Moleskine SpA: first half 2016 results

MOLESKINE SPA FIRST HALF 2016 RESULTS RESULTS IN LINE WITH EXPECTATIONS ON TRACK TO MEET FULL YEAR TARGETS Net Revenues1 of €60,4 million up 13,2% at constant exchange rates (+12,3% at current exchange rates) vs. first half 2015 with broad based growth across regions, product categories and channels Wholesale accelerated in the second quarter and B2B confirmed back-end loaded seasonality, in line with expectations Direct-to-consumer channels saw continued momentum, further boosted by the successful Smart Writing Set launch EBITDA2 of €15,4 million increased by 9,2% vs. first half 2015 at constant exchange rates and excluding exchange rate income and losses (+1,4% at current exchange rates vs. first half 2015). Second half weighted EBITDA reflects higher revenue weighting in the second half and resultant heightened operating leverage Net Income2 of €8,6 million increased by 18,2% vs. first half 2015 at constant exchange rates and excluding exchange rate income and losses (-0,1% at current exchange rates vs. first half 2015) also driven by lowered financial costs Strong operating cash generation led to net financial position of €-0,3 million post dividends and share buy back program of €15,6 million Full year guidance reiterated: Revenues of €148-153 million and EBITDA of €46-48 million at constant exchange rates, underpinned by positive current trading

Milan, August 4th 2016 - The Board of Directors of Moleskine S.p.A. ("Moleskine" or with its controlled companies the "Group" or the "Company") today approved the Financial Statements for the first half 2016.

(Thousands Euro)	1H 16	1H 15	% Growth at Current FX	% Growth at Constant FX(*)
Net Revenues	60.426	53.805	+12,3%	+13,2%
EBITDA	15.353	15.146	+1,4%	+9,2%
Net Income	8.579	8.584	-0,1%	+18,2%

(*) Source: Management Accounts. EBITDA and Net Income at constant FX and before realized / unrealized exchange rate income / losses

1 Revenues are reported on an adjusted basis and are defined as revenues net of revenues from display and other revenues

2 Adjusted EBITDA and adjusted net income relate to measures net of extraordinary and special items;

Arrigo Berni, Chief Executive Officer of Moleskine, commented:

"I am pleased to report that our sustainable growth trajectory has continued to accelerate in the second quarter. Our channels, product lines and geographic markets developed in line with plans, marking a solid progression towards full year targets.

Innovation has played a significant role in the first half of 2016, in particular the successful launch of the Smart Writing Set and the opening of the first street based Moleskine cafe in Milan. Both initiatives reflect Moleskine's strong traction as a lifestyle brand and its continued ascent amongst the "Creative Class".

Also, today's results show that, in an increasingly turbolent economic environment, we can rely on a highly diversified business model which acts as a natural hedge against market volatility.

To conclude, based on today's results and solid current trading, I am delighted to confirm that we are well on track to meet our full year targets, as the business continues to perpetuate its longstanding track record of growth."

Net Revenues by channel2

Moleskine sells its products (i) directly and indirectly through a network of 79 distributors (''Wholesale'') which serve bookstores, department stores, specialty stores, stationery stores and museums ("Retailers"); (ii) through a mixed model, direct and indirect, to business customers (''B2B''), iii) through website sales (''e-Commerce'') and (iv) through a growing network of Directly Operated Stores ("Retail" or "DOS").

(Thousands Euro)	1H 16	1H 15	% Growth at Current FX	% Growth at Constant FX(*)
Wholesale	39.487	37.385	+5,6%	+6,3%
B2B	9.164	8.944	+2,5%	+3,1%
Ecommerce	3.274	2.294	+42,7%	+43,4%
Retail	8.501	5.182	+64,1%	+66,8%
Net Revenues	60.426	53.805	+12,3%	+13,2%

(*) Source: Internal Management Accounts

Net revenue in the Wholesale channel rebounded in the second quarter to reach €39,5 million (+6,3% at constant exchange rates vs. first half 2015) in line with full year targets. In particular:

• EMEA (+7,4% at constant exchange rates vs first half 2015) reflected growth throughout the region, particularly in Germany, Italy, France and Spain.

• Americas (+2,8% at constant exchange rates vs first half 2015) returned to growth reflecting the expected launch of the "18-month" Planner Collection in the second quarter.

• APAC (+16% at constant exchange rates vs first half 2015) reported similarly a strong rebound also thanks to a favourable base of comparison, as sales calendarization in 2015 was second half weighted due to changes to the distributors network.

2 Net revenues by geographical area are reported on an adjusted basis excluding Net revenues from displays, income/loss from exchange rate and other Net revenues. Net revenues are also reported at constant exchange rates. See tables for growth rates on actual exchange rates.

Net revenue in the B2B channel reached €9,2 million (+3,1% at constant exchange rates vs. first half 2015). Confirmed full year target based on strong current trading and a solid order pipeline, with increased back-end loaded sales compared to 2015 due to country specific reasons. In particular, in EMEA (+4% at constant exchange rates vs first half 2015) growth will stem from the continued progress in larger order generation. The Americas (+15,5% at constant exchange rates vs first half 2015) will benefit from the start-up of distribution agreements in Mexico and Brazil, as well as the transition to a more effective consignment model of the US distributor. Finally, APAC's softer performance (-19,6% at constant exchange rates vs first half 2015) reflects the start-up of two important distributors in Japan and Australia which occurred in the first half of 2015 and generated an unfavourable base of comparison.

Net Revenues in e-Commerce reached €3,3 million (+43,4% at constant exchange rates vs first half 2015) reflecting strong fundamentals as well as a positive market response to the Smart Writing Set. Traffic and average order value grew thanks to globally more established operating platforms and also benefitting from the integrated marketing plan to support product launches.

The Retail channel saw continued growth exceeding the target rate for the full year (+66,8% at constant exchange rates vs first half 2015) and posted revenues of € 8,5 million with a global network of 65 DOS. This is well on track towards the full year target of 80 stores based on 15 additional locations already secured and a strong pipeline of active negotiations in place. Like-for-like sales growth stood at 11% at constant exchange rates, significantly ahead of the full year target of 7%, confirming the effectiveness of initiatives implemented in mid- 2015 to increase the productivity of existing stores.

Net Revenues by geographical area

The Company is a truly global business with presence in approximately 114 countries, and in the first half of 2016 all geographies continued to make strong contributions to Moleskine's revenue growth.

(Thousands Euro)	1H 16	1H 15	% Growth at Current FX	% Growth at Constant FX(*)
EMEA	26.092	23.220	+12,4%	+13,2%
AMERICAS	24.296	22.158	+9,6%	+10,2%
APAC	10.038	8.427	+19,1%	+20,9%
Net Revenues	60.426	53.805	+12,3%	13,2%

(*) Source: Internal Management Accounts

Net revenues in EMEA reached €26,1 million (+13,2% at constant exchange rates vs. first half 2015) driven by strong performance across all channels, particularly Retail and e-Commerce.

Net revenues in AMERICAS reached €24,3 million (+10,2% at constant exchange rates vs. first half 2015), driven by excellent momentum within direct-to-consumer channels and the expected rebound in Wholesale in the second quarter.

Net revenues in APAC reached €10 million (+20,9% at constant exchange rates vs. first half 2015) driven by strong performance across all channels with the exception of B2B, impacted by an unfavourable base of comparison due to the start-up of two important distributors in Japan and Australia in the first half of 2015.

Net Revenues by product category

Multi-channel expansion across all of our geographies, combined with further brand visibility, has driven healthy growth from both established categories in our product portfolio, with revenues from Paper and WTR ("Writing, Travelling & Reading") collections rising respectively by 9,8% and 14% at constant exchange rates vs. first half 2015. The Moleskine+ collection, which includes products and services that bridge the gap between the analog and digital dimension, accounted for 4,7% of total net revenues (+146,9% vs first half 2015 at constant exchange rates) following the successful launch of the Smart Writing Set. Altogether, "non-paper" categories (WTR and M+ collections) accounted for 13,9% of total net revenues.

(Thousands Euro)	1H 16	1H 15	% Growth at Current FX	% Growth at Constant FX(*)
Paper Collection	52.002	47.693	+9,0%	+9,8%
WTR Collection	5.572	4.946	+12,7%	+14,0%
M+ Collection(**)	2.852	1.166	+144,6%	+146,9%
Net Revenues	60.426	53.805	+12,3%	+13,2%

(*) Source: Internal Management Accounts

(**) M+ category includes Smart Notebooks (e.g. Evernote, Livescribe and Adobe), Smart Pens, Smart Writing Set and Timepage

In the first half of 2016 the Group continued to innovate, broadening and strengthening the brand's product offering. Within Paper, the Company launched Toy Story and Games of Thrones Limited Editions. In the WTR category, the Group launched the first premium full leather line of bags and wallets, and a collection of travel bags and luggage accessories developed in partnership with Bric's. Both launches reflect ongoing efforts to innovate and expand into new product categories dedicated to travel and mobility.

In the second quarter, the Group launched the Smart Writing Set, a specially designed tablet, smart pen and app working in tandem to digitize notes and sketches instantly, as they are made on paper. Based on positive initial results, a strong performance is also expected in the second half.

Finally, based on positive results from the Geneva location, the Group opened the first directly operated street-based Moleskine Café, within the Brera design district in Milan. The format aims to provide a contemporary interpretation of the "Café Littéraire" concept, adding Moleskine brand values and products to a unique café experience, giving consumers a distinct opportunity to be exposed to the creative content Moleskine generates, either directly or through its ever growing community of passionate followers. The format will be tested and validated before considering a global roll-out.