OVS S p A : The Board of Directors approved the results for financial year 2020

OVS increases market share and continues strong digital growth

EBITDA at 73 million Euro

• In a year heavily impacted by the pandemic, the clothing market in Italy, excluding e-commerce, fell by 36%. Sales made by OVS through its own network of stores contracted by 27%, outperforming the market.
• Sales made through the ovs.it website increased by 63% during the year, the double of the trend posted by the related channel.
• These trends resulted in a significant increase in market share, which went from 8.1% to 8.4%, in the absence of an increase in sales surfaces.
• Profitability was naturally impacted by lower sales, with quarterly developments fully attributable to lockdown periods. In fact, second and third quarters, less impacted by the closures, were in line with the previous year. The year ended with an adjusted EBITDA of €72.9 million and a negative net result of €4.8 million, after depreciation and amortisation at a full rate despite the reduced use of equipment and plant. Reported net income was positive and equal to €35.1 million, benefiting from €95.1 million of a positive effect on taxes deriving from the fiscal realignment of the OVS and Upim brands.
• The adjusted net financial position at 31 January 2021 was €401 million, with cash absorption caused by the pandemic contained in light of the events, mainly thanks to timely action to contain costs and reduce goods orders.

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• the main business objectives achieved during the year include:

1. improving the navigability of our site and increasing organic traffic in our online channels, which consistently exceeded 4 million visitors per month, and 12 million unique visitors (+43% vs 2019);
2. the successful launch of the Piombo brand, which was introduced to all OVS stores and enabled us to achieve strong productivity growth in the intended spaces;
3. the launch of a platform logic, where OVS acts as a brand but also as a physical and virtual location, capable of increasingly satisfying the diverse lifestyles of the extensive customer base. Also through the introduction of complementary brands, each with its own precise positioning. Grand & Hills, young men and boys, outdoor casual; Piombo men, Italian style smart casual; Everlast, men/women, sport casual. In addition to these brands, for which we manufacture the entire range, we invited some well known international brands, such as Gap, to our website and to a number of stores, to form part of our marketplace. Many other brands that combine effectively with our own offer will follow;
4. upgrading our portfolio of stores, with the "Balanced Store" campaign which, in light of the pandemic, has seen an acceleration in the process of exiting from stores without adequate profitability parameters; in Italy, twenty-six locations have been definitively abandoned and four repositioned or converted into other Group brands, with significant advantages in terms of profitability. Of the thirty-four withdrawals in 2020, 85% of the ensuing negotiations concluded with the maintenance of positions thanks to average rent reductions of 35%;
5. Thanks to the OVS "Ecovalore" project, the 2020 Circular Fashion System Commitment Report of the Global Fashion Agenda, has selected our Group among the 10 most relevant and innovative best practices for the implementation of the product circularity index. The commitment to sustainability is increasingly central and the objectives achieved in 2020 are numerous: from the use of organic or certified cotton which accounted for 85% of our offer, thus allowing an estimated saving of 25 billion liters of water, to the gradual increase in recycled materials such as polyester, which made it possible to avoid the dispersion of over 20 million plastic bottles.
6. purchasing the Stefanel brand, further enriching the multibrand approach, in order to exploit our sourcing synergies with a view to further diversifying positioning and optimising the use of commercial spaces.

FY20 Financial Results

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Key Consolidated Economic and Financial Results

The table shows the results reported and adjusted to represent the Group's operating performance net of non- recurring events, which are unrelated to ordinary operations. The adjusted results therefore enable a uniform analysis of performance in the periods indicated.

For details of non-recurring items unrelated to the core business, see page 13 of the document.

€ mln	31.01.2021	31.01.2021	31.01.2020	31.01.2020		Chg.	Chg. %
	Reported	Adjusted		Reported	Adjusted		(Adjusted)	(Adjusted)

Net Sales	1,017.8	1,018.5	1,374.8	1,370.1	(351.6)	(25.7%)
Gross Margin	563.4	565.3	758.0	778.2	(212.9)	(27.4%)
GM%		55.4%	55.5%		55.1%	56.8%			(130ppt)
EBITDA	205.1	72.9	293.0	156.3	(83.3)	(53.3%)
EBITDA%	20.1%	7.2%	21.3%	11.4%
EBIT	(1.7)	14.0	(84.0)	97.4	(83.3)	(85.6%)
EBIT%		(0.2%)	1.4%		(6.1%)	7.1%

PBT	(78.7)	(8.0)	(134.4)	77.9
Net Income	35.1	(4.8)	(140.4)	57.7

(85.8) n.m.

(62.5) n.m.

Net Financial Position	1,315.5		401.1	1,191.4		309.9		91.2	29.4%
Market Share		8.4%			8.1%				+33ppt

NB: The main differences between adjusted and reported values refer to the application of IFRS 16 and the tax benefit arising from the fiscal realignment of the brands. See page 13 for more information.

New campaign PIOMBO men

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Statement from the Chief Executive Officer, Stefano Beraldo

A year has ended that has led to exceptionally unfavourable conditions for our sector and the companies that operate in it. In this context, our company has shown strong resilience, demonstrating its positioning, determination and strategic vision, which are solid foundations for future growth.

We are aware that the events we have undergone have irreversibly accelerated trends that were already well under way. In particular: increasing consumer attention to issues of sustainability and the circular economy; greater importance of digital sales channels; more interest in clothing for domestic use or activewear to the detriment of office or formal clothes, as well as the transition from a "fast" fashion approach, aimed at frequently changing clothes, towards a greater focus on the quality and durability of one's wardrobe.

We believe that the attention given to natural fibres, such as certified organic cotton or Better Cotton Initiative, which now characterises 85% of our range (with our goal to reach 100% in 2021), low water consumption denim and the many other achievements relating to sustainability, together with our positioning for families, place us among the most credible brands in Italy in this field in terms of approach.

With regard to the digital evolution, many goals have been achieved, both where operations and customer services are concerned. We also believe that the "OVS platform" strategy, characterised by the introduction of new brands, particularly "international icons" or "unexpected discoveries", which will occupy an increasing part of our website, and sometimes stores, and effectively combine with our positioning, will allow us to be highly scalable. Just two weeks after Gap's inclusion in our site, early indications are very promising, both in terms of increased traffic and online sales.

Finally, the emergence of "softer" dressing and less formal clothes but instead simpler garments such as sweatshirts, t- shirts and jumpers, not to mention the explosion of pyjamas, reinterpreted as key homewear, see us as the natural first choice in Italy, from which we've certainly been able to draw advantage.

These factors contribute to explaining the significant growth in market share in 2020, from 8.1% to 8.4%, above previous years' achievements, despite no increase in floor space, rather, a reduction of 9 DOS in Italy. We believe that, given the external conditions, the results obtained in terms of both sales and profitability are satisfactory.

Our offline channel sales alone were down by 9 percentage points less than the figure for this channel. Ovs.it grew 63%, as anticipated, approximately twice the market rate.

With EBITDA of 72.9 million, we managed to meet the redefined targets in light of the first lockdown, albeit facing a fourth quarter characterised by further unexpected and severe restrictions, such as the closure of shopping centres during the weekends and about 30% of opening hours lost compared to the same quarter of the previous year. Despite the unexpected restrictions, the fourth quarter contributed

32.8 million to EBITDA. Overall, these results have been achieved through immediate and effective cost containment measures, made possible also as a result of our Company's solidity and credibility, especially with regard to rents.

Further comforting the future outlook is that during periods of non-store closures, despite general consumer caution and travel restrictions, sales were at or above those of the previous year - a further sign of our strong positioning.

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Sales lost during the first lockdown, together with goods already procured and paid, resulted in a loss of cash flow greater than the reduction in profitability, causing an increase in working capital. However, the effective slowdown in purchases planned for the second half of the year, combined with the good sell-out recorded by those spring goods which, due to their weight and colour, we decided to display for sale in the autumn, enabled us to limit cash absorption, thus achieving a better financial position than expected.

1. Priorities

We believe that there are significant growth opportunities ahead, involving a strategy that enhances our specific characteristics and is in line with structural trends in the market. We intend to address growth in an ecosystem logic, through the development of various channels, from physical to digital to B2B, with our own and new brands - some owned, others licensed and others granted in concession. The Ovs.it website will be gradually transformed into a marketplace, always duly fortified by products developed and manufactured by us but hosting selections of well-known or lesser-known brands, always complementing our offering, and characterised by a clear positioning. Physical stores will also be inspired by the same logic, in order to generate more interest and traffic into OVS.

We still see opportunities to grow market share in the brick-and-mortar channel, where penetration in Italy is still lower than that of leading groups in their domestic markets in Europe. Growth will mainly come from taking over existing companies or existing market shares, rather than through pure competition to take new market shares. The acquisition of 18 large commercial spaces previously held by Auchan, for example, is in line with this approach. Spaces already used for clothing, with related goodwill, mainly transformed into Upim stores, a brand where we are particularly suited to replacing the clothing sales already generated in the same spaces, due to its characteristics. Otherwise the takeover of spaces already launched and previously held by companies, including our competitors, in small towns, where their positioning too young/fashionable is incompatible with local consumer demand. Of course, bricks-and-mortar development will only take place in locations where real estate has rationalised what is happening and understands that the rent required must be compatible with the new equilibrium. This is what is happening in general. Ceasing to trade in locations that were unprofitable owing to the rent or a change of commercial conditions will also continue with careful resolve. We expect that after 37 DOS closures in 2020, others will follow after the six notices to quit that are active to date. Many will be relocations, with moves to stores offering better commercial and rental conditions.

EVERLAST: one of the brands included in OVS' offer

Market consolidation may occur through agreements or acquisitions of companies interested in seeking synergies or interested in divesting their business. Small-format growth will also continue in secondary commercial areas with less coverage, using the various formats available to us. We believe that as a result of the various lockdowns, and the reduced appetite for mobility in the foreseeable future, these formats, which have already demonstrated better than average trends and, in some cases, even absolute growth compared to 2019 levels, will play an increasingly important role in the geography of clothing consumption. Upim is perfectly placed in this context: its functional offering of quality clothing, at the right price, makes it correctly positioned to seize opportunities in neighbouring areas and small municipalities, where international brands are less suited to the needs of local customers, and the numerous multibrands are inefficient. Acquisitions will also cover brands that combine effectively with our strategy. The acquisition of Stefanel is in line with this approach. Although its position is above current ones, it is still a service product, able to meet the needs of different customers who, whilst often already shopping with us, are nevertheless willing to spend more on average. The brand will benefit from production synergies that allow us to lower production costs for the same quality offered, with a price reduction compared to the previous positioning.

FY20 Financial Results

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