OVS S p A : The Board of Directors approved the first semester 2021 results

OVS's market share continued to grow strongly

Record EBITDA and cash generation in the second quarter

• Market share reached 9%, up by nearly 100 bps in a year, due to the excellent performance of the like-for-like store network and online sales.
• Net sales for the quarter up by 35.4% on the same period of 2020 and higher than 2019 by 11%, even though restrictions were still in place during some weekends in May. Half-year net sales came in at €599.2 million, up 59.5% on 2020. Online sales through the ovs.it website increased by 30% compared with 2020 and by 77% compared with 2019. The loyal customer base has now reached 4.7 million (+12% in one year), while numbers of customers purchasing both online and on the physical channel continue to grow.
• Adjusted EBITDA for the second quarter was €54.5 million, up 50.9% compared with €36.1 million in 2020 and up 45.7% compared with €37.4 million in 2019. The excellent sales performance, good control of costs and careful management of mark-downs resulted in record EBITDA in the second quarter. Adjusted profit before tax for the quarter was also positive, at €33.5 million.
• The adjusted net financial position was €318.2 million, markedly lower than at 31 July 2020, but also €95.4 million lower than the pre-pandemic figure of 31 July 2019. The second quarter of the year saw cash generation of €75.7 million, in addition to €81 million deriving from the capital increase completed in July (giving a total of €156.7 million).

CONSOLIDATED SECOND-QUARTER RESULTS

€ mln	2Q 2021	2Q 2020	Chg.%
Adjusted	Chg.
	Adjusted

Net Sales	369.7	273.1	96.6	35.4%
Gross Margin	217.8	166.3	51.5	30.9%
GM%		58.9%		60.9%			(200ppt)
EBITDA	54.5	36.1	18.4	50.9%
EBITDA%	14.7%	13.2%			+151ppt
EBIT	39.9	21.2	18.7	88.2%
EBIT%		10.8%		7.8%			+303ppt
PBT	33.5	15.4	18.0	116.7%
Net Financial Position	318.2	410.6	92.5	22.5%
Market Share	9.0%	8.1%			+96ppt

New Piombo womenswear collection

NB: in order to give a clearer picture of the Group's performance, the data in this document have been adjusted. In particular, the adjusted figures exclude the accounting effects of IFRS16. See below for more information.

1H21 Financial Results

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Statement from the Chief Executive Officer, Stefano Beraldo

We are very pleased with the second quarter results, which are the best ever for our Group in terms of profitability and cash generation.

Sales grew by 35% in the last quarter compared with 2020, and, even more significantly, by 11% compared with 2019, despite a further 4.7% contraction in the market in the same period. This helped recover a part of the sales lost due to the lockdowns in the first three months of the year.

All this resulted in a further increase in market share, which has now reached 9%: OVS was also the fastest-growing group in terms of market share in the last quarter, including compared with international players operating only via digital channels, demonstrating that multi-channel remains a key factor in the market in which we operate and that our Group is benefiting from this.

There was a 12% increase in loyal customers, whose average spend per purchase is around 18% more than the ones not taking part to our loyalty program, and who now account for more than 40% of our sales. The number of customers who regularly buy both online and offline also grew.

The sales performance resulted in impressive EBITDA and cash generation in the May-July period: EBITDA, at €54.5 million, was up 51% compared to 2020 and 46% compared to 2019; cash flow amounted to €75.7 million over the same period, in addition to €81 million deriving from the capital increase; this cash generation allowed the Group to close the period with a €95 million improvement in its net financial position compared with the pre-pandemic figure of July 2019. It is therefore clear that, excluding the impact of capital increase, we have fully absorbed the cash loss caused by the 2020 closures, effectively bringing forward the expected deleveraging, and we now have sufficient resources to explore all the M&A opportunities offered by the market in the short and medium term.

The main final financial figures confirm that the elements of discontinuity implemented in the Group's strategy over the last period are continuing to produce increasingly tangible results.

The new third-party brands included in OVS's commercial offering are attracting new customers, enabling both excellent cross-selling with the Group-owned brands and better stock management in some product categories. Some of these, particularly in womenswear, performed exceptionally well, with sales per square metre also doubling compared with the average, making this the best performing segment over the quarter.

The Group's own brands are also enriching substantially the commercial offer, allowing the Group to cover higher positioning in terms of quality and price, and therefore to increase sales density. A clear case of success in this context is the Piombo brand, launched last autumn/winter in the menswear segment, which also performed very well during the spring/summer period. This year's autumn/winter collection saw the launch of the Piombo brand for womenswear, with early signs pointing to success in this category as well.

The Upim business unit has also successfully pursued its expansion plan, increasing its presence with a local approach, both providing a complete local offering for day-to-day needs, and giving entrepreneurs with multi-brand stores, whose market share decreased also last year, a valid business alternative.

1H21 Financial Results

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In addition, the new Stefanel collection was recently launched. The heritage of the brand, which is well-known in Italy and abroad, has been maintained, but the collection has been revised to make it more contemporary, with prices that are more than 30% lower, while top quality has been maintained thanks to the Group's sourcing capacity.

We believe that the innovations introduced in the commercial offering, including those described above, are the foundations of our Group's new positioning: we are a multi-channel, contemporary, accessible platform offering easy- to-wear fashion that is mainly aimed at Italian families, sustainable and far removed from the concept of fast fashion. Our Group is not only a traditional, vertically integrated retailer, but now has one of the largest and most well- structured supply chains in Europe, with unmatched know-how in the kids segment (market share in Italy has reached 22.2% in terms of value and 31.3% in terms of quantity).

The digitalisation process continues at a rapid pace, increasing the Group's flexibility, reducing costs and enhancing operational efficiency. To give just a few examples, during the first half of 2021: (i) the option of accessing "the entire product range in one click" was extended to another 250 franchise stores, allowing items not available in the stores to be sold in-store via i-pad; (ii) the first phase of the "Operational platform & order manager" was launched. Once it has been completed by the end of the year, this will allow real-time access from all the digital platforms to all of OVS's stock, effectively allowing, among other things, the effective use of stores as a hub for the distribution of items in the region; (iii) the new PLM ("Product Lifecycle Management") was released, enabling all product data to be integrated, from the R&D phase to the shipping phase; and (iv) the project to review the distribution model in stores also continues. Thanks to predictive algorithms, this will improve product distribution criteria by capturing customer socio- demographics.

Sustainability plays a central part in all the digitalisation projects: together with multi-channel services, they enable CO2 emissions and the consumption of natural resources to be reduced, as suppliers and the goods purchased in the various supply countries are better controlled, and travel and inbound and outbound goods shipments are reduced and optimized. This is also due to robust control of the entire supply chain: as a result of the very detailed information required to collaborate with our Group, it recently achieved first place on the Fashion Transparency Index, which analyses the performance of 250 of the world's leading fashion brands and retailers in terms of transparency.

Digitalisation and the intrinsic features of our commercial offering (less "fast fashion" and more "sustainable" and "cross-season") are enabling our Group, as was also the case last year, to manage effectively some inevitable delays caused by the pandemic in the delivery of goods in certain supply countries and the inefficiencies in goods shipments worldwide: we therefore do not believe that the current context will have a significant effect on the evolution of the Group's top line and profitability as this year continues.

We would like to thank our shareholders for the success of the capital increase, which was completed on 30 July of this year and was fully subscribed. We believe that the trust placed in us is valid proof of your endorsement of the strategies we have implemented and we are sure that these will create value in the short and medium-to-long term.

1H21 Financial Results

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CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2021

€ mln	31.07.2021	31.07.2021	31.07.2020	31.07.2020		Chg.	Chg. %
	Reported	Adjusted		Reported	Adjusted		(Adjusted)	(Adjusted)

Net Sales	599.2		599.2	375.1		375.7	223.5	59.5%
Gross Margin	351.1		350.2	216.7		222.9	127.4	57.2%
GM%		58.6%		58.4%		57.8%		59.3%			(86ppt)
EBITDA	160.8		60.1	48.1		2.1	58.1	2,826.2%
EBITDA%	26.8%		10.0%	12.8%		0.5%			+949ppt
EBIT	56.9		31.7	(55.8)		(26.5)	58.1	219.6%
EBIT%	9.5%		5.3%	(14.9%)		(7.0%)			+1,233ppt
PBT	27.0		20.0	(97.6)		(37.0)	56.9	154.0%
Net Income	17.0		13.0	(75.9)		(29.7)	42.7	143.6%
Net Financial Position	1,205.9		318.2	1,303.2		410.6	92.4	22.5%
Market Share		9.0%			8.1%				+96ppt

NB: in order to give a clearer picture of the Group's performance, the data in this document have been adjusted. In particular, the figures exclude the accounting effects of IFRS 16. See below for more information.

New Stefanel collection

1H21 Financial Results

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NET SALES

Total sales for the first half of the year came in at €599.2 million, up 59% compared with the same period of 2020. The Group outperformed the market, which nonetheless recorded an encouraging trend, recovering by 34.7% over the period compared with 2020. The second quarter of the year reported sales up by 11% vs. the pre-pandemic level of the second quarter of 2019.

Sales increased in all distribution channels and for both brands, with Upim registering more marked growth due to the greater weight of the franchise channel, mainly dedicated to the kids segment and therefore less subject to restrictions in the first few months of 2021.

NET SALES: aggregate performance

NET SALES: performance by brand

Dos&Siti Web

Franchising&Marketplace

+59%	599.2	+57%
375.7		472,4	+69%
			487,1	300,5	126,8
				75,2
308,9
			112,2
	66.9
31 July 2020	31 July 2021		31 July 2020 31 July 2021		31 July 2020 31 July 2021

EBITDA

In the second quarter, the Group achieved its highest ever EBITDA of €54.5 million. Thanks to this performance, together with the strong recovery in the first quarter, EBITDA for the first six months was €60.1 million, up €58.1 million compared with 2020, and substantially in line with the pre-pandemic figure for 2019 (€62.5 million). Both brands contributed to this result, with OVS increasing by €50.1 million and Upim by €8 million in the first six months of the year compared with 2020.

EBITDA: performance by brand

1H21 Financial Results

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