Hugo Boss AG · XETR:BOSS
Hugo Boss — FY2012 Earnings Presentation
52 slides from Hugo Boss's earnings presentation, Mar 14, 2013
Slide 1: HUGO BOSS
HUGO BOS 5S
Slide 2: Analysts' Conference 2013
ANALYSTS’ CONFERENCE 2013 Claus-Dietrich Lahrs (CEO) I Mark Langer (CFO) Metzingen, March 14, 2013 HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 2 / 52
Slide 3: Agenda
Agenda Operational highlights Financial highlights Strategic initiatives and outlook Summary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 3 / 52
Slide 4: Agenda: Operational highlights
Agenda Operational highlights Financial highlights Strategic initiatives and outlook Summary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 4 / 52
Slide 5: HUGO BOSS achieves record results
HUGO BOSS achieves record results Sales and EBITDA before special items Sales (in EUR million) EBITDA before special items 3,000 +13% +14%* 2,346 2,059 1,686 1,729 1,562 750 469 529 272 354 269 2008 2009 2010 2011 2012 … 2015e * +10% fx-adjusted. HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March
Slide 6: Beijing show largest BOSS fashion event ever in Asia
Beijing show largest BOSS fashion event ever in Asia BOSS fashion show, Beijing Fall/Winter 2012 collection HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 6 / 52
Slide 7: BOSS brand grows at double-digit rates across clothing and sportswear
BOSS brand grows at double-digit rates across clothing and sportswear HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 7 / 52
Slide 8: HUGO BOSS makes a strong statement at the Vendée Globe
HUGO BOSS makes a strong statement at the Vendée Globe HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 8 / 52
Slide 9: HUGO rocks Berlin fashion week
HUGO rocks Berlin fashion week HUGO fashion show, Berlin Fall 2013 collection HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 9 / 52
Slide 10: Womenswear business set for sustainable long-term growth
Womenswear business set for sustainable long-term growth HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 10 / 52
Slide 11: Successful product launches drive fragrance business
Successful product launches drive fragrance business HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 11 / 52
Slide 12: Own retail has grown into the Group's biggest distribution channel
Own retail has grown into the Group’s biggest distribution channel Sales by distribution channel Retail 22% 45% 49% 55% Wholesale 75% 53% 49% 43% … Royalties 3% 2% 2% 2% 2005 2011 2012 2015e HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 12 / 52
Slide 13: Further expansion of the own retail network
Further expansion of the own retail network Number of own retail stores as of December 31, 2012 (December 31, 2011: 622) TOTAL 840 (+218) Openings: 238 thereof takeovers: 116 Closings: 20 EUROPE* 469 (+159) Openings: 166 thereof takeovers: 87 Closings: 7 AMERICAS 147 (+23) ASIA/PACIFIC 224 (+36) Ope
Slide 14: High profile store openings across all continents
High profile store openings across all continents BOSS Store, Brussels BOSS Store, Toronto BOSS Store, Melbourne Boulevard de Waterloo Yorkdale Crown Plaza Opening: October 2012 Opening: November 2012 Opening: December 2012 Net size: 423 sqm Net size: 339 sqm Net size: 458 sqm HUGO BOSS Analysts' Co
Slide 15: Renovations offer attractive potential for productivity uplifts
Renovations offer attractive potential for productivity uplifts BOSS Store, Sydney King Street BOSS Store, London Regent Street BOSS Store, Paris Avenue des Champs-Élysées HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 15 / 52
Slide 16: Agenda: Financial highlights
Agenda Operational highlights Financial highlights Strategic initiatives and outlook Summary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 16 / 52
Slide 17: All regions contribute to Group sales growth in 2012
All regions contribute to Group sales growth in 2012 Sales growth by region, y-o-y in EUR Sales growth by region, y-o-y in EUR Q4 2012 fx-adjusted FY 2012 fx-adjusted (in %) (in %) 26 11 Europe* Europe* 24 10 24 23 Americas Americas 18 14 9 14 Asia/Pacific Asia/Pacific 3 4 22 14 Group Group 18 10 0
Slide 18: Robust growth in retail primary driver of Group sales increases
Robust growth in retail primary driver of Group sales increases Sales growth by channel, y-o-y in EUR Sales growth by channel, y-o-y in EUR Q4 2012 fx-adjusted FY 2012 fx-adjusted (in %) (in %) 21 5 Wholesale Wholesale 19 2 23 24 Retail Retail 19 19 10 15 Royalties Royalties 10 15 22 14 Group Group
Slide 19: Sales and gross margin improvements support net income growth
Sales and gross margin improvements support net income growth in EUR million 2012 2011* Change in % Net sales 2,345.9 2,058.8 14 Gross profit 1,453.2 1,264.8 15 in % of sales 61.9 61.4 0.5 pp ■ Positive channel mix effects and Selling and distribution expenses (808.8) (682.1) (19) efficiency improve
Slide 20: Margin improvements in the Americas and Asia benefit Group operating profit
Margin improvements in the Americas and Asia benefit Group operating profit growth Segment profit in % of in % of in EUR million 2012 segment sales 2011 segment sales Change in % Europe* 510.7 37.1 486.3 39.0 5 Americas 153.3 27.4 122.3 26.9 25 Asia/Pacific 131.2 37.2 111.1 35.9 18 Royalties 50.4 89
Slide 21: Trade net working capital grows significantly slower than sales
Trade net working capital grows significantly slower than sales Dec. 31, 2012 430 Inventories (6)% (6)% ■ Effective reduction (in EUR million) measures Dec. 31, 2011 458 fx-adjusted Trade Dec. 31, 2012 215 receivables +23% +24% ■ High December delivery volumes (in EUR million) Dec. 31, 2011 175 fx-a
Slide 22: Operating profit increase and working capital discipline support free cash flow
Operating profit increase and working capital discipline support free cash flow generation Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) +54% +13% (13)% 166 221 149 195 130 108 2011 2012 2011 2012 Dec. 31, 2011 Dec. 31, 2012 ■ Own retail expansion ■ Increase
Slide 23: Dividend proposal of EUR 3.12 per share reflects 70% payout ratio
Dividend proposal of EUR 3.12 per share reflects 70% payout ratio Dividend and payout ratio in EUR in %* 3.50 90 3.12 85% 80 3.00 2.88 75% 70 2.50 70% 70% 64% 60 2.02 2.00 50 1.50 1.37 40 0.96 30 1.00 20 0.50 10 0.00 0 2008 2009 2010 2011 2012** Proposal in line with dividend policy of 60% to 80% pa
Slide 24: HUGO BOSS successfully completes refinancing
HUGO BOSS successfully completes refinancing ■ Current syndicated loan was scheduled to mature in May 2013 ■ New 5-year, EUR 450 million syndicated loan facility structured in EUR 100 million term loan and EUR 350 million revolving credit facility ■ Strong demand and favorable conditions document co
Slide 25: Agenda: Strategic initiatives and outlook
Agenda Operational highlights Financial highlights Strategic initiatives and outlook Summary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 25 / 52
Slide 26: Continued focus on execution of medium-term strategy
Continued focus on execution of medium-term strategy STRENGTHENING MAXIMIZING OUR CONSUMER FOCUS BRANDS TO DRIVE RETAIL STRIVING FOR EXPLOITING OPERATIONAL GLOBAL EXCELLENCE GROWTH OPPORTUNITIES HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 26 / 52
Slide 27: Strong portfolio of attractive brands
Strong portfolio of attractive brands market segment luxury premium fashion statement casual modern modern progressive urban chic active sophisticated contemporary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 27 / 52
Slide 28: Integration of BOSS Black and BOSS Selection elevates the core brand
Integration of BOSS Black and BOSS Selection elevates the core brand HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 28 / 52
Slide 29: Unprecedented focus on womenswear
Unprecedented focus on womenswear HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 29 / 52
Slide 30: Dedicated advertising campaign puts womenswear in the spotlight
Dedicated advertising campaign puts womenswear in the spotlight HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 30 / 52
Slide 31: HUGO celebrates 20th anniversary
HUGO celebrates 20th anniversary HUGO 20th anniversary 20 iconic products HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 31 / 52
Slide 32: New BOSS Orange campaign takes consumers on a roadtrip
New BOSS Orange campaign takes consumers on a roadtrip HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 32 / 52
Slide 33: Martin Kaymer the face of the BOSS Green campaign
World class golfer Martin Kaymer the face of the BOSS Green campaign HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 33 / 52
Slide 34: Retail to remain the Group's growth engine
Retail to remain the Group’s growth engine Flagships in mega-cities Directly operated stores Controlled space E-Commerce M-Commerce 50 new stores and shop-in-shops to be opened in 2013 HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 34 / 52
Slide 35: New flagship stores define highest level of customer experience
New flagship stores define highest level of customer experience BOSS Store Shanghai, BOSS Store Shanghai, BOSS Store Amsterdam, Kerry Center APM International Leidsestraat BOSS Store Berlin, BOSS Store Stuttgart, BOSS Store Tokyo, Kurfürstendamm Königstraße Omotesando HUGO BOSS Analysts' Conference
Slide 36: Expansion of concession business model
Expansion of concession business model ■ Successful set-up of concession business model in the last year… … to be further expanded in 2013. HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 36 / 52
Slide 37: Chinese online store launched
Chinese online store launched HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 37 / 52
Slide 38: Continuous strive for operational excellence
Continuous strive for operational excellence ■ Continued SAP rollout ■ Implementation of global retail merchandise planning solution ■ Construction of flat-packed goods distribution center on track for 2014 opening HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 38 / 52
Slide 39: Extended brand control to drive growth in Europe
Extended brand control to drive growth in Europe ■ Expansion of own retail and controlled space in multi-brand environments ■ Intact growth trends in key European markets ■ Ambitious medium-term expansion plans in Russia BOSS Store, Brussels Boulevard de Waterloo HUGO BOSS Analysts' Conference 2013
Slide 40: Solid increases expected in America
Solid increases expected in America ■ European lifestyle brand value a solid foundation for further growth ■ Breadth of brand portfolio offers attractive opportunities ■ Continuous focus on further enhancement of retail experience BOSS Store, Los Angeles Beverly Center HUGO BOSS Analysts' Conference
Slide 41: Gradual improvement in China to support better performance in Asia/Pacific
Gradual improvement in China to support better performance in Asia/Pacific ■ Multiple initiatives in place to drive brand perception and awareness in China ■ Brand-building upgrades of Chinese retail network under way ■ Performance in Japan and Australia to improve compared to prior year BOSS Store,
Slide 42: 2013 Outlook
HUGO BOSS expects continued top and bottom line increases in 2013 2013 Outlook Sales growth (currency-adjusted) High-single-digit Growth of EBITDA before special items 10% to 12% Growth of EBITDA before special items High-single-digit Capex Increase on a comparable basis Own retail network Around 50
Slide 43: Agenda: Summary
Agenda Operational highlights Financial highlights Strategic initiatives and outlook Summary HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 43 / 52
Slide 44: 2013 to be another important step towards medium-term goals
2013 to be another important step towards medium-term goals ■ Group prepared to outperform difficult retail environments ■ Proven strategy solid foundation for growth ■ Important progress towards 2015 goals expected HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 44 / 52
Slide 45: Backup
BACKUP HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 45 / 52
Slide 46: Full year results at a glance
Full year results at a glance Sales Gross margin (in EUR million) (in %) +0.5pp +14% +10% 2,346 61.4% 61.9% 2,059 fx-adjusted 2011 2012 2011 2012 EBITDA before special items Net debt (in EUR million) (in EUR million) +13% (13)% 529 149 469 130 2011 2012 Dec. 31, 2011 Dec. 31, 2012 HUGO BOSS Analysts
Slide 47: Profit & loss statement
Profit & loss statement in EUR million Q4 2012 Q4 2011* Change in % 2012 2011* Change in % Net sales 607.4 499.3 22 2,345.9 2,058.8 14 Cost of sales (206.4) (160.2) (29) (849.2) (756.5) (12) Direct selling expenses (9.4) (8.4) (12) (43.5) (37.5) (16) Gross profit 391.6 330.6 18 1,453.2 1,264.8 15 in
Slide 48: Trade net working capital
Trade net working capital Average trade net working capital as a percentage of sales by quarter (in %) 29.7 30 28.5 27.2 24.6 +0.2pp 25 22.7 20.9 20.8 21.0 19.9 19.6 19.9 20.2 20.1 20 19.2 19.1 19.3 15 10 5 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4
Slide 49: Retail Network
Retail Network Number of own retail stores: +44 (20) 840 +28 +166 + 27 China + 11 Canada + 11 Taiwan + 9 USA + 4 Japan + 4 Mexico 622 + 2 Australia + 4 Brazil + 60 Spain + 32 Switzerland + 30 France + 11 Belgium + 5 Netherlands + 5 UK + 4 Germany + 4 Italy + 4 Portugal + 3 Austria + 3 Poland + 3 Swe
Slide 50: Financial calendar 2013
Financial calendar 2013 Date Event March 14, 2013 Press and Analysts’ Conference May 2, 2013 First Quarter Results May 16, 2013 Annual Shareholders’ Meeting July 31, 2013 First Half Year Results October 31, 2013 Nine Months Results HUGO BOSS Analysts' Conference 2013 HUGO BOSS © March 14, 2013 50 /
Slide 51: Forward looking statements contain risks
Forward looking statements contain risks This document contains forward-looking statements that reflect management's current views with respect to future events. The words "anticipate ", "assume ", "believe", "estimate", "expect", "intend", "may", "plan", "project", "should", and similar expressions
Slide 52: HUGO BOSS
HUGO BOS 5S