OVS : The Board of Directors approved the first semester 2019 results. Extension of Credit Facilities

Results in line with expectations. Excellent cash generation.

Extension of Credit Facilities to March 2023 has been approved.

• Market share at 8%, up slightly compared with the first half of 2018.
• Net sales for the first half were €650.6 million (down 2.4% compared with the previous year). Like-for- like sales were down 4%. Market still affected by unusual weather conditions.
• Adjusted EBITDA of €62.5 million, in line with expectations and reflecting the final phase of extraordinary promotional activities launched in 2018. Reported EBITDA was positive for €137.3 million.
• Network increased by 23 stores, including 13 DOS in Italy, mainly small formats.
• Adjusted net profit was €16.8 million. The reported figure was €5.3 million.
• Adjusted net financial position was €413.6 million, an improvement of €14 million on 31 July 2018.
• The process related to the extension of Credit Facilities is finalized.

CONSOLIDATED RESULTS

€ mln	31.07.2019	31.07.2019		31.07.2018	31.07.2018		Chg.	Chg. %
Reported	Adjusted		Reported	Adjusted		(Adjusted)	(Adjusted)
Net Sales
650.6	650.6		720.1	720.1		(69.5)	(9.7%)
Net Sales*	650.6	650.6	666.4	666.4	(15.7)	(2.4%)
Gross Margin	364.6	374.8	392.8	405.4	(30.5)	(7.5%)
GM%		56.0%	57.6%	58.9%	60.8%			(322ppt)
EBITDA		137.3	62.5		22.6	81.1		(18.6)	(22.9%)
EBITDA%		21.1%	9.6%		3.4%	12.2%			(256ppt)
EBIT	30.6	34.2	(8.6)	54.2	(20.0)	(36.9%)
EBIT%		4.7%	5.3%		-1.3%	8.1%			(288ppt)
PBT	10.8	25.2	13.4	46.3	(21.1)	(45.5%)
Net Income	5.3	16.8	5.1	32.8	(15.9)	(48.6%)
Net Financial Position	1,266.7	413.6	432.2	427.6	(14.0)	(3.3%)
Market Share	8.0%		8.0%			+3ppt

Note: in order to give a clearer picture of the Company's performance, the data in this document have been adjusted. In particular, the income statement and the Balance Sheet values reported at 31 July 2019 reflect the adoption of IFRS 16. See overleaf for more information.

The net sales used in the calculation of the financial KPIs (*) in 2018 do not include sales deriving from the cooperation agreement with the Sempione Fashion AG Group.

1H19 Financial Results

1

Statement from the Chief Executive Officer Stefano Beraldo

The Group's profitability for the first half of the year was in line with expectations, despite the fact that - as reported when the first-quarter 2019 results were published - the target market contracted significantly in April and May due to a delay in the start of the spring-summer season. The weather then stabilized in June, and Group sales outperformed their target market.

Actions to restore appropriate stock level conditions are paying off. The cautious purchasing policy that characterized the first half of 2019 led to a significant cash generation. Net cash flow improved by €72 million in the first six months compared with the same period a year earlier: in particular, in the second quarter, cash flows were positive by €31.8 million, a performance never achieved in the second quarter since the Group's listing.

First half EBITDA reflected the final phase of the "exceptional" promotional activities that characterized the OVS brand in the last 12 months. Starting from July, the recovery in margins expected for the second half already started.

The strategy of lowering the break-even, due mainly to lower store rental costs, and focusing on cash generation are now full in force.

There are numerous activities already put in place in order to allow the company to be even more reactive and fast: sourcing with new, local suppliers for goods most influenced by the fashion factor and weather conditions; new agreements with suppliers in order to better manage in-season purchases; better management post-distribution in stores; and new stock management between the various business units; and,.

1H19 Financial Results

2

Statement from the Chief Executive Officer Stefano Beraldo

In September, we launch a communication campaign dedicated to the beauty of the diversity of ways of being. We believe our customers will appreciate the great work done on the product, which involved extensive modernisation, in menswear under the stylistic direction of Massimo Piombo. At the same time, the newly opened and restructured stores, thanks to their new natural elements, including floral references and wood, will welcome customers in an even more comfortable environment.

The Upim brand has demonstrated its full ability to develop both in urban centres and in suburbs. The results seen so far, including in small centres and shop-in-shops within hypermarkets, point towards a clear brand evolution targeting needs of families. In particular, the excellent performance achieved in the hypermarkets has led to an escalation in contacts.

Digitalisation continues with a view to improving operations, and is also the driving factor in cutting-edge services for our customer. The personal digital shopper initiative, "OVS ID", and many other initiatives that will take place in the second half of the year, are tangible testimony to this.

Sustainability improvement initiatives continue. Specifically OVS was the first Italian company to support the Better Cotton Initiative (BCI), the international organization aimed at radically improving the impact of the global cotton industry. BCI placed OVS among the top 15 most virtuous businesses in the world (out of over 100 associated companies), for having helped to increase purchasing from more sustainable crops. In this regard, by the end of next year, 100% of the cotton used in the OVS collections will be sustainable and will include organic cotton and cotton from BCI or recycled crops. This is a fundamental objective for the entire Group, which, in terms of environmental impact, will correspond to a saving of around 14 billion litres of water and a significant reduction in pesticides (15 tonnes) and CO2 (around 6,000 tonnes).

1H19 Financial Results

3

NET SALES

Total sales in the first half were €651 million, down by 2.4% compared with the same period of 2018. They were adversely affected, as anticipated, by the sharp market contraction in April and May, significant in terms of both volumes sold and margins, and by lower purchases of goods, mainly OVS-branded, which, while it helped to reduce inventory, also inevitably resulted in lower sales.

Franchising network sales increased by 8.9%, partly due to the greater number of openings in the last 12 months. Direct network sales made a significant contribution to reducing stocks.

NET SALES: aggregate performance 1

NET SALES: performance by brand1

666

651

1. Excluding sell-in to Sempione Fashion AG.

EBITDA

As planned, EBITDA in the first half of 2019 was characterised by the final phase of the exceptional promotional activities marking out the OVS brand in the last 12 months. These activities came to an end in July and the recovery in margins expected for the second half of the year had already begun in August and it is proceeding.

Adjusted EBITDA was €62.5 million, down compared with the first half of the previous year, both in absolute terms and as a proportion of net sales. This decrease, due in large part to non-recurring aspects, characterised the OVS brand. Upim's result was unchanged, adversely affected only by the difficult months of April and May.

The decrease in margins was partially offset by the cost-saving activity that began last year: although the promotional activity was exceptional, ending in the first half of 2019, the revision of the Group's break-even point will continue during the year and its results will remain effective also in the future.

EBITDA: aggregate performance

EBITDA: performance by brand1

12.2% 9.6%Margin in % 12.1% 9.2%12.6% 11.3%

1. EBITDA margin is calculated excluding the sell-in to Sempione Fashion AG

1H19 Financial Results

4

NET RESULT

The adjusted net result was €16.8 million, down €15.9 million compared with the first half of 2018. The difference is attributable to the decrease in adjusted EBITDA, partially offset by lower taxes. The reported result for the period was €5.3 million, in line with the first half of 2018. However, it should be noted that it underwent a significant negative impact in accounting terms of €8.8 million due to the first application of IFRS 16.

STATEMENT OF CASH FLOW SUMMARY

The adjusted EBITDA performance, which was down compared with the previous year, was comfortably offset by the performance in terms of cash flows: operating cash flow in the first half of 2019 was up by approximately €62 million, a marked improvement compared with the same period of the previous year.

In addition to the absence of asset write-downs that characterised the first half of 2018, a significant contribution to this performance was due to good management of working capital, particularly inventory: despite the seasonal component of the business, which is historically characterised in the first half by an increase in inventory due to the arrival of the autumn/winter collection, stocks were €12.1 million lower than at 31 July 2018.

Net cash flow before accounting for derivatives and IFRS 16 improved by €71.9 million. In the second quarter of 2019, the Company generated €31.8 million in cash (the most since the Group's listing), compared with approximately €4 million absorbed in the same period in 2018. As a result, the net financial position was lower than at 31 July 2018.

€mln	31 July '19
EBITDA Adjusted	62.5
Adjustments1	(2.3)
Change in Trade Working Capital	(40.5)
Other changes in Working Capital	(19.5)
Capex	(19.9)
Operating Cash Flow	(19.6)
Financial charges	(8.1)
Others	(10.1)
Net Cash Flow

31 July '18

81.1

(58.5)

(60.3)

(11.3)

(32.3)

(81.4)

(7.6)

(20.7)

excl derivatives MtM and IFRS 16

(37.8)

(109.7)

Note:

1 For further details, please see the appendix;

The capital changes underlying the calculation of cash flow by the indirect method do not reflect the adoption of IFRS 16.

1H19 Financial Results

5