Adler Modemärkte AG: ADLER Modemärkte Adopts New 2020 Strategy

Haibach, 28 February 2018: By adopting the new "2020 Strategy", the Executive Board of ADLER Modemärkte is promoting the Company's further strategic development, which is aimed at positioning ADLER as an in-store and on-line destination for customers aged 55 and over. By promptly implementing numerous previously defined initiatives and measures spanning product, sales channel and communications strategies, ADLER sees enormous potential to generate sustainable, profitable growth by 2020 at the latest.

Under the leadership of Thomas Freude, ADLER's CEO since September 2017, the Company's new strategy comprises a fresh, new mission and vision: ensuring that people in the prime of their lives are impeccably dressed and that ADLER is the go-to destination for their fashion needs in terms of fit, quality and service. "We were not clearly positioned in the past. Attempts to attract a younger clientele did not succeed and at the same time unsettled our loyal regular customers. That's over now", explained Thomas Freude. "Our target group is people aged 55 and up - and going forward we will do everything necessary to gear our product range to their needs."

Focus on existing customers
The focus will not be on expensive measures to acquire new customers, but rather on more targeted efforts to address existing and former customers. "The ADLER brand is polarising. We won't turn an ADLER critic into an ADLER fan with a TV spot. And the good news is: we don't have to!", said Thomas Freude convinced. Extensive analyses have demonstrated that ADLER can sustainably increase its revenue by just mobilising existing customers to a greater extent. Individualisation and digitisation are the key premises of the new communications strategy, which focuses on the data generated by the ADLER customer card. "We barely used this wealth of data until now. An oversight we're going to make up for", said Thomas Freude.

Strengthening own brands, reducing external brands
Going forward, ADLER will place greater emphasis than to date on its high-margin own brands, which are specifically tailored in terms of fit to the Company's target group. In turn, the number of external brands will gradually be reduced by roughly half. ADLER already generates around 75% of its revenue from own brands. The target is to increase this share to 85% by 2020.

Increasing footfall through events and partnerships
In line with the objective of positioning ADLER as an in-store and on-line fashion destination for customers aged 55 and over, the Company is planning to offer more than just good value for money. For instance, in an effort to increase footfall and further improve customer loyalty, the Company plans to cater to its target group by periodically hosting social events that will also act as additional incentives to visit ADLER stores. Furthermore, the Company is planning to expand its own product range by partnering with vendors who market non-textile products and services to the target group.

Stores remain most important sales channel, online shop also increasingly a mainstay
Since ADLER customers value the "event" feeling and the friendly, knowledgeable customer service they receive when shopping at ADLER stores, the Company's brick-and-mortar business, which spans more than 180 stores, will remain ADLER's most important sales channel. The Company's new strategy places utmost importance on sales excellence: regular training sessions for sales staff, scheduling and planning staff to cover peak times, sensible incentive programmes for employees and attractive store designs and layouts will all contribute to improving customer satisfaction and thereby to increasing the ratio of revenue to sales receipts.

At the same time, the online shop is growing in importance. It helps attract new customers and increases footfall at the stores through the Click&Collect service. While the Company is striving to generate additional revenue growth, it will not do so at any price. Instead, the focus is on improving profitability. In addition to its own online shop, ADLER plans to focus more strongly on popular online marketplaces in an effort to increase revenue and boost brand awareness.

Staying connected on the go with the ADLER app
Additional functionalities are gradually being added to the ADLER app in order to further digitise the Company's sales and customer communication activities. The app allows customers to easily make purchases and stay connected with ADLER via mobile devices. The objective is to use personalised adverts, event info and other content relevant to the target group to encourage customers to use the app regularly, thereby strengthening customer loyalty.

"With our 2020 Strategy we have taken the Company's original approach - serving best agers -, thought it through to the end and expanded on it in a meaningful way. I'm confident that with these steps we will lead ADLER to success going forward", said Thomas Freude.

Healthy financial basis - revenue and earnings growth targeted
Thanks to the systematic implementation of measures designed to increase efficiency, ADLER raised its EBITDA by 7% to approximately EUR25.0 million in 2017 despite a decline in revenue. At EUR32.0 million, reported EBITDA was actually significantly higher as a result of a non-recurring effect stemming from real estate sales. The increase in net profit and non-recurring effects resulted in ADLER generating a record EUR36.0 million in free cash flow. CFO Karsten Odemann is pleased with the development: "Our equity ratio compared to the industry is a very solid 41.5%. This gives us financial leeway for the future, even if the investments for the strategic realignment are relatively modest. We're very glad that we can finance the growth targets for the coming years on our own."

Following declining consolidated revenue in recent years in light of the crisis in the textile retail industry, ADLER is looking to use the measures under the "ADLER 2020 Strategy" to stabilise revenue in the short term and to return to top-line growth by 2020 at the latest. The objective is for operating earnings to record significant double-digit growth in excess of current levels.

The new strategy will be presented in detail together with the publication of the figures for the 2017 financial year on 15 March 2018.

About Adler Modemärkte AG:
Adler Modemärkte AG, headquartered in Haibach near Aschaffenburg, Germany, is one of Germany's largest and most important textile retailers. According to the preliminary figures, the Group generated revenue of EUR 525.8 million and EBITDA of approximately EUR 31 million (adjusted approx. EUR 25 million) in 2017. As at 31 December 2017, ADLER employed a workforce of around 3,800 and currently operates 182 stores, 155 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 m² of retail space. With its many own brands and select external brands, ADLER offers a highly diverse product range. Thanks to nearly 70 years of tradition and strong customer loyalty, ADLER considers itself to be the market leader within its target group of affluent customers aged 55 and over.
For more information: www.adlermode-unternehmen.com; www.adlermode.com