DGAP-News: Adler Modemärkte AG: Strong Q3 Performance, Continued High Liquidity - Revenue and Earnings Forecast revised

In Light of Extreme Conditions:

Strong Q3 Performance, Continued High Liquidity - Revenue and Earnings Forecast revised

Mid-Term Guidance Intact Thanks to Implementation of Strategy 2020

Haibach (near Aschaffenburg), 8 November 2018: Despite the extreme conditions due to the unusually hot and long summer, Adler Modemärkte AG limited the rate of its decline in revenue in the third quarter of 2018 to the lower single-digits. Between July and September, the Group generated revenue of EUR 117.3 million, representing a decrease of 2.4% from EUR 120.2 million in Q3 2017. In the first nine months of the year, ADLER generated revenue of EUR 360.4 million, down 3.7% from EUR 374.2 million in the first nine months of 2017. The decline was even lower when measured on a like-for-like basis: -1.2% (Q3) and -3.1% (9M).

Despite the decline in revenue, the gross profit margin remained stable at 50.3% in the quarter under review. This was due to ongoing successful efforts to optimise purchasing volumes and manage existing inventories. On a nine-month basis, the margin improved significantly by 90 basis points to 53.0%.

Non-recurring effects had an impact on earnings before interest, taxes, depreciation and amortisation (EBITDA) in both 2017 and 2018. In 2017, the effects of real estate sales more than offset the impact of restructuring measures. By contrast, in 2018, costs in connection with the ADLER Group's strategic realignment together with the initial costs of implementing the new logistics service provider Meyer & Meyer led to a reduction in EBITDA.

Despite the impact of the non-recurring effects of in sum EUR -0.8 million, ADLER reported EBITDA of EUR -2.4 million in the third quarter of 2018, up 33.3% from EUR -3.6 million in the prior-year quarter. The adjusted figures amounted to EUR -1.6 million (Q3 2018) and EUR -2.4 million (Q3 2017). In the period from January to September, EBITDA totalled EUR -2.4 million (prior-year period: EUR 6.6 million). With special effects totalling EUR 5.0 million in 9M 2017, the adjusted figures were EUR 0.2 million in 2018 and EUR 1.6 million in 2017 respectively.

As is typical for ADLER's business model on account of the seasonal nature of the Company's collections, the Group reported a net loss after taxes of EUR 14.7 million as at 30 September 2018 (9M 2017: net loss after taxes of EUR 7.0 million). This represents earnings per share of EUR -0.80 (9M 2017: EUR -0.38 million).

Although ADLER generated free cash flow of EUR -6.4 million in the first nine months of the year (9M 2017: EUR 6.4 million), the Company's liquidity reserves remained high at EUR 47.5 million, up EUR 10.9 million from EUR 36.6 million as at 30 September 2017. This means that ADLER is still well positioned to finance the measures launched as part of its 2020 strategy on its own.

Forecast for full year 2018 revised downward
In light of the extraordinarily hot and long summer as well as downbeat industry expectations for the holiday season, Adler Modemärkte AG had revised downward its forecast for 2018 overall as reported in the 2017 Annual Report.

The management now expects revenue for the overall year to be down slightly year on year at EUR 525.8 million; previously, it had been expected that revenue would be roughly on par with the prior-year level. EBITDA is now expected to range between EUR 20 million and EUR 24 million, down from EUR 26-29 million.

For the fourth quarter 2018, ADLER anticipates clearly positive earnings as well as a clearly positive free cash flow. The quality of the balance sheet structure persists to be high. Liquidity at year-end is expected to exceed last year's level of EUR 63.3 million.

As predicted, the ADLER 2020 Strategy and the already announced switch in the logistics service provider will begin to have a positive effect for the first time in financial year 2019. The company still expects EBITDA to improve by more than 50% until the year 2020 compared to the operating EBITDA 2017 of EUR 25.4 million.

The full report on the first nine months of 2018 is available for download at http://www.adlermode-unternehmen.com/en/investor-relations/reports-and-publications/financial-reports/2018/.

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^* based on 18,510,000 no-par value shares.