OPERATIONAL TURNAROUND ACHIEVED – SALES DECLINE SLOWED AND CONSOLIDATED LOSS REDUCED SIGNIFICANTLY Dienstag, 08. April 2014 - 06:45

Pfäffikon SZ, 8 April 2014 – In 2013 Charles Vögele again had to assert itself in a hard fought, and in some key regions shrinking, market. The industry as a whole suffered from the wet, cold weather in the first half-year and the warm winter. The highest priority last year was targeted implementation of the initiated turnaround measures.

Positive EBITDA and significantly lower consolidated loss

Negative market growth in the core markets of Germany and Switzerland held back sales. While gross sales fell back –4.5% on a like-for-like basis in the first half of 2013, they rose by 1.1% in the second half of the year. Net sales at Charles Vögele Group fell by –2.6% to CHF 947 million. After adjusting for exchange rates and floorspace (like-for-like) the fall was –2.5%. However, certain regions, including Benelux and Central & Eastern Europe (CEE) managed to escape the negative trend and outperform the market. Pleasingly, the quality of sales has improved overall. Thanks to the targeted use of price discounts, improvements to the range and greater availability of merchandise, Charles Vögele achieved a positive operating result before depreciation and amortization (EBITDA) of CHF 28 million (2012 CHF –18 million) thus achieving operational turnaround. Operating earnings (EBIT) came to CHF –22 million, compared with a year-back figure of CHF –101 million. The consolidated loss was reduced to CHF –35 million (2012 CHF –111 million). Free cash flow improved from CHF 15 million in 2012 to CHF 27 million. Inventories shrank from CHF 184 million in 2012 to CHF 149 million.

Sales growth in the Benelux and CEE regions

Textile markets in Switzerland (minus 2%), Germany (minus 2%) and the Netherlands (minus 4%) shrank. Subdued consumer sentiment and concerns prompted by rising unemployment in various European countries were the main influences, resulting in intense competition among providers and rising pressure on prices. In Switzerland and Germany Charles Vögele saw sales fall as a consequence. Operating profit before depreciation and amortization (EBITDA) improved in all markets, however. The Benelux Region saw sales go up (like-for-like) 2.9% year-on-year in 2013 - the third annual rise in as many years. Gross sales in the CEE Region went up 0.7% (like-for-like)compared with 2012.

Streamlining of store portfolio

In April 2013 the Board of Directors of Charles Vögele Holding AG decided, based on a detailed review of market prospects at each country organization, to withdraw from Poland and the Czech Republic. The gradual withdrawal is underway and will be fully completed by the middle of 2014 (withdrawal Czech Republic completed in February 2014). By contrast the company is holding on to its presence in the Hungarian market. At the same time Charles Vögele has streamlined the branch network in its other markets and has been rigorous in shedding unprofitable locations.

Management team complete

In August the Board of Directors confirmed Markus Voegeli as Chief Executive Officer (CEO) of Charles Vögele Group. He had already performed the role on an interim basis from September 2012. Markus Voegeli is simultaneously performing his established role as Chief Financial Officer (CFO). The Board of Directors also appointed Beatrice Grünwald as Chief Purchasing Officer (CPO) and Matthias Wunderlin as Chief Sales Officer (CSO). Charles Vögele's Group Management has thus been complete again since mid-November 2013.

Rigorous focus on the turnaround
The highest priority last year was targeted implementation of the initiated turnaround measures.

The main points of focus were as follows:

Improving the performance
Further potential cost savings were realised in all areas thanks to a variety of immediate measures. Improvements within the main merchandise groups and targeted deployment of price discounts increased the quality of sales.

Getting closer to the market
The Group made important progress by improving customer service in the stores and managing merchandise in line with the market. In order to respond effectively to varying market needs, despite the diverse store portfolio, the company is working on optimizing its store format strategy. The aim of the project is to develop clearer format clusters so stores can be managed in a way that keeps us close to the market and customers, and that suits each particular space.

Outlook
Implementation of initiated turnaround measures remains the top priority for the current financial year, with a particular focus on increasing footfall and on further improvements to products, retail space and merchandise management. The main target for 2014 is to stop the decline in sales and reach breakeven at the EBIT level.

Charles Vögele Holding AG’s Annual General Meeting
The Board of Directors of Charles Vögele Holding AG is proposing that shareholders at the AGM on 20 May 2014 elect Meinrad Fleischmann to the Board. Meinrad Fleischmann (1961) graduated from St. Gallen University (lic.oec.) and has been CEO of the Pfister Group since 2007. He is an experienced manager with extensive knowledge of retail, and especially fashion retail, in the Swiss market. Before becoming CEO of the Pfister Group, he was CEO of the Schild fashion company from 2002 to 2006. From 1999 to 2001 he was CEO of ABM and from 1997 to 1999 CEO of Herren Globus, where he started his career in 1987. The existing Members of the Board of Directors of Charles Vögele Holding AG are all standing for re-election at the Annual General Meeting on 20 May 2014.

The Board of Directors is also proposing the creation of conditional share capital in order to maintain flexibility with regard to future financing options. In addition, it proposes the adoption of certain amendments to the articles of association to bring them into line with new company law in Switzerland.

Charles Vögele Group's 2013 Annual Report can be downloaded via the following link: http://ch.charles-voegele.ch/en/investor-relations/publikationen/CharlesVoegele.Press/year/2014

The presentation given at the results press conference will be available via the same link once the conference has finished.

Disclaimer

All statements made in this media release that do not refer to historical facts are future-oriented statements which offer no guarantee of future performance. They are subject to risks and uncertainties including, but not limited to, future global economic conditions, exchange rates, legal requirements, market conditions, activities by competitors and other factors outside the company's control.