Hugo Boss AG · XETR:BOSS
Hugo Boss — Investor Day (November 2013)
39 slides from Hugo Boss's investor day presentation, Nov 26, 2013
Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Investor Day 2013: Group Strategy
HUGO BOSS Investor Day 2013 Group Strategy Mr. Claus-Dietrich Lahrs, Chief Executive Officer November 26, 2013 Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 2 / 39
Slide 3: Agenda
Agenda Successful operational development has yielded strong financial results Several challenges affect progress towards achievement of medium-term targets Promising new initiatives underpin intact growth strategy Summary and conclusion Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2
Slide 4: Agenda
Agenda Successful operational development has yielded strong financial results Several challenges affect progress towards achievement of medium-term targets Promising new initiatives underpin intact growth strategy Summary and conclusion Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2
Slide 5: HUGO BOSS has grown tremendously in recent years
HUGO BOSS has grown tremendously in recent years Sales and EBITDA before special items Sales (in EUR million) +13% EBITDA before special items +14%* 2,346 Sales: 2,059 +6-8%** 1,729 1,562 469 529 EBITDA: 354 269 +6-8% 2009 2010 2011 2012 2013e * +10% fx-adjusted. ** fx-adjusted. Investor Day 2013 //
Slide 6: Brand portfolio sharpened and streamlined
Brand portfolio sharpened and streamlined market segment luxury premium fashion statement casual modern modern progressive urban chic active sophisticated contemporary Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 6 / 39
Slide 7: Group has succeeded in building a bigger and better own retail business
Group has succeeded in building a bigger and better own retail business Adj. EBITDA margin EBITDA margin and ROCE vs. channel mix ROCE Retail Wholesale Royalties 24% 49% 73% 64% 62% 49% 49% 22.8% 22.6% 33% 31% 31% 31% 20.5% 16.7% 17.2% 15.7% 16.1% 3% 2% 2006 2007 2008 2009 2010 2011 2012 Investor Da
Slide 8: Several key measures have made retail the core of the business model
Several key measures have made retail the core of the HUGO BOSS business model… Lead-time reduction ■ Time to market shortened by twelve weeks ■ Feedback loop enables optimization of new collection development Core range ■ Definition of core offering supports consistency of brand presentation ■ Supe
Slide 9: Industry-beating growth in many established markets
…enabling industry-beating growth in many of the Group’s established markets UK Sales Wholesale vs. retail (in EUR million) (in % of country sales) CAGR 197 ■ Consequent business model +27% 32 transformation 69 96 68 ■ Strong brand equity 31 Wholesale 2009 … 2012 2009 … 2012 Retail US CAGR 434 +23%
Slide 10: Group has made good progress building a truly global presence
Group has made good progress building a truly global presence Sales share by region* (in % of Group sales) Europe -8pp 67 59 2009 … 2012 Asia/Pacific +5pp 15 10 Americas +4pp 24 20 2009 … 2012 2009 … 2012 * excl. Royalties (2009: 3%, 2012: 2%). Investor Day 2013 // Group Strategy HUGO BOSS © Novembe
Slide 11: Supply chain integration project adds to strong operational backbone
Supply chain integration project adds to strong operational backbone ■ Homogenous, Group-wide integrated supply chain based on SAP a strong platform for further growth ■ Roll out completed in all production entities ■ New flat-packed goods distribution center to be seamlessly integrated in productio
Slide 12: Agenda
Agenda Successful operational development has yielded strong financial results Several challenges affect progress towards achievement of medium-term targets Promising new initiatives underpin intact growth strategy Summary and conclusion Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2
Slide 13: Overall economic backdrop much weaker than originally expected
Overall economic backdrop much weaker than originally expected Annual real GDP growth rates 2011he 2011a 2012he 2012a 2013he 2013e 2014e 2015e Eurozone +1.6% +1.6% +0.7% (0.7)% +1.5% (0.3)% +1.0% +1.4% Germany +2.9% +3.3% +1.0% +0.7% +2.0% +0.5% +1.7% +1.8% USA +1.7% +1.8% +2.0% +2.8% +2.5% +1.6% +2
Slide 14: Industry has returned to more moderate growth rates as the China boom is over
Industry has returned to more moderate growth rates as the China boom is over Overall industry growth has moderated… …with the slowdown in China decelerating our catch-up in the region World wide luxury goods sales Growth of Asian luxury goods market vs. (in EUR billion) Chinese personal luxury mark
Slide 15: This backdrop has affected top line momentum in wholesale and own retail
This backdrop has affected top line momentum in both wholesale and own retail recently Sales growth wholesale vs. retail l-f-l* Retail l-f-l 19% Wholesale 20 16% 15 11% 13% 12% 11% 13% 10% 10% 10 9% 9% 6% 10% 5% 4% 4% 5 2% 2% 4% 4% 2% 1% 0 2% -5 -10 -8% -9% -15 -14% Q1 2011 Q2 2011 Q3 2011 Q4 2011 F
Slide 16: Wholesale remains an important part of our business despite current challenges
Wholesale remains an important part of our business despite current challenges Overall difficult market situation… ■ Economic downturn and weak traffic development impact performance of many partners Share of TOP 50 wholesale customers (in % of total wholesale sales) ■ High number of owner-operated
Slide 17: Controlled space expansion can only partly mitigate pressure on wholesale
Controlled space expansion can only partly mitigate pressure on wholesale El Corte Inglés, Marbella Saks, Alsterhaus, Columbus (OH) Hamburg Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 17 / 39
Slide 18: Focused on further improvement of structural profitability
HUGO BOSS remains absolutely focused on further improvement of structural profitability Achievements Challenges ■ Brand portfolio sharpened and streamlined ■ Macroeconomic development worse than initially expected ■ Retail transformation faster and more comprehensive than expected ■ Wholesale market
Slide 19: Agenda
Agenda Successful operational development has yielded strong financial results Several challenges affect progress towards achievement of medium-term targets Promising new initiatives underpin intact growth strategy Summary and conclusion Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2
Slide 20: Growth strategy intact
Growth strategy intact STRENGTHENING MAXIMIZING OUR CONSUMER FOCUS BRANDS TO DRIVE RETAIL STRIVING FOR EXPLOITING OPERATIONAL GLOBAL EXCELLENCE GROWTH OPPORTUNITIES Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 20 / 39
Slide 21: Integrated BOSS offering underlines premium and luxury brand appeal
Integrated BOSS offering underlines premium and luxury brand appeal market segment ■ Integrated offering from premium to luxury luxury ■ Simplified brand messaging from end consumer perspective ■ Gradual exit of entry price points supports trade-up of core brand BOSS premium fashion modern modern st
Slide 22: BOSS suit offering reflects clear customer segmentation
BOSS suit offering reflects clear customer segmentation Premium market segment: Luxury market segment: FUSED SEMI CANVAS FULL CANVAS Industrial Semi traditional Traditional Thermally connected Only partly thermally connected Unfixed More efficient manufacturing technique Flexible pro
Slide 23: Luxury share has started growing visibly in Fall 2013 collection
Luxury share has started growing visibly in Fall 2013 collection already ■ Integrated luxury offering received positively by wholesale partners and end consumers ■ Growing weight across all categories BOSS Menswear Fall 2013 collection sell-in, premium vs. luxury ■ Product innovations to drive furth
Slide 24: Womenswear to become an important growth driver going forward
Womenswear to become an important growth driver going forward Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 24 / 39
Slide 25: Refined strategic brand communication approach to support momentum
Refined strategic brand communication approach to support momentum ■ Focusing on a new target audience From a wholesale to a consumer focused approach. From talking to thousands to talking to hundred millions of people. The consumer is BOSS. ■ Making the Brand Purpose consumer relevant and tangible
Slide 26: Customer relationship management efforts yield first positive results
Customer relationship management efforts yield first positive results ■ Multi-channel consumers purchase twice as much compared to offline/online only consumers ■ With myhugoboss.com every consumer gets a personalized service across all channels Brand Retail Stores Mobile Internet Online Store Front
Slide 27: The importance of the traveling consumer is growing robustly
The importance of the traveling consumer is growing robustly YoY growth of tourism-related own ■ The importance of tourism for HUGO BOSS European retail sales in Europe business is growing strongly… (estimate based on tax refund data) +26% ■ …with Italy and the UK being supported the most ■ Russian
Slide 28: Upgrade and expansion of flagship store network in key locations
Upgrade and expansion of flagship store network in key locations globally Number of flagship stores 25 16 15 13 11 New York, 2009 2010 2011 2012 2013e Columbus Circle Moscow, Shanghai, Kuznetsky Most APM Mall Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2013 28 / 39
Slide 29: Directly operated store expansion conquers white space
Directly operated store expansion conquers white space EUR spent on HUGO BOSS in 25 international metropolises (as of 2012, % of TEUR GDP per metropolis) 3.1 1.7 1.3 1.2 1.1 1.0 0.8 0.7 0.7 0.7 0.7 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 Frankfurt Hamburg Stuttgart Hong Kong Johannes
Slide 30: Refined showroom timing and delivery cycle optimizes time to market
Refined showroom timing and delivery cycle optimizes time to market Further enhancement of central D.R.I.V.E. concepts expected to drive performance ■ Analytical insight in collection performance deepened significantly 4-season cycle ■ Renewed emphasis on Spring and Fall collections in response to A
Slide 31: Underpenetration of emerging markets points to significant growth potential
Underpenetration of emerging markets points to significant growth potential Sales split HUGO BOSS Sales split peer group** (FY 2012) Emerging markets* (FY 2012) Emerging markets* RoW RoW 16% 40% * incl. Greater China. ** Peer group: Swatch, Richemont, Burberry, Gucci, LV, Tod’s, Salvatore Ferragamo,
Slide 32: China continues to be the biggest regional opportunity
China continues to be the biggest regional opportunity for HUGO BOSS China Sales share China ■ Late direct market entry (9M 2013, in % of Asian sales) Other ■ Successful build up of operational infrastructure has laid the foundation for expected future growth 39 ■ Focus on quality upgrade of retail
Slide 33: Russia has the potential to develop into a European core market
Russia has the potential to develop into one of the European core markets Russia Sales share Russia ■ HUGO BOSS enjoys high levels of brand awareness (9M 2013, in % of European sales) Other and favorable brand perception 3 ■ Comprehensive market presence driven by franchise and department store part
Slide 34: Latin America has become an increasingly important growth driver
Latin America has become an increasingly important growth driver in the Americas Latin America Sales share Latin America ■ 25+ years market presence (9M 2013, in % of American sales) Other ■ Strong brand recognition driven by menswear clothing 10 ■ Reputation for modern designs and perfect fit ■ Fre
Slide 35: Agenda
Agenda Successful operational development has yielded strong financial results Several challenges affect progress towards achievement of medium-term targets Promising new initiatives underpin intact growth strategy Summary and conclusion Investor Day 2013 // Group Strategy HUGO BOSS © November 26, 2
Slide 36: Retail-driven business model will secure long-term profitable growth
Retail-driven business model will secure long-term profitable growth ■ Macroeconomic development weaker than expected Economic and industry conditions more challenging ■ Deterioration of global wholesale market than expected ■ Temporary slowdown of industry growth in China impacting HUGO BOSS catch-
Slide 37: HUGO BOSS has a clear long-term vision
HUGO BOSS has a clear long-term vision HUGO BOSS will… …further build its leading market position in the global premium and luxury apparel industry, with an expanded womenswear and luxury offering adding to our historical strength in the menswear premium segment. …continue developing into a world-cl
Slide 38: HUGO BOSS
HUGO BOSS
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