DGAP-Adhoc: Gerry Weber not entirely isolated from negative

Gerry Weber International AG / Key word(s): Change in Forecast/Profit Warning 09.06.2015 17:36 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- Ad-hoc announcement pursuant to § 15 WpHG GERRY WEBER not entirely isolated from negative market trend in the fashion industry - Achievement of the revenue and earnings targets for the current financial year 2014/15 no longer ensured because of the market environment - Managing Board announces strategic measures to return to planned profitability - With like-for-like sales up by 1%, HALLHUBER defies the negative market environment (Halle/Westphalia, 9 June 2015) The Managing Board of GERRY WEBER International AG believes that the targets set at the beginning of 2015 for the current financial year 2014/15 can no longer be reached and has updated its short-term guidance for the financial year 2014/15. Management now expects sales revenues for the GERRY WEBER Group (incl. HALLHUBER) to increase by a high single-digit percentage compared to the previous year 2013/14. Earnings before interest and taxes (EBIT) of the GERRY WEBER Group for 2014/15 will be between 20% and 25% lower than in the previous year because of the current difficult market environment. Revenue growth supported by GERRY WEBER Retail expansion and HALLHUBER Sales revenues and earnings clearly lost momentum in the first half of the current financial year 2014/15. GERRY WEBER Group increased sales revenues in total by 4.8% to EUR 432.7 million. On the one hand, this increase is attributable to the initial consolidation of HALLHUBER and, on the other hand, to the expansion of GERRY WEBER's own Retail stores. Like-for-like sales revenues of GERRY WEBER's Retail segment (GERRY WEBER, TAIFUN and SAMOON) were down by 4.6% on the previous year. As a result of the expansion, however, total sales revenues of GERRY WEBER's Retail segment increased by 6.7% to EUR 201.3 million in the first half of 2014/15. During this period, HALLHUBER defied the general market trend in Germany of minus approx. 5% and achieved like-for-like sales growth of 1%. By contrast, GERRY WEBER's Wholesale segment clearly fell short of the company's expectations and posted an 11.8% decline in sales revenues to EUR 197.7 million in H1 2014/15. This was also due to the market development in Russia and Eastern Europe. With like-for-like sales down by 4.6% in H1 2014/15, GERRY WEBER Retail still outperformed the German market as a whole (-5%) but clearly fell short of the Managing Boards expectations. Seasonally adverse weather conditions as well as low footfall in the cities and stationary stores had also a negative impact on sales as did the consumer behaviour. According to a study carried out by GfK, German consumers currently prefer to buy higher-priced products like cars, furniture or to make investments into real estate. Profitability adversely affected by lower revenues and expansion-related costs Due to the lower-than-planned sales revenues, the above-average markdowns on seasonal items in the past months and the expansion-related higher fixed costs, earnings before interest, taxes, depreciation and amortisation (EBITDA) were down by 14.9% on the prior year period to EUR 52.5 million in the first half of 2014/15. The Group's EBITDA was primarily affected by the sale of products not sold in the previous season, which generated a lower gross profit. In addition, increased depreciation/amortisation of EUR 16.3 million resulting from the Retail expansion and the acquisition of HALLHUBER are weighing on the GERRY WEBER Group's operating result. Taking into account the above factors, earnings before interest and taxes (EBIT) of the GERRY WEBER Group amounted to EUR 36.2 million in H1 2014/15, down by 26.8% on the first six months of the previous year. In this context, it should be noted that the second quarter of the current fiscal year contrasts with above-average comparative figures of the previous year period. Further details about the business trend and the figures for the first half of 2014/15 will be announced in the context of the publication of the interim report of GERRY WEBER International AG on 12 June 2015. Strategic measures The Managing Board of GERRY WEBER International AG is implementing strategic measures to secure and push ahead the growth and profitability of the GERRY WEBER Group and to respond to the continued negative market trends in the textile retail sector. The GERRY WEBER management sticks to its expansion strategy in order to reach the long-term profitability targets of the Group. The following measures have been implemented, in order to respond quickly and comprehensively to the changing market conditions: 1. The GERRY WEBER Group will maintain its strategic focus on the international expansion of the Retail segment and the vertical integration of the distribution channels. 2. Accelerated roll-out and implementation of in-season management system. Quickly deliverable and flexible procurement programmes are to account for round about 20% of the GERRY WEBER collections. The aim is to get current trends and products tailored to current requirements to the stores as quickly as possible. 3. Ongoing flexibilisation and optimisation of the sourcing structures and introduction of "open to buy" limits, which afford greater seasonal flexibility in steering merchandise to the stores and shops. Moreover, these limits help to avoid excess inventories at the end of a season. 4. Implementation of strict cost management to reduce general and administrative expenses as well as material and personal costs. 5. The integration of HALLHUBER into the GERRY WEBER Group and the realisation of the resulting synergies as well as the acceleration of the HALLHUBER expansion will remain a key task of the management in the coming months. Already in the current fiscal year HALLHUBER will double his originally planned 30 store openings by taking advantage of the GERRY WEBER distribution network. The measures show that the management of GERRY WEBER International AG has responded quickly and comprehensively to the company's unsatisfactory sales and earnings performance in order to return to the originally planned profitability. Against the background of the unique market positioning, the target customer structure and, above all, the existing international growth opportunities, the business model of the GERRY WEBER Group remains geared to profitable growth. As we bring an effective response to the current negative market trends and developments, we remain confident that the company will reach its long-term growth and earnings targets. Admitted to the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) ISIN: DE0003304101 WKN: 330410 <pre> GERRY WEBER International AG </pre> Investor Relations Contact Claudia Kellert Tel: +49 (0)5201 185 8422 Email: c.kellert@gerryweber.de <pre> Corporate Communication Contact Catharina Berndt Tel: +49 (0)5201 185 320 Email: c.berndt@gerryweber.com </pre> 09.06.2015 The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Gerry Weber International AG Neulehenstraße 8 33790 Halle/Westfalen Germany Phone: +49 (0)5201 185-0 Fax: +49 (0)5201 5857 E-mail: c.kellert@gerryweber.de Internet: www.gerryweber-ag.de ISIN: DE0003304101 WKN: 330410 Indices: MDAX Listed: Regulated Market in Dusseldorf, Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------