Hugo Boss AG · XETR:BOSS

Hugo Boss — HUGO BOSS Analysts' Conference 2015

46 slides from Hugo Boss's conference presentation, Mar 12, 2015

  1. Slide 1: HUGO BOSS

    HUGO BOSS

  2. Slide 2: Analysts' Conference 2015

    ANALYSTS’ CONFERENCE 2015 Claus-Dietrich Lahrs (CEO) | Mark Langer (CFO) Metzingen, March 12, 2015 HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 2

  3. Slide 3: Claus-Dietrich Lahrs (CEO)

    Claus-Dietrich Lahrs (CEO) HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 3

  4. Slide 4: Agenda

    Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 4

  5. Slide 5: Agenda

    Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 5

  6. Slide 6: HUGO BOSS achieves solid sales and profit growth in 2014

    HUGO BOSS achieves solid sales and profit growth in 2014 Sales and EBITDA before special items +5% (in EUR million) +6%* Sales 2,572 EBITDA before special items 2,432 2,346 2,059 1,729 1,562 528 565 591 470 354 269 2009 2010 2011 2012 2013 2014 *+6% fx-adjusted HUGO BOSS Analysts' Conference 2015 HU

  7. Slide 7: Market environment more difficult than expected

    Market environment more difficult than expected German apparel ■ Lower consumer market, y-o-y spending for apparel (2) (2) Retail sales development (in %)* (3) ■ Unfavorable weather 2012 2013 2014 conditions 12 ■ Anti-corruption Chinese men’s luxury campaign reducing apparel market, y-o-y luxury gif

  8. Slide 8: Globally balanced footprint secures solid growth

    Globally balanced footprint secures solid growth Currency-adjusted sales development FY 2014 (in %) Europe Americas Asia/Pacific +7% +4% +7% Strength in core European markets shields the Group from economic turbulence elsewhere HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 8

  9. Slide 9: Retail expansion continues

    Retail expansion continues Number of own retail stores TOTAL 1,041 (+31) as of December 31, 2014 Total selling space 140,000 sqm (+4%) (December 31, 2013: 1,010) Openings 86 thereof takeovers 20 Closings 55 Europe* 595 (+19) Openings 43 thereof takeovers 5 Closings 24 Americas 204 (+4) Asia/Pacific

  10. Slide 10: Expansion and productivity improvements drive expansion of retail share

    Expansion and productivity improvements drive expansion of retail share Sales by distribution channel 44% 41% 53% 49% 64% 57% Wholesale Retail 54% 57% 45% 49% 40% 33% Licenses 3% 3% 2% 2% 2% 2% 2009 2010 2011 2012 2013 2014 HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 10

  11. Slide 11: HUGO BOSS has reached a new level in womenswear

    HUGO BOSS has reached a new level in womenswear BOSS Womenswear sales up 18% currency-adjusted, overall womenswear business +11% HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 11

  12. Slide 12: HUGO BOSS wins important brand rankings in Germany and China

    HUGO BOSS wins important brand rankings in Germany and China Germany China ■ HUGO BOSS named „Best Fashion ■ HUGO BOSS named „Best Fashion Brand“ Label for Men“ ■ Independent study conducted ■ Independent study conducted by market research institute GfK by The Hurun Research Institute ■ Based on com

  13. Slide 13: Mark Langer (CFO)

    Mark Langer (CFO) HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 13

  14. Slide 14: Agenda

    Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 14

  15. Slide 15: All regions contribute to Group sales growth in 2014

    All regions contribute to Group sales growth in 2014 in EUR in EUR Sales growth by region, y-o-y Sales growth by region, y-o-y Q4 2014 fx-adjusted FY 2014 fx-adjusted (in %) (in %) 4 7 Europe* Europe* 4 7 7 3 Americas Americas 1 4 9 4 Asia/Pacific Asia/Pacific 5 7 5 6 Group Group 3 6 0 5 10 0 5 10 ■

  16. Slide 16: Retail continues to drive Group sales increases

    Retail continues to drive Group sales increases in EUR in EUR Sales growth by channel, y-o-y Sales growth by channel, y-o-y fx-adjusted fx-adjusted Q4 2014 FY 2014 (in %) (in %) 2 (2) Wholesale Wholesale 0 (1) 8 12 Retail Retail 6 12 (5) 0 Licenses Licenses (5) 0 5 6 Group Group 3 6 (5) 0 5 10 (5) 0

  17. Slide 17: Robust full year gross profit margin improvement

    Robust full year gross profit margin improvement Fourth quarter Full year +120bp (80)bp 69.0 68.2 64.9 66.1 Q4 2013 Q4 2014 2013 2014 ■ Strong comparison base ■ Positive distribution channel mix ■ Above-average growth of outlet channel ■ Lower rebates ■ Moderate increase of rebates HUGO BOSS Analyst

  18. Slide 18: EBITDA grows despite higher operating expenses

    EBITDA grows despite higher operating expenses in EUR million ■ Own retail expansion main driver 2014 2013 Change in % of higher selling and Sales 2,571.6 2,432.1 6 distribution expenses Gross profit In % of sales 1,699.1 66.1 1,579.6 64.9 120 bp 8 ■ Marketing expenditures Selling and distribution e

  19. Slide 19: Region Europe records solid margin improvement

    Region Europe records solid margin improvement Segment profit in EUR million 2014 In % of sales 2013 In % of sales Change in % Europe* 536.1 34.2 490.2 33.6 9 Americas 151.1 25.8 152.0 26.7 (1) Asia/Pacific 112.2 31.1 117.3 33.8 (4) Licenses 49.1 85.2 49.3 85.2 0 Segment profit operating segments 84

  20. Slide 20: Trade net working capital increases despite moderation of inventory growth

    Trade net working capital increases despite moderation of inventory growth Dec. 31, 2014 507 ■ Retail expansion Inventories (in EUR million) +15% +8% ■ Softer sell-through Dec. 31, 2013 441 momentum fx-adjusted Dec. 31, 2014 251 ■ Timing of whole- Trade sale shipments receivables +11% +7% (in EUR mi

  21. Slide 21: Robust free cash flow growth

    Robust free cash flow growth Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) (27%) +17% (37)% 185 268 57 230 135 36 2013 2014 2013 2014 Dec. 31, 2013 Dec. 31, 2014 ■ Non-recurrence of prior ■ Increase mainly due to ■ Increase of FCF year distribution center low

  22. Slide 22: Adjusted financial leverage has remained broadly stable over the last years

    Adjusted financial leverage has remained broadly stable over the last years (Adjusted) financial leverage 2.4 2.2x 2.0 1.6 1.4x 1.6x ■ Adjusted financial leverage reflects 1.3x 1.3x profitability improvements offset by 1.2x 1.2x higher operating lease obligations 1.2 ■ Management comfortable with 0.

  23. Slide 23: Proposed dividend increases payout ratio to 75%

    Proposed dividend increases payout ratio to 75% Dividend and payout ratio in EUR in %* 4.00 100 3.62 90 3.50 3.34 3.12 80 3.00 2.88 75% 75% 70 2.50 70% 70% 70% 64% 60 2.02 2.00 50 40 1.50 0.96 30 1.00 20 0.50 10 0.00 0 2009 2010 2011 2012 2013 2014** Proposal in line with dividend policy of 60% to 8

  24. Slide 24: Claus-Dietrich Lahrs (CEO)

    Claus-Dietrich Lahrs (CEO) HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 24

  25. Slide 25: Agenda

    Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 25

  26. Slide 26: Growth strategy 2020 to drive further profitable growth

    Growth strategy 2020 to drive further profitable growth Elevate the Exploit growth Leverage the Build BOSS core brand’s potential omnichannel to opportunities in brand by under- in womenswear drive own retail engaging penetrated and shoes & online and offline consumers markets accessories emotionall

  27. Slide 27: Increasingly nuanced portfolio to support BOSS brand elevation

    Increasingly nuanced portfolio to support BOSS brand elevation Future brand positioning LUXURY RETAIL PREMIUM WHOLESALE authentic innovative confident progressive lighthearted dynamic sophisticated contemporary HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 27

  28. Slide 28: HUGO and BOSS Green to replace BOSS in category business

    HUGO and BOSS Green to replace BOSS in category business RETAIL WHOLESALE Own stores to increasingly focus on BOSS core brand Presence of BOSS core brand to become limited to exclusively shop-in-shops Category business focused on HUGO and BOSS Green HUGO BOSS Analysts' Conference 2015 HUGO BOSS © Ma

  29. Slide 29: Coming collections reflect product elevation in BOSS Womenswear

    Coming collections reflect product elevation in BOSS Womenswear HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 29

  30. Slide 30: BOSS campaign builds brand's credibility as a fashion destination

    BOSS campaign builds brand’s credibility as a fashion destination HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 30

  31. Slide 31: New openings and takeovers to contribute to retail expansion

    New openings and takeovers to contribute to retail expansion Number of own retail stores as of December 31 1,041 1,010 Outlets 113 122 840 Shop-in-Shops 104 Freestanding stores 622 531 526 537 88 413 79 264 261 323 371 388 270 197 2010 2011 2012 2013 2014 ■ Around 50 new openings planned in 2015 ■ T

  32. Slide 32: Omnichannel model geared to the demands of today's consumer

    Omnichannel model geared to the demands of today’s consumer Phase 2: hugoboss.com Phase 4: Completion of omni- relaunch online and mobile channel implementation 2014 2015 2016 Phase 1: Frontend Phase 3: Building the takeover digital flagship store Implementation of omnichannel business model under w

  33. Slide 33: Takeover of frontend has upgraded overall look and feel

    Takeover of frontend has upgraded overall look and feel HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 33

  34. Slide 34: Merger of online store and brand website drives traffic

    Merger of online store and brand website drives traffic Before Two different gateways for eCom store and brand website Seamless integration of Today content and commerce HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 34

  35. Slide 35: In-store availability feature introduced

    In-store availability feature introduced ■ Provides real-time store inventory information ■ Enables search for product in other stores ■ Locates closest store in relation to customer’s IP address or GPS position HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 35

  36. Slide 36: Further improvement of retail execution to support solid growth in Europe

    Further improvement of retail execution to support solid growth in Europe ■ Tough industry environment and weak customer footfall in many markets ■ Focus on improving in-store experience as well as customer service and relationship management ■ Underpenetrated categories and markets offer attractive

  37. Slide 37: Brand control key for success in the Americas

    Brand control key for success in the Americas ■ Promotional market environment set to continue for foreseeable future ■ Important retail-related process improvements under way ■ Focus on upgrade of brand presentation in US wholesale business BOSS Store Washington DC, City Center HUGO BOSS Analysts'

  38. Slide 38: Strategic progress in China adds to strength of other markets in Asia

    Strategic progress in China adds to strength of other markets in Asia ■ Growing momentum in formalwear to support further share gains in China despite ongoing market weakness ■ Confident outlook for Australia and Japan ■ Direct control of trendsetting South Korean market to improve market position B

  39. Slide 39: B2C distribution center builds foundation for omnichannel

    B2C distribution center builds foundation for omnichannel B2C Warehouse Wendlingen, Germany ■ Former flat-packed goods facility to serve as a B2C distribution center going forward ■ Key tasks: Storage, packing, return handling, product refurbishment ■ Handling of product returns from all European ma

  40. Slide 40: Launch of new systems refines retail management

    Launch of new systems refines retail management Retail Merchandise Planning Retail Assortment Planning ■ Systems-based planning process ■ SAP-based assortment planning based on sales, margins and approach based on store capacity, Purpose stock levels location characteristics and product lifecycles ■

  41. Slide 41: Consolidation of own production network drives operational efficiency

    Consolidation of own production network drives operational efficiency Metzingen, Germany (Group Headquarter) Radom, Poland Cleveland, USA Morrovalle and Scandicci, Italy 20% own Izmir, Turkey production* 80% third party production* *Percentage based on procurement volumes HUGO BOSS Analysts' Confere

  42. Slide 42: Solid growth of sales and operating profit expected in 2015

    Solid growth of sales and operating profit expected in 2015 Outlook 2015 Sales growth (currency-adjusted) Mid-single-digit rate Growth of 5% - 7% EBITDA before special items Capex EUR 200 million – EUR 220 million Own retail network Around 50 openings (excl. takeovers) HUGO BOSS Analysts' Conference

  43. Slide 43: Clear growth plan in place to overcome external challenges

    Clear growth plan in place to overcome external challenges ■ Group has coped well with market weakness in 2014 ■ Multi-faceted opportunities provide numerous levers for long-term growth ■ Another year of solid financial performance and important strategic progress ahead BOSS Store Osaka, Shinsaibash

  44. Slide 44: Questions & Answers

    QUESTIONS & ANSWERS HUGO BOSS Analysts' Conference 2015 HUGO BOSS © March 12, 2015 44

  45. Slide 45: 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

  46. Slide 46: HUGO BOSS

    HUGO BOSS

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