We believe sustainability is a value that is inseparable from our businesses, our strategy, and performance. Therefore, the message below is exactly the same as in our 2017 Financial Statements. The Annual Report and the Financial Statements are the two documents where our Chairman of the Board and our CEO bring their message to our stakeholders every year.

The exception is that here we state our continued support for the Global Compact, since this publication also informs the United Nations (UN) on our progress regarding the commitments we made throughout the year.

Our business model proved its resilience in 2017, when we resumed a growth trajectoryand further ramping up our investments despite the many challenges on the Brazilian macroeconomic front. What drives us is undoubtedly the passion we feel for what we do. We have a sparkle in our eyes, a desire to do more and an inability to accept the status quo, all of which is what drives us forward.

Proximity to the customers, knowledge of the fashion business and a set of daily practices focused on the simplicity of processes and directed towards operational efficiency are what have allowed us to maximize the opportunities for expansion with the opening of 70 stores during the year.

We have also concluded some important projects which will be instrumental in allowing us to move forward and preserve our competitiveness. During the year, we completed an important stage in infrastructure investment so that we now have a modern technological platform which will serve as a foundation for integrating the shopping experience in all channels.

We began this process with the construction of new Distribution Centers, which allowed us to operate a new logistics model. We then undertook a complete updating of the Company’s ERPs and last year, concluded the modernization of the e-commerce and financial products platforms. These are now ready to offer new functionalities and services in line with leading international benchmarks.

All these steps will provide us with greater accuracy and control over inventory, promoting productivity gains and greater use of new technologies and, consequently, an improved shopping experience for our customers. We also believe that this process of updating has been critical to offering a multichannel experience, leveraged with the use of data, significantly increasing our proximity to customers. An event of particular importance in 2017 was the incorporation of Realize CFI, our Financial Institution, which will support the core retailing business. Realize CFI now provides us with more agility and flexibility for managing the financial arm of the business. It also gives us a capability to offer new functionalities and services to card holding customers, thus fostering improved relationships and interactivity with the Renner brand. As for the infrastructural aspect, during the year we finalized the replacement of the existing financial products platform for a more modern and flexible one, giving us faster connections with internal and external systems. Additionally, we digitized the processes for granting and recovery of credit, providing more convenience and agility to our customers.

Another key event during the year was the unveiling of the first Renner stores outside Brazil. As from September, we launched our brand in Uruguay where we already have three units in operation. This was a key step for testing our business model abroad and for consolidating technological infrastructure and processes. To date, prospects are positive in the light of the good receptivity of Uruguayan operations.

In line with our commitment to continually supporting the United Nations Global Compact, we saw some equally important developments on the sustainable development of our businesses, following the definition of the strategic guidelines for sustainability and responsible fashion, resting on four pillars: i) responsible suppliers, ii) eco-efficient management, iii) engagement of employees, communities and customers and iv) sustainable products and services. During the year, we also introduced improvements to the Supplier Development Program and in Compliance, both along the textile and also the civil construction chains of our stores and DCs. Important advances were made in the efficient management of waste and inputs and greater efforts expended on engaging all stakeholders. During the period, we invested in the circular economy concept, as you will see in the body of this report, by developing more than 1.6 million pieces. As recognition, in 2017, we were placed 10th in the Dow Jones Sustainability Indices and became a member of the FTSE4Good by Financial Times and London Stock Exchange.*

In Corporate Governance, we undertook an in-depth assessment of our current practices in relation to the Brazilian Corporate Governance Code and also best international practices as well as Novo Mercado Listing Regulations, preparatory to a series of improvements which we plan to implement in 2018. During the year, we also began to adapt to new rules for the Novo Mercado, a process in which we voted in favor of all B3’s proposals.

In the light of the various initiatives mentioned above, in 2017 we reported Net Revenue from Merchandise Sales of R$ 6.6 billion, growth of 15.4% and Same Store Sales of 9.2%. Gross Margin from the Retail Operation was 55.7% and Total EBITDA, 22.4%. Net Income was R$ 732,7 million, growth of 17.2%. Over the course of the year, we saw growing customer traffic through the stores and posted an outstanding performance in apparel retailing in practically every month of 2017 according to IBGE (Brazilian Government Statistics Office) data. The average daily trading volume of our equities on the stock exchange was R$ 87.1 million, thus maintaining our position as one of the most liquid shares among companies in the Brazilian retail sector.

All this was only made possible thanks to our employees. Despite the difficulties during the year, we were able to invest and, in a suitably austere manner, manage operating expenses. Our team knows who we are, how we are and where we want to go, and for this reason, all are engaged in building the company of our dreams and transforming our plans into reality. It was thus in 2017, that we achieved the record level of engagement of 88%, according to AONHewitt data, ranking us internationally in a high-performance zone for more than seven years now. Additionally, we were rated the 11th Brazilian most valuable brand in the Interbrand ranking.

And now in 2018, we begin the year at a time of recovery. Having left the most critical period of the economic cycle behind us, we are beginning to glimpse positive signs in Brazil. It is in this context that we shall be investing, both in Brazil as well as abroad, in processes directed to the strengthening of the competitiveness of our value proposition. Our capital budget, subject to shareholder approval, will allocate R$ 620 million to the opening of approximately a further 25 to 30 Renner stores, two of which in Uruguay, 10 to 15 Camicado units and between 20 and 25 Youcom stores. Further investments will go to IT, logistics and modernization.

Our thanks go to all shareholders, employees, customers and suppliers for the trust deposited in this Company.

*Information changed in the Message from the Management disclosed in the 2017 Financial Statements available at www.lojasrenner.com.br/ri