Hugo Boss AG · XETR:BOSS
Hugo Boss — Investor Day (November 2011)
18 slides from Hugo Boss's investor day presentation, Nov 8, 2011
Slide 1: HUGO BOSS
HUGO BOS S$
Slide 2: Financial Strategy
Financial Strategy Mark Langer, Chief Financial Officer November 8, 2011 HUGO BOSS Investor Day 2011 // Financial Strategy HUGO BOSS © November 8, 2011 2 / 18
Slide 3: HUGO BOSS has significantly improved its business model
HUGO BOSS has significantly improved its business model ■ Bigger and better retail business ■ More balanced global exposure ■ Major profitability improvements ■ Clean operating working capital ■ Strong balance sheet ■ Highly cash flow-generative business model Solid foundation for continued growth H
Slide 4: Free cash flow maximization primary goal
HUGO BOSS – Free cash flow maximization primary goal SALES SALES EBITDA EBITDA before before special special items items FREE FREE CASH CASH FLOW FLOW NET NET WORKING WORKING CAPITAL CAPITAL CAPITAL CAPITAL EXPENDITURE EXPENDITURE Focus on increasing free cash flow through profitable growth and tigh
Slide 5: Targeting profitable growth
HUGO BOSS – Targeting profitable growth Sales EBITDA before special items (in EUR million) (in EUR million) 750 3,000 CAGR 12% CAGR 16% 2,500 500 1,729 350 … … 2010 2015 2015 2010 2015 2015 old new old new HUGO BOSS Investor Day 2011 // Financial Strategy HUGO BOSS © November 8, 2011 5 / 18
Slide 6: Economic and industry growth rates forecasted to moderate
Economic and industry growth rates forecasted to moderate Real GDP Luxury apparel year-over-year growth in % year-over-year growth (in %) 15% 2009 2010 2011e 2012e 12.0% 10% 8.0% 6.5% Eurozone -4.2 1.8 1.6 0.7 5% Germany -5.1 3.7 2.9 1.0 0% 2010 2011e 2012e World wide luxury goods sales USA -3.5 3.0
Slide 7: HUGO BOSS prepared to respond to adverse economic developments
HUGO BOSS prepared to respond to adverse economic developments ■ Transparency of key business processes significantly improved ■ Implementation of measures to improve organizational flexibility and speed to market well under way ■ Scenario planning part of regular budgeting process ■ Contingency pla
Slide 8: Retail growth key contributor to achievement of 2015 targets
Retail growth key contributor to achievement of 2015 targets Structural Changes ■ Positive mix effect on gross margin ■ Store expansion results in higher rent and personnel expenses ■ Shift from receivables to inventories ■ Increasing operating lease obligations Key levers for further profitability
Slide 9: Retail expansion supportive to Group profitability
Retail expansion supportive to Group profitability Adjusted EBITDA margin and retail development Retail in % of sales (in % of sales) EBITDA margin 50% 40% 40% 33% 30% 27% 24% 25% 20% 20% 17% 16% 17% 16% 10% 0% 2006 2007 2008 2009 2010 2011e HUGO BOSS Investor Day 2011 // Financial Strategy HUGO BOS
Slide 10: Comp store growth and store expansion to drive Retail sales increases
Comp store growth and store expansion to drive Retail sales increases Comp store growth Store expansion CAGR 19% Retail Sales 2010 2015 EUR 691 mio. ~EUR 1,650 mio. HUGO BOSS Investor Day 2011 // Financial Strategy HUGO BOSS © November 8, 2011 10 / 18
Slide 11: Region Asia/Pacific to account for significantly higher share of sales by 2015
Region Asia/Pacific to account for significantly higher share of sales by 2015 Asia / Pacific 8% 8% 10% 11% 8% 13% Americas 21% 18% 18% 18% 20% 22% 23% Europe 71% 71% 69% 67% 62% 54% Licenses 3% 3% 3% 3% 3% 3% … 2% 2006 2007 2008 2009 2010 2011e 2015e HUGO BOSS Investor Day 2011 // Financial Strateg
Slide 12: Implementation of Project D.R.I.V.E. changes Group's financial profile
Implementation of Project D.R.I.V.E. changes Group’s financial profile ■ Driver of future comp store sales development and retail profitability ■ Enables quicker response to market developments ■ Leads to seasonally more balanced sales and earnings development ■ Supports efficiency improvements in s
Slide 13: Tight working capital management continues to be a top priority
Tight working capital management continues to be a top priority Average trade net working capital as a percentage of sales by quarter (in %) 29.7% 30% 28.5% 27.2% 24.6% 22.7% 20.9% 19.9% 19.2% 19.3% 19.6% 19.1% 20% 10% 0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 201
Slide 14: Investments support realization of key strategic growth opportunities
Investments support realization of key strategic growth opportunities Annual investments (in EUR million) 140 119 120 99 ■ Strengthening the 100 Group’s retail footprint 85 80 ■ Upgrading supply chain capabilities 60 55 48 40 20 0 2006 2007 2008 2009 2010 2011e HUGO BOSS Investor Day 2011 // Financi
Slide 15: Profit-oriented dividend policy
Profit-oriented dividend policy Dividend* and payout ratio (in EUR and in % of consolidated net income) 2.03 2.0 1.46 1.5 1.38 1.20 0.97 1.0 84.7% 75.2% 0.5 64.1% 65.2% 64.0% 0.0 2006 2007 2008 2009 2010 Group committed to pay out between 60% and 80% of consolidated net income * Preferred shares / e
Slide 16: Strong free cash flow generation to sustain further debt reduction
Strong free cash flow generation to sustain further debt reduction Net debt (in EUR million) 600 583 500 400 379 300 201 200 174 118 100 0 2006 2007 2008 2009 2010 Use of Free Cash Flow to further reduce net debt HUGO BOSS Investor Day 2011 // Financial Strategy HUGO BOSS © November 8, 2011 16 / 18
Slide 17: Summary – Key principles of Group financial management
SUMMARY – Key principles of Group financial management ■ Focus on profitable growth – bottom line to grow stronger than top line ■ Maintain Profitability industry-leading working capital management position ■ Investments must be accretive to medium-term profitability targets ■ Total shareholder retu
Slide 18: HUGO BOSS
HUGO BOS S$