Good sales trend in the fourth quarter of 2006

• Department Stores achieve sales upturn for the third consecutive quarter and gain further market share. Core business grows by 5.3%
• Mail Order makes good progress in stabilizing sales as scheduled
• Thomas Cook continues to grow

In the KarstadtQuelle Group, the recovery in the operating segments continued in the fourth quarter of 2006. In the process, the successful strategic realignment of the Group is also being accompanied increasingly by an improvement and stabilization in the operating units. The Group has since successfully completed the restructuring phase and is back on growth track.

The fourth quarter of 2006, and especially the Christmas business, were in line with the company´s high expectations. According to provisional calculations, Group sales (without neckermann.de – not consolidated due to the pending IPO – and discontinued operations) reached €4.2 billion, a sales upturn of 1.0%.

Karstadt Department Stores and Sports Stores developed in a particularly pleasing manner. Retail sales in the fourth quarter improved by 4.4% to €1.38 billion (previous year: €1.32 billion). In the core business (without project stores), sales increased by as much as 5.3%, thus exceeding expectations. It was particularly the Fashion and Living segment which developed very positively. The stores of the Premium Group again posted an above-average trend with a sales plus of 8.6%. “The upwards trend of our Department Stores is continuing. Our high expectations are being exceeded. Customers appreciate our realignment. In the context of its positive company performance, Karstadt is increasingly bucking the market, gaining further market share, particularly in the Fashion segment. This makes us optimistic for 2007”, was how CEO Thomas Middelhoff commented the sales trend.

Stabilization continued at Mail Order in the fourth quarter, steadily improving in the course of the year. Sales – without neckermann.de and discontinued operations – achieved €1.24 billion in the fourth quarter (previous year: €1.26 billion). This represents a decline of only 2.0%, a strong improvement compared with the previous quarters.

Special Mail Order and the international business improved sales volume, while, as expected, the Quelle Universal Mail Order posted a sales decline. E-commerce again proved to be a growth driver. In the fourth quarter, online demand increased by 21% , E-commerce contributed more than 40% to sales in the fourth quarter. The number of visits doubling on what was already a high level. December 2006 showed record figures at quelle.de with 38 million visits.

The Thomas Cook Group, which is consolidated proportionately at 50%, in the fourth quarter ( August 1 to October 31, 2006) generated a sales upturn of 0.7% (l-f-l: 1.3%) to €1.38 billion. In the winter business, a bookings increase is apparent, especially in Germany and UK.

Overall adjusted Group sales (without neckermann.de and without discontinued operations) totaled approximately €12.9 billion in the 2006 financial year, thus almost at the level of the previous year.

“In the fourth quarter of 2006, the development of sales confirmed our earnings forecast. We expect adjusted Group EBITDA (without the Real Estate segment) to increase by some 10%. In terms of debt reduction, we will also achieve our ambitious targets. The KarstadtQuelle Group is free of net financial debt to the end of 2006. Furthermore, we have potential for further improvement of our financial situation. A focus here is the reduction of working capital by more than €500 million. What is more, we have significant hidden reserves with various assets, particularly in the Financial Services segment. We will exploit these to the advantage of our shareholders”, continued Middelhoff.

In the 2006 financial year, neckermann.de performed slightly ahead of plan. Preparations for the IPO, scheduled for the third quarter of 2007, are being pushed forward rigorously.

" Over the next few weeks, a further focus is the consolidation of the tourism market in Europe. We believe that we can play a decisive role here. During the course of 2007, the KarstadtQuelle Group will grow into a new structure, with a considerably higher level of internationalization. I anticipate that this strategic realignment will also result in a positive revaluation of the KarstadtQuelle Group”, stated Middelhoff.