Hugo Boss Ag · XETR:BOSS
Hugo Boss — Q3 2020 Earnings Presentation
38 slides from Hugo Boss's earnings presentation, November 2020
Slide 1: Investor Meeting Presentation November 2020
1 INVESTOR MEETING PRESENTATION INVESTOR MEETING PRESENTATION NOVEMBER 2020
Slide 2: Agenda
2 INVESTOR MEETING PRESENTATION AGENDA 1 Third Quarter Results 2020 2 Execution of Strategic Initiatives 3 General Information
Slide 3: Gradual business recovery continues in the third quarter
3 INVESTOR MEETING PRESENTATION GROUP SALES Q3 2020 EUR 533 MILLION (24)% CURRENCY-ADJUSTED Gradual business recovery continues in the third quarter
Slide 4: Europe records solid rebound in local demand
4 INVESTOR MEETING PRESENTATION EUROPE SALES ** Solid rebound in local demand, in particular in France, Benelux and the UK (21)% * Sales recovery in Germany broadly in line with that of the region Southern European markets negatively impacted by lower tourist flows Europe records solid rebound in lo
Slide 5: Pandemic continues to weigh on business in the Americas
5 INVESTOR MEETING PRESENTATION AMERICAS SALES Robust business recovery continues in Latin America (41)% * Temporary store closures due to local lockdowns in several key areas weighs on business recovery in the U.S. U.S. business also impacted by ongoing traffic declines in brick-and-mortar retail a
Slide 6: Asia/Pacific with strong business recovery in Q3
6 INVESTOR MEETING PRESENTATION ASIA/PACIFIC SALES Strong momentum in mainland China drives overall recovery in Asia/Pacific (14)% * Lower tourist flows continue to negatively impact business in Hong Kong and Macao Local lockdowns and temporary store closures weigh on several markets such as Austral
Slide 7: Momentum in mainland China further accelerates in Q3
7 INVESTOR MEETING PRESENTATION Recovery in mainland China continues, with revenues up 27% in Q3 Strong improvements in conversion rates in brick-and-mortar retail High double-digit online sales growth recorded in the third quarter Momentum in mainland China further accelerates in Q3 * CURRENCY-ADJU
Slide 8: Own retail business benefits from higher store opening rate
8 INVESTOR MEETING PRESENTATION RETAIL (20)%* Robust recovery in own retail, supported by average store opening rate of ~95% in Q3 Local demand improves in key markets while travel restrictions continue to weigh on business with tourists Wholesale business impacted by lower deliveries to partners (3
Slide 9: Online business continues its double-digit growth trajectory
9 INVESTOR MEETING PRESENTATION hugoboss.com and concession business record strong improvements in both traffic and conversion rates Further expansion of hugoboss.com to 24 additional countries in June and August 12th consecutive quarter with strong double-digit online sales growth Online business c
Slide 10: Profitability returns to positive territory in the third quarter
10 INVESTOR MEETING PRESENTATION Profitability returns to positive territory in the third quarter Gross margin Selling & distribution Administration EBIT Net income expenses expenses EUR EUR EUR EUR 61.9 251 65 15 3 % MILLION MILLION MILLION MILLION (140) bp (18)% (4)% (83)% (94)% YOY YOY YOY YOY YO
Slide 11: Inventories remain broadly stable year over year
11 INVESTOR MEETING PRESENTATION Inventories TNWC Free cash Capital flow expenditure September 30, 2020 September 30, 2020 April-June July–September Inventory growth curbed, reflecting gradual business recovery and measures to reduce inventory inflow EUR EUR EUR Decrease in trade net working capital
Slide 12: Successful execution of comprehensive measures to protect financial stability
12 INVESTOR MEETING PRESENTATION Successful execution of comprehensive measures to protect financial stability FY MEASURES IMPLEMENTED INITIATIVES PROGRESS IN Q3 Strict cost management • Significant payroll as well as rental savings achieved 1 Additional cost savings of • Lower marketing spend due t
Slide 13: Strong free cash flow generation accelerates in the third quarter
13 INVESTOR MEETING PRESENTATION Strong free cash flow generation accelerates in the third quarter Revolving syndicated loan, totaling JAN–SEP Q3 EUR 633 million, only utilized in the amount of EUR 134 million as of September 30 Additional credit commitments of EUR 275 million not drawn at the end o
Slide 14: Agenda
14 INVESTOR MEETING PRESENTATION AGENDA 1 Third Quarter Results 2020 2 Execution of strategic initiatives 3 General Information
Slide 15: Key priorities while managing the pandemic
15 INVESTOR MEETING PRESENTATION Key priorities while managing the pandemic MAR APR MAY JUN JUL AUG SEP OCT NOV 2020 2020 2020 2020 2020 2020 2020 2020 2020 MANAGING THE PANDEMIC Gradual recovery of business Measures to maintain financial stability and flexibility Execution of strategic initiatives
Slide 16: Exploiting the full potential of mainland China
16 INVESTOR MEETING PRESENTATION GROUP SALES CAGR 2016-2019 7% +10 % BASED on FY 2019 SALES ML CHINA CONTROLLED “TAILORED” DISTRIBUTION SHARE >95 % >30 % OWN RETAIL OF Exploiting the full potential SHARE PRODUCT MIX of mainland China
Slide 17: Local activation drives customer engagement
17 INVESTOR MEETING PRESENTATION Local activation drives customer engagement CHINESE GOLDEN WEEK OCTOBER 1–8, 2020 QIXI CHINESE VALENTINE'S DAY AUGUST 25, 2020
Slide 18: Leveraging sales opportunities in mainland China
18 INVESTOR MEETING PRESENTATION Leveraging sales opportunities in mainland China Robust retail footprint Concession business on Tmall and JD 1 across tier 1 and tier 2 cities 1 with strong double-digit growth White spot opportunities, Tapping in to additional e-com opportunities 2 especially in tie
Slide 19: Well on track to achieve 2022 online sales target
19 INVESTOR MEETING PRESENTATION Well on track to achieve 2022 online sales target Online sales to grow to more than EUR 400 million by 2022 Online sales x4 (in EUR million) >400 EUR 200 million mark to be crossed well before year-end 2020 >200 151 110 CAGR of >40% achieved 76 79 between 2018 and 20
Slide 20: Geographical rollout of hugoboss.com in full swing
20 INVESTOR MEETING PRESENTATION Geographical rollout of hugoboss.com in full swing hugoboss.com hugoboss.com markets 2019 markets 2021
Slide 21: Marketing initiatives to drive brand desirability
21 INVESTOR MEETING PRESENTATION Marketing initiatives to drive brand desirability EVENTS PERSONALITIES COLLABORATIONS
Slide 22: Milan Fashion Show goes Shanghai with local brand experience
22 INVESTOR MEETING PRESENTATION Milan Fashion Show goes Shanghai with local brand experience
Slide 23: Brand ambassadors drive brand heat for BOSS and HUGO
23 INVESTOR MEETING PRESENTATION 2.6 M 11.5 M 21.4 M FOLLOWERS FOLLOWERS FOLLOWERS BOSS X BOSS HUGO X CARO DAUR X AJBXNG LIAM PAYNE Brand ambassadors drive brand heat for BOSS and HUGO
Slide 24: Strong uplift in engagement on social media
24 INVESTOR MEETING PRESENTATION Strong uplift in engagement on social media AVERAGE NUMBER OF AVERAGE LIKES PER POST ENGAGEMENT RATE INCREASED BY 4x >60% Q3 2020 VS. Q3 2019 Q3 2020 VS. Q3 2019
Slide 25: BOSS teams up with Russell Athletic
25 INVESTOR MEETING PRESENTATION BOSS teams up with Russell Athletic CAPSULE COLLECTION BOSS X WITH FOCUS ON BOLD RUSSELL ATHLETIC CASUALWEAR LAUNCH ACCOMPANIED BY AN EXCLUSIVE CAMPAIGN PRODUCED BY HIGHSNOBIETY BOSS X RUSSELL ATHLETIC
Slide 26: Driving casualization across all wearing occasions
26 INVESTOR MEETING PRESENTATION Driving casualization across all wearing occasions
Slide 27: Push casual categories by focusing on casualized styles and casual tailoring
27 INVESTOR MEETING PRESENTATION Push casual categories by focusing on casualized styles and casual tailoring PERFORMANCE TAILORING PRODUCT INNOVATION TO FIT CUSTOMERS NEEDS IN TERMS OF WEARING EXPERIENCE
Slide 28: New interpretation of formalwear with strong focus on casual tailoring
28 INVESTOR MEETING PRESENTATION New interpretation of formalwear with strong focus on casual tailoring BROAD BOMBER SUIT CASUAL TAILORING
Slide 29: Agenda
29 INVESTOR MEETING PRESENTATION AGENDA 1 Third Quarter Results 2020 2 Execution of strategic initiatives 3 General Information
Slide 30: Sales by region and major markets
30 INVESTOR MEETING PRESENTATION Sales by region and major markets Share of Group sales* Europe (incl. Middle Americas Asia/Pacific East/Africa) 63% 19% 15% Germany: 14% U.S.: 14% China: 8% Great Britain: 13% Canada: 3% Oceania: 2% France: 6% Central & South America: 2% Japan: 2% Benelux: 5% Other:
Slide 31: Sales by distribution channel
31 INVESTOR MEETING PRESENTATION Sales by distribution channel 1 RETAIL 0,9 0,8 0,7 57% 60% 62% 63% 63% 65% 0,6 0,5 WHOLESALE 0,4 0,3 41% 38% 0,2 35% 34% 34% 32% 0,1 0 2% 2% 3% 3% 3% 3% LICENSES 2014 2015 2016 2017 2018 2019
Slide 32: Number of Group's own retail stores by region
32 INVESTOR MEETING PRESENTATION Number of Group’s own retail stores by region As of 30/09/2020 Freestanding stores 210 Shop-in-Shops 317 Outlets 75 Europe 602 Freestanding stores 92 Americas Shop-in-Shops 82 222 Asia/Pacific Outlets 48 303 Freestanding stores 129 Group 1,127 Shop-in-Shops 106 Outle
Slide 33: Shareholder return
33 INVESTOR MEETING PRESENTATION Shareholder return Strong commitment to profit-based dividend policy Dividend payout ratio in % of net income, dividend in EUR 6 100% 100% 93% 90% 90% 5 79% 79% 78% 80% 80% 75% 70% 4 3.62 3.62 60%-80% 70% 70% 3.34 60% 60% 3 2.60 2.65 2.70 50% 50% 2 40% 40% 2013 2014
Slide 34: (Adjusted) financial leverage
34 INVESTOR MEETING PRESENTATION (Adjusted) financial leverage * 1.6 1,5 1,5 Net debt / EBITDA 1,4 1,4 Net debt incl. operating leases / EBITDAR 1,3 1,3 1,3 1,2 1,2 1.2 0.8 0.4 0,3 0,2 0,2 0,2 0,1 0,1 0,1 0 0 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 Operating leases = Future committed operat
Slide 35: Sourcing and production structure
35 INVESTOR MEETING PRESENTATION Sourcing and production structure* 40 % ASIA 17 % OWN PRODUCTION 13 % WESTERN EUROPE 6 % NORTH AFRICA 01 % AMERICAS 83 % THIRD PARTY PRODUCTION 40 % EASTERN EUROPE * = as of 2019, in value terms
Slide 36: Multi-Year overview
36 INVESTOR MEETING PRESENTATION Multi-Year overview 2019 2018 2017 2016 2015 Sales 2,884 2,796 2,733 2,693 2,809 Gross profit 1,875 1,824 1,808 1,777 1,853 Gross profit margin in % 65.0 65.2 66.2 66.0 66.0 EBITDA 467 476 499 433 590 EBIT 333 347 341 263 448 EBIT margin in % 11.5 12.4 12.5 9.8 15.9
Slide 37: Financial Calendar & Investor Relations contact
37 INVESTOR MEETING PRESENTATION Financial Calendar & Investor Relations contact MARCH Christian Stöhr 11 Full Year Results Senior Head of E-Mail: Christian_Stoehr@hugoboss.com 2021 Investor Relations 2020 Phone: +49 (0) 7123 94 - 80903 MAY Frank Böhme 5 First Quarter Results Senior Investor Relatio
Slide 38: Forward-looking statements contain risks
38 INVESTOR MEETING PRESENTATION 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”, “s