TOM TAILOR Group publishes preliminary results 2019 - TOM TAILOR brand grows again in fiscal 2019; Corona crisis impacts fiscal 2020

- Group revenue in line with expectations, at EUR 803.1 million

- Group adjusted EBITDA margin (before IFRS 16 and one-off expenditure items) increases to 4.2 percent (2018: 3.0 percent)

- TOM TAILOR brand grows by 0.4 percent in a persistently challenging market environment; adjusted EBITDA margin at 9.1 percent (2018: 10.3 percent)

- Gross profit margin within Group of 57.9 percent on a par with previous year

- Economic impact of corona pandemic not quantifiable - outlook for 2020 not yet possible

Hamburg, 31 March 2020. The TOM TAILOR Group ("the Company") closed fiscal 2019 in line with expectations. According to preliminary, unaudited results, Group revenue declined by 4.8 percent, from EUR 843.8 million to EUR 803.1 million. Reasons for this were the continued decrease in revenue at BONITA due to the difficult market situation as well as further planned store closures in this segment. By contrast, revenue generated by the TOM TAILOR brand rose slightly year on year, by 0.4 percent to EUR 620.3 million (2018: EUR 618.1 million). The gross profit margin within the Group, at 57.9 percent, was approximately on a par with the previous year's level of 58.1 percent.

Reported Group EBITDA (after the first-time application of IFRS 16 and including one-off expenditure items) was EUR 98.5 million, the previous year's figure was EUR 25.7 million. Adjusted Group EBITDA (before application of IFRS 16 and one-off expenditure items) was EUR 33.7 million. The one-off items recorded at Group level, at EUR 18.7 million, were related to the restructuring of the financing agreements, restructuring costs and higher planned HR costs. The EBITDA margin reported at Group level was thus 12.3 percent (2018: 3.0 percent); Group adjusted EBITDA margin was 4.2 percent.

The TOM TAILOR brand adjusted EBITDA (before application of IFRS 16 and one-off expenditure items) of EUR 56.5 million, below the previous year's level of EUR 64.0 million. The adjusted EBITDA margin amounted to 9.1 percent, compared to 10.3 percent in fiscal 2018.

"Fiscal 2019 was in line with our expectations. We were able to grow the TOM TAILOR brand once again and we returned in particular to an increase in revenue in our own Retail business for the first time in three years. At the same time, we succeeded both in slowing the decline in revenue and improving the income situation at BONITA", says Dr Gernot Lenz, CEO of TOM TAILOR Holding SE.

TOM TAILOR Retail posts increase in revenue and result

The revenue of the TOM TAILOR Retail segment increased in the year under review due to a positive trend in stationary retail as well as in e-commerce, with growth of 2.9 percent to EUR 291.1 million (2018: EUR 283.0 million). Revenue in e-commerce was particularly positive, with an increase of 6.5 percent to EUR 50.4 million (2018: EUR 47.3 million). Like-for-like sales also increased by 0.9 percent compared to the previous year. The gross profit margin in the TOM TAILOR Retail segment, at 59.3 percent, was on a par with the previous year's level (2018: 59.3 percent). Adjusted EBITDA (before application of IFRS 16 and one-off items amounting to EUR 1.1 million) increased in the year under review by EUR 7.3 million to EUR 11.7 million (2018: EUR 4.4 million). This improvement resulted in particular from a higher gross profit and the partial utilisation of provisions for contingent losses made in the previous year. By contrast there were higher HR and marketing costs in e-commerce.

TOM TAILOR Wholesale posts decline in revenue and result

Revenue at the TOM TAILOR Wholesale segment dropped in 2019 by 1.8 percent to EUR 329.2 million (2018: EUR 335.1 million). This is mainly attributable to the insolvencies of several large customers as well as lower license proceeds. The gross profit margin declined due to the lower licence proceeds and negative currency effects from 54.3 percent in the previous year to 53.4 percent. Adjusted EBITDA (before application of IFRS 16 and one-off items) decreased significantly year on year by EUR 14.8 million to EUR 44.8 million (2018: EUR 59.6 million). One of the main reasons for the decline in EBITDA was one-off expenditure items in connection with the restructuring of the financing agreements that were signed in October 2019 as well as other one-off effects that burdened the Wholesale segment by a total of EUR 15.7 million. In addition to the decline in gross profit of EUR 6.1 million, higher planned HR costs as well as decreased proceeds from the release of provisions also had a negative impact on EBITDA.

BONITA slows down decline in revenue and improves gross profit margin

In fiscal 2019, the BONITA segment posted a decline in revenue, as expected; it was possible, however, to reduce this decline considerably on a quarterly basis. Overall, revenue decreased by 19.0 percent, from EUR 225.7 million in the previous year to EUR 182.8 million. The decline in revenue was mainly due to planned store closures as well as an overly strong rejuvenation of the collections. The realignment of the product range strategy introduced in 2019, with a clear focus on the existing target customers as well as shorter development and ordering cycles, began to show initial success in the second half of the year. The gross profit margin also improved, rising in 2019 by 1.6 percentage points to 63.7 percent (2018: 62.1 percent). The main driver of this was lower write-downs on inventory assets in the fourth quarter of 2019 compared to the previous year. Adjusted EBITDA (before application of IFRS 16 and one-off items amounting to EUR 1.9 million) in the BONITA segment improved in 2019 to EUR -22.7 million (2018: EUR -38.2 million). The improvement resulted from lower HR, rent and marketing expenditures, in spite of a revenue-related decline in gross profit. In addition, EBITDA in the previous year had been burdened by higher provisions for contingent losses.

In fiscal 2019, net debt in the Group (before application of IFRS 16) was EUR 138.3 million, on a par with the previous year's level (2018: EUR 139.3 million); free cash flow (before application of IFRS 16) improved to EUR -2.4 million (2018: EUR -14.2 million).

Corona crisis impacts fiscal 2020

Until further notice and in line with the requirements of the national governments and regional authorities, TOM TAILOR Group stores (Retail) are closed in most European markets due to the continuing spread of the coronavirus (COVID-19). The ongoing business with large customers (Wholesale) is also considerably impacted by the restrictions imposed by the respective European governments. TOM TAILOR Group's online retail and wholesale offerings currently continue to be available to customers. However, due to the fact that the online activities do not generate a large enough share of overall revenue, they cannot compensate for the losses in revenue in the company's own retail and wholesale businesses. Due to the worsening of market conditions in almost all markets relevant to the TOM TAILOR Group and the associated risks for the financing and liquidity situation of the Group, the Executive Board rates short-term and medium-term liquidity planning as significantly risky. These risks include the risk of non-fulfilment of key lending indicators as well as the risk of liquidity bottlenecks. "The corona pandemic has led to a dramatic deterioration in market conditions in recent weeks in all of our markets. Therefore, we are putting all our efforts into taking countermeasures to minimise the economic damage for the Group and to successfully master this extraordinary challenge together with our customers, suppliers, employees and financing partners", says Christian Werner, CFO of TOM TAILOR Holding SE.

The TOM TAILOR Group has already introduced extensive operational cost reduction measures. In addition, the Company intends to apply for the financial support programmes announced in Europe within the context of the COVID-19 crisis. These include among others government funding programmes, short-time working, as well as deferral of tax payments.

The economic impact on the TOM TAILOR Group for the year as a whole cannot be quantified. Therefore, it is currently not possible to give a valid outlook for fiscal 2020.

PRELIMINARY KEY FIGURES TOM TAILOR GROUP

*adjusted for one-off expenses of EUR 18.7 million and effects from the initial application of IFRS 16
 

About TOM TAILOR Group
TOM TAILOR Group is an international, vertically integrated fashion company focused on casual wear in the medium price segment. The product portfolio is complemented by an extensive range of fashionable accessories. With its brands, the company covers the various core segments of the fashion market. The TOM TAILOR brand is marketed through the retail and wholesale segments, and thus through single-label stores as well as wholesale partners. As of 31 December 2019, these include 466 TOM TAILOR stores and 184 franchise stores, 2.575 shop-in-shops and 7.751 multi-label points of sale. The brand is present in more than 32 countries. The BONITA brand has 694 retail stores and 61 shop-in-shop spaces. The collections of both brands are also available through their respective online shops.

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