Brazilian Retail News

Year 09 - Issue # 371 - São Paulo, January, 24h, 2010

Phone: (5511) 3405-6666

Cosmetics segment to increase sales by

10% in 2011

The Brazilian Personal Care, Perfumery and Cosmetics

Industry Association (Abihpec) forecasts this year the
segment’s sales will rise in the 10% range over 2010, partly
due to the credit restriction measures recently announced
by the Central Bank, that shall lower the demand for
durable goods and drive consumers to purchase more
beauty care and cleaning goods.

Brazil ends 2010 with almost 203 million mobile phones

Brazil ended 2010 with a total of 202.94 million mobile phones, a 16.66% growth over 2009, with 28.98 million new
lines, said the National Telecommunications Agency (Anatel). In November, the country had 197.53 million active lines.
The teledensity index rose to 104.68 mobile phones to every 100 people and 16 states now have more than one phone
per person.

Shopping centers advance to the

countryside

Shopping centers are not big city stuff anymore. Definitely.

In 2011, most new malls to be opened in the country will be
built in 150,000+ people cities in the countryside, according
to trade group Abrasce. Of the 16 malls to be opened in 2011,
only ten will be in capital cities. In 2010, half of the 16 new
shoppings were in the countryside. In the next two years,
total investment in shopping centers will be of about R$ 13.7
billion (US$ 7.61 billion), 67% off capital cities.

Electronics sales to rise 15% in 2011

Eletros, the electronics industry’s trade group in Brazil, forecast for 2011 the same growth level achieved last year:
15% for electronics, 10% in portable goods and 7% in the white line (ovens, refrigerators, washing machines).

Brazilian Retail News 1 01/24/2010

Brazilian Retail News
Year 09 - Issue # 371 - São Paulo, January, 24h, 2010
Phone: (5511) 3405-6666

Mobile phone leads intention of replacing electronic goods

Of the electronic devices Brazilian have and intend to replace still this year, mobile phone is a highlight, according
to a GfK study that interviewed 1,000 people in nine metropolitan regions. The survey said 40% of the interviewed who
own a mobile phone intend to replace it for a newer model. Youngsters in the 18-24 years old are the ones most likely
to purchase a newer device (53%).

Retailers to prioritize investments in people, IT and sales

A survey conducted by GS&MD – Gouvêa de Souza with the 200+ group of Brazilian retail executives the company
led to follow NRF Big Show two weeks ago in New York shows the country’s companies are highly optimistic for this year.
Ninety-four per cent of the interviewed plan expansion for 2011, and 53% of them forecast a sales growth in the 11%-30%
range, while 23% forecast sales will be up above 30%. The investments will prioritize People (42%), IT (37%) and Sales
(36%). More than 80% of the interviewed will hire more people this year.

Shoe segment reaches all-time high sales

Last year, there were sold in Brazil 744 million pairs of shoes, 6% more than in 2009. Sales went up 12.5% year-on-
year, to R$ 37.7 billion (US$ 20.94 billion), according to the Brazilian Shoe Industry Association (Abicalçados) and the
Brazilian Shoe Retailers Association (Ablac). Figures were driven by credit expansion and improving consumer income,
leading to the purchase of better quality, more expensive shoes.

Brazilian Retail News 2 01/24/2010

Brazilian Retail News
Year 09 - Issue # 371 - São Paulo, January, 24h, 2010
Phone: (5511) 3405-6666

Momentum
Brazil’s finest hour
Marcos Gouvêa de Souza - CEO, GS&MD - Gouvêa de Souza

There has been in the international community an ongoing perception of the unique moment the country has been
living. Perception increased by another foreign travel and networking, crowned with our presence in the NRF’s 100th Annual
Convention, in New York.

Although many economists, for professional obligation or positioning, have been alerting to the risk of a new cycle of
economic instability that could affect Brazil, the volume of contacts, demands, information and prospects we’ve been dealing
with when overseas confirms the perception that one can have a clearer view of what’s been going on now when looking from
outside in.

The NRF Convention, gathering more than 8,000 congressists and close to 20,000 attendees in the trade show, is a
business trigger that creates a tsunami effect of people trying to resume contacts, analyzing new opportunities and discussing
new roads, generating a lot of parallel meetings in hotels, restaurants and offices. And not only in New York, but also in Chicago,
Dallas, Washington and other cities.

Specially in 2011, when the retail sales results from Q4 in the US, Germany, the UK, Russia, India, China and Brazil seem
to show that, considering spending, consumers are tired of living the crisis and have started a cautious recovery.

The growth of the expanded US retail, around 6% for 2010, triggers the development of many other economies, as in
China, India, Europe and Latin America, who feel in this perspective a more positive scenario ahead, at least in the tactical aspect.

In the most strategic aspect one can’t deny the broader conditions create barriers to a continuous, relevant and sustainable
growth for Europe, mainly, but also for North America. Thus the evident will to explore opportunities in emerging markets, the
real drivers of a new growth cycle. Countries who were able to lower the impact of the global economic and financial crisis in
the most developed economies. And this situation is not likely to change, only to be rebalanced under a new reality.

In this aspect Brazil has been living a very particular situation, once it sums a significant young and modern population,
prone to try new things, with a stable political and economic reality, and a competitive, modern and mature market, although still
with many opportunities to drive social and economic development.

A virtuous sum of these structural aspects and the near future, with World Cup, Olympic Games, Pre-salt oil and the
recovery of the global economy, being Brazil a large and important supplier of food and commodities, lead to a situation that
can’t and won’t be disregarded. It all leads to a perception this is Brazil’s finest hour.

Going against it, only a short-sighted perception that maybe the speed and size of changes and opportunities is not
that big, as well as a mindset of going slow to minimize risks. In this moment, in most businesses, walking slow means lagging
behind. And irreversibly.

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
E-mail: gsmd-de@gsmd.com.br
Home-page: www.gsmd.com.br

Brazilian Retail News 3 01/24/2010