Hugo Boss AG · XETR:BOSS

Hugo Boss — Analysts' Conference 2016

33 slides from Hugo Boss's conference presentation, Mar 10, 2016

  1. Slide 1: HUGO BOSS

    HUGO BOSS

  2. Slide 2: Analysts' Conference 2016

    ANALYSTS’ CONFERENCE 2016 Mark Langer (CFO) Metzingen, March 10, 2016 HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 2

  3. Slide 3: Agenda

    Agenda Operational and financial review 2015 Strategic outlook 2016 Financial outlook 2016 HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 3

  4. Slide 4: Agenda: Operational and financial review 2015

    Agenda Operational and financial review 2015 Strategic outlook 2016 Financial outlook 2016 HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 4

  5. Slide 5: 2015 marks another year of growth for HUGO BOSS despite slowdown

    2015 marks another year of growth for HUGO BOSS despite slowdown Sales and EBITDA before special items +1% (in EUR million) +9%* Sales 2,809 EBITDA before special items 2,572 2,432 2,346 2,059 1,729 1,562 528 565 591 594 470 354 269 2009 2010 2011 2012 2013 2014 2015 *+3% FX-adjusted HUGO BOSS Analy

  6. Slide 6: Stable or even recessionary global market environment

    Stable or even recessionary global market environment 0 German apparel market, y-o-y Retail sales development (2) (2) (in %)* (3) 2012 2013 2014 2015 7 Americas luxury goods 5 4 market, y-o-y Personal luxury goods market 0 (in %)** 2012 2013 2014 2015 12 Chinese men’s luxury apparel market, y-o-y (1

  7. Slide 7: Europe best performing region again in 2015

    Europe best performing region again in 2015 HUGO BOSS Europe sales 2010-2015 ■ Business model transformation ongoing (in EUR million) 1,567 1,683 ■ Successful completion of category migration 1,245 1,378 1,457 process supports uplift of BOSS brand perception at 1,073 wholesale ■ Solid growth expecte

  8. Slide 8: Impressive fashion shows build BOSS Womenswear brand recognition

    Impressive fashion shows build BOSS Womenswear brand recognition HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 8

  9. Slide 9: Acceleration in the fourth quarter supports solid full year sales growth

    Acceleration in the fourth quarter supports solid full year sales growth Q4 Group sales FY Group sales (in EUR million) (in EUR million) +10% +9% 750 2,809 684 2,572 Q4 2014 Q4 2015 FY 2014 FY 2015 (+5% FX-adjusted) (+3% FX-adjusted) HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 9

  10. Slide 10: Region Europe more than offsets sales declines in the Americas and Asia/Pacific

    Region Europe more than offsets sales declines in the Americas and Asia/Pacific Sales growth by region, y-o-y in EUR Sales growth by region, y-o-y in EUR Q4 2015 FX-adjusted FY 2015 FX-adjusted (in %) (in %) 13 7 Europe* Europe* 10 6 9 14 Americas Americas (1) (1) 1 9 Asia/Pacific Asia/Pacific (7) (

  11. Slide 11: Own retail is the Group's growth driver also in 2015

    Own retail is the Group’s growth driver also in 2015 Sales growth by channel, y-o-y in EUR Sales growth by channel, y-o-y in EUR Q4 2015 FX-adjusted FY 2015 FX-adjusted (in %) (in %) 11 15 Retail Retail 6 7 6 1 Wholesale Wholesale 2 (3) 10 8 Licenses Licenses 10 8 10 9 Group Group 5 3 0 5 10 15 (5)

  12. Slide 12: Gross profit margin decline and higher operating expenses weigh on profit growth

    Gross profit margin decline and higher operating expenses weigh on profit growth Selling & Distribution Gross profit margin (10)bp expenses 66.0% 1,137 EUR million 14% Administration expenses EBITDA (before special items) 264 EUR million 12% 594 EUR million 1% EBIT Net income attributable to 0% equi

  13. Slide 13: Better inventory management supports working capital improvement

    Better inventory management supports working capital improvement Average trade net working capital as a percentage of sales (in %) Currency-adjusted inventory growth, y-o-y 19.7% 19.8% 19.8% 19.5% 20% 19.1% 18.7% Trade net working capital 17.9% 18.1% as a percentage of sales 15% Inventory growth y-o

  14. Slide 14: Higher investments affect free cash flow and net debt position

    Higher investments affect free cash flow and net debt position Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) +63% +130% (23)% 220 268 82 208 135 36 FY 2014 FY 2015 FY 2014 FY 2015 Dec. 31, 2014 Dec. 31, 2015 ■ Investments in retail and ■ Decrease due to highe

  15. Slide 15: Dividend proposal underlines financial strength and confidence in long-term growth

    Dividend proposal underlines financial strength and confidence in long-term growth in EUR in %*** 4.00 100 85% 3.62 3.62** 3.50 3.34 90 3.12 80 3.00 2.88 64% 65% 66% 64% 78% 70 75% 75% 2.50 70% 70% 70% 60 2.02 2.00 50 1.45* 1.37 40 1.50 1.19 1.00 0.96 30 1.00 20 0.50 10 0.00 0 2005 2006 2007 2008 20

  16. Slide 16: Agenda: Strategic outlook 2016

    Agenda Operational and financial review 2015 Strategic outlook 2016 Financial outlook 2016 HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 16

  17. Slide 17: Strong assets are solid foundation for Group's long-term success

    Strong assets are solid foundation for Group’s long-term success Globally recognized brand Strong operational infrastructure Passionate workforce Customer centricity, focus on brand control and global growth ambition to remain cornerstones of Group strategy HUGO BOSS Analysts' Conference 2016 HUGO B

  18. Slide 18: Upgrade of store network in China addresses legacy of prior franchise model

    Upgrade of store network in China addresses legacy of prior franchise model HUGO BOSS China sales 2010-2015 ■ Upgrade and optimization of retail presence ongoing (in EUR million) ■ Around 20 store closures planned in 2016 211 211 215 232 183 ■ Renegotiation of rental contracts yields positive initia

  19. Slide 19: Price adjustments further strengthen the brand's value proposition in Asia/Pacific

    Price adjustments further strengthen the brand’s value proposition in Asia/Pacific Price levels by market (indexed, after adjustment) ■ Price reduction of around 20% in China yields positive ~135 ~150 effect on demand and unit sales 100 ~110 ■ Stepped-up of social media and CRM activities contribute

  20. Slide 20: Upgrade of distribution in U.S. wholesale initiated

    Upgrade of distribution in U.S. wholesale initiated HUGO BOSS U.S. sales 2010-2015 ■ Category migration limits exposure of BOSS core brand (in EUR million) 463 530 434 447 to promotional retail environment 349 283 ■ Concession agreement with Macy’s in place since the end of January ■ BOSS core brand

  21. Slide 21: "Man of today" influencer program to re-ignite brand interest in the U.S.

    “Man of today” influencer program to re-ignite brand interest in the U.S. HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 21

  22. Slide 22: HUGO BOSS adjusts to changing customer journeys

    HUGO BOSS adjusts to changing customer journeys ■ hugoboss.com website important mean to engage customers and drive them to store ■ Insourcing of online fulfillment in Europe in May prerequisite for planned launch of omnichannel services later in the year ■ Marketing spend to prioritize digital over

  23. Slide 23: CRM and personalized service foster close ties with the customer

    CRM and personalized service foster close ties with the customer ■ Ongoing rollout of my HUGO BOSS and corresponding in-store application upgrades customer service ■ High focus on personnel management and retail trainings HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 23

  24. Slide 24: In-store performance sole driver of retail merchandising decisions in 2016

    In-store performance sole driver of retail merchandising decisions in 2016 BOSS BOSS BOSS BOSS BOSS Made To Measure Full Canvas Suits Tailored Premium Premium Formalwear Sportswear ~10% of net sales ~90% of net sales HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 24

  25. Slide 25: Improvement of retail performance takes priority over further network expansion

    Improvement of retail performance takes priority over further network expansion Number of HUGO BOSS freestanding stores ■ Around 100 store refurbishments planned in 2016 430 388 ■ Detailed analysis of underperforming stores being 327 371 prepared 277 196 ■ New store opening projects planned for 2016

  26. Slide 26: Agenda: Financial outlook 2016

    Agenda Operational and financial review 2015 Strategic outlook 2016 Financial outlook 2016 HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 26

  27. Slide 27: Sales trends in the second half of 2015 forecast to extend into 2016

    Sales trends in the second half of 2015 forecast to extend into 2016 Group sales are forecast to increase at low single-digit percentage rate* Sales by region* Sales by channel* Europe Retail Americas Wholesale Asia/Pacific Royalties *On a currency-adjusted basis HUGO BOSS Analysts' Conference 2016

  28. Slide 28: Strict focus on cost management and cash generation in light of challenging outlook

    Strict focus on cost management and cash generation in light of challenging outlook Margin protection Free cash flow protection Review of operating overhead cost structure Re-evaluation of planned 2016 store openings Renegotiations of rental contracts Review of other non-committed capital investment

  29. Slide 29: Free cash flow to exceed prior year level despite earnings decline

    Free cash flow to exceed prior year level despite earnings decline Outlook 2016 Sales growth (currency adjusted) Low single-digit percentage increase Gross margin Stable performance EBITDA before special items Low double-digit percentage decrease Capex < EUR 200 million Free cash flow Increase HUGO

  30. Slide 30: Management committed to making 2016 a year of change and opportunity

    Management committed to making 2016 a year of change and opportunity HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 30

  31. Slide 31: Questions & Answers

    Questions & Answers HUGO BOSS Analysts' Conference 2016 HUGO BOSS © March 10, 2016 31

  32. Slide 32: 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

  33. Slide 33: HUGO BOSS

    HUGO BOSS

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