GERRY WEBER International AG — Call Transcript 2022

Nov 10, 2022

ANALYST / INVESTOR CALL 9M 2022

10 November 2022

/ TODAY´S SPEAKER

Angelika Schindler-Obenhaus CEO

Florian Frank CFO

/ EXECUTIVE SUMMARY 9M 2022

Environment increasingly challenging, but on track to meet guidance for FY 2022

• Positive normalized EBITDA¹ at EUR 11.1 mn in 9M 2022 compared to EUR -2.2 mn in 9M 2021 ▪ Positive normalized EBITDA¹ at EUR 11.1 mn in 9M 2022 compared to EUR -2.2 mn in 9M 2021
• Net sales at EUR 247.4 mn (+30.2%) in line with management expectations ▪ Net sales at EUR 247.4 mn (+30.2%) in line with management expectations
• E-Commerce grew 35.7% in 9M 2022 in line with mid term targeted growth ▪ E-Commerce grew 35.7% in 9M 2022 in line with mid term targeted growth
• Retail performance in Germany in Q3 improving, but impacted by decreasing consumer sentiment ▪ Retail performance in Germany improving, but impacted by decreasing consumer sentiment
• First time participation at PREMIUM fashion trade fair in Berlin with very positive feedback ▪ First time participation at PREMIUM fashion trade fair in Berlin with very positive feedback
• Group equity ratio decreased to 17.6% robust cash position of EUR 57.2 mn at end of Sept 2022 ▪ Group equity ratio decreased to 17.6% - robust cash position of EUR 57.2 mn at end of Sept 2022
• Supply chain challenges well managed in 9M 2022, situation remains challenging in Q4 2022 ▪ Supply chain challenges well managed in 9M 2022, situation remains challenging in Q4 2022

On track despite challenging environment; outlook for FY 2022 confirmed On track despite challenging environment; outlook for FY 2022 confirmed

OPERATIVE HIGHLIGHTS

/ E-COMMERCE DEVELOPMENT 9M 2022

KEY HIGHLIGHTS

• Sales increased by 35.7% to EUR 41.5 mn/ share of 16.8 % of total Group sales
• Relaunch of Samoon.com in March 2022
• Promising new marketplaces added in each quarter
• Integration of About You`s fulfillment model
• Ongoing targeted growth of 20% yoy

5

/ KEY FIGURES E-COMMERCE SEGMENT 9M 2022

On track to grow at targeted rate of 20%+ mid term

KEY FIGURES E-COMMERCE 9M 2022 (vs. previous year) 1

1 Key figures include own web-shops and online outlets, no marketplaces unless otherwise indicated

2 Total E-Commerce including marketplaces

/ RETAIL DEVELOPMENT 9M 2022

KEY HIGHLIGHTS

• Sales increased by 34.4% to EUR 116.0 mn/ share of 46.9% of total Group sales
• Like-for-like sales increased by 40.6% in 9M 2022
• LTM net sales per sqm improved by 41% to 1,800 € but still below our expectations
• Limited comparability of figures due to loss of around 55 sales days in Q1 2021
• Frequencies remain low due to ongoing weak customer sentiment
• New store concept implemented in Munich and Warsaw
• Development remains challenging due to unforeseeable development of Russia Ukraine conflict, pandemic heading into winter and overall economic development esp. inflation
• Target remains to steer sqm sales and like-for-like sales to 2019 level and beyond

/ RETAIL PERFORMANCE IN GERMANY IN FY 2022

Retail performance in Q3 2022 in line with overall market development

• Retail development above market development in some weeks in 9M 2022 but overall suffering from overall weak consumer sentiment
• Development from week 20 onwards reflects the early and aggressive sell-off of summer merchandise in Q2 and Q3 2022

/ ROLLOUT NEW STORE CONCEPT IN MUNICH VIKTUALIENMARKT

/ ROLLOUT NEW STORE CONCEPT IN WARSAW

10

/ WHOLESALE DEVELOPMENT 9M 2022

KEY HIGHLIGHTS

• Sales rose by 23.0% to EUR 89.8 mn/ share of 36.3 % of total Group sales
• Increased sales support for partners (on-site training measures, franchise days and monthly newsletter for each brand)
• First time participation at PREMIUM fashion trade fair in Berlin with very positive feedback
• First Pop-Up Store opened near Heidelberg

/ PREORDER SYSTEM IN WHOLESALE LEADS TO MORE VISIBILITY

80% of total wholesale sales for FY 2022 are secured by April 2022

• LfL preorder development for O1 to O4 2022 underpins we are succeeding in improving our performance at our wholesale partners
• Preorder development in 2022 also shows that confidence among partners rises again

/ SUSTAINABILITY IMPLEMENTATION UPDATE 9M 2022

Organization of a sustainability week for employees to raise awareness of CSR

Implementation of new IT tool to ensure adequate tracking of German "Lieferkettengesetz"¹

Climate neutral headquarter in Halle (as of March 2022)

ESG targets are part of long term incentive plan measurable (LTI) for the management

transparent demanding

1 "Supply Chain Due Diligence Act"

/ SUPPLY CHAIN AND RAW MATERIAL INFLATION UPDATE 9M 2O22

Close cooperation with suppliers and partners to manage and mitigate disruption effects

01

Closure of production facilities led to shortage of production capacities in sourcing countries (e.g. Turkey / Bangladesh)

Partial shutdowns may occur due to energy bottlenecks

OUTLOOK Q4 2022

02

Shipping of goods stabilized in reliability and duration around the world across all transport vehicles

Costs are easing

03

Task force screens situation daily; counteraction with revised schedules (longer deadlines) and close cooperation with production partners to secure merchandise delivery on time

Delivery rates in 9M within redelivery deadline between 90 to 95%

04

Cost increases of materials, energy and inflation has led in some cases to significant price increases executed in 2022

Price increases apparently accepted by customers and help compensate declining frequencies

▪ Ongoing close screening in all sourcing countries and derivation of corresponding countermeasures

FINANCIAL HIGHLIGHTS

/ FINANCIAL HIGHLIGHTS 9M 2022

Positive normalized EBITDA at 11.1 mn in 9M 2022 despite challenging environment

Total Sales	Sales Split1	Normalized EBITDA	Net Income
EUR 247.4 mn (+ 30.2 %)	Retail: EUR 116.0 mn (+34.3 %) Wholesale: EUR 89.8 mn (+23.1 %) E-commerce: EUR 41.5 mn (+35.7 %)	EUR 11.1 mn (+EUR 13.3 mn)	EUR -10.2 mn (+EUR 14.1 mn)
Cash Flow from current operating	Cash & Cash Equivalents2	Net Debt2	Equity ratio2
activities EUR 14.3 mn (-27.6 %)	EUR 57.2 mn (+14.3 %)	EUR 28.2 mn (+48.0 %)	EUR 17.6 % (-2.3 pp)

1 Excluding Segment Others

2 Compared to December 31, 2021

/ SALES DEVELOPMENT IN 9M 2022 – IN LINE WITH EXPECTATIONS

Limited comparability due to COVID-19

Comments

• Net sales at EUR 247.4 mn (+30.2%) in line with management expectations
• Growth in E-Commerce of 35.7% driven by additional marketplaces and performance enhancement of own e-shops
• Sales growth Retail and Wholesale mainly due to the fact that stores were permanently open again in 2022 (restrictive 2G rules in Q1 but no lockdown like in Q1 2021)
• Retail like-for-like sales were at +40.6% compared to 9M 2021

/ POSITIVE NORMALIZED EBITDA¹ IN 9M 2022

Retail development points in the right direction

Comments

• Positive normalized EBITDA at EUR 11.1mn in 9M 2022 compared to EUR - 2.2mn in 9M 2021
• Retail EBITDA still negative, but figures in 9M 2022 show that segment performance is improving
• Wholesale segment shows solid and improved normalized EBITDA
• E-Commerce on last year´s level due to higher costs incurred in 9M 2022

18

/ POSITIVE OPERATING CASH FLOW / RCF FULLY REPAID

Cash position can be kept at a constant level

Positive Free Cash flow despite challenging environment

• Positive Cash flow from current operating activities of EUR 14.3 mn including payment from state support (EUR 2.5 mn)
• Financing of Inventories requires EUR 7,5 mn

	9M 2022
CF from current operating activities	14.3
CF from investing/desinvesting activities	-9.1
Free Cash flow	5.2
CF from financing activities	-0.7
Exchange rate differences	2.7
Cash & cash equivalents at the beginning1	50.0
Cash & cash equivalents at the end1	57.2

Cash flow from financing activities

• Proceeds from additional loan of EUR 10.0 mn (refinancing of RCF) and full utilization of the remaining RCF (7.5 mn)
• Payment of liabilities relating to the rights of use (IFRS 16) of EUR 16.5 mn
• Repayment of insolvency liabilities of EUR 1.9 mn

¹ According to balance sheet

/ CAPITAL STRUCTURE IN DETAIL

Robust cash position combined with devaluation of contingent liabilities leads to massively reduced net debt of EUR 28.2 mn

¹ Thereof EUR 9.7 mn deposited in insolvency plan escrow account ² 4% p.a. commitment fee. 8% p.a. cash interest on drawn amounts

³ 2% p.a. interest rate + 1,5% interest on drawn amounts ⁴ 12% p.a. of which up to 8% p.a. may be capitalized (PIK)

SUMMARY 9M 2022

Despite deteriorating macroeconomic environment in the reporting period

• GERRY WEBER GROUP reported solid net sales increase driven by continuous opening of stores
• Strict cost management led to significant improvement in normalized EBITDA compared to 9M 2021
• E -Commerce grows in line with mid term target of 20%+
• Retail development improved
• Solid Wholesale performance in 9M 2022
• Ongoing robust liquidity position

OUTLOOK FY 2022

/ ASSESSMENT OF BUSINESS SITUATION – NOVEMBER 2022

Expected successful implementation of further optimization measures

OPTIMIZATION OF INVENTORY AND MERCHANDISE MANAGEMENT

Strong focus on clearance of old goods and overhang Introduction of new software to support inventory optimization in Q4 2022

SUPPORTING EBITDA THROUGH COST SAVINGS IN PERSONNEL EXPENSES

Restrictive hiring of new employees ongoing Potential re-introduction of short-time work across the Group

OPTIMIZATION OF RETAIL PORTFOLIO

Pandemic accelerated changes in shopping behavior of customers => additional cities are losing shopping appeal which will lead to additional soft store closures

/ ASSUMPTIONS – GUIDANCE FY 2022 (1)

Overall goal is to secure successful refinancing in FY 2023

TAKEN INTO ACCOUNT IN GUIDANCE UNCERTAINTY IN GUIDANCE

RETAIL STORES remain open throughout 2022 fewer restrictions compared to Q1 2022

CONSUMER SENTIMENT

in Germany, Benelux, Austria and Switzerland will not deteriorate further in the coming months (compared to sentiment in May 2022)

RETAIL STORES

increasing restrictions up to lockdown towards winter in case covid-19 pandemic flares up again

CONSUMER SENTIMENT

deteriorates further due to overall economic and macroeconomic situation

according to the latest news and statistics, the situation remains challenging in Q4 2022

WAR BETWEEN RUSSIA AND UKRAINE

potential effects such as sales shortfalls and margin pressure considered to the extent that they can be estimated; maintain business relations

WAR BETWEEN RUSSIA AND UKRAINE

additional negative effect on consumer sentiment in e. g. neighboring countries

/ ASSUMPTIONS – GUIDANCE FY 2022 (2)

Overall goal is to secure successful refinancing in FY 2023

TAKEN INTO ACCOUNT IN GUIDANCE UNCERTAINTY IN GUIDANCE

COST INCREASES

assumed to be covered fully through price increases already proved in orders

COST SAVINGS

personnel measures (restrictive recruitment policy, implementation of short-time work), restrictive expenses and investments

DEVELOPMENT OF THE SEGMENTS

Retail and Wholesale expected to grow noticeably due to catch-up effect following lockdown in 2021 E-Commerce expected to continue growing at 20% plus per year

DEVELOPMENT OF THE SEGMENTS

negatively affected by overall economic and macroeconomic situation that could lead to growth rates below our expectations segment development remains to be seen in Q4 depending on various risks such as insolvencies of wholesale partners

inflation and price increases higher than considered in guidance with no full handover to customers possible

savings cannot be realized or not be realized to the

implementation of further optimization measures

to support guidance for FY 2022

COST INCREASES

COST SAVINGS

planned extent

/ OUTLOOK FY 2022 AND BEYOND

Updated due to expected successful implementation of further optimization measures

GUIDANCE FOR FY 2022	SPECIFIED
Net Sales	Between EUR 315 mn and EUR 340 mn
Normalized EBITDA1	Negative single-digit million EUR range to positive single-digit million EUR range

OUTLOOK FY 2023

2023 Successful refinancing

¹Excluding effects from lease accounting pursuant to IFRS 16

/ COVENANTS FY 2022 AND FY 2023

COVENANT DETAILS*

in k EUR	March 22	June 22	Sep 22	Dec 22	March 23	June 23	Sep 23	Dec 23
Minimum liquidity	4.000	4.000	4.000	4.000	4.000	4.000	4.000	4.000
Normalized EBITDA1			> 0	> 0
Net debt/normalized EBITDA1				5.94	4.33	3.32	3.20	3.10
Capital expenditure				12.000				7.000
Normalized EBITDA1/interest				1.31	1.91	2.27	2.62	2.84

*Negotiated with main financing partners / possibility for renegotiation in case of ongoing disruptions ¹ Excluding effects from lease accounting pursuant to IFRS 16

APPENDIX

/ CAPITAL MARKETS EVENTS 2022

Nov 29, 2022 German Equity Forum Frankfurt

/ INVESTOR RELATIONS CONTACT

GERRY WEBER International AG

Investor Relations Dr Andrea Rolvering

E-Mail andrea.rolvering@gerryweber.com Mobile +49 157 57103411

#WE ARE SO GERRY

/ DISCLAIMER

This presentation does not constitute an offer of securities or otherwise constitute an invitation or inducement to any person to subscribe for or otherwise acquire or dispose of securities of GERRY WEBER International AG (the "Company") or any of its affiliates.

This presentation contains "forward-looking statements" with respect to the Company's financial condition, results of operations and business plans and objectives. These forwardlooking statements reflect the current views of the Company's management with respect to future events. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "will", "anticipates", "aims", "could", "may", "should", "expects", "believes", "intends", "plans" or "targets". By their nature, forwardlooking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. Such factors may have a materially adverse effect on the costs and revenue development of the Company. For example, economic downturns in the Company's markets and changes in currency exchange rates may have negative effects on the Company's business development and financial condition. The factors that could affect the Company's future financial results are discussed more fully in the Company's most recent annual and interim reports, which can be found on its investor relations website at ir.gerryweber.com. All written or oral forward-looking statements attributable to the Company or any of its affiliates or any persons acting on its behalf or contained in or made in connection with this presentation are expressly qualified in their entirety by factors of the kind referred to above. No assurances can be given that the forward-looking statements in this presentation will be realized. Except as otherwise stated herein and as may be required to comply with applicable law and regulations, the Company does not intend to update these forward-looking statements and does not undertake any obligation to do so.

This presentation has been prepared by the Company's management solely for information purposes. This presentation is in summary form and does not purport to be a full or complete description of the Company and its subsidiaries. No representation or warranty, express or implied, is made as to the fairness, accuracy, adequacy, completeness or correctness of such information, nor as to the achievement or reasonableness of any projections, targets, estimates, or forecasts. Nothing in this presentation should be relied upon as a promise or representation as to the future.