Hugo Boss Ag · XETR:BOSS

Hugo Boss — Non-Deal Roadshow (May 2017)

60 slides from Hugo Boss's roadshow presentation, May 11, 2017

Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Investor Meeting Presentation
Investor Meeting Presentation • Roadshow Edinburgh • BoAML • May 11, 2017 • Dennis Weber, Head of Investor Relations BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 2
Slide 4: HUGO BOSS starts the year with sales increase
HUGO BOSS starts the year with sales increase HUGO BOSS Sales (in EUR million) ■ Difficult market environment continues in Q1 1% 1 % fx-adjusted ■ Good performance in core markets UK and China 643 651 ■ Sales growth in Europe and Asia more than compensates for declines in the Americas Q1 2016 Q1 201
Slide 5: UK business drives overall sales increase in Europe
UK business drives overall sales increase in Europe HUGO BOSS Europe Sales (in EUR million) ■ Different timing of wholesale deliveries supports regional 2% 3 % fx-adjusted sales performance ■ 7% growth in the UK due to solid 402 412 local demand and growing tourist business ■ Sales in Germany up sli
Slide 6: Performance in the Americas continues to suffer from sales declines in the U.S.
Performance in the Americas continues to suffer from sales declines in the U.S. HUGO BOSS Americas Sales (in EUR million) ■ Performance in the U.S. improves sequentially but sales (4) % (7) % fx-adjusted still down year-on-year ■ Discontinuation of off-price 130 125 business in wholesale has started
Slide 7: Growth in China more than offsets weaker trends in rest of Asia/Pacific
Growth in China more than offsets weaker trends in rest of Asia/Pacific HUGO BOSS Asia/Pacific Sales (in EUR million) ■ Strong volume growth drives double-digit comp store sales 3% 1 % fx-adjusted increase in Mainland China ■ Ongoing weakness in Hong 95 97 Kong and Macau and prior year store closure
Slide 8: Stable sales trends in own retail
Stable sales trends in own retail BOSS Store Moscow GUM HUGO BOSS Retail Sales (in EUR million) ■ Own retail sales down 3% on a comp store basis 0% 0 % fx-adjusted ■ Trends improve over the course of the quarter 370 372 ■ Overall retail store count remains virtually unchanged BOSS Store Dalian, Chin
Slide 9: Wholesale business up in the first quarter
Wholesale business up in the first quarter HUGO BOSS Wholesale Sales (in EUR million) ■ Wholesale sales benefit from delivery shift effect in Europe 3% 2 % fx-adjusted ■ Solid underlying trends in Europe 257 263 ■ Pressure from distribution restructuring in the U.S. expected to fade gradually over t
Slide 10: Fragrances drive growth in license business
Fragrances drive growth in license business HUGO BOSS License Sales (in EUR million) ■ Fragrance business up double- digits 5% 5 % fx-adjusted ■ Successful launches drive performance 17 16 ■ Watches grow solidly, eyewear more difficult Q1 2016 Q1 2017 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017
Slide 11: HUGO sales grow at strong double-digit rate
HUGO sales grow at strong double-digit rate BOSS Brand Sales HUGO Brand Sales (in EUR million) (in EUR million) ■ BOSS Green sales increase at (1) % double-digit rate, BOSS core 17 % (1) % fx-adjusted 16 % fx-adjusted brand sales affected by more restrictive distribution in 560 554 97 wholesale 83 ■
Slide 12: Non-recurrence of prior year special items and strict cost discipline drive profit growth
Non-recurrence of prior year special items and strict cost discipline drive profit growth Gross margin Selling & Distribution expenses 64.4 % 30bp 283 EUR million 1% 3% Administration expenses EBITDA (before special items) 0% 72 EUR million 97 EUR million 4% Special items Net income attributable to
Slide 13: Profitability in Asia/Pacific improves significantly
Profitability in Asia/Pacific improves significantly Segment earnings In EUR million Q1 2017 In % of sales Q1 2016 In % of sales Change in % Europe* 126.8 30.8 117.9 29.3 8 Americas 15.4 12.3 26.5 20.4 (42) Asia/Pacific 24.7 25.3 17.5 18.4 41 Licenses 14.0 84.9 13.4 85.3 5 Earnings of operating segm
Slide 14: Group inventories continue to be well controlled
Group inventories continue to be well controlled Average trade net working capital as a percentage of sales (in %) Currency-adjusted inventory growth, y-o-y Trade net working capital ■ Trade net working capital 30bp down 1% in currency- as a percentage of sales 19.5% 19.6% 19.7% 19.8% 19.8% adjusted
Slide 15: Different timing of investments supports free cash flow performance
Different timing of investments supports free cash flow performance Capital expenditure Free cash flow Net financial liabilities (in EUR million) (in EUR million) (in EUR million) +23% 109 (38)% >100% 89 38 7 24 Q1 2016 Q1 2017 (5) Q1 2016 Q1 2017 Q1 2016 Q1 2017 ■ Decline reflects different timing
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 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 17
Slide 19: Focus on two clearly positioned brands
Focus on two clearly positioned brands BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 19
Slide 20: Two strong brands with distinctive cores
Two strong brands with distinctive cores Brand values Top quality, sharp tailoring, Progressive & contemporary design, expressive fashion clear designs statement Brand BOSS offers confident business wear and refined HUGO offers designer clothes at an affordable price which give message casual wear f
Slide 21: 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 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 21
Slide 22: New York Fashion Show showcases the elements fundamental to BOSS
New York Fashion Show showcases the elements fundamental to BOSS #NYCFASHIONSHOWFALL/WINTER 2017 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 22
Slide 23: 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 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 23
Slide 24: Womenswear continues to be an important part of the BOSS business
Womenswear continues to be an important part of the BOSS business BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 24
Slide 25: HUGO represents an exciting long-term growth opportunity
HUGO represents an exciting long-term growth opportunity CASUAL BUSINESS BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 25
Slide 26: Two competitive environments
Two competitive environments Upper Premium Premium BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 26
Slide 27: Average HUGO prices are around 30% below BOSS
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 5,600 Global sales share by brand, FY 2016 (in %) 14% 86%  Average HUGO prices are around 30% below BOSS BoA
Slide 29: Wholesale partners welcome clarity and consistency 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
Slide 30: Target to increase own retail sales productivity by 20% in the next five years
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 BoAML Roadshow //
Slide 31: Own retail selling space will remain largely stable in 2017
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
Slide 32: New BOSS pricing architecture clears up historical imbalances
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  Around 20% above  All Euro countries  Max. 30% above European levels fully aligned European levels  The
Slide 33: 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 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 33
Slide 34: Online and physical retailing are becoming one
Online and physical retailing are becoming one BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 34
Slide 35: Online business set to return to growth after disappointing start to 2017
Online business set to return to growth after disappointing start to the year 2017 Search engine optimization • CRM • Mobile • Page load performance • User experience • Merchandising BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 35
Slide 36: The Group's digital roadmap
The Group’s digital roadmap Enable the cultural transformation Set the foundations Improve performance  Takeover of website  Rollout of omnichannel services frontend management  Commercial optimization of  Insourcing of European hugoboss.com and app online fulfilment Develop the model  hugoboss
Slide 37: Innovate the Way We Operate
I N N O VAT E T H E W AY W E O P E R AT E BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 37
Slide 38: Agility is the basis of innovation
Agility is the basis of innovation Establish flexible structures Empower our people Foster entrepreneurial thinking BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 38
Slide 39: Speed drives commercial success
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 supply Supplement the regular collection development process with a fast track concept which reduces the ti
Slide 40: Financial and Operational Outlook
FINANCIAL AND O P E R AT I O N A L OUTLOOK BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 40
Slide 41: Important milestones of new strategy implementation ahead
Important milestones of new strategy implementation ahead HUGO fashion show Launch Fall/Winter 2017 collection Combined mens- and womenswear fashion show Includes first elements of at the Pitti Uomo in Florence the new brand strategy, in particular a stronger casualwear offering June 2017 August 201
Slide 42: 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
Slide 43: 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
Slide 44: Low- to mid-single-digit retail comp store sales growth needed to expand operating margin
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 45: Group confident to maintain current gross margin level and limit future cost inflation
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 46: 2017 - A year of stabilization and strategy implementation
2017 - A year of stabilization and strategy implementation BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 46
Slide 48: Sales by region and major markets
Sales by region and major markets Share of Group sales* Europe Americas Asia/Pacific (incl. Middle East/Africa) 61% 22% 14% Germany: 17% U.S.: 16% China: 8% Great Britain: 12% Canada: 3% Oceania: 2% France: 6% Central & Japan: 2% Benelux: 5% South America: 2% Other: 2% Other: 21% Other: 1% * As of 2
Slide 49: Sales by distribution channel
Sales by distribution channel 38% 35% 44% 41% 53% 49% Wholesale Retail 60% 62% 54% 57% 45% 49% Licenses 2% 2% 2% 2% 2% 3% 2011 2012 2013 2014 2015 2016 BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 49
Slide 50: Number of Group's own retail stores by region
Number of Group’s own retail stores by region As of 31/03/2017 Freestanding Shop-in-Shops Outlets Total stores Europe 187 346 62 595 Americas 92 105 48 245 Asia/Pacific 157 89 40 286 Total 436 540 150 1,126  Low single-digit contribution from new space expected in 2017 BoAML Roadshow // Edinburgh H
Slide 51: Retail comp stores sales
Retail comp stores sales Retail l-f-l sales development* 8 6% 6% 6 4% 4% 4 3% 3% 2% 4% 2 3% 2% 2% 0% 0 0% (3)% (3)% (2) (1)% (4) (6)% (6)% (6)% (6) (8)% (8) Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q3 FY Q1 2013 2013 2013 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2016 2016 201
Slide 52: Dividend policy
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 2013 2014 2015 2016  Dividend policy of paying out between 60%
Slide 53: (Adjusted) financial leverage
(Adjusted) financial leverage 2.4 2.2x 2.0 1.6x 1.6 1.5x 1.4x 1.4x 1.3x 1.3x 1.2x 1.2x Net debt / EBITDA 1.2 Net debt incl. operating leases / EBITDAR 0.8 0.6x 0.4 0.3x 0.2x 0.2x 0.1x 0.1x 0.1x 0.0 2009 2010 2011 2012 2013 2014 2015 2016 Operating leases = Future committed operating lease obligation
Slide 54: Sourcing and production structure
Sourcing and production structure* Americas: Western 2% Europe: 12% Own production: 20% Eastern Europe: 46% Asia: 36% Third party production: North 80% Africa: 4% *As of 2016, in value terms BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 54
Slide 55: Multi-Year overview
Multi-Year overview In EUR million 2016 2015 2014 2013 2012 2011 Sales 2,692.8 2,808.7 2,571.6 2,432.1 2,345.9 2,058.8 Gross profit 1,777.5 1,852.8 1,699.1 1,579.6 1,444.1 1,252.0 EBITDA 432.7 589.9 571.5 561.4 523.9 468.0 EBITDA before special items 493.1 594.1 590.8 564.7 528.1 469.5 EBIT 263.5 44
Slide 56: Analyst coverage
Analyst coverage The HUGO BOSS AG share is covered by the following financial analysts: Institution Analyst Institution Analyst Aurel BGC David Da Maia Hauck & Aufhäuser Christian Salis Baader Bank Volker Bosse HSBC Antoine Belge Bankhaus Lampe Peter Steiner Intermonte Daniele Alibrandi Bank of Amer
Slide 57: Shareholder structure
Shareholder structure* 10% PFC S.r.l. / Zignago Holding S.p.A. 2% Own shares 88% Free float *Source: Share register, voting rights notifications (as of May 2017) BoAML Roadshow // Edinburgh HUGO BOSS © May 2017 57
Slide 58: Financial Calendar 2017 and Investor Relations contact
Financial Calendar 2017 and Investor Relations contact Date Event May 23, 2017 Annual Shareholders’ Meeting August 2, 2017 HUGO BOSS Investor Day 2017 August 2, 2017 Publication of the First Half Year Report November 2, 2017 Publication of the Third Quarter Results Investor Relations Contact Dennis
Slide 59: 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 60: HUGO BOSS
HUGO BOSS

Hugo Boss — Non-Deal Roadshow (May 2017) on 6ix

Hugo Boss — Non-Deal Roadshow (May 2017)

Slide 1: HUGO BOSS

Slide 2: Investor Meeting Presentation

Slide 3: First Quarter Results 2017

Slide 4: HUGO BOSS starts the year with sales increase

Slide 5: UK business drives overall sales increase in Europe

Slide 6: Performance in the Americas continues to suffer from sales declines in the U.S.

Slide 7: Growth in China more than offsets weaker trends in rest of Asia/Pacific

Slide 8: Stable sales trends in own retail

Slide 9: Wholesale business up in the first quarter

Slide 10: Fragrances drive growth in license business

Slide 11: HUGO sales grow at strong double-digit rate

Slide 12: Non-recurrence of prior year special items and strict cost discipline drive profit growth

Slide 13: Profitability in Asia/Pacific improves significantly

Slide 14: Group inventories continue to be well controlled

Slide 15: Different timing of investments supports free cash flow performance

Slide 16: Group Strategy

Slide 17: Group strategy focuses on four fields of action

Slide 18: Refocus the Brand

Slide 19: Focus on two clearly positioned brands

Slide 20: Two strong brands with distinctive cores

Slide 21: BOSS dresses the demanding customer for all occasions

Slide 22: New York Fashion Show showcases the elements fundamental to BOSS

Slide 23: Marketing strategy prioritizes digital and menswear

Slide 24: Womenswear continues to be an important part of the BOSS business

Slide 25: HUGO represents an exciting long-term growth opportunity

Slide 26: Two competitive environments

Slide 27: Average HUGO prices are around 30% below BOSS

Slide 28: Refine the Way We Sell

Slide 29: Wholesale partners welcome clarity and consistency of refined brand positioning

Slide 30: Target to increase own retail sales productivity by 20% in the next five years

Slide 31: Own retail selling space will remain largely stable in 2017

Slide 32: New BOSS pricing architecture clears up historical imbalances

Slide 33: Drive the Digital Transformation

Slide 34: Online and physical retailing are becoming one

Slide 35: Online business set to return to growth after disappointing start to 2017

Slide 36: The Group's digital roadmap

Slide 37: Innovate the Way We Operate

Slide 38: Agility is the basis of innovation

Slide 39: Speed drives commercial success

Slide 40: Financial and Operational Outlook

Slide 41: Important milestones of new strategy implementation ahead

Slide 42: Group sales to remain largely stable in 2017

Slide 43: Financial outlook expects stabilization of operational performance in 2017

Slide 44: Low- to mid-single-digit retail comp store sales growth needed to expand operating margin

Slide 45: Group confident to maintain current gross margin level and limit future cost inflation

Slide 46: 2017 - A year of stabilization and strategy implementation

Slide 47: Backup

Slide 48: Sales by region and major markets

Slide 49: Sales by distribution channel

Slide 50: Number of Group's own retail stores by region

Slide 51: Retail comp stores sales

Slide 52: Dividend policy

Slide 53: (Adjusted) financial leverage

Slide 54: Sourcing and production structure

Slide 55: Multi-Year overview

Slide 56: Analyst coverage

Slide 57: Shareholder structure

Slide 58: Financial Calendar 2017 and Investor Relations contact

Slide 59: Forward looking statements contain risks

Slide 60: HUGO BOSS