YEAR-END REPORT SEPTEMBER 2012–AUGUST 2013

STORE EXPANSION AND INVESTMENTS IN FUTURE PROFITABLE GROWTH

FOURTH QUARTER, JUNE–AUGUST 2013

• Group net sales amounted to SEK 219.6 M (211.2). The number of stores totaled 128, compared with 117 in the year-earlier period. Seven stores were added during the period.
• Gross profit margin was 49.9% (55.3).
• Profit before depreciation, amortization and impairment amounted to SEK 8.4 M (4.0).
• Profit after tax totaled SEK 4.6 M (9.5).
• Earnings per share before and after dilution totaled SEK 0.57 (1.17).

FISCAL YEAR SEPTEMBER 2012–AUGUST 2013

• Group net sales amounted to SEK 844.1 M (823.5).
• Gross profit margin was 54.8% (57.0).
• Profit before depreciation, amortization and impairment amounted to SEK 46.5 M (59.5).
• Profit after tax totaled SEK 23.4 M (43.0).
• Earnings per share before and after dilution totaled SEK 2.88 (5.43).
• The Group's long-term dividend policy is to distribute 50% of net income, if the company's situation allows. In light of the acquisition of the accessories chain Deco Bags comprising 27 stores and that the Board foresees further potential for more stores, particularly in the Stockholm area, the Board proposes a dividend of SEK 0.25 per share (1.50).

SIGNIFICANT EVENTS DURING THE QUARTER AND FISCAL YEAR

• The Group’s like-for-like sales increased 4%, thus outperforming the market according to available sector statistics.
• As planned, seven new stores were opened in the Swedish market during the fourth quarter.
• On August 26, 2013 a contract was signed for the acquisition of the accessories chain Deco Bags comprising 27 stores, with transfer to occur on October 1, 2013. As a result of the acquisition, the Group can achieve its long-term goal of sales exceeding SEK 1 billion in 2013/2014. The results for the fourth quarter include SEK 1.8 M comprising external fees related to the acquisition.
• An e-commerce project was started, with launch scheduled for spring 2014.

SIGNIFICANT EVENTS AFTER THE QUARTER

• The Group’s like-for-like sales trend in September was weak and down 9% year-on-year. In Sweden, sales declined 7% compared with the Swedish market, which was down closer to 6%. Autumn sales had a sluggish start due to the warm weather, which particularly affected the performance of the Rizzo shoe chain.
• The Board has formulated new goals for the Group through to the end of the financial year 2015/2016.
  - Annual net sales of not less than SEK 1.2 billion, corresponding to average annual growth of 12.5%.
  - Achieve and maintain a sustainable EBITDA margin of not less than 8%
  - Have a long-term, average equity/assets ratio in excess of 40%

“The year was characterized by store expansion and investments in future profitable growth. We have again outperformed the market sales trend in like-for-like sales and completed the acquisition of an accessories chain, where we are now working on integration to rapidly realize the full effects and increased profitability,” says Susanne Börjesson, CEO, Venue Retail Group.

CEO’S COMMENTS ON PERFORMANCE

With the conclusion of the fourth quarter, we closed a year characterized by aggressive investment for the future. We opened seven stores during the quarter and announced the acquisition of Deco Bags with 27 stores in southern and western Sweden. The acquisition strengthens our market position and gains the company a significantly improved geographical distribution, primarily, for the Accent chain.

During the quarter, like-for-like sales increased 4%, and 2% for the full year, which again underlines that Venue Retail Group’s chains outperform market trends. Generally, sales have trended as expected, both for new and existing stores, however, sales of autumn products were extremely slow in August due to the warm late summer weather. In addition, we also have several new stores that were added in the latter part of the quarter, which have yet to reach full rates of income generation while personnel and rental expenses opened at these levels directly.

Gross profit margin totaled slightly less than 50%, impacted by a weak NOK and a relatively higher proportion for discount sales as a consequence of the slower start to the autumn. Furthermore, the high levels of the preceding year were positively impacted by 2.5 percentage points a reversal of calculated costs related to inventories, thereby compromising any comparison between the quarters.

In my assessment, we have a favorable balance with regard to the company’s operating expenses. Our aggressive investment in store expansion comprising 12 new stores during the year, and their associated costs, in combination with a weak market means that our operating profit for the full year totaled SEK 29.4 M (43.7). Naturally, I am less than satisfied with the outcome, but we are following a clear plan to strengthen our position. Outperforming the market in terms of sales over a long period is evidence that the strategy is working.

Preparing for future profitable growth
During the current fiscal year, we will continue to invest in profitable growth through the rapid integration of the newly acquired stores and through increasing sales in the existing store portfolio. Furthermore, we have identified still more potential for additional stores, primarily in the Stockholm area.

I am convinced we will have to live with a market where there is generally fewer visitors to shopping malls and stores – which means that higher average purchases and conversion rates are increasingly key factors and a path to increased sales. Providing an outstanding customer experience will require upgraded stores, more customer-focused employees and, naturally, an attractive range. Therefore, during the year, we have invested in updating the stores, a new more efficient intranet, leadership and sales training for store managers and sales personnel as well as more frequent customer-experience measurements in stores where we have also invested in floor traffic counters. These measures are aimed at generating increased sales moving forward.

The acquisition of Deco Bags was recently completed and I envisage a rapid integration process to realize the synergies as quickly as possible. In parallel, we are continuing to develop our concept, range and take even better care of our customers. In short – first and foremost develop and streamline operations with a focus on increased profitability.

Stockholm, October 10, 2013

Susanne Börjesson
CEO, Venue Retail Group
   

The information in this report is such that Venue Retail Group is obligated to publish under the Swedish Securities Market Act.
The information was submitted for publishing on October 10, 2013 at 3:00 p.m. (CET).

FOR FURTHER INFORMATION, PLEASE CONTACT:
Susanne Börjesson, VD, Tel: +46 (0)8-508 99 253 or +46 (0)701-90 11 53
Staffan Gustafsson, CFO and Deputy CEO, Tel: +46 (0)8-508 99 244 or +46 (0)70-889 92 44
Mats Persson, Chairman of the Board, Tel: +46 (0)8-545 133 52 or +46 (0)70-511 46 36