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2016-10-20

Qliro Group AB (publ.): Interim report for 1 January - 30 September 2016

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.

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http://news.cision.com/qliro-group-ab--publ-/r/interim-report-for-1-janu...
http://mb.cision.com/Main/53/2104817/577480.pdf

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