Wolford AG — Earnings Release 2007

Mar 16, 2007

News Details

Ad-hoc | 16 March 2007 08:30

Wolford AG: Sales and earnings for the first three quarters of the 2006/07 financial year

Wolford AG / Quarter Results

Release of an Ad hoc announcement, transmitted by DGAP - a company of
EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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Wolford achieves double-digit sales and earnings growth in the first nine
months of 2006/07

· Sales up by 16.1 percent
· EBIT up by 66.4 percent year-on-year
· Earnings per share more than doubled
· Boutiques and department stores continue to drive growth

Bregenz, 16 March 2007

Vienna-listed Wolford Group confirmed it is still successfully on course,
with a 16.1 percent increase in sales to EUR 107.8 million in the first
nine months of financial 2006/07 (EUR 92.9 million in the same period last
financial year), and even higher rates of increase in EBITDA (earnings
before interest, taxes, depreciation and amortization), EBIT (operating
profit) and RCO (result from continuing operations).

'These results confirm the correctness of our strategy and clearly
illustrate that the turnaround is lasting,' comments Wolford Chief
Executive Holger Dahmen on the positive performance of the first nine
months of the current financial year. 'We are now reaping the initial
rewards of the strategic repositioning of the Wolford brand, which we have
been rigorously pursuing for about the last three years,' he adds. 'The
realignment of the Wolford range and intensification of brand communication
have resulted in double-digit sales increases and earnings growing faster
than sales. This growth is not only attributable to the successful,
selective expansion of the range — particularly the ready-to-wear portfolio
— but also to tightening the focus on the point of sale with the new store
concept.'

Earnings grow faster than sales
Earnings grew at a faster rate than sales, thus increasing the
profitability of the Austrian luxury brand. In the first three quarters of
financial 2006/07, Wolford Group’s EBITDA grew from EUR 8.6 million to EUR
11.7 million, an increase of 36.8 percent compared with the first three
quarters of 2005/06. EBIT was up 66.4 percent, from EUR 4.2 million to EUR
7 million, while the improvement in RCO was even more encouraging, with an
82.8 percent increase in the first nine months from EUR 3.2 million to EUR
5.8 million.

This development is even more satisfactory given the need, starting in the
third quarter, to integrate over 100 new employees into the production
process in order to cope with the increased demand and the resulting
requirement for increased capacity, which in turn affects both productivity
and costs.

As a result, the EBITDA margin for the first nine months rose to 10.9
percent, compared with 9.2 percent in the same period last year. The EBIT
margin for the same period was 6.5 percent, compared with 4.5 percent for
the first three quarters of 2005/06.

Earnings per share of EUR 1.20 after nine months have more than doubled
compared with the like period a year earlier.

Sound equity capital base
At the reporting date of January 31, 2007, equity was EUR 73.7 million, up
16.2 percent from one year earlier, and up 11.1 percent compared with
October 31, 2006. The equity ratio was 51.5 percent. Last year’s net debt
of EUR 19.1 million improved 6.2 percent, to EUR 17.9 million. Earnings
before tax plus amortization and depreciation at January 31, 2007 of EUR
10.5 million were up 39.6 percent compared with the first nine months of
financial 2005/06.

Double-digit sales increases in most main markets
Geographically, the Wolford Group recorded double-digit growth rates in
almost all of its markets in the first nine months of the financial year.
Wolford was particularly successful in the highly competitive US market,
with an increase of 34.7 percent. The Group’s product portfolio also scored
successes in its main European markets, generating increases of 25.5
percent (UK), 22.7 percent (the Netherlands), 17.0 percent (Germany), 15.0
percent (Italy), 11.7 percent (Scandinavian markets) and 11.3 percent in
Central and Eastern Europe. Wolford Group also expanded in its Austrian
home market, where a 11.2 percent rise further bolstered its market
position. The Group’s performance was also positive in its French market,
with sales increases of 7.5 percent, and in Switzerland, where Wolford held
sales at the same level as in the same period in the previous year. The
only decline was in Spain - this is chiefly attributable to an
exceptionally strong third quarter in the last financial year.

The Group’s performance is also encouraging in Asia and Oceania, where in
the course of the reorganization sales improved by 37.9 percent.

Boutiques and department stores continue to drive growth
Once again Wolford boutiques were the main growth motor in the third
quarter of 2006/07. The 222 Wolford boutiques (78 Wolford-owned and 144
partner-operated) together generated sales growth of 27.1 percent and
accounted for the largest contribution to revenues, with double-digit sales
increases in all markets.

Wolford-owned stores (boutiques, shop-in-shops and factory outlets)
together recorded sales increases of 33.1 percent compared with the first
nine months of the previous year. On a like-for-like basis, this amounts to
a highly encouraging increase of 14.4 percent. The performance of the
Group’s own boutiques is particularly gratifying, with sales increases of
33.9 percent, or 17.3 percent like-for-like.

The redesigning of boutiques in line with the uniform store concept also
continued at a rapid pace. Since the launch of the new store concept in
August 2005, a total of 76 outlets (36 Wolford-owned and 40
partner-operated) has been opened or refitted in the new design.

Business with department stores reflected positive growth rates in the
third quarter, with increases of 19.2 percent by the end of the period
under review. The performance relating to department stores in the USA was
particularly encouraging. Following a relatively strong third quarter with
a growth of 6.2 percent, the improvement left cumulative sales in the
multibrand retail segment only down slightly.

Fashion highlights — encouraging growth for all product groups
The two main Wolford product groups — legwear and ready-to-wear — recorded
revenue growth in the double digits in the period under review. In
particular, Wolford’s gradual strategic expansion of the ready-to-wear
product line is being well received by the market, and the products
continue to perform very promisingly. The lingerie and swimwear categories
registered slight improvements. The newly introduced leather accessories
collection has performed well and shows signs of further potential.

Initial reactions from fashion professionals and retailers to the new 07/08
fall winter collection are exceptionally positive and confirm that the
brand is on the right track.

Outlook
In the fourth quarter, the Wolford Group will continue to pursue its chosen
strategy energetically, particularly with regard to product range and
distribution, and will continue with the roll-out of the e-commerce
business — launched in November 2006 — in the new financial year.

In March 2007 Ronald van der Kemp joined the Wolford team as designer. He
has already begun work on the 2008/09 fall winter collection in his new
role. He is taking over from Antonio Berardi, who will be moving on after
completion of the 2008 summer collection, following three highly successful
seasons designing for Wolford.

As a result of the good order situation and the very positive Christmas
season, the management expects sales for this financial year to grow to at
least EUR 136 million, with growth in operating profit disproportionately
higher.

Earnings data for the first three quarters of 2006/07 (May 1, 2006 to
January 31, 2007)

First three quarters cumulative

EUR million 31.01.2007 31.01.2006 Change in %

Sales 107.79 92.88 16.1%
EBITDA 11.71 8.56 36.8%
EBITDA margin 10.86% 9.22% -
EBIT 6.99 4.20 66.4%
EBIT margin 6.49% 4.52% -
RCO 5.80 3.17 82.8%
Result for the period 5.87 2.66 120,5%
Earnings before tax plus amortization and depreciation 10.51 7.53 39.6%
Cash generated by operations 5.04 4.46 13.0%
Earnings per share in EUR 1.20 0.56 114.1%

The full consolidated balance sheet and income statement are available on
the Internet at: www.wolford.com

Contacts: Holger Dahmen, Chief Executive Officer
Peter Simma, Deputy Chief Executive Officer
investor@wolford.com
Wolford AG, Wolfordstraße 1, A-6901 Bregenz, Austria
+43 (0) 5574/690-0
www.wolford.com

DGAP 16.03.2007

Language: English
Issuer: Wolford AG
Wolfordstraße 1
6901 Bregenz Österreich
Phone: +43/5574/6907434
Fax: +43/5574/6907440
E-mail: investor@wolford.com
www: www.wolford.com
ISIN: AT0000834007
WKN: 83400
Indices: ATX
Listed: Amtlicher Markt in Wien; Freiverkehr in Berlin-Bremen,
Stuttgart, München; Open Market in Frankfurt

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