Hugo Boss Ag · XETR:BOSS
Hugo Boss — Non-Deal Roadshow (March 2015)
57 slides from Hugo Boss's roadshow presentation, Mar 27, 2015
Slide 1: HUGO BOSS
HUGO BOS S§S
Slide 2: Roadshow Dublin // Hauck & Aufhäuser – Company Handout
ROADSHOW DUBLIN // HAUCK & AUFHÄUSER HUGO BOSS Company Handout Dublin, March 27, 2015 Dennis Weber, Head of Investor Relations Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 2
Slide 3: Agenda
Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 3
Slide 4: Agenda
Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 4
Slide 5: HUGO BOSS achieves solid sales and profit growth in 2014
HUGO BOSS achieves solid sales and profit growth in 2014 Sales and EBITDA before special items +5% (in EUR million) +6%* Sales 2,572 EBITDA before special items 2,432 2,346 2,059 1,729 1,562 528 565 591 470 354 269 2009 2010 2011 2012 2013 2014 *+6% fx-adjusted Roadshow Dublin // Hauck & Aufhäuser H
Slide 6: Market environment more difficult than expected
Market environment more difficult than expected German apparel ■ Lower consumer market, y-o-y spending for apparel (2) (2) Retail sales development (in %)* (3) ■ Unfavorable weather 2012 2013 2014 conditions 12 ■ Anti-corruption Chinese men’s luxury campaign reducing apparel market, y-o-y luxury gif
Slide 7: Globally balanced footprint secures solid growth
Globally balanced footprint secures solid growth Currency-adjusted sales development FY 2014 (in %) Europe Americas Asia/Pacific +7% +4% +7% Strength in core European markets shields the Group from economic turbulence elsewhere Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 7
Slide 8: Retail expansion continues
Retail expansion continues Number of own retail stores TOTAL 1,041 (+31) as of December 31, 2014 Total selling space 140,000 sqm (+4%) (December 31, 2013: 1,010) Openings 86 thereof takeovers 20 Closings 55 Europe* 595 (+19) Openings 43 thereof takeovers 5 Closings 24 Americas 204 (+4) Asia/Pacific
Slide 9: Expansion and productivity improvements drive expansion of retail share
Expansion and productivity improvements drive expansion of retail share Sales by distribution channel 44% 41% 53% 49% 64% 57% Wholesale Retail 54% 57% 45% 49% 33% 40% Licenses 3% 3% 2% 2% 2% 2% 2009 2010 2011 2012 2013 2014 Retail to account for at least 75% of Group sales by 2020 Roadshow Dublin //
Slide 10: HUGO BOSS has reached a new level in womenswear
HUGO BOSS has reached a new level in womenswear BOSS Womenswear sales up 18% currency-adjusted, overall womenswear business +11% Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 10
Slide 11: HUGO BOSS wins important brand rankings in Germany and China
HUGO BOSS wins important brand rankings in Germany and China Germany China ■ HUGO BOSS named „Best Fashion ■ HUGO BOSS named „Best Fashion Brand“ Label for Men“ ■ Independent study conducted ■ Independent study conducted by market research institute GfK by The Hurun Research Institute ■ Based on com
Slide 12: New flat-packed goods distribution center in Germany fully operational
New flat-packed goods distribution center in Germany fully operational Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 12
Slide 13: Agenda
Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 13
Slide 14: All regions contribute to Group sales growth in 2014
All regions contribute to Group sales growth in 2014 in EUR in EUR Sales growth by region, y-o-y Sales growth by region, y-o-y Q4 2014 fx-adjusted FY 2014 fx-adjusted (in %) (in %) 4 7 Europe* Europe* 4 7 7 3 Americas Americas 1 4 9 4 Asia/Pacific Asia/Pacific 5 7 5 6 Group Group 3 6 0 5 10 0 5 10 ■
Slide 15: Retail continues to drive Group sales increases
Retail continues to drive Group sales increases in EUR in EUR Sales growth by channel, y-o-y Sales growth by channel, y-o-y fx-adjusted fx-adjusted Q4 2014 FY 2014 (in %) (in %) 2 (2) Wholesale Wholesale 0 (1) 8 12 Retail Retail 6 12 (5) 0 Licenses Licenses (5) 0 5 6 Group Group 3 6 (5) 0 5 10 (5) 0
Slide 16: Robust full year gross profit margin improvement
Robust full year gross profit margin improvement Fourth quarter Full year +120bp (80)bp 69.0 68.2 64.9 66.1 Q4 2013 Q4 2014 2013 2014 ■ Strong comparison base ■ Positive distribution channel mix ■ Above-average growth of outlet channel ■ Lower rebates ■ Moderate increase of rebates Roadshow Dublin /
Slide 17: EBITDA grows despite higher operating expenses
EBITDA grows despite higher operating expenses in EUR million ■ Own retail expansion main driver 2014 2013 Change in % of higher selling and Sales 2,571.6 2,432.1 6 distribution expenses Gross profit In % of sales 1,699.1 66.1 1,579.6 64.9 120 bp 8 ■ Marketing expenditures Selling and distribution e
Slide 18: Region Europe records solid margin improvement
Region Europe records solid margin improvement Segment profit in EUR million 2014 In % of sales 2013 In % of sales Change in % Europe* 536.1 34.2 490.2 33.6 9 Americas 151.1 25.8 152.0 26.7 (1) Asia/Pacific 112.2 31.1 117.3 33.8 (4) Licenses 49.1 85.2 49.3 85.2 0 Segment profit operating segments 84
Slide 19: Trade net working capital increases despite moderation of inventory growth
Trade net working capital increases despite moderation of inventory growth Dec. 31, 2014 507 ■ Retail expansion Inventories (in EUR million) +15% +8% ■ Softer sell-through Dec. 31, 2013 441 momentum fx-adjusted Dec. 31, 2014 251 ■ Timing of whole- Trade sale shipments receivables +11% +7% (in EUR mi
Slide 20: Robust free cash flow growth
Robust free cash flow growth Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) (27%) +17% (37)% 185 268 57 230 135 36 2013 2014 2013 2014 Dec. 31, 2013 Dec. 31, 2014 ■ Non-recurrence of prior ■ Increase mainly due to ■ Increase of FCF year distribution center low
Slide 21: Adjusted financial leverage has remained broadly stable over the last years
Adjusted financial leverage has remained broadly stable over the last years (Adjusted) financial leverage 2.4 2.2x 2.0 1.6 1.4x 1.6x ■ Adjusted financial leverage reflects 1.3x 1.3x profitability improvements offset by 1.2x 1.2x higher operating lease obligations 1.2 ■ Management comfortable with 0.
Slide 22: Proposed dividend increases payout ratio to 75%
Proposed dividend increases payout ratio to 75% Dividend and payout ratio in EUR in %* 4.00 100 3.62 90 3.50 3.34 3.12 80 3.00 2.88 75% 75% 70 2.50 70% 70% 70% 64% 60 2.02 2.00 50 40 1.50 0.96 30 1.00 20 0.50 10 0.00 0 2009 2010 2011 2012 2013 2014** Proposal in line with dividend policy of 60% to 8
Slide 23: Agenda
Agenda Strategic review 2014 Financial performance 2014 Outlook 2015 and beyond Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 23
Slide 24: Growth strategy 2020 to drive further profitable growth
Growth strategy 2020 to drive further profitable growth Elevate the Exploit growth Leverage the Build BOSS core opportunities in brand’s potential omnichannel to brand by under- in womenswear drive own retail engaging penetrated and shoes & online and offline consumers markets accessories emotionall
Slide 25: Increasingly nuanced portfolio to support BOSS brand elevation
Increasingly nuanced portfolio to support BOSS brand elevation Future brand positioning LUXURY RETAIL PREMIUM WHOLESALE authentic innovative confident progressive lighthearted dynamic sophisticated contemporary Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 25
Slide 26: HUGO and BOSS Green to replace BOSS in category business
HUGO and BOSS Green to replace BOSS in category business RETAIL WHOLESALE Own stores to increasingly focus on BOSS core brand Presence of BOSS core brand to become limited to exclusively shop-in-shops Category business focused on HUGO and BOSS Green Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © M
Slide 27: Coming collections reflect product elevation in BOSS Womenswear
Coming collections reflect product elevation in BOSS Womenswear Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 27
Slide 28: BOSS campaign builds brand's credibility as a fashion destination
BOSS campaign builds brand’s credibility as a fashion destination Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 28
Slide 29: New openings and takeovers to contribute to retail expansion
New openings and takeovers to contribute to retail expansion Number of own retail stores as of December 31 1,041 1,010 Outlets 113 122 840 Shop-in-Shops 104 Freestanding stores 622 531 526 537 88 79 413 264 261 323 371 388 270 197 2010 2011 2012 2013 2014 ■ Around 50 new openings planned in 2015 ■ T
Slide 30: Omnichannel model geared to the demands of today's consumer
Omnichannel model geared to the demands of today’s consumer Phase 2: hugoboss.com Phase 4: Completion of omni- relaunch online and mobile channel implementation 2014 2015 2016 Phase 1: Frontend Phase 3: Building the takeover digital flagship store Implementation of omnichannel business model under w
Slide 31: Key digital initiatives defined
Key digital initiatives defined Initiative Description and rationale Status Launch of own store Takeover of Demandware software from former Done frontend fulfillment partner enabling full control Relaunch of Migration of formerly separate eCom and brand Done hugoboss.com worlds driving traffic to st
Slide 32: Takeover of frontend has upgraded overall look and feel
Takeover of frontend has upgraded overall look and feel Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 32
Slide 33: Merger of online store and brand website drives traffic
Merger of online store and brand website drives traffic Before Two different gateways for eCom store and brand website Seamless integration of Today content and commerce Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 33
Slide 34: In-store availability feature introduced
In-store availability feature introduced ■ Provides real-time store inventory information ■ Enables search for product in other stores ■ Locates closest store in relation to customer’s IP address or GPS position Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 34
Slide 35: Further improvement of retail execution to support solid growth in Europe
Further improvement of retail execution to support solid growth in Europe ■ Tough industry environment and weak customer footfall in many markets ■ Focus on improving in-store experience as well as customer service and relationship management ■ Underpenetrated categories and markets offer attractive
Slide 36: Brand control key for success in the Americas
Brand control key for success in the Americas ■ Promotional market environment set to continue for foreseeable future ■ Important retail-related process improvements under way ■ Focus on upgrade of brand presentation in US wholesale business BOSS Store Washington DC, City Center Roadshow Dublin // H
Slide 37: Strategic progress in China adds to strength of other markets in Asia
Strategic progress in China adds to strength of other markets in Asia ■ Growing momentum in formalwear to support further share gains in China despite ongoing market weakness ■ Confident outlook for Australia and Japan ■ Direct control of trendsetting South Korean market to improve market position B
Slide 38: B2C distribution center builds foundation for omnichannel
B2C distribution center builds foundation for omnichannel B2C Warehouse Wendlingen, Germany ■ Former flat-packed goods facility to serve as a B2C distribution center going forward ■ Key tasks: Storage, packing, return handling, product refurbishment ■ Handling of product returns from all European ma
Slide 39: Launch of new systems refines retail management
Launch of new systems refines retail management Retail Merchandise Planning Retail Assortment Planning ■ Systems-based planning process ■ SAP-based assortment planning based on sales, margins and approach based on store capacity, Purpose stock levels location characteristics and product lifecycles ■
Slide 40: Consolidation of own production network drives operational efficiency
Consolidation of own production network drives operational efficiency Metzingen, Germany (Group Headquarter) Radom, Poland Cleveland, USA Morrovalle and Scandicci, Italy 20% own Izmir, Turkey production* 80% third party production* *Percentage based on procurement volumes Roadshow Dublin // Hauck &
Slide 41: Solid growth of sales and operating profit expected in 2015
Solid growth of sales and operating profit expected in 2015 Outlook 2015 Sales growth (currency-adjusted) Mid-single-digit rate Growth of 5% - 7% EBITDA before special items Capex EUR 200 million – EUR 220 million Own retail network Around 50 openings (excl. takeovers) Roadshow Dublin // Hauck & Auf
Slide 42: Clear growth plan in place to overcome external challenges
Clear growth plan in place to overcome external challenges ■ Group has coped well with market weakness in 2014 ■ Multi-faceted opportunities provide numerous levers for long-term growth ■ Another year of solid financial performance and important strategic progress ahead BOSS Store Osaka, Shinsaibash
Slide 43: Backup
BACKUP Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 43
Slide 44: Brand portfolio
Brand portfolio 72%* of Group sales 8%* of Group sales modern / sophisticated modern / active 10%* of Group sales 10%* of Group sales casual / urban chic progressive / contemporary *as of FY 2014 Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 44
Slide 45: Sales by region 2014
Sales by region 2014 Share of Group sales* 14% Asia/Pacific Europe (incl. Middle East and Africa) 23% 61% Americas *+2% Licenses Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 45
Slide 46: Retail comp stores sales growth
Retail comp stores sales growth Retail l-f-l Sales growth retail l-f-l* 12 11% 10 8 6% 6 5% 4% 4% 4% 4 4% 3% 4% 3% 2 2% 2% 2% 2% 0% 0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 FY 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 *fx-adjusted Roadshow Dublin // Hauck & Aufhäu
Slide 47: Income statement
Income statement in EUR million Q4 2014 Q4 2013 Change in % 2014 2013 Change in % Sales 683.6 649.0 5 2,571.6 2,432.1 6 Cost of sales (217.3) (200.9) (8) (872.5) (852.5) (2) Gross profit 466.3 448.1 4 1,699.1 1,579.6 8 In % of sales 68.2 69.0 (80) bp 66.1 64.9 120 bp Selling and distribution expense
Slide 48: 5-Year Overview
5-Year Overview in EUR million 2014 2013 2012 2011 2010 Earnings Position Sales 2,571.6 2,432.1 2,345.9 2,058.8 1,729.4 Gross profit 1,699.1 1,579.6 1,444.1 1,252.0 1,022.4 EBITDA 571.5 561.4 523.9 468.0 340.1 EBITDA before special items 590.8 564.7 528.1 469.5 353.7 EBIT 448.7 456.2 432.0 394.6 267
Slide 49: EBITDA margin and ROCE vs. channel mix
EBITDA margin and ROCE vs. channel mix Adj. EBITDA margin ROCE Retail Wholesale Royalties 24% 57% 73% 64% 62% 63% 60% 49% 22.8% 41% 22.5% 33% 31% 31% 31% 20.5% 23.2% 23.0% 17.2% 16.7% 15.7% 16.1% 3% 2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © Marc
Slide 50: Trade net working capital
Trade net working capital Average trade net working capital as a percentage of sales by quarter* (in %) 22 20.7 +120 bp 20.1 20.6 19.8 19.7 20 18.6 18.7 19.1 18.0 17.9 17.9 18.1 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 Q2 2014 Q3 2014 Q4 2014 *
Slide 51: Sourcing structure
Sourcing structure Regional split of sourcing and production volume 2014 4% 5% Americas North Africa 11% Western Europe 47% Eastern Europe 33% Asia Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 51
Slide 52: Retail network
Retail network Number of own retail stores + 33 (55) + 43 + 10 + 4 USA + 16 Australia 1,041 1,010 + 3 Mexico + 6 China + 15 France + 2 Canada + 5 Taiwan + 7 Italy + 1 Brazil + 3 Hong Kong + 6 Great Britain + 3 Japan + 3 Germany + 2 Spain + 2 Finland + 1 Turkey + 1 Switzerland + 1 Sweden + 1 Russia +
Slide 53: Shareholder structure
Shareholder structure* 7% PFC S.r.l. / Zignago Holding S.p.a. (Marzotto family) 2% Own shares 91% Free float *Based on ad-hoc announcement dated March 16, 2015 Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 53
Slide 54: Financial calendar 2015
Financial calendar 2015 Date Event May 6, 2015 First Quarter Results May 12, 2015 Annual Shareholders’ Meeting August 4, 2015 First Half Year Results November 3, 2015 Nine Months Results Roadshow Dublin // Hauck & Aufhäuser HUGO BOSS © March 27, 2015 54
Slide 55: Investor Relations contact
Investor Relations contact Dennis Weber, CFA Dr. Kay Hofmann Head of Investor Relations Investor Relations Manager Phone: +49 (0) 7123 94 - 86267 Phone: +49 (0) 7123 94 - 87581 E-Mail: Dennis_Weber@hugoboss.com E-Mail: Kay_Hofmann@hugoboss.com Internet: group.hugoboss.com Internet: group.hugoboss.co
Slide 56: 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 57: HUGO BOSS
HUGO BOS S§S