DGAP-News: TOM TAILOR GROUP launches new initiatives to

DGAP-News: TOM TAILOR Holding AG / Key word(s): Change in Forecast/Strategic Company Decision TOM TAILOR GROUP launches new initiatives to significantly raise its profitability 20.10.2016 / 07:38 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- TOM TAILOR GROUP launches new initiatives to significantly raise its profitability - Focusing on profitable core business - Discontinuation of unprofitable activities and withdrawal from loss- making regions - One-off, primarily non-cash-effective negative charge of around EUR 70 million in the third quarter of 2016 - Short-term impact, sustainable savings with first positive effects already in the fourth quarter of 2016 - Full support from lending banks Hamburg, 20 October 2016. TOM TAILOR GROUP's new management team is launching a set of new initiatives to further improve the profitability of the Group. These measures will deliver results short term and significantly exceed the CORE program launched at the end of 2015. The new initiatives are directed to concentrate on the Group's strong core businesses in an increasingly changing market environment. It will sustainably strengthen earnings power and unlock financial resources for investments in the Group's digital sales channels and brands. TOM TAILOR GROUP will consequently discontinue loss-making activities. The Group will also withdraw from unprofitable foreign markets, close additional retail stores and curtail selected product lines. Going forward, the activities of the Group will focus on the umbrella brand TOM TAILOR with the Casual, Denim and Kids lines, as well as on BONITA Women. The implementation of this cost and process optimization program has led to a unscheduled one-off charge of around EUR 70 million in the third quarter of 2016, primarily non-cash expenses. However, the fourth quarter will already display first positive effects in the earnings before interest, tax, depreciation and amortization (EBITDA). TOM TAILOR GROUP expects to substantially improve profitability and achieve a higher reported EBITDA margin in fiscal year 2017. Furthermore, the Executive Board expects to reduce the company's gearing faster than previously envisaged. The cost and process optimization measures will not entail any further financing requirement and have the complete support of the lending banks. In view of the unscheduled charge, the Executive Board is withdrawing the forecast 2016 which was projected in March. An updated forecast for the current financial year will be presented when the company reports third quarter results on 10 November 2016. Thomas Dressendörfer, Chief Financial Officer of TOM TAILOR Holding AG, said: "The textile sector is undergoing a fundamental change in which strong brands like TOM TAILOR and BONITA enjoy very good prospects in the marketplace. However, in order to be successful in this environment, it requires an even sharper correction than in the past. The new program that has been decided will release the company from the legacy burden of loss- making operations and will allow us to streamline the business to profitability. This will entail unscheduled financial charges which will negatively impact earnings in the third quarter. We anticipate that initial positive effects will be generated already in the fourth quarter; furthermore, compared to previous forecasts our profitability will significantly be improved in 2017. The financial basis of the company will therefore be strengthened." Dr Heiko Schäfer, Chief Operating Officer and interim Chief Executive Officer, explained: "TOM TAILOR GROUP has a very robust core. This includes our exceptionally strong wholesale business as well as the retail activities of our brands TOM TAILOR and BONITA Women. Concentrating on and further optimizing this core will enable us to sustainably improve the profitability of the Group. We will therefore streamline the portfolio of brands and stores, withdraw from selected foreign markets and reduce complexity in our products, processes, and organization. This will enable us to create operational and financial headroom to invest in our core brands and in advancing digitalization. In addition, we will expand already initiated cost cutting measures in procurement. The new management team is clearly committed to delivering results." The new operational cost and process optimization measures are being implemented using the three levers of geographical presence, store portfolio and product lines. In future, the TOM TAILOR GROUP will concentrate its brand portfolio on the two brands TOM TAILOR and BONITA Women. The brand BONITA Men will be taken off the market. Furthermore, the TOM TAILOR GROUP is going to withdraw from France and South Africa and revisit the go-to-market approach in China and India (e.g. licensee models). At the same time, the Group will bring about further reductions in its network of branches. The company projects that the portfolio will be reduced by up to 300 stores in the business year 2017. This means that all the stores for the BONITA Men brand will close. Moreover, up to 150 unprofitable stores of the BONITA Women brand will be closed. Individual flagship stores of the TOM TAILOR brand will also be subject to a thorough review and removed from the portfolio if they do not meet their profitability targets. These measures will be associated with a reduction in the number of jobs. Over the coming weeks, socially acceptable solutions will be developed in collaboration with the works councils of the Group. TOM TAILOR GROUP will publish the full results for the third quarter as planned on 10 November 2016. About TOM TAILOR GROUP TOM TAILOR GROUP is an international fashion and lifestyle company offering stylish apparel and accessories in the medium price range through its umbrella brands TOM TAILOR and BONITA. The TOM TAILOR umbrella brand comprises the brands TOM TAILOR, TOM TAILOR Denim, and TOM TAILOR CONTEMPORARY Women. These high-quality collections are aimed at customers between 0 and 40. BONITA, one of Germany's leading fashion brand producers and retailers, has been a part of the TOM TAILOR GROUP since August 2012. BONITA sells menswear and womenswear collections for the over-40 age group. The TOM TAILOR brand is marketed through the retail and wholesale segments, and thus through single-label stores as well as wholesale partners. At the end of June 2016, these comprised 468 TOM TAILOR stores and 206 franchise stores, 3,145 shop-in-shops and around 8,400 multi-label points of sale. The brand is present in more than 40 countries. BONITA has more than 1,011 retail stores and now has more than eleven shop- in-shop spaces. The collections of both brands are also available through their respective online shops. Further information is also available at www.tom-tailor-group.com and www.bonita.eu Media and Investor Contact Felix Zander Head of Investor Relations & Corporate Communications TOM TAILOR GROUP Phone: +49 (0) 40 58956-449 Email: felix.zander@tom-tailor.com --------------------------------------------------------------------------- 20.10.2016 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: TOM TAILOR Holding AG Garstedter Weg 14 22453 Hamburg Germany Phone: +49 (0) 40 589 56 0 Fax: +49 (0) 40 589 56 398 E-mail: info@tom-tailor.com Internet: www.tom-tailor-group.com ISIN: DE000A0STST2 WKN: A0STST Listed: Regulated Market in Frankfurt (Prime Standard), Hamburg; Regulated Unofficial Market in Berlin, Dusseldorf, Hanover, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 512979 20.10.2016