

Consolidated Gross Margin (%NR)

28.9 29.4 30.2 30.3 30.3 30.1 30.1

Parent Company Gross Margin (%NR)

464.8 585.1 704.2 839.71,167.2

1,831.9

2,280.9

2002 2003 2004 2005 2006 2007 2008


410.0 496.2580.5 646.9

795.8966.1

1,198.9

2002 2003 2004 2005 2006 2007 2008


29.5 30.2 30.9 30.3 30.8 32.0 31.8

2002 2003 2004 2005 2006 2007 2008


28.9 29.4 30.2 30.3 30.3 30.1 30.1

2002 2003 2004 2005 2006 2007 2008


464.8 585.1 704.2 839.71,167.2

1,831.9

2,280.9

2002 2003 2004 2005 2006 2007 2008


410.0 496.2580.5 646.9

795.8966.1

1,198.9

2002 2003 2004 2005 2006 2007 2008


29.5 30.2 30.9 30.3 30.8 32.0 31.8

2002 2003 2004 2005 2006 2007 2008


28.9 29.4 30.2 30.3 30.3 30.1 30.1

2002 2003 2004 2005 2006 2007 2008


Operating ExpensesFor the year 2008, the consolidated operating expenses (excluding depreciation and amortization) reached R$ 1,335.7 million, or 18.6% of net revenue (NR), a reduction of 0.8 pp over the previous year.

The opening of 58 stores in 2008; the evolution of sales of our e-commerce, which grew 30% in the accumulated period of 2008; and Financeira Americanas Itaú, which doubled its credit card base, reaching 2.2 million cards, should all be taken into

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consideration in this analysis.

In the Parent Company, the operating expenses (excluding depreciation and amortization) during 2008 totaled R$ 684.1 million, or 17.2% of the net revenue, a decline of 0.6 pp over the previous year.

20.419.0 18.9 18.4 18.8 19.4 18.6

Consolidated Operational Expenseswithout Depreciation & Amortization (%NR)

19.518.3 18.6 18.8 18.6 17.8 17.2

Parent Company Operational Expenseswithout Depreciation & Amortization (%NR)

20.419.0 18.9 18.4 18.8 19.4 18.6

2002 2003 2004 2005 2006 2007 2008


19.518.3 18.6 18.8 18.6 17.8 17.2

2002 2003 2004 2005 2006 2007 2008


20.419.0 18.9 18.4 18.8 19.4 18.6

2002 2003 2004 2005 2006 2007 2008


19.518.3 18.6 18.8 18.6 17.8 17.2

2002 2003 2004 2005 2006 2007 2008


Operating Income*In the year 2008, the consolidated operating income (before financial income) was R$ 717.2 million, representing an increase of 26.5% compared to 2007. The operating margin (%NR) rose 0.1 pp in comparison with the previous year (% NR).

The improvement in the operating performance of Lojas Americanas and its subsidiaries over the past six years presented a compound annual growth rate (CAGR) of 37.1%, indicates that the Company’s strategy converges towards the consolidation of its competitive advantages and has been adding opportunities for the growth of profitability over the long-term.

The parent company operating income (before financial income and equity accounting) was R$ 383.5 million in 2008, an increase of 26.7% when compared to 2007. The operating margin (%NR) rose 0.2 pp over the previous year (%NR).

175 0 224.0 267.8368.7

566.9

717.2

CAGR = 37.1%

Consolidated Operating Income(R$ million)

100.6 148.4180.2 194.2

240.1302.8

383.5

Parent Company Operating Income(R$ million)

CAGR = 25.0%

107.9 175.0 224.0 267.8368.7

566.9

717.2

2002 2003 2004 2005 2006 2007 2008

CAGR = 37.1%

Consolidated Operating Income(R$ million)

100.6 148.4180.2 194.2

240.1302.8

383.5

2002 2003 2004 2005 2006 2007 2008

Parent Company Operating Income(R$ million)

CAGR = 25.0%

* Operating Income before Financial Income and Equity Accounting.

AR 17


Operating Income before amortization of goodwill:

2008 %NR 2007 %NR Var (%) 2008 %NR 2007 %NR Var (%)

Gross Profit 1,198.9 30.1% 966.1 30.1% 24.1% 2,280.9 31.8% 1,831.9 32.0% 24.5%

Operating Expenses (Revenues) (815.4) -20.4% (663.3) -20.7% 22.9% (1,563.7) -21.8% (1,265.0) -22.1% 23.6%(+) Sales (637.3) -16.0% (525.6) -16.4% 21.3% (1,217.8) -17.0% (983.3) -17.2% 23.8%(+) General and administrative (46.8) -1.2% (47.1) -1.5% -0.6% (117.9) -1.6% (129.1) -2.3% -8.7%(+) Depreciation and Amortization (131.3) -3.3% (90.6) -2.8% 44.9% (228.0) -3.2% (152.6) -2.7% 49.4%

Amortization of goodwill* (29.0) -0.7% (12.3) -0.4% 135.8% (53.1) -0.7% (38.6) -0.7% 37.6%Deprec. and Amort. excluding amort. Goodwill (102.3) -2.6% (78.3) -2.4% 30.7% (174.9) -2.4% (114.0) -2.0% 53.4%

(+) Other - 0.0% - 0.0% - 0.0% - 0.0%

Operating Income 383.5 9.6% 302.8 9.4% 26.7% 717.2 10.0% 566.9 9.9% 26.5%

(-) Amortization of goodwill (29.0) -0.7% (12.3) -0.4% 135.8% (53.1) -0.7% (38.6) -0.7% 37.6%

Operating Income Before Amortization of Goodwill 412.5 10.3% 315.1 9.8% 30.9% 770.3 10.7% 605.5 10.6% 27.2%

Consolidated: Amortization of the Parent Company's and B2W's goodwill (Shoptime acquisition).

p y g g y g , y q y j y pBTOW3 shares by B2W.

Parent Company Consolidated

The operating income of the Parent Company in 2008, without the effect of the amortization of goodwill stemming from the merger of Americanas.com and Submarino, of the acquisition of BTOW3 shares by Lojas Americanas and also by the repurchase of BTOW3 shares by B2W, represents an improvement of 0.5 pp over 2007 as a percentage of NR, or an increase of 30.9%.

The consolidated operating income in 2008 without the effects of amortization of goodwill was 0.1 pp up over 2007, or a growth of 27.2%.

EBITDAIn 2008, consolidated EBITDA totaled R$ 945.2 million, representing a 31.4% increase over 2007.

The consolidated EBITDA margin for the year was 13.2% of net revenue, compared to 12.6% of NR for 2007. The EBITDA per company is presented in the following table:

2008 %NR 2007 %NR Var. ($) Var. (%)

EBITDA 945.2 13.2% 719.5 12.6% 225.7 31.4%

LOJAS AMERICANAS 514.8 12.9% 393.4 12.3% 121.4 30.9%B2W 483.6 14.9% 347.1 13.9% 136.5 39.3%FAI (54.9) -48.5% (18.7) -19.6% -36.2 193.6%BWU AND OTHER SUBSIDIARIES 1.7 23.5% (2.3) -2.7% 4.0 -173.9%

In 2008, the Parent Company’s EBITDA totaled R$ 514.8 million, equivalent to an increase of 30.9% when compared to 2007. It is important to note that the growth of net revenue for the same period was 24.3%. It can be seen that the FAI presented a negative EBITDA variation of R$ 36.2 million over 2007, reporting negative EBITDA of R$ 54.9 million. FAI’s result is in line with

the business plan established by the Company.

AR 18


186.4222.7 245.9

305.6

393.4

514.8

12.9%

Parent Company EBITDA

CAGR = 25.3%

274.7330.9

455.1

719.5

945.2

13 2%

Consolidated EBITDA

CAGR = 37%

133.3186.4

222.7 245.9305.6

393.4

514.8

9.4%11.0%

11.6% 11.5%11.6%

12.3%12.9%

2002 2003 2004 2005 2006 2007 2008

EBITDA (R$ MM) EBITDA (% RL)


CAGR = 25.3%

142.8217.6

274.7330.9

455.1

719.5

945.2

9.1%11.2% 12.1% 12.0% 12.0% 12.6%

13.2%

2002 2003 2004 2005 2006 2007 2008


Consolidated EBITDA

CAGR = 37%

133.3186.4

222.7 245.9305.6

393.4

514.8

9.4%11.0%

11.6% 11.5%11.6%

12.3%12.9%

2002 2003 2004 2005 2006 2007 2008



CAGR = 25.3%

142.8217.6

274.7330.9

455.1

719.5

945.2

9.1%11.2% 12.1% 12.0% 12.0% 12.6%

13.2%

2002 2003 2004 2005 2006 2007 2008


Consolidated EBITDA

CAGR = 37%

EBITDA (Operating earnings before interest, taxes, depreciation and amortization and excluding extraordinary or non-operating expenses) is presented as additional information because we believe it is an important indicator of our operating performance, as well as being useful for comparing our performance with that of other companies in the retail sector. However, no number should be considered isolatedly as a substitute for net income calculated according to Company Law and the rules of the Brazilian Securities Exchange Commission (CVM) or, even, as a measure of the Company’s profi tability. Furthermore, our calculations may not be compatible with similar measures adopted by other companies.

Sales by Means of Payment

The sales by means of payment in 2008 can be observed in the following table:

2008 2007 Chg. 2008 2007 Chg.Cash 51% 52% - 1 pp 36% 37% - 1 pp

Check 1% 1% - 1% 0% + 1 pp

Credit Card 40% 44% - 4 pp 57% 60% - 3 pp

Private Label Cards* 8% 3% + 5 pp 6% 3% + 3 pp*Considers the Financeira Americanas Itaú and Submarino Finance private label cards.

Sales by Means of Payment

Mean of Payment Parent Company Consolidated

Working Capital [gain of 20 days in net working capital in 4Q08 vs. 3Q08]The Parent Company’s net working capital in 4Q08 improved 20 days over the third quarter of the year. This performance comes from the gain of 30 days in the ratio between inventories and suppliers, with an increase in accounts receivables of only 10 days (20 days 4Q07 vs. 3T07).

The evolution of Lojas Americanas’ net working capital in 2008 demonstrates the constant striving for the improvement of our operating processes and the development of partnerships with our suppliers.

AR 19


109

140

9581

106125

Suppliers (Parent Company)

31 days 19 days108 104

91 91 98 87

Inventories (Parent Company)

4 days11 days109

140

9581

106125

3T07 4T07 1T08 2T08 3T08 4T08


31 days 19 days108 104

91 91 98 87

3T07 4T07 1T08 2T08 3T08 4T08


4 days11 days

38

6054

4643

53

Accounts Receivables (Parent Company)

20 days 10 days

3950

56

Net Working Capital Evolution (Parent Company)

15 days

Better

109

140

9581

106125

3T07 4T07 1T08 2T08 3T08 4T08


31 days 19 days108 104

91 91 98 87

3T07 4T07 1T08 2T08 3T08 4T08


4 days11 days

38

6054

4643

53

3T07 4T07 1T08 2T08 3T08 4T08

Accounts Receivables (Parent Company)

20 days 10 days

39

24

5056

35

15

3T07 4T07 1T08 2T08 3T08 4T08

Net Working Capital Evolution (Parent Company)

15 days20 days

Better

Days of inventories: [360 / (COGS last 12 months / balance of inventories)]Days of suppliers: [360 / (COGS last 12 months / balance of suppliers)]Days of accounts receivable: [360 / (Gross Revenue of the last 12 months/ balance of accounts receivable)]:Days of net working capital: (inventory days – supplier days + accounts receivable days)

Financial IncomeFor the year, the consolidated net financial expenses totaled R$ 432.4 million, or 6.0% of net revenue (NR). This same indicator in 2007 was R$ 366.0 million, or 6.4% of NR.

In the Parent Company, the net financial expenses in 2008 totaled R$ 238.8 million compared to R$ 149.1 million in 2007.

It is important to note that, for a better assessment of the Parent Company’s net financial income, we should include the financial revenues and expenses of its non-operating subsidiaries (Klanil, Louise, BWU and others). Thus, we demonstrate in the following table a view of the financial income of the aforementioned effects.

Breakdown of the Net Financial Income - R$MM 2008 2007R$ MM %

(+) Interest and monetary variation on money market investments 111.3 42.6 68.6 161.0%

(=) Total Financial Revenue 111.3 42.6 68.6 161.0%

(+) Interest and monetary variation on loans and financing (327.7) (155.9) (171.8) 110.2%(+) Monetary variation on tax liabilities (12.0) (17.1) 5.1 -29.8%(+) Tax on financial transactions (10.3) (18.7) 8.4 -44.9%

(=) Total Financial Expenses (350.0) (191.7) (158.3) 82.6%

Parent Company Financial Result (before Klanil, Louise, BWU, others) (238.8) (149.1) (89.7) 60.2%

(+) Equity accounting of Klanil, Louise and other subsidiaries (7.3) (39.1) 31.8 -81.4%(+) Net Financial Result BWU 37.4 (6.8) 44.2 -652.5%

Parent Company Net Financial Result (after Klanil, Louise, BWU, others) (208.7) (195.0) (13.7) 7.0%

(+) B2W Net Financial Result - consolidated (223.7) (171.0) (52.7) 30.8%

Consolidated Net Financial Result (432.4) (366.0) (66.4) 18.1%

Variation

AR 20


The net financial expenses of the Parent Company in 2008, taking into account the aforementioned effects and before B2W, totaled R$ 208.7

million and presented an increase of 7.0%, whereas the Parent Company’s net revenues rose 24.3%. During the period, we invested in the

inauguration and refurbishment of new stores and the expandion and modernization of our distribution centers, we paid out dividends, we

bought back shares (LAME3 and LAME4) and we purchased B2W shares (BTOW3).

The Company continues to reaffirm its commitment to a conservative cash investment policy, manifested through the utilization of hedge

instruments, in foreign currencies, to offset eventual exchange fluctuations, whether relative to financial liabilities or total cash position. Such

instruments offset the foreign exchange risk, converting the debt cost to local currency and interest rate (as a percentage of the Interbank

Deposit Rate - CDI). In the same way, it is worth mentioning that the Company’s available cash is invested in Brazil’s largest financial

institutions.

* CDI – Interbank Deposit Certificate: average rate of funding through the interbank market.

Net IncomeNet income in 2008 totaled R$ 111.7 million, compared to the R$ 103.0 million for 2007.

Net income for the fourth quarter of 2008 was R$ 105.8 million, 40.7% higher than the R$ 75.2 million posted during the same period of 2007.

The following table presents the main variations from EBITDA to net income:

RECONCILIATION OF THE NET INCOMER$MM 2008 2007 Var. ($) Var. (%)

EBITDA 514.8 393.4 121.4 30.9%(+) Depreciation/Amortization (without goodwill) (102.3) (78.3) (24.0) 30.7%

(+) Financial Result Parent Company (238.8) (149.1) (89.7) 60.2%

(+) Amort. of goodwill (merger/Lojas purchase of BTOW3) (20.0) (11.4) (8.6) 75.4%(+) Amort. of goodwill (B2W repurchase of BTOW3) (9.0) (0.9) (8.1) 900.0%

Total goodwill Amortization (Parent Company) (29.0) (12.3) (16.7) 135.8%

(+) Equity Accounting (B2W) 49.1 33.4 15.7 47.0%(+) Equity Accounting (FAI) (38.2) (17.2) (21.0) 122.1%(+) Equity Accounting other subsidiaries 12.7 (30.7) 43.4 -141.4%

(+) Non Operating Income (7.8) 0.3 (8.1) -2700.0%(+) Statutory Participation (7.0) (6.0) (1.0) 16.7%

(+) Income and social contribution taxes (41.8) (30.5) (11.3) 37.0%

NET INCOME (LOSS) 111.7 103.0 8.7 8.4%

(-) Goodwill amortization write back (29.0) (12.3) (16.7) 135.8%

NET INCOME WITHOUT AMORTIZATION OF GOODWILL 140.7 115.3 25.4 22.0%

Lojas Americanas (Parent Company)

* the non operating income, by the new Law 11,638/07 is considered as “other operating income”.

Amortization of goodwill

The amortization of goodwill presented in the above chart were originated by the merger of Americanas.com and Submarino

in December 2006, by the purchase of BTOW3 shares by Lojas Americanas and by the repurchase of BTOW3 shares by

B2W. The amount of these amortizations had a negative effect of R$ 29.0 million on the Parent Company’s income in 2008,

AR 21


presenting a negative variation of R$ 16.7 million compared to the previous year.

FAI Equity AccountingFAI (Financeira Americanas Itaú) posted a loss of R$ 38.2 million in 2008, a negative variation of R$ 21.0 million versus 2007. It should be noted that FAI is a company in the process of investment and maturation.

Non-Operating Income (by the new Law 11,638/07, considered as “other operating income”)The non-operating income in 2008 was negative in R$ 7.8 million, versus a positive income of R$ 0.3 million in 2007.

INDEBTEDNESS

Lojas Americanas uses its cash flow to prioritize investments that generate the best returns for shareholders. Thus, we have listed below the main actions carried out in the January 1, 2008 to December 31,2008 period:

• Investments made by Lojas Americanas and B2W in fixed, deferred and intangible assets (development of web sites and systems) of R$ 459.2 million;• Payment of dividends of R$ 31.0 million, paid out in April 2008, referring to 2007’s net income;• Share buy-backs (LAME3 and LAME4) in the amount of R$ 25.8 million;• Purchase of 1,497 thousand common shares of our subsdiary B2W (BTOW3), for a total amount of R$ 88.3 million.• Share buy-backs by B2W (BTOW3) in the amount of R$ 122.2 million.

Lojas Americanas’ consolidated short and long-term loans on December 31, 2008 totaled R$ 4,032.7 million. If we deduct the cash position of R$ 3,066.7 million (cash + money market investments + accounts receivable from credit and debit cards + 50% of FAI’s consumer financing ) from total loans, we arrive at a net debt position of R$ 966.0 million.

Consolidated Indebtedness

12/31/08 09/30/08 12/31/07Short-term loans and financing 1,841.4 1,817.5 1,444.5 Short-term debentures 115.3 100.0 18.3

Short-term indebtedness 1,956.7 1,917.5 1,462.8 Long-term loans and financing 1,343.7 985.3 660.4 Long-term debentures 732.3 732.3 434.6

Long-term indebtedness 2,076.0 1,717.6 1,095.0 Gross indebtedness 4,032.7 3,635.1 2,557.8

Cash and banks 112.7 315.2 340.1 Money market investments 2,182.1 1,682.9 871.1 Receivables from clients (credit/debit cards) 514.1 111.9 859.3 Customers financing - FAI (50%) 257.8 266.6 119.1 Total Cash and Cash Equivalents 3,066.7 2,376.6 2,189.6

Net Cash (Debt) (966.0) (1,258.5) (368.2)

Adjustments to Law 11,638/07In 2008, Law 11,638/07 went into effect along with the respective changes introduced by Provisional Measure 449 of December 3, 2008, which changed, revoked and introduced new conditions to Brazilian publicly traded company Law. This new legislation mainly is designed to bring Brazilian corporate law up to date to make it possible to converge the accounting practices adopted in Brazil with international accounting regulations (IFRS).

AR 22


The changes accounted in the financial statements for the period ended in December 31, 2008, affecting the net income and shareholders equity, due to the Law 11.638/07 and Provisional Measure 449/08 adoption, are demonstrated below:

• Present Value Adjustment (PVA): impacted positively in the amount of R$1.5 million in the parent company and negatively

in R$13.3 million in the consolidated view, due to adjustment effect of non current assets and liabilities operations. Most part

of this impact was registered in lines of “credit card receivables”, “suppliers”, “inventories” and their respective counterpart

accounts.

• Hedge Accounting Application: impacted positively in the amount of R$27.6 million in the parent company and in R$41.1

million in the consolidated view, due to derivative financial instruments (traditional swaps) adjustments and their respective

debts (which are hedged) fair value adjustment (hedge accounting).

• Write-off of unreclassified deferred assets: impacted negatively in the amount of $11.4 million in the parent company

and in R$18.0 million in the consolidated view, due to the write-off of deferred assets that could not be reclassified like plant,

property, equipments or intangible assets.

• Stock Option Plan (SOP): impacted negatively in the amount of R$ 1.3 million in the parent company and in R$2.3 million

in the consolidated view, due to management and employees compensation expenses.

• Equity Accounting: impacted by the effects of Law 11,638/07 in the Company’s subsidiaries.

RECONCILIATION OF NET INCOME 2008 2008 R$MM Parent Company Consolidated

Net Income before Law 11,638/07 and MP 449/08 111.7 111.7

Effects of Law 11.638/07 and MP 449/08

Present Value Adjustment (PVA) 1.5 (13.3)Hedge Accounting Application 27.6 41.1Write-off of unreclassified deferred assets (11.4) (18.0)Stock Option Plan (SOP) (1.3) (2.3)Equity Accounting (5.8) 0.0Fiscal effects (5.7) (2.7)

Net effect 4.9 4.9

AR 23


5. FINANCIALS REPORTS

LOJAS AMERICANAS S.A.INCOME STATEMENTSIn million of Reais. Except net income per share

4Q08 4Q07 Var. (%) 4Q08 4Q07 Var. (%)Proforma Published Proforma Published

Gross Sales and Services Revenue 1,649.4 1,449.4 13.8% 2,943.3 2,579.3 14.1%Taxes, returns and discounts on sales (329.3) (326.3) 0.9% (754.9) (687.8) 9.8%

Net Sales and Services Revenue 1,320.1 1,123.1 17.5% 2,188.4 1,891.5 15.7%Cost of goods and services sold (879.8) (765.3) 15.0% (1,449.8) (1,272.7) 13.9%

Gross Profit 440.3 357.8 23.1% 738.6 618.8 19.4%Gross Margin (% of Net Revenue) 33.4% 31.9% +1,5 pp 33.8% 32.7% +1,1 pp

Operating Revenue (expenses) (223.7) (188.6) 18.6% (421.3) (345.0) 22.1%Sales (174.7) (151.0) 15.7% (339.7) (268.6) 26.5%General and administrative (11.2) (11.0) 1.8% (21.2) (34.0) -37.6%Depreciation/Amortization (37.4) (26.6) 40.6% (58.9) (42.8) 37.6%Other (0.4) - (1.5) 0.4

Operating Expenses (% of Net Revenue) 16.9% 16.8% +0,1 pp 19.3% 18.2% +1,1 pp

Operating Income before financial expenses and equity accounting 216.6 169.2 28.0% 317.3 273.8 15.9%

Operating Margin (% of Net Revenue) 16.4% 15.1% +1,3 pp 14.5% 14.5% -

Financial Expenses - Net (73.6) (41.0) 79.5% (104.6) (126.1) -17.0%Operating income before equity accounting 143.0 128.2 11.5% 212.7 147.7 44.0%

Equity Accounting 21.6 0.3 7100.0% - - - Capital Gain form variation in participations - 1.7 -100.0% - 1.7 -100.0%Non-Operating Income* (13.1) (17.9) -26.8% (31.9) (12.1) 163.6%Minority Interest / Statutory Participation (7.0) (6.0) 16.7% (20.2) (22.9) -11.8%Income Tax and Social Contribution (38.7) (31.1) 24.4% (54.8) (39.2) 39.8%

Net Income 105.8 75.2 40.7% 105.8 75.2 40.7%Net Margin (% of Net Revenue) 8.0% 6.7% +1,3 pp 4.8% 4.0% +0,8 pp

EBITDA 254.0 195.8 29.7% 376.2 316.6 18.8%EBITDA Margin (% of Net Revenue) 19.2% 17.4% +1,8 pp 17.2% 16.7% +0,5 pp

Total shares (thousand) 757,042 754,144

Total shares in treasury (thousand) 28,398 25,436

Total outstanding shares (thousand) 728,644 728,708

4Q08Proforma

4Q07Published

Net income per outstanding share R$ 0.145 R$ 0.103 40.7%

December 31 December 31

Parent Company ConsolidatedQuarters ended Quarters ended

AR 24



2008 2007 Var. (%) 2008 2007 Var. (%)Proforma Published Proforma Published

Gross Sales and Services Revenue 4,952.0 4,115.3 20.3% 9,527.4 7,722.4 23.4%Taxes, returns and discounts on sales (963.7) (905.7) 6.4% (2,359.4) (1,991.1) 18.5%

Net Sales and Services Revenue 3,988.3 3,209.6 24.3% 7,168.0 5,731.3 25.1%Cost of goods and services sold (2,789.4) (2,243.5) 24.3% (4,887.1) (3,899.4) 25.3%

Gross Profit 1,198.9 966.1 24.1% 2,280.9 1,831.9 24.5%Gross Margin (% of Net Revenue) 30.1% 30.1% - 31.8% 32.0% -0,2 pp

Operating Revenue (expenses) (815.4) (663.3) 22.9% (1,563.7) (1,265.0) 23.6%Sales (637.3) (525.6) 21.3% (1,217.8) (983.3) 23.8%General and administrative (46.8) (47.1) -0.6% (117.9) (129.1) -8.7%Depreciation/Amortization (131.3) (90.6) 44.9% (228.0) (152.6) 49.4%Other

Operating Expenses (% of Net Revenue) 20.4% 20.7% -0,3 pp 21.8% 22.1% -0,3 pp

Operating Income before financial expenses and equity accounting 383.5 302.8 26.7% 717.2 566.9 26.5%

Operating Margin (% of Net Revenue) 9.6% 9.4% +0,2 pp 10.0% 9.9% +0,1 pp

Financial Expenses - Net (238.8) (149.1) 60.2% (432.4) (366.0) 18.1%Operating income before equity accounting 144.7 153.7 -5.9% 284.8 200.9 41.8%

Equity Accounting 23.6 (14.5) -262.8% - - - Capital Gain form variation in participations 3.9 36.0 -89.2% 3.9 36.0 -89.2%Non-Operating Income* (11.7) (35.7) -67.2% (46.3) (35.6) 30.1%Minority Interest / Statutory Participation (7.0) (6.0) 16.7% (46.1) (40.7) 13.3%Income Tax and Social Contribution (41.8) (30.5) 37.0% (84.6) (57.6) 46.9%

Net Income 111.7 103.0 8.4% 111.7 103.0 8.4%Net Margin (% of Net Revenue) 2.8% 3.2% -0,4 pp 1.6% 1.8% -0,2 pp

EBITDA 514.8 393.4 30.9% 945.2 719.5 31.4%EBITDA Margin (% of Net Revenue) 12.9% 12.3% +0,6 pp 13.2% 12.6% +0,6 pp




2008Proforma

2007Published



Parent Company ConsolidatedPeriods ended Periods ended

AR 25



2008 2008 Var. (%) 2008 2008 Var. (%)

ProformaLaw

11,638/07

Proforma Law11,638/07

Gross Sales and Services Revenue 4,952.0 4,883.4 -1.4% 9,527.4 9,260.3 -2.8%Taxes, returns and discounts on sales (963.7) (950.6) -1.4% (2,359.4) (2,285.2) -3.1%

Net Sales and Services Revenue 3,988.3 3,932.8 -1.4% 7,168.0 6,975.1 -2.7%Cost of goods and services sold (2,789.4) (2,706.4) -3.0% (4,887.1) (4,741.3) -3.0%

Gross Profit 1,198.9 1,226.4 2.3% 2,280.9 2,233.8 -2.1%Gross Margin (% of Net Revenue) 30.1% 31.2% +1,1 pp 31.8% 32.0% +0,2 pp

Operating Revenue (expenses) (815.4) (807.6) -1.0% (1,563.7) (1,550.6) -0.8%Sales (637.3) (637.3) 0.0% (1,217.8) (1,217.2) 0.0%General and administrative (46.8) (48.1) 2.8% (117.9) (121.0) 2.6%Depreciation/Amortization (131.3) (122.2) -6.9% (228.0) (212.4) -6.8%Other

Operating Expenses (% of Net Revenue) 20.4% 20.5% +0,1 pp 21.8% 22.2% +0,4 pp

Operating Income before financial expenses and equity accounting 383.5 418.8 9.2% 717.2 683.2 -4.7%

Operating Margin (% of Net Revenue) 9.6% 10.6% +1,0 pp 10.0% 9.8% -0,2 pp

Financial Expenses - Net (238.8) (248.3) 4.0% (432.4) (359.5) -16.9%Operating income before equity accounting 144.7 170.5 17.8% 284.8 323.7 13.7%

Equity Accounting 23.6 29.5 25.0% - - -Capital Gain form variation in participations 3.9 - -100.0% 3.9 - -100.0%Non-Operating Income* (11.7) (28.8) 146.2% (46.3) (81.7) 76.5%Minority Interest / Statutory Participation (7.0) (7.0) 0.0% (46.1) (40.4) -12.4%Income Tax and Social Contribution (41.8) (47.6) 13.9% (84.6) (85.0) 0.5%

Net Income 111.7 116.6 4.4% 111.7 116.6 4.4%Net Margin (% of Net Revenue) 2.8% 3.0% +0,2 pp 1.6% 1.7% +0,1 pp

EBITDA 514.8 541.0 5.1% 945.2 895.6 -5.2%EBITDA Margin (% of Net Revenue) 12.9% 13.8% +0,9 pp 13.2% 12.8% -0,4 pp




2008Proforma

2008Law

11,638/07



Parent Company ConsolidatedPeriods ended Periods ended

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LOJAS AMERICANAS S.A.BALANCE SHEETS AS OF DECEMBER 31, 2008 AND 2007In thousand of Reais

Parent Company ConsolidatedNota 2008 2007 2008 2007

ASSETS

CURRENT ASSETS

Cash and banks 71,268 252,920 112,690 340,128 Temporary cash investments 4 1,025,691 522,637 2,172,195 863,257 Trade accounts receivable 5 176,073 355,263 888,905 1,173,926 Inventories 6 655,178 648,410 1,000,246 963,982 Recoverable taxes 7 85,891 27,784 122,506 32,005 Deferred income tax and social contribution 8 34,936 32,419 133,419 76,951 Dividends and interest on own capital receivable 10,378 8,034 - - Prepaid expenses 31,419 18,449 144,944 62,731 Other accounts receivable 78,295 16,403 240,721 104,266

2,169,129 1,882,319 4,815,626 3,617,246

NON-CURRENT ASSETS

Long-Term Assets: Temporary cash investments 4 - 3,858 5,846 7,878 Loans and advances to subsidiary companies 9 (d) 2,498 7,630 - - Receivables from stockholders - Stock Option Plan 19 81,256 48,564 81,256 48,564 Deferred income tax and social contribution 8 6,197 10,356 88,480 103,644 Escrow deposits 17 39,915 38,764 55,443 50,304 Prepaid expenses - 2,570 4,781 7,745 Recoverable taxes and other accounts receivable 14,779 12,863 21,140 14,488

144,645 124,605 256,946 232,623

Investments 9 491,582 489,799 - - Property and equipment 10 421,130 323,499 498,451 379,302 Intangible 11 563,295 428,736 825,525 636,310 Deferred charges 12 102,331 99,779 181,350 186,923

1,722,983 1,466,418 1,762,272 1,435,158

3,892,112 3,348,737 6,577,898 5,052,404

The accompanying notes are an integral part of these financial statements.

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LOJAS AMERICANAS S.A.BALANCE SHEETS AS OF DECEMBER 31, 2008 AND 2007In thousand of Reais

Parent Company ConsolidatedNota 2008 2007 2008 2007

LIABILITIES

CURRENT LIABILITIES

Suppliers 953,977 873,596 1,617,966 1,447,900 Loans and financing 13 702,085 547,538 1,790,114 1,444,512 Debentures 14 87,527 18,344 113,412 18,344 Payroll and related charges 21,861 27,714 34,635 49,382 Taxes payable 15 116,911 158,461 155,517 200,401 Dividends and participations proposed 19 (f) 37,400 37,000 45,385 43,739 Provisions for contingencies 17 17,578 16,952 20,087 18,379 Other current liabilities 61,563 56,839 153,980 156,440

1,998,902 1,736,444 3,931,096 3,379,097

NON-CURRENT LIABILITIES

Long-Term Liabilities:

Loans and advances from subsidiaries 9 (d) 2,567 83,460 - - Loans and financing 13 1,072,193 540,647 1,330,217 660,393 Debentures 14 366,980 434,600 729,888 434,600 Taxes payble 16 56,254 65,508 77,604 85,710 Provision for contingencies 17 45,042 44,211 52,336 48,779 Allowance for loss on investments 386 154,332 - - Other accounts payable - - 14,734 7,166 Advance for cession in minig usage rights 18 28,305 - 23,588 -

1,571,727 1,322,758 2,228,367 1,236,648

MINORITY INTEREST 96,952 147,124

STOCKHOLDER'S EQUITY

Capital 19 (b) 273,718 239,037 273,718 239,037 Capital Reserves 3,381 - 3,381 Revenue Reserves 201,930 179,949 201,930 179,949 Treasury stock (155,242) (129,451) (155,242) (129,451) Retained earnings - - - - Equity Valuation Adjustments (2,304) - (2,304)

321,483 289,535 321,483 289,535

3,892,112 3,348,737 6,577,898 5,052,404

The accompanying notes are an integral part of these financial statements,

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6. CORPORATE GOVERNANCE AND THE CAPITAL MARKETS

100% tag-along rights for all shareholdersLojas Americanas has maintained a commitment, as part of its By-Laws, to concede full (100%) tag-along rights for all of the Company’s common and preferred shares since 2006. This guarantees that all of Lojas Americanas’ shareholders will receive equal treatment in the event of a change of ownership; the right to sell their shares under the same conditions as the controlling shareholders is guaranteed.

Establishment of B2W with high standards of Corporate GovernanceAt the close of 2006, Lojas Americanas announced the merger of its Americanas.com subsidiary with Submarino. The operation resulted in the creation of B2W – Companhia Global do Varejo. Lojas Americanas’ shareholders owned, at the time, 53.25% equity in the new company.

B2W was constituted under the rules established through the Bovespa “Novo Mercado” (New Market), the highest level of Corporate Governance in Brazil. The rules include the requirement of a shareholder base comprised exclusively of common shares and the election of independent members to the Board of Directors. B2W’s Board of Directors is made up of nine members, of which five are indicated by Lojas Americanas and four are independent members. Lojas Americanas and B2W signed a Vote and Assumption of Obligations Agreement that governs its Corporate Governance and shareholder ownership policies. For a period of four years, Lojas Americanas will not be able to acquire additional shares in B2W in excess of 10% of the free float without the prior approval of a majority of the independent members of the Board of Directors (standstill). Moreover, Lojas Americanas also is prohibited from selling B2W’s shares obtained through a merger agreement or a period of two years (lock-up).

DISTRIBUTION OF DIVIDENDSThe Company’s Bylaws, in accordance with the current terms of legislation in force, sets a minimum dividend value of 25% of net earnings for the year, after the constitution of a legal reserve of 5%.The Company’s Board of Directors approved the distribution of dividends and interest on own capital in the total amount of R$ 30.4 million, calculated on the net income in 2008.

Share Buy-Back ProgramLojas Americanas has had a buy-back program in effect since 2003 for the purchase of Company shares, with the objective of holding them in treasury or future cancellation. The program calls for the buy-back of up to 10,788,942 common, nominative subscribed shares and 36,505,323 nominative subscribed preferred shares.During the year, the amount used for the repurchase of shares totaled R$ 25.8 million. From the beginning of the program until the end of 2008, the Company already has bought back 8,218,309 nominative, subscribed common shares and 20,179,480 nominative, subscribed preferred shares.

Share PerformanceLojas Americanas’ preferred shares (LAME4) and common shares (LAME3) closed the year quoted at R$ 6.27 and R$ 5.31, declining in value 59.7% and 68.3%, respectively. Over the same period, the Ibovespa registered a decline of 41.2%. Over the past eight years, Lojas Americanas (LAME4) accumulated share price rose approximately 17 times over the price at the beginning of 2001.

In 2008, the annual trading volume of LAME4 increased 32% compared to 2007. It should be mentioned that Lojas Americanas’ preferred shares (LAME4) are traded on the Ibovespa, the most important indicator of the average performance of prices of shares traded on Brazilian stock markets. Moreover, the Company’s common and preferred shares are part of the differentiated Share Tag-Along Index (ITAG). This indicator is composed of the shares of companies that offer the same conditions to minority shareholders in the event of a change in ownership control.

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700080009000

10000

ANNUAL TRADING VOLUME LAME4 (R$ MILLION)

0100020003000400050006000700080009000

10000


0100020003000400050006000700080009000

10000

2001 2002 2003 2004 2005 2006 2007 2008


AuditIn compliance with CVM Instruction 381 of January 14, 2003, external auditor Deloitte Touche Tohmatsu Auditores Independentes did not render services unrelated to the auditing of the Company’s financial statements exceeding the percentage limit established by the aforementioned instruction (5%).

The Company’s policy regarding the hiring of independent auditors for services not related to the outside audit assures that there is no conflict of interest or loss of independence or objectivity with regard to the independent auditors’ work.

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7. SOCIAL-ENVIRONMENTAL ASPECTS

Lojas Americanas is recognized in the market for generating internal opportunities and developing its corps of professionals. Today we generate more than 15,000 jobs in 22 states, as well as the Federal District and about 99% of our coordinator and manager positions are filled from within the company. Moreover, we send quality products at fair prices to municipalities with little or no access to the variety that our Company offers, raising the quality of life in such locations in an ethical and

responsible manner.

Companhia Verde

Business to WorldCompanhia Global do Varejo

In July 2007, Lojas Americanas and B2W - Companhia Global do Varejo created the Companhia Verde. The goal of this initiative is to raise the awareness of our associates regarding the importance of being concerned about the environment, especially in their day-to-day actions as well as to develop and implement socio-environmental projects that are applicable to the reality of our business.

Since then, the Company has been conducting a training program design to raise environmental awareness among staff members. These training sessions, and others, are held at the Americanas Development Center (CDA), headquartered in Rio de Janeiro, and in centers located in other Brazilian states. Furthermore, the orientation of new associates involves a module dedicated to environmental education.

The Company already has implemented an in-house selective waste collection system at its headquarters, in some stores and in the distribution centers. The target for 2009 is to expand selective waste collection to all of our traditional format stores. Currently Lojas Americanas and B2W are working to disseminate awareness throughout its workforce about the correct way of discarding each type of material, within the scope of a plan to develop a sustainability culture throughout the Company.

The new B2W distribution center built in 2008 in the municipality of Itapevi in São Paulo already encompasses a series of sustainable architecture standards.

The year also was notable for a number of achievements to control water and energy consumption, involving the headquarters area, stores, studio and distribution centers, part of the overall effort to reduce the consumption of natural resources. To this end an application was developed in-house designed to facilitate the weekly monitoring of the consumption of these resources, identifying and dealing with possible anomalies as soon as they are identified. We believe that this will allow us to trim waste, contributing to reduced consumption and, consequently, improving the environment.

LOJAS AMERICANAS S.A. MANAGEMENT REPORT 2008 · Ecommerce, TV, Telephone Sales, Catalogues and...

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