Hugo Boss Ag · XETR:BOSS
Hugo Boss — FY2010 Earnings Presentation
48 slides from Hugo Boss's earnings presentation, Mar 29, 2011
Slide 1: HUGO BOSS
HUGO BOS S$
Slide 2: Analysts' Conference 2011
ANALYSTS‘ CONFERENCE 2011 Metzingen – March 29, 2011 Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 2 / 48
Slide 3: Agenda
AGENDA 2010 HIGHLIGHTS GROWTH STRATEGY 2010 FINANCIAL YEAR OUTLOOK Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 3 / 48
Slide 4: Agenda: 2010 Highlights
AGENDA 2010 HIGHLIGHTS GROWTH STRATEGY 2010 FINANCIAL YEAR OUTLOOK Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 4 / 48
Slide 5: 2010 Highlights – HUGO BOSS marks most successful year in its history
2010 HIGHLIGHTS – HUGO BOSS marks most successful year in its history Sales at record high Powerful growth in China and the Americas Systematic expansion of own retail network Adjusted EBITDA margin at 20 percent Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 5 / 48
Slide 6: Agenda: Growth Strategy
AGENDA 2010 HIGHLIGHTS GROWTH STRATEGY 2010 FINANCIAL YEAR OUTLOOK Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 6 / 48
Slide 7: Growth Strategy – D.R.I.V.E. project ensures interaction between growth factors
GROWTH STRATEGY – D.R.I.V.E. project ensures interaction between growth factors INTER- CONSUMER NATIONALI- PROXIMITY ZATION D.R.I.V.E. BRAND RETAIL DIFFEREN- TIATION Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 7 / 48
Slide 8: Consumer Proximity – stronger end-consumer focus
CONSUMER PROXIMITY – stronger end-consumer focus Early incorporation of market information Shortening of development and production processes Reducing complexity of collections Tailoring POS deliveries to actual consumer demand Introduction of new collection cycle Clearly defined core ranges for dir
Slide 9: Retail – global presence considerably extended
RETAIL – global presence considerably extended Number of own stores climbs by 99 to 537 Investments focus on Asia / Pacific growth region Improved like-for-like sales High-impact store concepts developed Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 9 / 48
Slide 10: Retail – successful new store openings in 2010 / 2011
RETAIL – successful new store openings in 2010 / 2011 Antwerp / Belgium Las Vegas / U.S.A Hong Kong Kunming / China Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 10 / 48
Slide 11: Retail – above-average increase in online sales
RETAIL – above-average increase in online sales Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 11 / 48
Slide 12: Retail – marked rise in share of sales
RETAIL – marked rise in share of sales Retail 22% 33% 40% 48% Wholesale 75% 64% 57% 49% Licenses 3% 3% 3% 3% 2005 2009 2010 2015 Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 12 / 48
Slide 13: Internationalization – Europe
INTERNATIONALIZATION – Europe More dynamic development in second half of year Double-digit growth in Great Britain Southern European markets stabilize Leadership in domestic market extended Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 13 / 48
Slide 14: Internationalization – Americas
INTERNATIONALIZATION – Americas U.S. sales up by 16 percent in local currency Additional sales floor space secured at U.S. wholesalers Strong brand positioning pays off Double-digit growth in Central and South America Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 14 / 48
Slide 15: Internationalization – Asia / Pacific
INTERNATIONALIZATION – Asia / Pacific China grows by 84% in local currency Successful integration of joint venture with Rainbow Group Clear perception as a luxury brand Continuing difficult market environment in Japan Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 15 / 48
Slide 16: Internationalization – non-European share of sales up sharply
INTERNATIONALIZATION – non-European share of sales up sharply Asia / Pacific 8% 10% 13% 21% Americas 18% 20% 22% 25% Europe 71% 67% 62% 51% Licenses 3% 3% 3% 3% 2005 2009 2010 2015 Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 16 / 48
Slide 17: Brand Differentiation – clear positioning in premium and luxury segment
BRAND DIFFERENTIATION – clear positioning in the premium and luxury goods segment Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 17 / 48
Slide 18: Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011
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Slide 20: Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011
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Slide 21: Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011
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Slide 22: Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011
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Slide 28: Agenda: 2010 Financial Year
AGENDA 2010 HIGHLIGHTS GROWTH STRATEGY 2010 FINANCIAL YEAR OUTLOOK Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 28 / 48
Slide 29: Sales by Region – Broad-based growth
SALES BY REGION – Broad-based growth in euro Sales development by region, y-o-y in euro Sales development by region, y-o-y fx adjusted 2010 fx adjusted Q4 2010 Europe* 19% Europe* 3% 17% 2% 32% 22% Americas 20% Americas 14% 80% 40% Asia/Pacific 62% Asia/Pacific 28% 30% 11% Group 24% Group 7% 0% 20%
Slide 30: Sales by Distribution Channel – Retail drives Group sales increase
SALES BY DISTRIBUTION CHANNEL – Retail drives Group sales increase Sales development by distribution channel, in euro Sales development by distribution channel, in euro y-o-y fx adjusted y-o-y fx adjusted Q4 2010 2010 Wholesale 17% Wholesale -5%-1% 11% Retail 44% Retail 35% 36% 30% Royalties 24% Roy
Slide 31: Income Statement – Gross profit margin up strongly
INCOME STATEMENT – Gross profit margin up strongly Change in EUR million 2010 2009 in % Net sales 1,729.4 1,561.9 11 1 Increase of gross profit margin Cost of sales (661.8) (680.9) 3 Direct selling expenses (40.5) (33.9) (19) by 5.2 pp to 59.4%: Gross profit 1,027.2 847.1 21 Own retail in % of sales
Slide 32: Net Working Capital – New record low
NET WORKING CAPITAL – New record low Inventories increase 23% to EUR 377 million (+10% currency-neutral and excluding China JV) Trade receivables down 5% to EUR 133 million (-10% currency-neutral) Trade payables grow 25% to EUR 188 million (+20% currency-neutral) Net working capital as a percentage
Slide 33: Net Financial Position – Net debt almost halved
NET FINANCIAL POSITION – Net debt almost halved compared to prior year Net debt (in EUR million) 583 600 500 400 379 300 -47% 201 200 174 118 100 0 2006 2007 2008 2009 2010 Significant progress in net debt reduction: Net financial position reduced by 47% to EUR 201 million (2009: EUR 379 million) Eq
Slide 34: Dividend – Increase proposed for 2010
DIVIDEND – Increase proposed for 2010 Dividend* and Payout ratio (in EUR and in %) 2.03 2.0 1.46 1.5 1.38 1.20 1.01 0.97 1.0 0.85 0.76 0.76 0.79 84.7% 75.2% 0.5 71.1% 67.0% 67.1% 64.9% 64.1% 65.2% 64.0% 45.2% 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010** Dividend proposal follows profit or
Slide 35: Agenda: Outlook
AGENDA 2010 HIGHLIGHTS GROWTH STRATEGY 2010 FINANCIAL YEAR OUTLOOK Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 35 / 48
Slide 36: Outlook – Economic and industry environment provides growth opportunities
OUTLOOK – Economic and industry environment provides further growth opportunities Global economic growth to moderate slightly Industry expansion continues to be driven by emerging markets Group set to benefit from stronger quality awareness of consumers Analysts‘ Conference 2011 HUGO BOSS © March 29
Slide 37: Financial Guidance 2011
FINANCIAL GUIDANCE 2011 2011 Outlook Sales growth at least 12% (currency-adjusted) Growth of EBITDA at least 15% before special items Capex approx. EUR 90 mill. Own retail network Expansion by around 70 stores Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 37 / 48
Slide 38: Key Takeaways – HUGO BOSS set for another record year
KEY TAKEAWAYS – HUGO BOSS set for another record year 2010 most successful year in the Group’s history to date Strong start into 2011 Solid foundation built for future profitable growth Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 38 / 48
Slide 39: Questions & Answers
QUESTIONS & ANSWERS Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 39 / 48
Slide 40: Backup
BACKUP Analysts‘ Conference 2011 HUGO BOSS © March 29, 2011 40 / 48
Slide 41: Full Year 2010 Results at a Glance
FULL YEAR 2010 RESULTS AT A GLANCE Sales Gross margin (in EUR million) (in %) 63.8% 1,729 60.6% 59.4% 1,750 1,562 60% 54.2% 1,500 +11% +3.2 pp 50% +5.2 pp 1,250 40% 1,000 30% 750 422 20% 500 324 250 +30% 10% 0 0% Q4 2009 Q4 2010 2009 2010 Q4 2009 Q4 2010 2009 2010 EBITDA before special items Net deb
Slide 42: Wholesale Sales Development
WHOLESALE SALES DEVELOPMENT Wholesale sales development FY and by quarter, fx-adjusted (in %) 11.1% 12% 8% 5.5% 4% 0% -4% -8% -4.8% -12% -10.6% -16% -20% -17.7% Q1 2010 Q2 2010 Q3 2010 Q4 2010 FY 2010 Preorder business improves in second half year Continuous strong development of replenishment busin
Slide 43: Segment Profit
SEGMENT PROFIT In % of Sales In % of Sales Change in % in EUR million 2010 2009 Europe* 143 13.3 119 11.4 20 Americas 47 12.4 15 4.7 >100 Asia/Pacific 40 17.3 15 8.9 >100 Licenses 79 75 5 All regions generate double-digit adjusted EBITDA margin in 2010 Own retail expansion drives profit improvements
Slide 44: Cash Flow Development
CASH FLOW DEVELOPMENT Change in % in EUR million 2010 2009 Cash flow from operating activities 308.3 343.7 (10) Cash flow from investing activities -62.0 -44.2 (40) Cash flow from financing activites -68.2 -210.7 68 Change in cash and cash equivalents 180.8 89.5 >100 Operating cash flow down compare
Slide 45: Capital Expenditure
CAPITAL EXPENDITURE Capital expenditure 2009 (in EUR million) 2010 35 32 30 27 25 20 15 10 10 11 9 10 5 2 3 0 Own Retail - Own Retail - General and Manufacturing New projects and Renovations Administration expansion Capital expenditures increase by 15% to EUR 56 million Investments focus on own reta
Slide 46: Sales and Number of Stores per Region
SALES AND NUMBER OF STORES PER REGION GROUP EUROPE* AMERICAS ASIA/PACIFIC 2010 2009 2010 2009 2010 2009 2010 2009 Sales 1,073 1,041 381 312 230 165 1,729 1,562 (in EUR mio.) huh Stores 219 113 108 171 111 537 438 (Own Retail) 253 *Europe incl. Middle East / Africa Analysts‘ Conference 2011 HUGO BOSS
Slide 47: Financial Calendar 2011
FINANCIAL CALENDAR 2011 Date Event Publication First Quarter Results April 28, 2011 First Quarter Report 2011 2011 Annual Shareholders’ May 10, 2011 Video Recording Meeting First Half Year Results First Half Year Report July 28, 2011 2011 2011 Nine Months Results Video Recording November 2, 2011 201
Slide 48: HUGO BOSS
HUGO BOS S$