OVS : The Board of Directors meeting approved the results of the first quarter 2019 (1 February 2019 - 30 April 2019)

Group results in line with expectations, despite a market that is still contracting

The Board of Directors meeting held in Milan on 19 June 2019 approved the results of the

first quarter 2019 (1 February 2019 - 30 April 2019)

• Market share at 8.0% up 15 bps compared to the first quarter of 2018. The reference market contracted by 4.3%, mainly due to weather conditions that caused a delay in the start of the spring-summer season.
• Net sales of €317.5m, were essentially stable compared to the same period of the previous year (-0.9%).
• Adjusted EBITDA stood at €25.1 m representing 7.9% of net sales. The decrease compared to the first quarter of 2018 (which was in line with 2017, when the EBITDA for the full year was €196.5m), is in line with expectations. The gap in profitability experienced in the 1Q19 compared to the previous year is lower compared to the one reported in the last two quarters of 2018.
• Adjusted pre-taxprofit (PBT) was €7.6m, substantially in line with the fall in EBITDA.
• Perimeter increased by 3 full-formatDOS in Italy and another 13 stores, mainly kids in franchising.
• Adjusted net financial position at €445.4m. The improvement in the financial profile is continuing thanks to a reduction in the level of stock: the gap in indebtedness compared to the same period of the previous year fell from €105.6m in October 2018, to €57.8 m at the end of January 2019, to the current €21.9 m. Following the release of the FY18 Results, discussion with Banks in relation to the Financial Package are proceeding well.

The IFRS16 accounting standard, which is applied for the first time in this quarterly report, has a positive impact of €43.3 million on EBITDA and an impact of €896.1 m on the net financial position. This accounting standard, aiming at recognizing the right of use of a leased asset, doesn't reflect the value of break-up clauses in favor of OVS, present in almost all the contracts. In fact, out of the total amount of liabilities amounting to €896,1m, only about €116m refer to liabilities for rents due before the dates of break-up options.

CONSOLIDATED RESULTS

€ mln	30.04.2019	30.04.2019	30.04.2018	30.04.2018		Chg.	Chg. %
Adjusted	Adjusted		(Adjusted)	(Adjusted)
		IFRS		IFRS
Net Sales
	317.5	317.5		353.0	353.0		(35.5)	(10.1%)
Net Sales*	317.5	317.5	320.5	320.5	(2.9)	(0.9%)
EBITDA	62.0	25.1	(24.5)	30.1	(5.0)	(16.5%)
EBITDA%		19.5%	7.9%	-7.7%	9.4%			(148ppt)
EBIT		9.2	11.3		(39.9)	16.9		(5.6)	(33.2%)
EBIT%		2.9%	3.5%	-12.4%	5.3%			(172ppt)
PBT		2.1	7.6		(26.1)	13.2		(5.6)	(42.5%)
Net Financial Position	1,324.2	445.4	451.2	423.5	21.9	5.2%
Market Share		8.0%		7.9%			+15ppt

Note: in order to provide a clearer representation of the organic business and render it comparable with the current year, the net sales underlying the calculation of the 2018 financial KPIs (*) have been stripped of the sales resulting from the service contract with the former Swiss client Sempione Fashion AG.See page 5 for further information on the accounting impact of the first-time adoption of IFRS 16.

1Q19 Financial Results

1

Statement from the Chief Executive Officer Stefano Beraldo

In a context that is still difficult, our company was able to benefit from the implementation of many projects put in place.

The decision to reduce planned purchases, made possible thanks to timely "in-season" purchasing methods, was decisive for mitigating the effects of the difficult seasonal trend.

The reduction in costs, and in particular in rents, continued according to plan.

1Q19 profitability compared to the one of 1Q18 and 1Q17 is in line with our expectations and it is based on the first part of the current year still characterized by the final phase of promotional initiatives dedicated to the normalization of the level of stock and on a second part which will be characterized by lower markdowns.

Inventory has returned to the levels of the previous year, despite the presence of a wider network, and with a mix of goods characterized by more recent collections that will enable increased marketability and margins in the coming periods.

The net financial position, adjusted to exclude the impact of the first-time adoption of IFRS 16, was therefore characterized by lower cash absorption in the first quarter of this year relative to the previous year, thus further reducing the gap compared to a year ago (the cash flow in the first quarter was approximately €36m better than the same period last year).

Of particular interest for the Group's future prospects, including with reference to its "seasonally adjusted" value, is the strong performance of the new shop-in-shops which have opened in some large hypermarkets. We expect to develop this form of B2B through other openings with Panorama and Finiper in the second half of the year as well as with other groups.

During this initial period, the evolution of our digital transformation process continued: for example, the "OVS ID" project, which gives a digital identity to our clients, was strongly developed. We have reached 810,000 digital cards, out of which about half consists of newly-registered clients.

1Q19 Financial Results

2

NET SALES

Total sales, compared with those net of the sell-in to the former Swiss client, remained essentially stable (down 0.9%), despite the fact that the reference market contracted by 4.3% in the period from February to April, and by 9.4% in April alone, as a result of temperatures which were significantly lower than the seasonal average.

The OVS brand experienced a fall in sales of 2.1%, mainly due to the effect of the kids segment, which is more sensitive to climatic trends. Upim, on the other hand, continued its growth, with sales up by 5%.

As a result of the increased openings in the last 12 months, the franchising network partially offset the contraction in sales of the direct network.

NET SALES: aggregate performance

NET SALES: performance by brand1

320.51

-0.9%317.5

1. Excluding sell-in to Sempione Fashion AG.

1. Excluding sell-in to Sempione Fashion AG.

EBITDA

Adjusted EBITDA, which is representative of the Group's actual operating performance, amounted to €25.1 m, in line with expectations. The impact on profitability generated by increased promotional activities in view of the continuation of the de-stocking which began in mid-2018 was effectively offset by the actions taken on costs.

The gap in profitability experienced in the 1Q19 compared to the previous year is lower compared to the one reported in the last two quarters.

Adjusted EBITDA: aggregate performance1

Adjusted EBITDA: performance by brand1

30.1	25.1
30 April '18	30 April '19
9.4%	7.9%	9.4%	7.6%	9.5%	9.1%
			1. EBITDA margin is calculated excluding the sell-in to
					Sempione Fashion AG

1Q19 Financial Results

3

OPERATING PROFIT AND PRE-TAX PROFIT

Adjusted EBIT and pre-tax profit amounted to €11.3m and €7.6m respectively, mainly reflecting EBITDA performance. The reported results are significantly improving compared to the previous year.

NET FINANCIAL POSITION AND CASH FLOW

At 30 April 2019, the Group's net financial position adjusted for the impact of the mark-to-market and the impact of the first-time adoption of IFRS 16, stood at €445.4m, while the ratio of the average adjusted Net Financial Position to the Last twelve months adjusted EBITDA was 3.1x. This increase is almost entirely attributable to the fall in EBITDA in the second half of 2018 and will result in the application of a spot interest rate of 3.00% + Euribor 3M (previously 2.50% + Euribor 3M).

As anticipated, the recovery of the Group's net financial position continued. After reporting a level of indebtedness of €105.6m higher than the end of the third quarter of 2018, the net financial position reduced the gap to €57.8 m in January 2019 and, thanks to the lower absorption in the first quarter, this gap has further decreased to €21.9m.

The strategy followed, which has led to lower purchases of goods and greater in-season flexibility, combined with lower investments will enable the Group to continue in this direction.

€ mln	30 April 2019	30 April 2018
Net Debt excluding MtM & IFRS16	445.4	423.5
Leverage on EBITDA (*)	3.2x	2.1x
Adjusted Net Debt/EBITDA Adjusted LTM
Leverage on EBITDA (**)	3.1x	1.8x

Adj. Average last 12 months Net Debt/EBITDA Adjusted LTM

1. Net debt does not include the impact arising from the valuation at fair value of the mark-to-market and the IFRS16 first adoption (see overleaf for further information). while the Adjusted EBITDA considered is the one reflecting the last twelve months of Company's performance

1. Net debt considered is the average last twelve month Net Debt not including the impact arising from the valuation at fair value of the mark-to-market and the IFRS16 first adoption while the Adjusted EBITDA considered is the one reflecting the last twelve months of Company's performance

1Q19 Financial Results

4

Key consolidated economic and financial results _ Adjustments and IFRS16 impacts

€ mln	30.04.2019	Adjustments,		30.04.2019		30.04.2018	Adjustments,	30.04.2018		Chg.	Chg. %
Normalizations	IFRS16	Adjusted		Normalization	Adjusted		(Adjusted)	(Adjusted)
		IFRS	& Reclass.			IFRS	s & Reclass.
Net Sales
317.5					317.5		353.0		353.0		(35.5)	(10.1%)
Net Sales*	317.5					317.5	320.5		320.5	(2.9)	(0.9%)
EBITDA	62.0	6.4			(43.3)	25.1	(24.5)	34.6	30.1	(5.0)	(16.5%)
EBITDA%		19.5%					7.9%	-7.7%		9.4%			(148ppt)
EBIT		9.2	8.5			(6.5)	11.3		(39.9)	36.8	16.9		(5.6)	(33.2%)
EBIT%		2.9%					3.5%		-12.4%		5.3%			(172ppt)
PBT	2.1	(0.6)			6.1	7.6	(26.1)	54.3	13.2	(5.6)	(42.5%)
Net Financial Position	1,324.2	17.4			(896.1)	445.4	451.2	(27.7)	423.5	21.9	5.2%
Market Share		8.0%					7.9%				+15ppt

(*) Excluding sell-in to Sempione Fashion AG.

The table shows the results adjusted to represent the Group's operating performance, net of non-recurrent events not related to ordinary operations. Furthermore, this year, following the adoption of the new international accounting standard IFRS16 Leasing, the reported results reflect significant impacts on both the income statement and balance sheet, but without any impact on the Group's cash flow.

IFRS16

In particular, excluding this principle, adjusted EBITDA considers €43.3m in increased net rental costs (out of which €44.7 m are higher rental expenses and €1.4m are lower costs as a result of rental income). This impact is also visible at the adjusted EBIT level, from which, however, €36.8 m of depreciation must be adjusted as a result of the recognition under tangible fixed assets of the rights of use, which can be amortised over the term of the relevant contract. Finally, the adjusted PBT was affected by lower net financial charges of €12.6m related to leasing liabilities recorded from 1 February 2019.

At balance sheet level, the application of this accounting principle has had two main effects: an increase in fixed assets of €887.8 m and an increase in net financial debt of €896.1 m.

This accounting principle requires the entire amount of rent payments to be recorded as a debt, ignoring the value of the right of break-up clauses in our favour, which concern approximately 99% of the existing contracts. Therefore, of the total sum of €896.1 m, a portion of approximately €780m of the debt represents a mere and not certain liability to counterparties for rents due after the dates of the possible withdrawal.

Further Adjustments

Further adjustments to EBITDA in the first quarter of 2019 consist of: (i) €4.7 m of financial income reclassified to the gross margin, in order to reflect the actual impact of the EUR/USD hedge on goods sold in the quarter, (ii) other adjustment elements linked to the accounting treatment of stock option plans (non-cash charge of €0.8 m), and (iii) €0.8 m of other miscellaneous non-recurrent costs, including personnel layoff costs. In addition, there were €2.1 m of cost adjustments at EBIT level relating to the amortisation of intangible assets linked to the PPA ("Purchase Price Allocation") and €9.1 m of revenues adjusted at PBT level relating to exchange rate differences arising from the valuation of items in foreign currencies, including with respect to forward derivative instruments and realised exchange rate differences.

1Q19 Financial Results

5