BESTSELLER’S

ANNUAL REPORT 2011/12

28 November 2012

The Annual Report 2011/12 is characterised by lack of growth in several markets, depreciations of inventory, extraordinary provisions and an increased level of investments.

“Despite market challenges, we have chosen to increase our investments and make BESTSELLER even more ready for the future," says CEO Anders Holch Povlsen and continues: "We know that we are still facing a number of challenges in several markets and at some of our brands, but we are working hard and persistently to meet our employees’ and customers' expectations.”

The past year has been characterised by challenges in some markets, which has resulted in an overall weak growth and a slight decline in turnover in a number of stores.

This year’s result shows an increase in turnover by 5% to EUR 2,446 million – an increase that does not meet the expectations set at the beginning of the financial year. At the same time the figures show a decline in earnings by 48% to EUR 161 million, which is unsatisfactory.

"Naturally, we are not satisfied with such a significant decline in our earnings. On the other hand, we are fully aware of the causes, and we work determinedly to improve the results for the current year," says Anders Holch Povlsen.

"We have increased our investments in the future and are ready to continue developing and improving our business. We recognise, however, that we will not see the desired growth rates in the current financial year," Anders Holch Povlsen points out.

This year’s result must be seen in the light of numerous and large investments made during the past year and not least the derived costs hereof. These include the completion of the new logistics centre in Haderslev, the on-going construction of the new office building in Aarhus and increased investments in IT infrastructure.

CHALLENGES IN RETAIL
In the past year, BESTSELLER’s retail stores in southern Europe, the Middle East, India, and the UK have not been profitable. On the other hand, there is a satisfactory development in the overall business, not least in Germany, but also the Scandinavian markets show a reasonable trend. The E-commerce business is developing positively as well.

A major part of BESTELLER’s sales takes places through external chain stores and department stores. Many of BESTSELLER’s business partners are experiencing decline in sales, show caution in purchase activities and many have problems with solvency. This has had consequences that BESTSELLER has had to take into account for future activities.

In total, depreciations and provisions on tangible and intangible assets have been increased by EUR 100 million.

THE FUTURE
"Our results in the past year do not match the effort made by many of our employees. We clearly expect that we will strengthen our bottom line in the current financial year and ensure a healthier balance between income and costs. We will focus on simplifying our business, consolidating our organisation and creating more efficient operations,” says Anders Holch Povlsen.

KEY FIGURES FOR THE FINANCIAL YEAR 2011/2012*

Net turnover: EUR 2,446 million (5% increase)
Result before tax: EUR 161 million (48% decrease)
Total equity: EUR 994 million


AS OF 31 JULY 2012

Number of employees: 13,900 (hereof 3,300 in Denmark)
Number of chain stores: 2,979, hereof 300 in Denmark (2,800 last financial year)
Markets: Most of Europe, the Middle East, Canada, India and globally via e-commerce.

*All figures include BESTSELLER UNITED A/S, BESTSELLER A/S and VILA A/S.