KappAhl profits soared 70 percent in 2003

For the second year in succession KappAhl reported an increase in earnings to end 2003 with an operating profit of SEK 120 million. This represents an increase of SEK 326 million over the past two years. Retail sales totalling SEK 504 million in December made the 2003 Christmas period the best ever recorded by KappAhl.

While the rise in gross profit has been of crucial significance to the company´s financial recovery, vigorous cost-cutting programmes and the winding up of operations in Denmark and the Czech Republic have also played their part in the success.

"We are now witnessing the effects of two years of hard work, during which the focus has consistently been on customers, stores and our product range," says Christian W. Jansson, President and CEO of the KappAhl Group. "Our six percent growth in volumes during the year is a clear indication that customers have found our offer attractive, and this is further confirmed by the fact that 2003 saw KappAhl regain its number one spot as Sweden´s biggest clothing retailer for mature female fashion."

Sales increases have been high and uniform in all age groups. The increase has made itself felt on all KappAhl´s current markets (Sweden, Norway, Finland and Poland), even if the greatest impact has, naturally, been felt on "home ground" in Sweden. Factors behind the success include the decision to earmark trousers as a strategic product group, the implementation of a more intelligent strategy for dealing with price reductions, and a quicker goods flow. Nor should the fact be overlooked that sales of the XLNT range, KappAhl´s own brand of plus-size female fashion, and the American men´s fashion brand, U.S. Polo Association, have both exceeded expectations. The U.S. Polo Association collection was launched as recently as in October 2003, but it has already boosted sales of the rest of the menswear range, enabling KappAhl to capture market share in this segment for the first time in many years.

"The financial results for 2003 are good news," says Christian W. Jansson. "Better still, however, is the news that customers are flocking back to KappAhl. Now we are continuing the task of developing and improving our offer in order to attract even more customers. 2004 has begun satisfactorily and we remain firmly resolved to become Scandinavia?s number one clothing retailer for 30 to 50-year olds. If things continue to progress as well as they have done so far, we will soon have achieved this ambition. Then it will be time to raise the bar even further."

For further information, please contact:
Christian W. Jansson, tel. +46 (0)708
-16 02 20

KappAhl is one of the Nordic region´s leading fashion retailers, with 240 store locations in Sweden, Norway, Finland and Poland and 3,300 employees. KappAhl is headquartered in Mölndal, outside Gothenburg, Sweden. KappAhl was founded in 1953 and acquired by KF in 1990. Visit www.kappahl.com for more information.

Press contacts

Corporate and Investor Relations

Charlotte Högberg, Head of Corporate Communications
Phone: +46 31 - 771 56 31
charlotte.hogberg@kappahl.com

Sweden

Olivia Larsson
Tel: +46 (0)31 - 771 58 47
olivia.larsson@kappahl.com

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