Press Release from Adler Modemärkte AG

Nine-Month EBITDA up €14.3 Million to €6.6 Million:

Annual Targets in Sight - Earnings and Free Cash Flow Significantly Improved Free Cash Flow up €26.6 Million to €6.4 Million

Haibach (near Aschaffenburg), 9 November 2017: Nine months into the financial year, Adler Modemärkte AG remains firmly on track to achieve its annual targets for 2017 after a healthy third quarter in which earnings and free cash flow improved considerably. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose significantly to €6.6 million in the first three quarters from

€-7.7 million in 2016. The improvements were due to sustainable increases in efficiency and a non- recurring gain on the sale of real estate.

Revenue up 2% in Q3

Revenue amounted to €374.2 million at the end of the first nine months of 2017, almost exactly level with the prior-year figure of €375.0 million. Like-for-like revenue declined by 1.9%, which is roughly in line with the general trend among German retailers according to TW-Testclub, Textilwirtschaft magazine's survey panel. ADLER reported a 1.9% improvement in revenue to €120.2 million in the third quarter of 2017 (Q3 2016: €117.9 million).

In the first nine months of the year, cost of materials decreased by 2.3% from €183.5 million to €179.2 million due to an adjustment in purchasing volumes. Gross profit increased accordingly, rising from

€191.5 million to €194.9 million, the gross profit on goods went up from 51.1% to 52.1%. The process optimisation measures implemented in recent quarters resulted in an almost 6% reduction in personnel expenses to €73.1 million (9M 2016: €77.7 million), even though the costs for staff restructuring measures rose by €1.4 million year on year.

EBITDA excluding non-recurring items increases by more than €8 million

Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose significantly in the reporting period from €-7.7 million to €6.6 million. Earnings were also affected by two non-recurring items in addition to the above efficiency measures. The sale of two buildings in Austria in the second quarter generated a non-recurring gain of €7.5 million; by contrast, the costs for personnel restructuring measures, which were up €1.4 million, had an offsetting effect on earnings. Excluding these non-recurring items, nine-month EBITDA amounted to €0.4 million (9M 2016: €-7.7 million). As a reflection of the operating improvement in profitability, EBITDA amounted to €-3.6 million in the third quarter of 2017, well in excess of the prior year quarter (€-8.4 million). A loss in Q3 is normal under ADLER's seasonal, cyclical business model. By contrast, the majority of profit is generated in the final quarter of the year (see forecast).

Given the stable depreciation, amortisation and write-downs, ADLER reported earnings before interest and taxes (EBIT) of €-5.7 million for the first nine months, following €-20.1 million in the previous year. Earnings before taxes (EBT) also improved significantly, rising from €-23.8 million to €-9.7 million. At

€-7.0 million, a net loss was likewise generated after taxes (9M 2016: €-18.4 million). This figure is expected to be well in the black for the full year.

Free cash flow rises by €26.6 million to €6.4 million

One of the core targets for 2017 - a substantial improvement in cash flow - remained on track at the end of the first nine months. Net cash flows from operating activities rose by more than €20 million to

€8.3 million. Cash flows from investing activities increased as expected from €-8.4 million to €-1.9 million due to the non-recurring items stemming from the real estate transactions. This enabled ADLER to increase its free cash flow significantly to €6.4 million in the first three quarters of 2017 (9M 2016:

€-20.2 million).

As announced, the cash outflow typically seen in the reporting period saw a very significant year-on- year reduction, with cash and cash equivalents decreasing by just €6.2 million as against the end of 2016 to €36.6 million. In the comparable period of 2016, that figure had decreased by €38.1 million to

€14.0 million. In addition to this very solid liquidity buffer, ADLER's balance sheet structure remains extremely sound. Despite the net loss, the equity ratio amounted to 35.7% as at 30 September 2017 (30 September 2016: 33.5%), and is expected to return to well above the 40% mark by the end of 2017.

Forecast for full year 2017 confirmed: operating EBITDA expected to climb to €27-30 million Given its positive performance over the first nine months of the year, ADLER confirms the forecast for its operating business for the current year, as given in the 2016 Annual Report. Despite what continues to be a challenging environment for the textile retail industry, ADLER's Executive Board expects operating EBITDA to improve as against 2016 from €23.3 million to €27-30 million. The net profit actually reported will far exceed this figure, however, due to the non-recurring gains on the real estate transactions, particularly given that ADLER expects additional positive non-recurring items from further real estate sales to boost the bottom line in the fourth quarter of 2017. However, it is not presently possible to quantify these positive effects. The forecast for operating earnings is based on continuing expectations of a slight drop in revenue as against the 2016 financial year (€544.6 million). It is expected that revenue generated by the online shop will once again significantly exceed the 2016 figure.

The full report on the first nine months of 2017 is available for download at http://www.adlermode- unternehmen.com/en/investor-relations/reports-and-publications/financial-reports/2017/.

ADLER Group's key performance indicators

(€ million)

9M 2017

9M 2016

Change

Q3 2017

Q3 2016

Change

Revenue

374.2

375.0

-0.2%

120.2

117.9

+1.9%

Gross profit

194.9

191.5

+1.8%

60.4

56.3

+7.3%

Earnings before interest, taxes, depreciation and amortisation (EBITDA)

6.6

-7.7

+>100%

-3.6

-8.4

+57.1%

Earnings before interest and taxes (EBIT)

-5.7

-20.1

+71.6%

-7.6

-12.6

+39.7%

Consolidated net profit/loss

-7.0

-18.4

+62.0%

-6,3

-10.5

+40,0%

Earnings per share (€)*

-0.38

-1.00

+62.0%

-0.34

-0.57

+40.4%

* based on 18,510,000 no-par value shares.

30 Sept.

2017

31 Dec.

2016

Change

Total assets (€ million)

249.6

222.6

+12.1%

Equity (€ million)

89.1

95.8

-7.0%

Equity ratio

35.7%

43.1%

Debt/equity ratio

1.80

1.32

Cash and cash equivalents (€ million)

36.6

42.8

-14.5%

Employees

3,821

3,984

-4.1%

Total number of stores

184

183

+1%

Press enquiries Adler Modemärkte AG:

Katrin Schreyer

Media & Investor Relations Tel.: +49 6021 633 1828

E-mail: investorrelations@adler.de

About Adler Modemärkte AG:

Adler Modemärkte AG, headquartered in Haibach near Aschaffenburg, Germany, is one of Germany's largest and most important textile retailers. In 2016, the Group generated revenue of €544.6 million and EBITDA of €23.3 million. As at 30 September 2017, ADLER employed a workforce of around 3,800 and currently operates 184 stores, 157 of which are located in Germany, 22 in Austria, three in Luxembourg, two in Switzerland, plus an

online shop. The Company focuses on large-space concepts offering in excess of 1,400 m2of retail space. With

its many own brands and select external brands, ADLER offers a highly diverse product range. Thanks to more than 60 years of tradition and strong customer loyalty, ADLER considers itself to be the market leader within its target group of affluent customers aged 45 and over.

For more information: www.adlermode-unternehmen.com;www.adlermode.com

Adler Modemärkte AG published this content on 09 November 2017 and is solely responsible for the information contained herein.
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