Hugo Boss Ag · XETR:BOSS
Hugo Boss — HSBC Luxury Conference 2014
45 slides from Hugo Boss's conference presentation, May 22, 2014
Slide 1: HUGO BOSS
HUGO BOS 5S
Slide 2: HSBC Luxury Conference – HUGO BOSS Company Handout
HSBC Luxury Conference HUGO BOSS Company Handout May 22-23, 2014 HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 2 / 45
Slide 3: Agenda
Agenda Strategy review First quarter results Outlook HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 3 / 45
Slide 4: Agenda
Agenda Strategy review First quarter results Outlook HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 4 / 45
Slide 5: 2013 a year of good strategic and financial progress
2013 a year of good strategic and financial progress Sales and EBITDA before special items Sales (in EUR million) +7% EBITDA before special items +4%* 2,432 2,346 2,059 1,729 1,562 528 565 470 354 269 *+6% fx-adjusted. 2009 2010 2011 2012 2013 HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 5 / 4
Slide 6: Financial performance testifies to successful strategy execution
Financial performance testifies to successful strategy execution MAXIMIZING GROWING THE BRAND ATTRACTIVENESS GROUP’S OWN RETAIL BUSINESS IMPROVING LEVERAGING OPERATIONAL PROCESSES GLOBAL GROWTH POTENTIAL HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 6 / 45
Slide 7: Further strengthening the brand portfolio
Further strengthening the brand portfolio market segment luxury premium fashion statement casual modern modern progressive urban chic active sophisticated contemporary HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 7 / 45
Slide 8: Unleashing the emotional power of the brand
Unleashing the emotional power of the brand HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 8 / 45
Slide 9: Increased awareness to drive sales growth in womenswear
Increased awareness to drive sales growth in womenswear HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 9 / 45
Slide 10: Womenswear visibility increasing at wholesale and in own retail
Womenswear visibility increasing at wholesale and in own retail BOSS womenswear shop, Matsuya Ginza, Tokyo BOSS womenswear shop, Printemps Haussmann, Paris BOSS womenswear floor, Columbus Circle, New York HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 10 / 45
Slide 11: Expansion and productivity improvements to drive future retail growth
Expansion and productivity improvements to drive future retail growth Stores Europe* 2009: 219 ■ Successful exploitation of white space 2013: 576 + 357 opportunities in the past few years ■ Around 50 new store openings expected in 2014 ■ Focus on sales productivity improvements Stores Americas 2009:
Slide 12: Upgrade and expansion of retail store universe
Upgrade and expansion of retail store universe Number of flagship stores 25 16 15 13 11 BOSS Store, Central Building, BOSS Store, Canton Road, 2009 2010 2011 2012 2013 Hong Kong Hong Kong HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 12 / 45
Slide 13: Extended brand control in department stores
Extended brand control in department stores Printemps, Paris Saks 5th Avenue, New York Selfridges, London HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 13 / 45
Slide 14: Improving frontline execution
Improving frontline execution ■ Superior service levels in line with brand proposition ■ Focus on ensuring high standards globally ■ Strong emphasis on customer feedback and constant evaluation HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 14 / 45
Slide 15: Omnichannel main strategic focus in coming years
Omnichannel main strategic focus in coming years HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 15 / 45
Slide 16: Rollout of myhugoboss.com started
Rollout of myhugoboss.com started HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 16 / 45
Slide 17: Further operational process improvements offer significant long-term potential
Further operational process improvements offer significant long-term potential ■ Retail merchandise planning tool provides integrated view of sales and inventories ■ Positive impact on full-price sell-throughs ■ Rollout in phases until end of 2015 HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 1
Slide 18: Migration to new distribution center according to plan
Migration to new distribution center according to plan ■ Migration under way and to be completed by the end of June ■ Shorter time to market ■ Efficiency gains through comprehensive automation and close upstream integration HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 18 / 45
Slide 19: Encouraging trends in Europe to continue
Encouraging trends in Europe to continue ■ Improving sentiment among customers and retail partners ■ Ongoing business model transformation towards own retail ■ Focus on lifting brand presence in multi-brand environments HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 19 / 45
Slide 20: Positive outlook for the Americas despite headwinds
Positive outlook for the Americas despite headwinds at the beginning of the year ■ Sharp deceleration of overall market growth ■ Very disciplined market approach to support long-term growth and profitability ■ Positive womenswear reception adds to key strength in menswear HSBC Luxury Conference HUGO
Slide 21: Asia remains Group's largest regional opportunity
Asia remains Group’s largest regional opportunity ■ Important investments in retail presence and brand perception ■ Franchise legacy thoroughly addressed ■ Suiting competence a key competitive differentiator HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 21 / 45
Slide 22: Agenda
Agenda Strategy review First quarter results Outlook HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 22 / 45
Slide 23: HUGO BOSS off to a good start in 2014
HUGO BOSS off to a good start in 2014 Sales EBITDA before special items (in EUR million) (in EUR million) +3% (1)% 613 133 131 594 Q1 2013 Q1 2014 Q1 2013 Q1 2014 (+6% fx-adjusted) HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 23 / 45
Slide 24: Good momentum in Europe drives Group sales increase
Good momentum in Europe drives Group sales increase Sales growth by region, y-o-y in EUR Q1 2014 fx-adjusted (in %) 8 Europe* 8 (7) Americas (2) 0 Asia/Pacific 7 3 Group 6 (8) (4) 0 4 8 ■ UK and Germany strongest growing major markets in Europe ■ Tough market environment weighs on sales development
Slide 25: Like-for-like growth acceleration contributes to robust retail sales development
Like-for-like growth acceleration contributes to robust retail sales development Sales growth by channel, y-o-y in EUR Q1 2014 fx-adjusted (in %) 16 Retail 19 (8) Wholesale (6) 0 Royalties 0 3 Group 6 (8) (5) 0 5 10 15 20 ■ Europe primary driver of 6% comp store sales increase supporting double-digi
Slide 26: Growth investments weigh on short-term margin development
Growth investments weigh on short-term margin development in EUR million Net sales Q1 2014 612.6 Q1 2013* 593.5 Change in % 3 ■ Investments in own retail, marketing Gross profit 400.6 366.8 9 and logistics main driver of higher in % of sales 65.4 61.8 360 bp selling and distribution expenses Selling
Slide 27: Higher working capital position due to inventory increase
Higher working capital position due to inventory increase Mar 31, 2014 430 ■ Increase reflects mix Inventories shift to own retail +10% +16% (in EUR million) business Mar 31, 2013 391 fx-adjusted Trade Mar 31, 2014 231 ■ Reduction due to (7)% (4)% wholesale sales receivables (in EUR million) decline
Slide 28: Strong free cash flow generation supports further net debt reduction
Strong free cash flow generation supports further net debt reduction Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) (32)% >100% (78)% 31 31 124 21 27 5 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Mar 31, 2013 Mar 31, 2014 ■ Moderation due to non- ■ Cash generation ■ Stron
Slide 29: Several shop-in-shop closures mask underlying retail space expansion
Several shop-in-shop closures mask underlying retail space expansion Number of own retail stores as of March 31, 2014 (December 31, 2013: 1,010) TOTAL 1,007 (-3) Openings: 25 thereof takeovers: 12 Closings: 28 EUROPE* 574 (-2) Openings: 10 thereof takeovers: - Closings: 12 AMERICAS 198 (-2) ASIA/PAC
Slide 30: Agenda
Agenda Strategy review First quarter results Outlook HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 30 / 45
Slide 31: 2014 Outlook
Full year financial guidance reconfirmed 2014 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 EUR 110 million - EUR 130 million Own retail network Around 50 organic openings HSBC
Slide 32: Positive outlook despite ongoing challenges in some key markets
Positive outlook despite ongoing challenges in some key markets ■ Strength in Europe to continue ■ Uncertainties persist in the US and China ■ Business model transformation and better wholesale business to support accelerated growth over the remainder of 2014 HSBC Luxury Conference HUGO BOSS © May 2
Slide 33: Backup
BACKUP HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 33 / 45
Slide 34: Five year overview
Five year overview* in EUR million 2013 2012 2011 2010 2009 Earnings Position Sales 2,432.1 2,345.9 2,058.8 1,729.4 1,561.9 Gross profit 1,579.6 1,444.1 1,252.0 1,022.4 836.2 EBITDA 561.4 523.9 468.0 340.1 226.5 EBITDA before special items 564.7 528.1 469.5 353.7 269.2 EBIT 456.2 432.0 394.6 267.9 1
Slide 35: Profit & loss statement
Profit & loss statement in EUR million Q1 2014 Q1 2013* Change in % 2013 2012* Change in % Net sales 612.6 593.5 3 2,432.1 2,345.9 4 Cost of sales (212.0) (226.7) 6 (852.5) (901.8) 5 Gross profit 400.6 366.8 9 1,579.6 1,444.1 9 in % of sales 65.4 61.8 360 bp 64.9 61.6 330 bp Selling and distribution
Slide 36: Segment profitability
Segment profitability Segment profit in EUR million Q1 2014 in % of sales Q1 2013* in % of sales Change in % Europe** 136.6 34.6 123.1 33.6 11 Americas 25.0 21.0 29.6 23.2 (16) Asia/Pacific 26.5 30.7 29.2 33.8 (9) Royalties 10.7 82.8 11.0 85.1 (3) Segment profit operating segments 198.8 32.5 192.9 3
Slide 37: Retail comp stores sales growth
Retail comp stores sales growth Sales growth retail l-f-l* Retail l-f-l 20 16% 15 13% 12% 11% 11% 10 10% 6% 5% 5 4% 4% 4% 3% 2% 2% 2% 2% 0 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2014 *fx-adjusted. HSBC Luxury Confere
Slide 38: Trade net working capital
Trade net working capital Average trade net working capital as a percentage of sales by quarter* (in %) 22 20.7 (180)bp 20.1 20.6 19.8 19.7 20 18.6 18.0 17.9 17.9 18 16 14 12 10 8 6 4 2 0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 *Certain amounts shown here do not corre
Slide 39: Retail network
Retail network Number of own retail stores: + 14 (28) + 10 +1 1,007 1,010 + 1 Canada + 12 Australia + 1 Hong Kong + 6 France + 1 Taiwan + 2 Italy + 1 Germany + 1 Turkey Dec 31, 2013 Europe* Americas Asia/Pacific Closings Mar 31, 2014 *Europe incl. Middle East and Africa. HSBC Luxury Conference HUGO
Slide 40: Sales split by distribution channel
Sales split by distribution channel Sales by distribution channel 49% 44% 57% 53% 64% Wholesale Retail 49% 54% 40% 45% 33% Royalties 3% 3% 2% 2% 2% 2009 2010 2011 2012 2013 HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 40 / 45
Slide 41: Dividend development
Dividend development Dividend and payout ratio in EUR in %* 3.50 3.34 90 3.12 80 3.00 2.88 75% 70 2.50 70% 70% 70% 64% 60 2.02 2.00 50 1.50 40 30 1.00 0.96 20 0.50 10 0.00 0 2009 2010 2011 2012 2013** Proposal in line with dividend policy of 60% to 80% payout of consolidated net profit *As a percent
Slide 42: Financial calendar 2014
Financial calendar 2014 Date Event May 13, 2014 Annual Shareholders’ Meeting July 31, 2014 First Half Year Results November 4, 2014 Nine Months Results HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 42 / 45
Slide 43: Investor Relations contact
Investor Relations contact Dennis Weber, CFA Head of Investor Relations Phone: +49 (0) 7123 94 - 86267 E-Mail: Dennis_Weber@hugoboss.com Internet: www.hugoboss.com HSBC Luxury Conference HUGO BOSS © May 22-23, 2014 43 / 45
Slide 44: 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 45: HUGO BOSS
HUGO BOS 5S