Hugo Boss AG · XETR:BOSS
Hugo Boss — Q1 2011 Earnings Presentation
34 slides from Hugo Boss's earnings presentation, Apr 28, 2011
Slide 1: HUGO BOSS
HUGO BOS S$
Slide 2: HUGO BOSS First Quarter Results 2011
HUGO BOSS First Quarter Results 2011 Claus-Dietrich Lahrs (CEO) I Mark Langer (CFO) April 28, 2011 Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 2 / 34
Slide 3: Claus-Dietrich Lahrs (CEO)
Claus-Dietrich Lahrs (CEO) Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 3 / 34
Slide 4: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST QUARTER RESULTS 2011 OUTLOOK 2011 BACKUP Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 4 / 34
Slide 5: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST QUARTER RESULTS 2011 OUTLOOK 2011 BACKUP Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 5 / 34
Slide 6: HUGO BOSS has a strong start to 2011
HUGO BOSS has a strong start to 2011 Sales: EUR 539 mill. EUR 444 mill. ■ Ongoing strong momentum throughout the business +21% ■ Double-digit sales increases across all regions, distribution channels and Q1 2010 Q1 2011 brands EBITDA before special items: EUR 132 mill. ■ Significant profitability im
Slide 7: Robust growth in the key European markets
Robust growth in the key European markets Q1 2011 Sales by Market / Europe: 37% // Other 26% // Germany (2010: 36%) (2010: 26%) ■ Wholesale business recovers compared to prior year quarter 13% // Benelux (2010: 14%) ■ Significant sales increases in UK (+24%) and Germany (+16%) 10% // Great Britain 1
Slide 8: US wholesale business drives double-digit sales increase in the Americas
US wholesale business drives double-digit sales increase in the Americas Q1 2011 Sales by Market / Americas: 9% // Central / South America (2010: 9%) ■ Strength in the US market continues 17% // Canada (2010: 19%) ■ HUGO BOSS brand positioning highly 74% // USA (2010: 72%) attractive to US wholesale
Slide 9: Booming Chinese market fuels expansion in Asia/Pacific
Booming Chinese market fuels expansion in Asia/Pacific Q1 2011 Sales by Market / Asia: 11% // Other (2010: 12%) 58% // China ■ Sales in China more than double 14% // Japan (2010: 43%) (2010: 23%) ■ BOSS Selection supports favorable brand perception in luxury segment 17% // Oceania (2010: 22%) ■ Japa
Slide 10: Wholesale business has returned to growth
Wholesale business has returned to growth ■ Second consecutive quarter of double- digit sales increases ■ Brand strength supports good sell- through results in all major markets ■ Important selling space gains at key accounts Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 10
Slide 11: Group retail excellence improves steadily
Group retail excellence improves steadily ■ 8% comp store sales increase in local currencies ■ Consumer focus guides retail management decisions ■ Merchandise management process significantly improved Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 11 / 34
Slide 12: New openings enhance Group store portfolio
New openings enhance Group store portfolio ■ BOSS Black Shop, Kunming, China Opening date: January 2011 Net Size: 268 m² ■ BOSS Store, Schaumburg / Woodfield, USA Opening date: February 2011 Net Size: 212 m² ■ BOSS Black Store, Harbin, China Opening date: March 2011 Net Size: 160 m² Conference Call,
Slide 13: Acquisition of franchise stores in the UK completed
Acquisition of 15 franchise stores in the UK completed HUGO BOSS Store, New Bond Street, London: ■ Attractive store portfolio secured ■ Integration with existing UK own retail activities well under way ■ Positive impact on Group financial results HUGO BOSS Store, in 2011 New Cathedral Street, Manche
Slide 14: Transition to four season cycle a milestone of project D.R.I.V.E.
Transition to four season cycle a milestone of project D.R.I.V.E. ■ Project D.R.I.V.E. synchronizes product offering with actual consumer buying behavior ■ Switch from two major seasons to four-season cycle including monthly themes ■ First ever dedicated winter collection to be launched in May Confe
Slide 15: New schedule of collection offering in four season cycle
New schedule of collection offering in four season cycle Spring Summer Fall Winter Dec Core theme Jan and changing Feb monthly themes Mar Core theme Apr and changing May monthly themes Jun Core theme Jul and changing Aug monthly themes Sep Core theme Oct and changing Nov monthly themes Conference Ca
Slide 16: Mark Langer (CFO)
Mark Langer (CFO) Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 16 / 34
Slide 17: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST QUARTER RESULTS 2011 OUTLOOK 2011 BACKUP Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 17 / 34
Slide 18: Sales by Region – Broad-based growth
SALES BY REGION – Broad-based growth in euro Sales development by region, y-o-y fx adjusted Q1 2011 Europe* 15% 14% 25% Americas 21% 55% Asia/Pacific 46% Group 21% 19% 0% 10% 20% 30% 40% 50% 60% ■ Broad-based growth in Europe led by the UK and Germany ■ Continued strong performance in the US drives
Slide 19: Sales by Distribution Channel – Double-digit increases in all channels
SALES BY DISTRIBUTION CHANNEL – Double-digit increases in all channels Sales development by distribution channel, in euro y-o-y fx adjusted Q1 2011 Wholesale 13% 10% Retail 42% 38% Royalties 15% 15% Group 21% 19% 0% 10% 20% 30% 40% 50% ■ Wholesale business rebounds from prior year low ■ Strong retai
Slide 20: Income Statement – Gross profit margin continues to improve
INCOME STATEMENT – Gross profit margin continues to improve ■ Own retail expansion +2.2 pp ■ Consistent pricing strategy 58.4% ■ Impact from higher sourcing costs 56.2% mitigated by efficiency improvements in sourcing and production Q1 2010 Q1 2011 Conference Call, First Quarter Results 2011 HUGO BO
Slide 21: Income Statement – First quarter EBITDA margin reaches 24.4%
INCOME STATEMENT – First quarter EBITDA margin reaches 24.4% in EUR million Q1 2011 Q1 2010 Change in % Net sales 539.2 444.2 21 Gross profit 314.7 249.6 26 in % of sales 58.4 56.2 2.2 pp Selling and distribution expenses (152.5) (132.8) (15) Administration costs and other operating income and expen
Slide 22: Segment Profit – Strong performance in the Americas and Asia/Pacific
SEGMENT PROFIT – Strong performance in the Americas and Asia/Pacific in EUR million Q1 2011 in % of sales Q1 2010 in % of sales Change in % Europe* 143.8 40.9 119.2 39.1 21 Americas 25.3 24.8 12.8 15.6 98 Asia/Pacific 25.3 33.8 15.4 32.0 64 Royalties 8.8 83.8 7.8 85.5 13 Segment profit operating seg
Slide 23: Net Working Capital – Low year-end level stabilized
NET WORKING CAPITAL – Low year-end level stabilized Net working capital as a percentage of sales by quarter (in %) 30% -4.6 pp 26.1% 24.4% 23.1% 20.3% 20% 17.6% 15.5% 14.0% 12.9% 13.0% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2009 2009 2009 2009 2010 2010 2010 2010 2011 ■ Inventories increase 28% to EUR 34
Slide 24: Net Debt – Further reduction in the first quarter
NET DEBT – Further reduction in the first quarter -41% ■ Net financial liabilities down compared to prior year quarter and year-end level 316 ■ Strong free cash flow generation supports progress 187 Q1 2010 Q1 2011 Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 24 / 34
Slide 25: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST QUARTER RESULTS 2011 OUTLOOK 2011 BACKUP Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 25 / 34
Slide 26: Financial Guidance – 2011 targets confirmed
FINANCIAL GUIDANCE – 2011 targets confirmed 2011 Outlook Sales growth at least 12% (currency-adjusted) Growth of EBITDA before at least 15% special items Capex approx. EUR 90 mill. Own retail network Expansion by around 70 stores Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011
Slide 27: Key Takeaways – HUGO BOSS off to a strong start in 2011
KEY TAKEAWAYS – HUGO BOSS off to a strong start in 2011 ■ Continued strong growth momentum in the first quarter ■ All brands in good shape ■ Execution of growth strategy and implementation of project D.R.I.V.E. key to future success Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2
Slide 28: Questions & Answers
QUESTIONS & ANSWERS Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 28 / 34
Slide 29: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST QUARTER RESULTS 2011 OUTLOOK 2011 BACKUP Conference Call, First Quarter Results 2011 HUGO BOSS © April 28, 2011 29 / 34
Slide 30: First Quarter Results at a Glance
FIRST QUARTER RESULTS AT A GLANCE Sales Gross margin (in EUR million) (in %) 600 539 58.4% 60% 56.2% 500 444 50% +2.2 pp +21% 400 40% 300 30% 200 20% 100 10% 0 0% Q1 2010 Q1 2011 Q1 2010 Q1 2011 EBITDA before special items Net debt (in EUR million) (in EUR million) 132 316 140 320 120 280 100 92 +43
Slide 31: Retail Network – Net increase of 7 stores
RETAIL NETWORK – Net increase of 7 stores Number of own retail stores: AMERICAS ASIA/PACIFIC CLOSINGS EUROPE* +4 544 +2 -7 537 +8 + 4 China + 1 USA + 1 Brazil + 4 Spain + 2 Great Britain + 1 Poland + 1 Portugal Dec 31, 2010 March 31, 2011 *Europe incl. Middle East / Africa Conference Call, First Qua
Slide 32: Financial Calendar 2011
FINANCIAL CALENDAR 2011 Date Event Publication April 28, 2011 First Quarter Results 2011 First Quarter Report 2011 Annual Shareholders’ May 10, 2011 Video Recording Meeting July 28, 2011 First Half Year Results 2011 First Half Year Report 2011 Video Recording November 2, 2011 Nine Months Results 201
Slide 33: Forward-Looking Statements Contain Risks
FORWARD-LOOKING STATEMENTS CONTAIN RISKS This document contains forward-looking statements that reflect management's Date current views with respect to future events. The words "anticipate“, "assume“, "believe", "estimate", "expect", "intend", "may", "plan", "project", "should", and similar expressi
Slide 34: HUGO BOSS
HUGO BOS S$