MQ HOLDING – SECOND QUARTER 2019/2020

WEDNESDAY 18 MARCH 2020

AGENDA

Financial information- Second quarter 2018/2019

- First six months 2018/2019

The six months in summary

Launch of MarQet

Range offering

Development of online shopping

Actions

Questions

SECOND QUARTER 2019/2020DECEMBER 2019–FEBRUARY 2020

THE QUARTER IN SUMMARY

Weak quarter with a sharp decrease in sales

MQ

The fall in sales is mainly due to weaker development of the women’s range.

The vital sales and profitability in December are decreasing due to the high campaign intensity and deeper price cuts.

Joy

Lower discounted sales where the new spring products have been well received by our customers

Strong gross profit for the quarter due to lower discounted sales and therefore a dramatic improvement in the gross margin.

The structural action programme is proceeding to plan and has boosted results by SEK 11 million during the quarter.

The effect of coronavirus on our business to date has primarily manifested in minor delays in the supply chain. Naturally we are still unable to get an overall picture of the effect coronavirus will have on the market, but coupled with uncertainty at a macroeconomic level it is very likely to influence consumer behaviour.

NET SALES Q2

NETSALES

TOTAL SALES LIKE-FOR-LIKE SALES

GROSS MARGIN Q2

GROSSMARGIN

GROSS MARGIN GROSS MARGIN

OPERATING EXPENSES Q2

OPERATING EXPENSES

OPERATING PROFIT/LOSS Q2

OPERATING PROFIT/LOSS

OPERATING PROFIT/LOSS

OPERATING MARGIN

OPERATING PROFIT/LOSS

OPERATING MARGIN

OPERATING MARGIN

PROFIT/LOSS FOR THE PERIOD Q2

PROFIT/LOSSFOR THE PERIOD

CASH FLOW Q2

CASH FLOW FROM

OPERATING ACTIVITIES

NET DEBT

NET DEBT

NET DEBT/EBITDA

FIRST SIX MONTHS 2019/2020SEPTEMBER 2019–FEBRUARY 2020

NET SALES, THE FIRST SIX MONTHS

NETSALES

TOTAL SALES LIKE-FOR-LIKE SALES

GROSS MARGIN, THE FIRST SIX MONTHS

GROSSMARGIN

GROSS MARGIN GROSS MARGIN

OPERATING EXPENSES, THE FIRST SIX MONTHS

OPERATING EXPENSES

OPERATING PROFIT/LOSS, THE FIRST SIX MONTHS

OPERATING PROFIT/LOSS

OPERATING PROFIT/LOSS

(

OPERATING MARGIN

OPERATING PROFIT/LOSS

OPERATING MARGIN

OPERATING MARGIN

PROFIT/LOSS FOR THE PERIOD, THE FIRST SIX MONTHS

PROFIT/LOSSFOR THE PERIOD

CASH FLOW, THE FIRST SIX MONTHS

CASH FLOW FROM

OPERATING ACTIVITIES

THE FIRST SIX MONTHS IN SUMMARY

Lower like-for-like sales in physical stores

The MQ chain’s lower sales relate primarily to lower sales for the women’s range.

The gross margin has been adversely affected by a campaign-intensive market, deeper price cuts and increased currency effects.

The Joy chain has lower sales but improved gross profit thanks to better balanced inventories and increased full-price sales.

The next stage of our new brand positioning is continuing with changes in the stores across the country.

Focus on taking the best from MQ into the transformation

to MarQet

Three pilot stores remodelled in accordance with the

MarQet concept

Digital development is continuing with a focus on an enhanced customer experience for online shopping.

The structural action programme is proceeding to plan and has boosted profit by SEK 21 million during the six months.

The launch of MarQet is continuing

During the second quarter we launched our new MarQet

store in Emporia.

The first three pilot stores on Drottninggatan in

Stockholm, Fredsgatan in Gothenburg and in Emporia,

Malmö have been further developed during the quarter.

We are now beginning to implement these changes in

other stores across Sweden.

Marketing and communication concepts have been

developed ahead of the launch of MarQet.

We have trained store staff to increase the level of

service they provide and their product knowledge.

New product categories have been added at selected

stores and further stores will be added.

MARQET LAUNCH

Focus on developing and strengthening our overall

customer offering in our transformation from MQ to

MarQet.

We are continuing our efforts to develop our women’s

range in particular with a focus on increased quality and

fashion content, as well as on reducing the number of

options.

During the quarter we concluded agreements and

launched new collaborations with e.g. Filippa K Soft Sport,

at selected stores and for online shopping.

In our collaboration with Myrorna we offer second-hand

products, and on the back of this success we are now

rolling out the scheme in further stores.

RANGE OFFERING

DEVELOPMENT OF ONLINE SHOPPING

MQ’s online shopping initiative has produced results

with an increase in traffic and the conversion rate. We are seeing increased growth in online shopping

since the launch.

During the six months, online shopping sales grew

by 2.6% for the Group, and even more for MQ.

We have now improved the user experience ahead

of the launch of marqetstores.se: More sales interfaces adapted for mobile devices and

better product descriptions.

Start pages for women and men to make it easier to

use and to highlight messages and offerings for our

target groups.

In conjunction with the launch of marqetstores.se, we

have now extended our range with more product

categories.

Information about sustainability included in all product

descriptions.

STRUCTURAL ACTION PROGRAMME

The structural action programme was launched at the

end of January 2019 and will affect Group profitability

by SEK 50 million during the financial year.

The structural action programme has boosted this

quarter’s figures by SEK 11 million and figures over the

six months by SEK 21 million.

The cost savings come from the following areas Employees

Rent

Closure of unprofitable Joy stores

NEW FINANCING AND BANKRUPTCY OF JOY

The Board of Directors has decided on a new guaranteed

rights issue of SEK 250 million

Authorisation from a general meeting of shareholders

is required

A general meeting of shareholders is scheduled for

16 April 2020

New bank funding

Long-term extension of existing credit financing,

conditional on preference share issue

Reduces the Group’s debt/equity ratio

Creates the financial scope to realise the company’s

growth-promoting initiatives for increased profitability

and competitiveness

Application for bankruptcy of the subsidiary Joy Shop AB

Write-down of intangible assets, which is expected to

entail non-recurring costs of SEK 192 million

QUESTIONS