KappAhl: Substantially improved cash flow despite weak market

Report for the third quarter 2010/2011




Third quarter
(March 2011 - May 2011)

·      KappAhl's net sales for the period amounted to SEK 1,237 (1,221) million,
an increase of 1.3 per cent.

·      The operating profit was SEK 57 (112) million.

·      The gross margin was 60.1 (64.6) per cent and the operating margin was
4.6 (9.2) per cent.

·      Profit after tax was SEK 26 (65) million, which is equivalent to SEK
0.35 (0.87) per share.

·      Cash flow from operating activities was SEK 139 (-7) million.

Nine months
(September 2010 - May 2011)

·         KappAhl's net sales for the period amounted to SEK 3,766 (3,821)
million, a decrease of 1.4 per cent.

·         The operating profit was SEK 219 (395) million.

·         The gross margin was 60.4 (62.5) per cent and the operating margin was
5.8 (10.3) per cent.

·         Profit after tax was SEK 122 (277) million, which is equivalent to SEK
1.63 (3.69) per share.

·         Cash flow from operating activities was SEK 187 (285) million.


CEO's comments

The industry is affected by a weak market and the quarter was largely
characterised by both our and our competitors' large inventories. Consequently,
customers have had plenty of attractive offers to choose from. Increasing
purchasing costs also had a negative effect on the gross margin.

In this difficult market we also see positive signs. Sales in comparable stores
are better than in the first six months, though they are still not meeting our
targets. We are now also starting to see light at the end of the tunnel as
regards purchasing costs. The shortage of capacity among our suppliers is
decreasing and we also see that cotton prices are falling, though from a high
level.

KappAhl's concept of value-for-money fashion for our adult customers will hold
its own well in future too, so we are confidently continuing with our long-term
expansion. In autumn 2012 we will establish KappAhl in Austria, which will then
be our sixth sales market.

Christian W. Jansson, President and Chief Executive Officer


Telephone conference for analysts and the media
A telephone conference will be held for analysts, media and investors, today at
10.30. To participate please call +46 (0)8 5051 3791 (Sweden) or +44 (0)20
7806 1966 (United Kingdom) about 5 minutes before the start and quote the code
9101144.

For further information, please contact:
Christian W. Jansson, President and Chief Executive Officer, tel.
+46 709 95 02 01
Håkan Westin, Chief Financial Officer, tel. +46 704 71 56 64

For images and other information, please contact:
Annette Björklund, Head Public Relations,annette.bjorklund@kappahl.com tel.
+46 704 71 55 42

KappAhl is a leading fashion chain with 367 stores and 4,800 employees in
Sweden, Norway, Finland, Poland and the Czech Republic. KappAhl sells value-for-
money fashion with a wide appeal - to women, men and children - and focuses in
particular on women aged 30-50 with families. All clothes are from our own
designers. In 1999 KappAhl was the first fashion chain to be environmentally
certified.


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