Wolford AG — Earnings Release 2011

Mar 18, 2011

Ad hoc announcement

Wolford AG / Keyword(s): Quarter Results

Wolford AG: Sales and earnings Q3 2010/11

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Press information
Sales and earnings in the first three quarters of the 2010/11 fiscal year

Wolford achieves significant sales and earnings growth in Q1-Q3

• Sales increase of 6.6 percent to EUR 120.0 million

• Above-average improvement in earnings indicators

• Result from continuing operations almost doubled

• Net debt reduced by 47.8 percent

• Monobrand distribution surpasses 60 percent threshold

Bregenz, March 18, 2011

In the third quarter of the 2010/11 fiscal year, the Wolford Group also
succeeded in seamlessly continuing the positive development manifested in
the first two quarters. On balance, sales of the international fashion
company in the first nine months of the current fiscal year (May 1, 2010 -
January 31, 2011) rose by 6.6 percent to EUR 120.0 million. The operating
performance indicators developed even more gratifyingly. The result from
continuing operations was improved by 93 percent from the prior-year's
period, from EUR 4.6 million to EUR 8.9 million. 'We have been able to
significantly increase sales in almost all markets and distribution
channels for five straight quarters. At the same time, we expanded
monobrand distribution to comprise more than 60 percent of total sales.
This shows that our strategy of continually improving distribution quality
and focusing on Wolford-controlled distribution has had a sustainably
positive impact', comments Holger Dahmen, Chief Executive Officer of
Wolford Aktiengesellschaft. 'The considerably improved operating
performance indicators and the net profit for the period, which we came
close to doubling, reflect sales growth but are also the logical result of
consistently implemented cost reduction and efficiency improvement
measures, which we will continue to work on in the future as well,' Holger
Dahmen concludes.

Ongoing earnings improvement and disproportionately high increases in all
relevant earnings indicators

On balance, total sales of the Wolford Group rose 6.6 percent in the first
three quarters of the 2010/11 fiscal year, amounting to EUR 120.0 million
(Q1-Q3 2009/10: EUR 112.6 million). This development can primarily be
attributed to the performance of Wolford's proprietary stores, which raised
sales by 14.1 percent during the period under review.

The positive development of key earnings indicators was even more
pronounced in the reporting period, posting above-average growth compared
to the rise in sales. Accordingly, EBITDA of the Wolford Group amounted to
EUR 15.9 million, representing an increase of 31 percent from the level of
EUR 12.1 million in the first nine months of 2009/10. The corresponding
EBITDA margin improved to 13.2 percent (Q1-Q3 2009/10: 10.8 percent). The
increase in the operating profit (EBIT) was even more impressive, climbing
by 59 percent to EUR 9.9 million, up from EUR 6.2 million in the first
three quarters of the previous year. In addition to the growth in sales,
the gratifying development in the operating performance indicators also
reflects the persistent implementation of far-reaching cost reduction and
efficiency enhancement measures.

Against this backdrop, the Wolford Group came close to doubling the result
from continuing operations, which totaled EUR 8.9 million in the reporting
period (Q1-Q3 2009/10: EUR 4.6 million). The net profit for the period rose
to EUR 7.0 million compared to EUR 3.8 million in the first three quarters
of the previous year, a rise of 86 percent. Earnings per share were EUR
1.43 (Q1-Q3 2009/10: EUR 0.77).

Reduction of net debt and higher equity ratio

In the first nine months of the current fiscal year, Wolford continued its
efforts to optimize financial resources tied up in working capital. At the
same time, the Wolford Group succeeded in reducing liabilities to banks,
which in turn resulted in a significant reduction of net debt, which was
almost cut in half to EUR 12.9 million as at January 31, 2011, from EUR
24.7 million on January 31, 2010. The gearing ratio clearly improved from
30.7 percent to 15.1 percent. On an absolute basis, shareholders' equity
rose from EUR 80.5 million at the third-quarter 2009/10 reporting date to
the current level of EUR 85.3 million as at January 31, 2011. The equity
ratio as at January 31, 2011 improved to 57.1 percent (January 31, 2010:
52.5 percent).

Significant sales increase in Wolford's core geographic markets

From a regional perspective, most of Wolford's core geographic markets
generated considerable sales increases during the reporting period. The
strongest growth rates were achieved by the Wolford Group in the region
Asia/Oceania, where sales were raised by 33.7 percent. A similar
development took place in Spain, where sales expanded by 27.9 percent, and
in the USA, which posted growth of 23.2 percent. Wolford also achieved
double-digit growth in Switzerland (+14.1 percent), Scandinavia (+ 12.3
percent) and Great Britain (+11.8 percent). Wolford also managed to further
increase total sales in Belgium (+ 7.4 percent), Italy (+ 5.8 percent) and
Germany (+ 2.2 percent). Sales in France during the first three quarters of
2009/10 also rose (+ 0.5 percent) due to a clearly positive development in
the third quarter, whereas Wolford suffered a slight decline in sales in
Austria (- 1.6 percent) and in the Netherlands (-3.9 percent) compared to
the prior-year period.

Monobrand distribution expanded to 61.8 percent of sales

Sales with Wolford's proprietary stores (boutiques, shop-in-shops and
factory outlets) showed a positive development during the period under
review, featuring a 14.1 percent rise in sales. This growth was partially
due to the consistent expansion of Wolford's own distribution network. On a
like-for-like basis, sales were up 5.9 percent. The share of total sales
generated by retail outlets also increased further in the third quarter of
the current fiscal year, rising from 47.4 percent in the first half of
2010/11 to 50.6 percent in the first nine months (Q1-Q3 2009/10: 47.4
percent).

Considering the sales development of the individual distribution channels
in greater detail, Wolford's own boutiques showed a pronounced positive
development, achieving a 12.7 percent rise in sales. At the same time,
sales with partner-operated boutiques also improved by 3.4 percent. As a
result, sales with boutiques, the most important distribution channel
accounting for 48.0 percent of total sales (Q1-Q3 2009/10: 46.6 percent),
rose by 10.4 percent during the first three quarters of the 2010/11 fiscal
year. At the reporting date of January 31, 2011, Wolford distributed its
products via a network of 215 boutiques, of which 105 are operated by
Wolford and 110 are operated by partners.

The business with department stores in the first three nine months of
2010/11 also developed particularly gratifyingly, increasing by 14.2
percent. This development is primarily due to the performance of Wolford's
own concession shop-in-shops. Whereas sales with multi-brand retailers were
slightly down from the prior-year period (-1.6 percent), Wolford's online
business climbed 35.4 percent on a like-for-like basis, providing a clear
continuity to the upward trend. As of the end of January 2011, Wolford
operated online shops in 13 countries.

The positive development of Wolford's controlled distribution channels (own
and partner-operated boutiques, factory outlets and concession
shop-in-shops) was reflected by the rising sales share of monobrand
distribution. With 61.8 percent of total sales (Q1-Q3 2009/10: 59.1
percent), monobrand distribution exceeded the 60 percent threshold for the
first time in the company's history.

Outlook

The business results of the Wolford Group reflect the persistent focus on
improving distribution quality in line with the targeted expansion of
monobrand sales outlets and the implementation of cost reduction and
efficiency enhancement measures. Wolford will further strengthen its market
presence in the future by continuing these measures, as well as by
expanding its sales and marketing activities, particularly in the Asian
region. Moreover, the implementation of these measures will be supported by
the timely market launch of new products. Retailers reacted very positively
to the new Wolford fashion collection. Pre-orders which were placed for the
spring-summer 2011 collection could be increased by 6.8 percent, and
Wolford has already received consistently positive feedback on its
fall-winter 2011/12 collection presented in January 2011.

Against this backdrop, the Executive Board confirms its recently published
forecasts, and expects a rise in sales as well as a significant improvement
in earnings for the entire 2010/11 fiscal year compared to 2009/10.

Overview of sales and financial data for the first three quarters of the
2010/11 fiscal year (May 1, 2010 - January 31, 2011)

in TEUR Q1-Q3 Q1-Q3 Change Change
2010/11 2009/10 absolute in percent
Revenue 120,045 112,641 7,404 6.6 %
EBITDA 15,850 12,123 3,727 30.7 %
EBITDA margin 13.2 % 10.8 % 2.4
Operating profit (EBIT) 9,895 6,227 3,668 58.9 %
EBIT margin 8.2 % 5.5 % 2.7
Result from continuing
operations
(before taxes) 8,931 4,630 4,301 92.9 %
Net result for the period 6,986 3,753 3,233 86.1 %
Earnings per share in EUR 1.43 0.77 0.66 86.1 %
Net cash from operating 12,250 16,524 -4,274 -25.9 %
activities
Gross cash flow*) 13,499 9,762 3,737 38.3 %
Capital investments excluding
financial assets 4,402 7,154 -2,752 -38.5 %
Shareholders' equity 85,299 80,533 4,766 5.9 %
Equity-to-assets ratio 57.1 % 52.5 % 4.6
Net debt 12,892 24,700 -11,808 -47.8 %
Debt/equity ratio (gearing) in % 15.1 % 30.7 % -15.6
Number of employees at period
end
(full-time equivalents) 1,634 1,466 168 11.5 %

• Net profit/loss for the period
  +/- Depreciation, amortization, impairment losses/reversals of
  impairment losses on intangible assets and property, plant and
  equipment
  -/+ Gains/losses on the disposal of property, plant and equipment
  +/- Change in non-current provisions
  = Gross cash flow

The interim report for the first three quarters of the 2010/11 fiscal year
is available on the internet at www.wolford.com under Investor Relations.

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

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

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