Hugo Boss Ag · XETR:BOSS
Hugo Boss — Non-Deal Roadshow (November 2016)
47 slides from Hugo Boss's roadshow presentation, Nov 30, 2016
Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Investor Meeting Presentation
Investor Meeting Presentation Mark Langer, CEO Frank Böhme, Investor Relations Manager Roadshow Paris • HSBC • November 30, 2016
Slide 3: HUGO BOSS has been impacted by some profound changes in the industry
HUGO BOSS has been impacted by some profound changes in the industry Premium and luxury apparel markets have weakened in all regions Global price transparency has rendered large price imbalances unsustainable Changing customer behavior requires adjustments to the route to market Growing impo
Slide 4: These changes have affected financial performance across the market
These changes have affected financial performance across the market… Luxury apparel market growth1 (fx-adjusted) Mean adjusted EBITDA margin in premium and luxury apparel & footwear peer group2 21.6% 21.1% 20.7% 19.1% 19.3% 18.3% 12% 17.3% 8% 8% 2% 2% 2% 2010 2011 2012 2013 2014 2015 2016e (4)% 2010
Slide 5: The Group's financial performance has also deteriorated
…and the Groupʼs financial performance has also deteriorated Sales (in EUR million), adj. EBITDA margin (in %) 2,809 2,059 1,968 2,572 2,432 2,346 2,059 1,729 1,562 22.8% 22.5% 23.2% 23.0% 21.2% 20.5% 20.5% 17.2% 17.6% 2009 2010 2011 2012 2013 2014 2015 9M 2015 9M 2016 Roadshow Paris // HSBC HUGO BO
Slide 6: HUGO BOSS faces four key challenges
In addition to these industry pressures HUGO BOSS faces four key challenges Current brand Go-to-market positioning is unclear approaches differ by market Current business Organizational inertia affects model neglects the the speed of decision-making potential of digital and key operational processes
Slide 7: HUGO BOSS has taken immediate actions
HUGO BOSS has taken immediate actions Cost savings 1 Reduced operating expense growth and investments significantly Consolidation of store network 2 Initiated program to close unprofitable stores Restructuring of US wholesale business 3 Discontinued distribution formats not in line with brand positi
Slide 8: The return to profitable and sustainable growth
Overall objective The return to profitable and sustainable growth Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 8
Slide 9: Vision: most desirable premium fashion & lifestyle brand
Vision Be the most desirable premium fashion & lifestyle brand Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 9
Slide 10: Corporate goals
Corporate goals PROFITABLE & Employ the Offer the best best people in SUSTAINABLE GROWTH products in the industry our segment Maximize customer satisfaction Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 10
Slide 11: Strategic and operational framework
Strategic and operational framework DIGITAL GLOBAL AGILE CUSTOMER- CENTRIC SUSTAINABLE Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 11
Slide 12: Fields of action
Fields of action DIGITAL III. DRIVE THE I. REFOCUS DIGITAL TRANS- THE BRAND FORMATION GLOBAL AGILE CUSTOMER- CENTRIC II. REFINE THE IV. INNOVATE WAY THE WAY WE SELL WE OPERATE SUSTAINABLE Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 12
Slide 13: Refocus the brand
REFOCUS THE BRAND Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 13
Slide 14: What has made our current brand positioning unclear?
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate What has made our current brand positioning unclear? Brand’s DNA diluted Brand lines miss clear Pricing strategy by an over-ambitious push into positioning and inconsistent between markets the
Slide 15: From a product & distribution-led brand portfolio to a customer-centric approach
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate From a product & distribution-led brand portfolio to a customer-centric approach Fashion level A large variety of customers with different expectations, needs and shopping behavior Extravagant
Slide 16: Focus on 2 strategically relevant customer segments
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate From a product & distribution-led brand portfolio to a customer-centric approach Fashion level Focus on 2 strategically relevant customer segments Extravagant Edgy Open-Minded Life Enthusiast F
Slide 17: Demanding Quality Seeker and Open-Minded Life Enthusiast
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Demanding Quality Seeker Open-Minded Life Enthusiast Attitude Status-oriented, traditional, rational Attitude Open-minded, individual, spontaneous Style Classic, modern, sophisticated Style Fas
Slide 18: Two brands, two brand identities, two target customers
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Focus on two clearly positioned brands TWO brands I TWO brand identities I TWO target customers Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 18
Slide 19: Focus on two clearly positioned brands
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Focus on two clearly positioned brands BOSS offers confident business wear and refined HUGO offers designer clothes at an affordable price casual wear for the demanding customer which give the
Slide 20: Two competitive environments
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Two competitive environments Upper Premium Premium Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 20
Slide 21: BOSS: Impeccably dressed whatever the occasion
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate BOSS: Impeccably dressed whatever the occasion BUSINESS SMART CASUAL AT H L E I S U R E Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 21
Slide 22: HUGO: Designer clothes at an affordable price
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate HUGO: Designer clothes at an affordable price BUSINESS CASUAL Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 22
Slide 23: Attractive pricing will contribute to the expansion of HUGO
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Attractive pricing will contribute to the expansion of HUGO across all regions Entry price point for suits Euro Countries (in EUR) United States (in USD) China (in CNY) 399 599 595 795 3,700 5,
Slide 24: Refine the way we sell
R E F I N E T H E W AY WE SELL Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 24
Slide 25: Our distribution strategy places equal importance on all channels
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Our distribution strategy places equal importance on all channels Wholesale Retail Both brands Both brands Focus on strengthening Focus on strengthening the core the core Grow online,
Slide 26: Ongoing evolution of the store network
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Ongoing evolution of the store network Openings Takeovers Renovations Closures Selective white space No further major franchise Renovation of around 100 Closure of 20 underperforming op
Slide 27: Increasing sales productivity the key focus of retail management
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Increasing sales productivity the key focus of retail management Sales productivity by retail format, FY 2015 Sales productivity by region, FY 2015 (in EUR/m2) (in EUR/m2) 12,000 12,000 ~9,600
Slide 28: Brand and merchandising strategy expected to increase sales volumes
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Adjustment of brand and merchandising strategy expected to increase sales volumes Units/ Average Traffic Conversion transaction price Comp store x x x = sales growth Growth Brand Merchandis
Slide 29: In-store merchandising to better balance offerings across price points
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate In-store merchandising changes will better balance offerings across price points… Illustration of composition of product assortment in directly operated stores Price Price Luxury Future Upper T
Slide 30: …and different wearing occasions
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate …and different wearing occasions To be added to the product range In-store today Smart casual Athleisure Business Womenswear S&A Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 30
Slide 31: New BOSS pricing architecture clears up historical imbalances
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate New BOSS pricing architecture clears up historical imbalances Americas Europe Asia BOSS prices to remain Single-digit % Mid-teens % virtually unchanged increase overall decline overall
Slide 32: Drive the digital transformation
D R I V E T H E D I G I TA L T R A N S F O R M AT I O N Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 32
Slide 33: The Group's digital roadmap
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate The Group’s digital roadmap Enable the cultural transformation Set the foundations Improve performance Takeover of website Rollout of omnichannel services frontend management Commercial o
Slide 34: 2017 will be about commercial optimization of our website
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate 2017 will be about the commercial optimization of our website Net Sales = Traffic x Conversion x # of Units x Avg Price SEO improvements Product availability Cross-selling Assortment
Slide 35: Innovate the way we operate
I N N O VAT E T H E W AY W E O P E R AT E Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 35
Slide 36: Agility is the basis of innovation
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Agility is the basis of innovation Establish flexible structures Empower our people Foster entrepreneurial thinking Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 36
Slide 37: Speed drives commercial success
Refocus the brand │ Refine the way we sell │ Drive the digital transformation │Innovate the way we operate Speed drives commercial success Adjust collection content based on short-term trends Replenish Become more sold-out flexible in our bestsellers approach in-season towards seasons Demand-driven
Slide 38: Financial & Operational Outlook
Wrap-Up Financial & Operational Outlook Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 38
Slide 39: HUGO BOSS continues to be focused on profitable and sustainable growth
HUGO BOSS continues to be focused on profitable and sustainable growth Improved speed-to- Refocusing of market and BOSS and agility HUGO Future Further Growth enhancement Acceleration Drivers of retail in Asia management Solid growth in Online and established omnichannel key markets Low- to mid-si
Slide 40: Disciplined cost management will support profitability
Disciplined cost management will support profitability Key influencing factors on gross margin and major cost items, medium-term trend as a % sales OPEX Gross profit margin Retail costs Marketing & CX1 G&A Channel mix Wage cost inflation Brand investments IT and digital Reduction of rebate
Slide 41: Our return path to profitable and sustainable growth
Our return path to profitable and sustainable growth Stabilization Acceleration Profitable growth Completion of store closure program Continuation of US distribution upgrade Go-live new merchandising strategy Go-live new brand strategy Next steps global price alignment 2019 2017 2018 Roadshow Paris
Slide 42: Continuously strong free cash flow supports shareholder returns
Continuously strong free cash flow generation supports shareholder returns 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 2009 2010 2011 2012
Slide 43: HUGO BOSS reconfirms sales and profit outlook for 2016
HUGO BOSS reconfirms sales and profit outlook for 2016 Outlook 2016 Sales (currency adjusted) Stable or decline by up to 3% Gross margin Stable EBITDA before special items Decrease between 17% and 23% Capex EUR 160 million to EUR 180 million Free cash flow Stable Wholesale sales decline of up to 1
Slide 44: 2016 – A year of change
2016 – A year of change Strategic adjustments gear HUGO BOSS towards the return to profitable and sustainable growth Roadshow Paris // HSBC HUGO BOSS © November 30, 2016 44
Slide 45: Financial Calendar 2017 and Investor Relations Contact
Financial Calender 2017 Date Event March 9, 2017 Press and Analysts‘ Conference May 3, 2017 Publication of the First Quarter Results May 23, 2017 Annual Shareholders‘ Meeting August 2, 2017 Publication of the First Half Year Report November 2, 2017 Publication of the Nine Months Results Investor Rel
Slide 46: 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 47: HUGO BOSS
HUGO BOSS