STORE ELEC SYS : Sales for the 3rd quarter of 2014

Press Release

Paris, 27 October 2014

Sales for the 3rd quarter of 2014

 Q3 sales of €18 million, down (-25%) year-on-year due to adverse base effect and despite 14% growth in France

 Return to growth expected in Q4 thanks to robust level of new orders (€21.5 million)

 ABI Research study confirms strong potential of global ESL market

Store Electronic Systems (NYSE Euronext: SESL, FR0010282822), the leader in Electronic Shelf Labeling (ESL) systems for large-scale food and non-food retailers, today announces its sales for the third quarter of 2014.

As expected, Store Electronic Systems sales were down in Q3 compared to the last three quarters, impacted by an adverse base effect linked to very strong growth in Q3 2013 (+63%). Sales in France performed particularly well, supported by modernization programs in the Company's large domestic installed base, and to an ongoing innovation drive over the past 3 years. International sales were impacted by weaknesses of the Global economy, which caused projects to be deferred or temporarily delayed. However, Store Electronic Systems reported satisfactory sales performance with new orders increasing to more than €21 million, and anticipates a return to growth in Q4. Given the very positive momentum in new customer acquisition and the rapid development of Imagotag, Store Electronic Systems is confident of achieving its growth and improved profitability target for 2014 overall, as well as in the year ahead.

Over the third quarter of 2014, Store Electronic Systems achieved 14% growth in its home market with sales coming in at €10 million. This favorable trend was due to extensive modernization of its installed base towards the next generation technologies (dynamic interactive graphic labels) and Store Electronic Systems' ongoing efforts in the non-food market.
New applications developed by Store Electronic Systems in the areas of geolocation, dynamic planograms, optimization of Drive productivity (strong growth segment) and mobile self-scanning

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are increasingly being trialed as strategic projects by retailers and may well prove to be real source of future growth for Store Electronic Systems.

SES Group's international sales totaled €8.3 million (€2 million for Imagotag alone). This was down vs Q3 2013, mainly due to an adverse base effect linked to the accelerated rollout in Scandinavia during the second half of 2013 (international growth was up 201% in Q3 2013). As a point of reference, international growth was up 22% in Q3 2012.
The economic situation has temporarily impacted investments and caused rollouts to be deferred or delayed. Store Electronic Systems' international installed base has not yet been established long enough to cushion the economic effects from lower new installations.
However, the market trend remains structurally very positive: Store Electronic Systems has seen a large increase in the number of pilots in new retailers since the beginning of the year, and ESL is rising as an investment priority, supported by studies conducted by both ABI Research and Gartner. This is translating into strong growth in the portfolio of sales proposals for rollouts.
Imagotag is gathering momentum in Germany in particular, with more than 10 successful operational pilots at leading stores and steady growth in sales, which are expected to exceed the
€5 million target for the current fiscal year.

Sales in the first nine months of the year totaled nearly €60 million, a comparable figure to that recorded the same period last year. Likewise, SES recorded positive momentum in Q3 with orders taken totaling €21.5 million, up +8% on Q3 2013. Orders taken in the year to date are stable and close to €70 million. Q4 business outlook confirms our objectives for both sales and EBIT growth for the year 2014 as a whole despite the current difficult economic situation in the retail sector.

The report recently published by ABI Research, 'Next Gen Retail: Electronic Shelf Labels', predicts that electronic labeling will play an increasingly key role in the digital transformation of the retail trade and anticipates strong growth in the sector in the years ahead (6-fold increase in ESL sales to USD 1.7 billion by 2019).
The report discusses the challenges currently facing the retail sector: fiercer price competition, the rise of e-commerce, pressure on margins. In light of these challenges, retailers must invest in their digital revolution to improve productivity, enhance their multi-channel strategies, implement dynamic pricing, turn their stores into connected and interactive environments for consumers (via their smartphones) and maintain the synchronization and continuity of the customer relationship via their different sales channels. The ABI study confirms that, as part of this necessary digital transformation of stores, the latest generation smart electronic labels equipped with interactive technology (NFC, BLE) are set to play a key role in the future.
This report fully vindicates Store Electronic Systems' strategy and its innovation plans as well as its expectations in terms of development of the global ESL market.

Store Electronic Systems anticipates sustained activity in the last few months of the year and remains confident of achieving its growth and improved profitability target for 2014 as a whole.
According to Thierry Gadou, CEO of Store Electronic Systems: "As anticipated, Q3 was impacted by a 'wait-and-see attitude' internationally due to the economic situation and an adverse base effect. Nevertheless, activity is still close to that of the previous two quarters, with growth up 22% on Q3 2012, 63% of that growth generated outside of France. The structural changes in the market remain highly positive. The number of new retailers undertaking pilots or planning to roll out our

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solutions has never been so high. Several recent studies also confirm that electronic pricing is climbing to the top of the agenda for many retailers due to accelerated price competition, the urgency of achieving productivity gains and the need for improved multi-channel synchronization. Our acquisition of Imagotag is keeping all its promises and shows every sign of being a strong future growth driver. Given the status of our order books and our sales pipeline, we anticipate growth in Q4 and are therefore confident of achieving our business and profitability improvement targets for the year as a whole."

Sales for 2014: 30 January 2015.

Store Electronic Systems is the leader in Electronic Shelf Labeling systems (ESL) for large-scale food and non-food retailers. The Group designs, markets and installs the entire system's components (software and communication platform, displays, mounts), thus providing clients with a turnkey solution. The range of products and services offered by SES allows retailers to manage pricing dynamically, while significantly improving store productivity and developing new contactless uses for consumers.

Store Electronic Systems is listed on Compartment C of Euronext™ Paris.

Ticker: SESL - ISIN Code: FR0010282822 - Reuters: SESL.PA - Bloomberg: SESL.FP

www.store-electronic-systems.com

NewCap. Florent Alba - Investor Relations & Financial Communication

+33 (0)1 44 71 98 55 - falba@newcap.fr

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