Hugo Boss Ag · XETR:BOSS
Hugo Boss — 9M 2010 Earnings Presentation
30 slides from Hugo Boss's earnings presentation, Nov 2, 2010
Slide 1: HUGO BOSS
HUGO BOS S$
Slide 2: Conference Call Nine Months Results January – September 2010
Conference Call Nine Months Results January – September 2010 Claus-Dietrich Lahrs Mark Langer Chief Executive Officer Chief Financial Officer Metzingen | November 2, 2010 Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 2 / 30
Slide 3: Claus-Dietrich Lahrs, Chief Executive Officer
Claus-Dietrich Lahrs Chief Executive Officer Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 3 / 30
Slide 4: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST NINE MONTHS FIRST NINE MONTHS RESULTS OUTLOOK 2010 BACKUP Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 4 / 30
Slide 5: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST NINE MONTHS FIRST NINE MONTHS RESULTS OUTLOOK 2010 BACKUP Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 5 / 30
Slide 6: First Nine Months Results at a Glance
FIRST NINE MONTHS RESULTS AT A GLANCE Sales Gross Margin in EUR million in % 1,307 1,238 1.250 59.2% 58.0% 60% 54.3% 52.6% 1.000 50% 750 40% 538 500 450 30% 20% 250 10% 0 0% Q3 2009 Q3 2010 Jan. - Sep. 2009 Jan. - Sep. 2010 Q3 2009 Q3 2010 Jan. - Sep. 2009 Jan. - Sep. 2010 EBITDA before special item
Slide 7: Accelerating Momentum in Wholesale
ACCELERATING MOMENTUM IN WHOLESALE Wholesale sales growth by quarter, fx adjusted: in % 5.5% 5% 0% -5% -10% -7.6% -10.6% -15% -20% -17.7% Q1 2010 Q2 2010 Q3 2010 Jan. - Sep. 2010 Europe and the Americas drive improvement compared to the first half Healthy short-term replenishment business Conferece
Slide 8: New Joint Venture in China Up and Running
NEW JOINT VENTURE IN CHINA UP AND RUNNING New joint venture in China with long-time franchise partner Rainbow Group established in July HUGO BOSS holds 60% stake Group benefits from partner’s local market insight and infrastructure as well as access to new mall projects Third quarter net effect of E
Slide 9: Continued Expansion of Own Retail Network
CONTINUED EXPANSION OF OWN RETAIL NETWORK Year-to-date, number of directly operated stores increases by 78 to 510 stores at the end of September 52 net additions in the third quarter, including 34 joint venture stores Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 9 / 30
Slide 10: Online Sales Triple Compared to Prior Year
ONLINE SALES TRIPLE COMPARED TO PRIOR YEAR Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 10 / 30
Slide 11: Project D.R.I.V.E. Prepares Organization for Future Growth
PROJECT D.R.I.V.E. PREPARES ORGANIZATION FOR FUTURE GROWTH Understand and learn from the consumer Consumer at the center Create consumer centric collections React faster to market developments Increase conversion rates, productivity D.R.I.V.E and sell-thru in retail and in wholesale Design efficient
Slide 12: Developing Towards a Consumer Centric Company
DEVELOPING TOWARDS A CONSUMER CENTRIC COMPANY Wholesale Consumer orientation Product Samples / Sell-in / Sales floor development Production Showroom Consumer proximity Consumer Consumer orientation Product Samples / Sell-in / Sales floor development Production Showroom Conferece Call I Nine Months R
Slide 13: Lead Time Reduction from 50 to 38 Weeks Targeted
LEAD TIME REDUCTION FROM 50 TO 38 WEEKS TARGETED Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Product Development Sales Today Production Sell Thru Product Development Future Sales 4-cycle Production Feedback from market, sales, retail sales Sell Thru Conferece Call I Nin
Slide 14: Four Season Cycle Reflects Actual Consumer Demand
FOUR SEASON CYCLE REFLECTS ACTUAL CONSUMER DEMAND Today Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Future 4-cycle Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 14 / 30
Slide 15: Mark Langer, Chief Financial Officer
Mark Langer Chief Financial Officer Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 15 / 30
Slide 16: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST NINE MONTHS FIRST NINE MONTHS RESULTS OUTLOOK 2010 BACKUP Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 16 / 30
Slide 17: Strong Growth in Asia/Pacific and the Americas
STRONG GROWTH IN ASIA/PACIFIC AND THE AMERICAS Sales development by region, y-o-y: Jan. - Sep. 2010 Third quarter 2010 fx adjusted fx adjusted -2% 12% Europe* -1% in euro Europe* in euro 15% 11% 13% Americas 19% Americas 26% 16% 27% Asia/Pacific 26% Asia/Pacific 43% 2% 14% Group 6% Group 19% -5% 5%
Slide 18: Retail Sales Grow at Double-Digit Rates
RETAIL SALES GROW AT DOUBLE-DIGIT RATES Sales development by distribution channel, y-o-y: Jan. - Sep. 2010 Third quarter 2010 fx adjusted fx adjusted Wholesale -8% -5% in euro Wholesale 6% 10% in euro 27% 36% Retail 32% Retail 44% -5% 11% Royalties -5% Royalties 11% 2% 14% Group 6% Group 19% -10% 0%
Slide 19: Contribution Margin Improves by 5.4 Percentage Points in the First Nine Months
CONTRIBUTION MARGIN IMPROVES BY 5.4 PERCENTAGE POINTS IN THE FIRST NINE MONTHS Jan. - Sep. Jan. - Sep. Change in EUR million 2010 2009 in % Sales 1,307.0 1,238.0 6 1 Cost of Sales (521.0) (559.9) 7 Direct selling expenses (28.3) (27.3) (4) Contribution Margin 757.7 650.8 16 in % of Sales 58.0 52.6 5
Slide 20: Segment Profit Improvement in All Regions
SEGMENT PROFIT IMPROVEMENT IN ALL REGIONS First nine months segment profit, y-o-y: Jan. - Sep. In % of Sales Jan. - Sep. In % of Sales Change in % in EUR million 2010 2009 Europe* 122.2 14.4 99.0 11.6 23 Americas 28.6 10.3 6.5 2.8 >100 Asia/Pacific 23.8 15.4 8.0 6.6 >100 Royalties 59.1 65.3 59.0 65.
Slide 21: Average Net Working Capital Reaches Record Low
AVERAGE NET WORKING CAPITAL REACHES RECORD LOW Average net working capital as a percentage of sales by quarter: in % 30% 25.8% 25.5% 26.1% 24.4% 23.1% 20.3% 20% 17.6% 15.5% 14.0% 10% 0% Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Reduction of net working capital by 15% to
Slide 22: Trade Receivables Decline
TRADE RECEIVABLES DECLINE September 30 September 30 Change in % in EUR million 2010 2009 Trade receivables, other assets1 297.0 306.0 (3) Increase in inventories of 21% Inventories 325.2 267.8 21 (fx adj. 14%) reflects expected sales Trade payables and other liabilities1 (284.0) (215.2) (32) growth,
Slide 23: Strong Cash Flow Development Supports Net Debt Reduction
STRONG CASH FLOW DEVELOPMENT SUPPORTS NET DEBT REDUCTION Jan. - Sep. Jan. - Sep. in EUR million 2010 2009 Cash flow from operating activities 170.8 229.4 Cash flow from investing activities (37.3) (7.2) Cash flow from financing activities (56.0) (195.2) Change in cash and cash equivalents 79.4 27.4
Slide 24: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST NINE MONTHS FIRST NINE MONTHS RESULTS OUTLOOK 2010 BACKUP Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 24 / 30
Slide 25: 2010 Financial Outlook Increased
2010 FINANCIAL OUTLOOK INCREASED 2010 Guidance (old) 2010 Guidance (new) … 2015 Guidance Sales growth (fx. adj.) 3 - 5% 5% 8% (CAGR)** EBITDA growth 10 - 12% around 20% 11% (CAGR)** (before special items) Capex EUR 60 - 80 mill. around EUR 60 mill. Retail Network + 50 - 60 stores + 90 - 100 stores*
Slide 26: Agenda
AGENDA OPERATIONAL HIGHLIGHTS FIRST NINE MONTHS FIRST NINE MONTHS RESULTS OUTLOOK 2010 BACKUP Conferece Call I Nine Months Results 2010 HUGO BOSS © November 2, 2010 26 / 30
Slide 27: Group Income Statement
GROUP INCOME STATEMENT Jan. - Sep. Jan. - Sep. Change in % Q3 Q3 Change in % in EUR million 2010 2009 2010 2009 Sales 1,307.0 1,238.0 6 538.0 450.4 19 1 Cost of Sales (521.0) (559.9) 7 (205.1) (195.2) (5) Direct selling expenses (28.3) (27.3) (4) (14.4) (10.7) (35) Contribution Margin 757.7 650.8 16
Slide 28: Investments Focus on Retail Expansion
INVESTMENTS FOCUS ON RETAIL EXPANSION Investments in EUR million 16 17 2010 2009 15 10 7 6 6 6 5 2 2 1 1 0 Own Retail - New Own Retail - Other Sales and General and Manufacturing Projects Renovations Marketing Administration Total investments decline to EUR 31 mill. In 2010 (2009: EUR 32 mill.) Conf
Slide 29: 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 i
Slide 30: HUGO BOSS
HUGO BOS S$