Adler Modemärkte AG: Executive Board Targets EBITDA Growth of More Than 50% by 2020

Haibach, 15 March 2018: Adler Modemärkte AG concluded financial year 2017 with a significant improvement in earnings despite weaker revenue. Against the backdrop of an industry environment that remained difficult, revenue was down slightly as expected at EUR 525.8 million (previous year: EUR 544.6 million). By contrast, adjusted EBITDA rose by 7.2% to EUR 25.4 million (2016 adjusted: EUR 23.8 million). Reported EBITDA amounted to EUR 32.0 million due to a non-recurring effect from the sale of real estate, and was thus up 37.3% over the EUR 23.3 million reported for the previous year. Earnings before interest and taxes (EBIT) increased by EUR 9.1 million to EUR 15.6 million. The consolidated net profit for the year also improved significantly year on year, from EUR 0.4 million to EUR 3.9 million.

Centralised cost efficiency measures proving effective - sharp increase in gross profit margin
The measures introduced in 2016 to reduce costs and increase efficiency continued to prove effective in the past financial year. For instance, personnel expenses fell year on year by 5.3% to EUR 96.9 million (2016: EUR 102.3 million) primarily due to improved staffing plans. Thanks to an adjustment to procurement volumes, optimised inventory management and a more efficient marketing of old merchandise, the cost of materials was cut by EUR 12.4 million to EUR 244.1 million. As a consequence, the gross profit margin improved by 70 basis points to EUR 53.6% (2016: 52.9%). Moreover, by switching its logistics service provider with effect of 1 January 2019, ADLER laid the groundwork at the end of 2017 for further significant savings in the low to mid seven-figure range starting in 2019.

Record-level free cash flow and high liquidity
ADLER substantially improved its free cash flow in the past financial year. At EUR 35.9 million, the figure was EUR 24.5 million higher than the previous year's figure of EUR 11.4 million. The liquidity reserves of the very financially stable Company showed a similarly positive development: at 31 December 2017, cash and cash equivalents amounted to EUR 63.3 million in total, and was thus significantly higher than the EUR 42.8 million reported at the end of 2016. The balance sheet remains extremely healthy with an equity ratio of 41.5%.

Proposed dividend of EUR 0.05 per share
In light of the Company's positive earnings trend and very stable financial situation, the Executive Board and the Supervisory Board recommend reinstating the dividend at a level that is appropriate to the difficult general conditions in which the Company operates. At the Annual General Meeting on 9 May 2018, the Executive Board will propose to the Company's shareholders the distribution of a EUR 0.05 per-share dividend for the 2017 financial year.

Refined strategy aims to generate sustainable profitable growth beginning in 2019
ADLER's Executive Board expects the environment in the textile retail industry to remain challenging in the 2018 financial year and therefore expects revenue to remain approximately level with the prior-year figure (EUR 525.8 million). EBITDA is expected to significantly exceed the adjusted 2017 figure (EUR 25.4 million) and amount to between EUR 26-29 million. The measures to increase efficiency are expected to have a positive impact, particularly in the Purchasing and Salas and Distribution departments.

By adopting the "2020 Strategy" programme, which the Company announced on 28 February of this year, ADLER has set its sights on increasing revenue by at least 5% as compared to 2017's figure by 2020. Significantly above-average EBITDA growth of at least 50% is projected. Substantial improvements are expected as soon as 2019. The aim of the new strategy is to make ADLER a real-life and a digital platform for people aged 55 and up, and thus to increase not only customer footfall, but also customer loyalty and revenue per ADLER customer. In this connection, ADLER is aligning its product and sales strategy as well as its Communications and Marketing departments to a greater extent with the needs of its customers.

The full 2017 Annual Report, containing a detailed presentation of the new 2020 Strategy, is available online at www.adlermode-unternehmen.com

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