ARCADIA GROUP SIGN UKP 75 MILLION STRATEGIC IT AGREEMENT Submittedwith IBM By: Pleon Tuesday, 30 November 1999

ARCADIA GROUP SIGN UKP 75 MILLION STRATEGIC IT AGREEMENT SubmittedWITH IBM by: Pleon Tuesday, 30 November 1999

The UK's second largest fashion retailer, Arcadia Group, today announced that it has signed a strategic Information Technology (IT) outsourcing agreement with IBM. The agreement valued at UKP 75 million (USD 124 million) over 10 years is for the direct management and support of all its 5,000 point-of-sale terminals in 2,000 standalone stores and 600 concessions throughout the UK and Ireland. It is anticipated that this outsourcing arrangement will lead to cost-efficiencies for Arcadia Group of more than UKP 1 million per year. With the emergence of sophisticated customer focused systems in the retail sector, professional services companies, such as IBM, are developing and deploying professional services to assist in the management of what can be a large and complex environment. This agreement is one of the first major agreements of its kind in the retail sector and is the first deal of this type for IBM Global Services in Europe. It will involve the transfer of around 50 staff to IBM. No redundancies are expected. John Hoerner, CEO of Arcadia Group said; "This agreement is consistent with our partnering with market leaders in key support areas. This deal enables us to deliver improved cost-efficiencies for the Group, to maintain our leading edge in the use of IT and will result in better service to our customers by speeding up transactions at the point of sale. This alliance with IBM will give us the efficiencies and organisational flexibility we need to pursue our business strategy in this age of new technology." Arcadia Group has made wide use of technology across its business to gain competitive advantage and improve efficiencies. These include the use of the Internet to review and monitor its supply chain and working with IBM to extract maximum benefit from e-business and e-commerce in every aspect of the organisation from initial garment design to on-line purchasing and supply chain management. Carl Symon, General Manager of IBM UK, said: "We are delighted to be working even more closely with Arcadia

Page 1 Group, because they are one of the UK's most progressive companies in terms of the use of information technology to improve service to its customers. Arcadia Group will benefit from the very best technical support that IBM has to offer." As a result of the agreement, IBM will support Arcadia Group using the successful technology infrastructure that it has built to support its existing customers. IBM currently support over 1.6 million desktops worldwide but this is the first such agreement focusing on the support of EPOS terminals in the retail industry. Arcadia Group's in store systems initiative (ISSI) saw new EPOS terminals rolled out to all stores over the last two years. The new Windows-based terminals have improved customer service by speeding up customer transactions. The new system also enables all the Group's stores to accept all major currencies. In addition, the time taken to train staff to use the tills has been significantly reduced thanks to the new system. Robin Turner, IT Director of Arcadia added, "Here at Arcadia Group we like to focus on the business and serving customers rather than on the nuts and bolts of technology. Working with a leading partner like IBM, who have the infrastructure in place, the in-depth technical specialists, systems and software; avoids our having to concentrate our resources on these areas. We view IT as a strategic management tool that gives us significant competitive advantage. We will therefore retain the setting of the IT strategy but all the technical infrastructure, helpdesk, support, delivery and services management of the EPOS network for the stores is being outsourced to IBM Global Services." Mike Farrell, Industrial and Distribution Director for IBM Global Services said; "IBM has enjoyed a long term association with Arcadia Group and both parties see this contract as the natural next step in the strengthening of our business relationship. I look forward to IBM not only delivering significant cost-efficiencies to Arcadia Group but also continuing with our collaboration on leading edge retail solutions." Noel Rees, Director of Distribution Sector, IBM Northern Region added, "This is a significant contract for IBM in the retail industry and reaffirms the good relationship that IBM has established with Arcadia

Page 2 Group." The new service commences today. As well as catering for today's needs, IBM's support service will facilitate Arcadia Group's growth plans by making it simpler for them to accommodate new stores and rapidly deploy new functionality. About Arcadia Group Arcadia Group is the UK's second largest fashion retailer, with 2,000 stores and 600 concessions in high streets and shopping centres throughout the UK. It also reaches its customers via its international outlets, home shopping catalogues and e-commerce sites. The Group comprises 15 brands: Burton Menswear, Dorothy Perkins, Evans, Hawkshead, Miss Selfridge, Outfit, Principles for Men, Principles for Women, Racing Green, SU214, Top Man, Top Shop, WADE SMITH, Wallis and Warehouse. For more information, visit www.arcadiagroup.co.uk About IBM IBM is the world's leading e-business solutions provider. IBM's Global Retail Industry provides retailers with consulting, focused on business transformation, IT strategy and planning, store operations improvement, and supply chain optimisation; with solutions; with technology and with services, such as strategic outsourcing, systems integration, and application development and design with IBM's services division. About IBM Global Services IBM Global Services is the world's largest information technology services provider, with 1998 revenues of approximately USD 29 billion. Services is the fastest growing part of IBM, with more than 136,000 professionals serving customers in 160 countries. IBM Global Services integrates IBM's broad range of capabilities - services, hardware, software and research - to help companies of all sizes realise the full value of information technology. For more information visit www.ibm.com/services. For more information about IBM e-business, visit the IBM web page on the world wide web at http://www.ibm.com/e-business

Page 3 Ref: 99/417 Contact: Lorna Campbell, IBM Global Services Tel: 01844 338145 or 0836 625 999 Email: [email protected] Contact: Sandra Bull, Allan Hobbs, Arcadia Group Tel: 0171 927 1881 E-mail: [email protected] [email protected]

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