Hugo Boss Ag · XETR:BOSS

Hugo Boss — HUGO BOSS Analysts' Conference 2017

40 slides from Hugo Boss's conference presentation, Mar 9, 2017

  1. Slide 1: HUGO BOSS

    HUGO BOSS

  2. Slide 2: Analysts' Conference 2017

    Analystsʼ Conference 2017 Metzingen – March 9, 2017 Mark Langer Chief Executive Officer Ingo Wilts Chief Brand Officer Bernd Hake Chief Sales Officer HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 2

  3. Slide 3: Mark Langer, Chief Executive Officer

    Mark Langer Chief Executive Officer HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 3

  4. Slide 4: 2016 – A year of change

    2016 – A year of change HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 4

  5. Slide 5: Industry under pressure in 2016

    Industry under pressure in 2016  Overall positive consumption Luxury apparel market growth* climate does not support (FX-adjusted) industry sales 12%  Apparel is losing share of consumers’ wallet 8% 8%  High level of promotions 2% 2% 2% (4)% 2010 2011 2012 2013 2014 2015 2016 * Source: Bain & Alt

  6. Slide 6: Company-specific challenges clearly identified

    Company-specific challenges clearly identified Brand positioning Go-to-market approaches unclear different by market Speed of decision-making and Potential of digital underutilized key operational processes slowed by organizational inertia HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 201

  7. Slide 7: HUGO BOSS responded swiftly to challenges

    HUGO BOSS responded swiftly to challenges 1 Comprehensive cost savings achieved 2 Optimization of store network initiated 3 Off-price business in the US largely discontinued 4 Global prices harmonized further 5 Foundation built for future growth in digital HUGO BOSS Analysts' Conference 2017 HUGO BO

  8. Slide 8: Strong free cash flow generation despite earnings decline

    Strong free cash flow generation despite earnings decline Sales EBITDA before special items Free cash flow (in EUR million) (in EUR million) (in EUR million) 2,809 2,693 594 (4)%* 493 220 208 (17)% +6% FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 * (2)% FX-adjusted HUGO BOSS Analysts' Conference

  9. Slide 9: Europe records positive sales performance in 2016

    Europe records positive sales performance in 2016  8% sales growth in the UK Sales by region y-o-y supports increase in Europe (in %)  Decline in the US pressures sales in the Americas (1) Europe* 1  Sales momentum in China accelerates throughout the year (13) Americas (12) (3) Asia/Pacific (2) (

  10. Slide 10: Growth in own retail does not fully offset sales decline in wholesale

    Growth in own retail does not fully offset sales decline in wholesale  Retail expansion more than Sales by channel y-o-y offsets currency-adjusted comp (in %) store sales decline of 6%  Decline in wholesale business (1) mainly attributable to Retail 2 distribution changes in the US  Robust growth

  11. Slide 11: Group profitability suffers from operating deleverage

    Group profitability suffers from operating deleverage Gross profit margin Selling & Distribution expenses 66.0 % 0bp 1,176 EUR million 3 % Administration expenses EBITDA (before special items) 272 EUR million 3 % 493 EUR million (17) % Special items Net income 67 EUR million >100% 194 EUR million (3

  12. Slide 12: Tight grip on working capital management despite sales decline

    Tight grip on working capital management despite sales decline  Working capital almost stable Average trade net working capital Inventories in relation to sales (as a percentage of sales) (in EUR million)  Inventory position in the US and China improves significantly over the course of the year 19

  13. Slide 13: Investments focus on own retail and IT

    Investments focus on own retail and IT  Investments decrease due to HUGO BOSS Investments by area 2016 slow down of retail expansion (in %) and non-recurrence of prior year one-time projects  Two thirds of budget spent on store expansion and 18% 32% refurbishments (2015: 25%) (2015: 32%) EUR 157 

  14. Slide 14: Strong free cash flow generation despite earnings decline

    Strong free cash flow generation despite earnings decline Free cash flow Net debt (in EUR million) (in EUR million) 220 113 208 82 6% 38% FY 2015 FY 2016 Dec 31, 2015 Dec 31, 2016  Lower investments more than offset earnings  Net debt increases on low levels shortfall  Equity ratio amounts to alm

  15. Slide 15: One-time nature of 2016 warrants exception from dividend policy

    One-time nature of financial year 2016 warrants exception from dividend policy Dividend per share and payout ratio (in EUR) (in %***) 4.00 100 85% 3.62 3.62 3.34 3.12 93% 2.88 80 3.00 66% 64% 78% 2.60** 75% 75% 70% 70% 70% 60 2.02 2.00 1.45* 1.37 40 0.96 1.00 20 0.00 0 2007 2008 2009 2010 2011 2012

  16. Slide 16: Further building brand desirability will drive long-term success

    Further building brand desirability will drive the Group’s long-term success HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 16

  17. Slide 17: Group strategy focuses on four fields of action

    Group strategy focuses on four 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 HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 17

  18. Slide 18: Ingo Wilts, Chief Brand Officer

    Ingo Wilts Chief Brand Officer HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 18

  19. Slide 19: Focus on two clearly positioned brands

    Focus on two clearly positioned brands HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 19

  20. Slide 20: BOSS dresses the demanding customer for all occasions

    BOSS dresses the demanding customer for all occasions BUSINESS CASUAL ATHLEISURE June 2017: January 2018: Sell in of the collection to wholesale partners Spring / Summer collection 2018 in stores HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 20

  21. Slide 21: New York Fashion Show showcases the elements fundamental to BOSS

    New York Fashion Show showcases the elements fundamental to BOSS #NYCFASHIONSHOWFALL/WINTER2017 HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 21

  22. Slide 22: Marketing strategy prioritizes digital and menswear

    Marketing strategy prioritizes digital and menswear Marketing split Online/Print 50% 60% 70% 2015 2016 2017e Online Print Marketing split Menswear/Womenswear 40% 50% 70% 2015 2016 2017e Menswear Womenswear HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 22

  23. Slide 23: Womenswear continues to be an important part of the BOSS business

    Womenswear continues to be an important part of the BOSS business HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 23

  24. Slide 24: HUGO represents an exciting long-term growth opportunity

    HUGO represents an exciting long-term growth opportunity CASUAL BUSINESS HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 24

  25. Slide 25: Bernd Hake, Chief Sales Officer

    Bernd Hake Chief Sales Officer HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 25

  26. Slide 26: Wholesale partners welcome clarity of refined brand positioning

    Wholesale partners welcome clarity and consistency of refined brand positioning  Positive overall feedback from wholesale partners on refined brand strategy  Order intake for Fall/Winter 2017 in line with expectations, positive momentum in casualwear  Group committed to align global selling price

  27. Slide 27: Target to increase own retail sales productivity by 20%

    Target to increase own retail sales productivity by 20% in the next five years Better and broader Expansion of casual Rollout of Investment in Optimization of offering at entry and athleisure omnichannel retail staff retail network price points offering in stores services training HUGO BOSS Analysts

  28. Slide 28: Store renovations will upgrade own retail network

    Store renovations will upgrade own retail network Openings Closures Renovations  10-15 freestanding store  Remaining circa 15 store  Renovations to account for openings will strengthen the closures to be completed by the the bulk of retail network end of the year investments  First HUGO pilot st

  29. Slide 29: Online and physical retailing are becoming one

    Online and physical retailing are becoming one HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 29

  30. Slide 30: Improvement of online business a key priority in 2017

    Improvement of online business a key priority in 2017 Mobile Service Content Merchandising HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 30

  31. Slide 31: Mark Langer, Chief Executive Officer

    Mark Langer Chief Executive Officer HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 31

  32. Slide 32: European business to weather industry storms

    European business to weather industry storms German apparel sales y-o-y UK branded menswear (in %) apparel sales y-o-y** (in %) Europe 0% 5%  Broadly stable sales expected in Europe 3%  Tough market environment to weigh on sales performance in Germany  UK to continue growing solidly (2)% (2)% (2)

  33. Slide 33: Step-by-step improvements targeted in the Americas

    Step-by-step improvements targeted in the Americas Personal consumption expenditures for clothing y-o-y (in %)* Americas 5  Slight sales decline forecasted 4 in the Americas 3  Distribution changes in wholesale and footfall declines 2 to affect US performance  Solid growth expected in 1 Canada an

  34. Slide 34: Growth in China to drive sales increases in Asia/Pacific

    Growth in China to drive sales increases in Asia/Pacific WeChat follower Weibo follower Asia/Pacific 124,000 213,000  Slight sales increase expected in Asia/Pacific 161,000  Successful digital 141,000 communication an important driver of robust growth in China 109,000  Continued declines projecte

  35. Slide 35: Group sales to remain largely stable in 2017

    Group sales to remain largely stable in 2017 Sales by region* Sales by channel* Increase of up to mid single-digit percentage Europe Stable Retail rate, comp store sales -3% to +3% Decline at a low Slight Americas decline Wholesale to mid single-digit percentage rate Asia/ Slight Solid increase Lice

  36. Slide 36: Financial outlook expects stabilization of operational performance in 2017

    Financial outlook expects stabilization of operational performance in 2017 Sales* Largely stable Gross margin Slight increase EBITDA -3% to +3% before special items Low double-digit Net income percentage rate increase EUR 150 million to Capex EUR 170 million Free cash flow Largely stable * On a curr

  37. Slide 37: 2017 - A year of stabilization and strategy implementation

    2017 - A year of stabilization and strategy implementation HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 37

  38. Slide 38: Q&A

    Q&A HUGO BOSS Analysts' Conference 2017 HUGO BOSS © March 9, 2017 38

  39. Slide 39: 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

  40. Slide 40: HUGO BOSS

    HUGO BOSS

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