Interim report for 1 January – 30 September 2016

SWEDEN


Third quarter (1)

  ·  Net sales for continuing operations decreased by 1%, and amounted to SEK
917.1 (930.3) million
  ·  Gross margin for continuing operations, excluding items affecting
comparability, rose by 3.0 percentage points to 17.8 % (14.8 %)
  ·  Operating earnings before depreciation and amortization (Ebitda) for
continuing operations, excluding items affecting comparability, improved to SEK
-12.7 (-18.5) million
  ·  Operating earnings (Ebit) for continuing operations, excluding items
affecting comparability, amounted to SEK -31.8 (-28.3) million
  ·  Items affecting comparability affected operating earnings (Ebit) by SEK
-20.0 (-13.0) million
  ·  Net income after tax amounted to SEK -45.8 (-32.0) million
  ·  Earnings per share excluding discontinued operations amounted to SEK -0.30
(-0.21) before and after dilution
  ·  Earnings per share including discontinued operations, before and after
dilution, amounted to SEK -0.31 (-0.21)
  ·  Cash flow from continuing operations amounted to SEK -109.1 (-111.3)
million

First nine months (1)

  ·  Net sales for continuing operations amounted to SEK 2,945.1 (2,943.0)
million
  ·  Gross margin for continuing operations, excluding items affecting
comparability, rose by 1.3 percentage points to 17.0% (15.7%)
  ·  Operating earnings before depreciation and amortization (Ebitda) for
continuing operations, excluding items affecting comparability, amounted to SEK
-30.0 (-34.2) million
  ·  Operating earnings (Ebit) for continuing operations, excluding items
affecting comparability, amounted to SEK -76.8 (-60.9) million
  ·  Items affecting comparability affected operating earnings (Ebit) by -35.4 (
-30.9) million
  ·  Net income after tax amounted to SEK -206.4 (-72.2) million
  ·  Earnings per share excluding discontinued operations amounted to SEK -0.64
(-0.49) before and after dilution
  ·  Earnings per share including discontinued operations, before and after
dilution, amounted to SEK -1.38 (-0.48)
  ·  Cash flow from continuing operations amounted to SEK -338.3 (-376.1)
million

(1) Qliro Group’s sale of subsidiary Tretti AB was completed in the third
quarter. Thus, continuing operations exclude Tretti, which is recognised under
Discontinued operations in the consolidated income statement. Comparative
figures in the consolidated income statement and cash flow statement have been
adjusted correspondingly. The table below also presents continuing operations.

Doubled operating revenue in Qliro FS and significantly improved profitability
in Nelly

During my first two months at Qliro Group, I have focused on getting to know the
organisation better, and together with our new CFO, taken a more detailed look
at our operations. In general, I am impressed by the growth and opportunities
within Qliro Financial Services, the standard of operations within Gymgrossisten
as well as by the significant earnings improvements in Nelly. CDON continues to
grow its sales to external merchants on CDON Marketplace, but we will need to
focus on the balance between this growth and profitability. Lekmer still has
clear challenges linked to its warehouse operations, affecting growth as well as
earnings, which we are adressing. In summary, we have a very strong plattform to
build from, but with challenges and opportunities relating to operational
efficiency.

Our review of operations has also resulted in the decision to reduce operational
risks in the group by introducing a more conservative approach to several
aspects of financial accounting policies, i.a. capitalization of development
expenditures and inventory management. This has resulted in a negative impact of
SEK 20 million in the quarter. We are confident that this approach will provide
a clearer picture of our underlying earnings going forward, and enable more
efficient governance, tie up less capital and generate improved cash flow.

In parallel, we have initiated a strategy review which we expect to conclude by
year-end. We are reviewing each segment and their respective challenges and
opportunities, while also conducting a review of the operational structure to
evaluate synergies, optimise scalability and highlight the potential of Qliro
Financial Services.

Operational efficiency
Qliro Group’s sales decreased by one percent in the third quarter, while the
gross margin increased by three percentage points to 17.8 percent. The increase
was driven by Qliro Financial Services’ continued earnings improvement and
Nelly’s successful efforts in improving its assortment strategy and continued
focus on private label. On an overall level, our e-commerce businesses’ sales
are not growing in line with the market. This, however, is partly reflecting a
conscious decision to focus on profitability rather than growth.

A foundation for future growth will be set through more efficient operations,
driven by a structured approach focusing on continuous improvement.

As it stands today, Lekmer is not profitable. However, Lekmer has a strong
offering towards a segment with high growth potential and the company has also
regained high customer satisfaction, showing that the underlying business model
is attractive. In order to realise this potential, we will continue to invest
time and resources into Lekmer. We have started by strengthening the company’s
management team and initiated projects focusing on strengthening customer
exerience, IT-innovation and warehouse efficiency.

Significant potential in financial services
Qliro Financial Services continued to grow strongly, and total revenues
increased by 113% in the quarter. Earnings have continuously improved and
reached break-even before tax in the quarter. The company remains focused on
product development to further broaden and strengthen the offer to both
consumers and merchants. Regarding the license application to operate as a
credit market company, we expect that the Swedish FSA, Finansinspektionen, will
revert with their decision before the end of the year.

Overall, my initial observations are that Qliro Group has well established
brands, a strong product portfolio as well as highly skilled and dedicated
employees. In a rapidly changing environment, it is necessary to understand and
adapt to customer needs and thus to develop a corporate culture that promotes
simplicity, speed and innovation. We still have some challenges to overcome
within our businesses, but I confidently look forward to working with all
employees to create shareholder value by developing a more competitive and
stronger group.

Stockholm, October 2016

Marcus Lindqvist, CEO

For additional information, please visit www.qlirogroup.com or contact:
Marcus Lindqvist, Chief Executive Officer
Tel: +46 10 703 20 00

Mathias Pedersen, Chief Financial Officer
Tel: +46 10 703 20 00

Questions from media, investors and research analysts:
Erik Löfgren, Head of Communications
Tel: +46 700 80 75 06
E-mail: press@qlirogroup.com, ir@qlirogroup.com

About Qliro Group
Qliro Group is a leading e-commerce group in the Nordic region. Since the start
in 1999, the Group has expanded and broadened its product portfolio and is now a
leading e-commerce player in consumer goods and lifestyle products through
CDON.com, Lekmer, Nelly (Nelly.com, NLYman.com, Members.com) and Gymgrossisten
(Gymgrossisten.com/Gymsector.com, Bodystore.com, Milebreaker.com and Fitness
Market Nordic). The group also comprises the payment and consumer financing
solution Qliro. In 2015, the group generated over 4.4 billion SEK in revenue.
Qliro Group’s shares are listed on Nasdaq Stockholm’s Mid-cap list under short
name “QLRO”.

This information is information that Qliro Group AB is obliged to make public
pursuant to the EU Market Abuse Regulation. The information was submitted for
publication, through the agency of the contact persons set out above, at 08:00
CET on 20 October 2016.

Attachments

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