Hugo Boss Ag · XETR:BOSS
Hugo Boss — Investor Presentation (March 2009)
47 slides from Hugo Boss's investor presentation, Mar 26, 2009
Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Annual Press Conference
Annual Press Conference Metzingen – March 26th, 2009
Slide 3: Today's Agenda
Today’s Agenda Strategic direction Main areas of change Financial Performance 2008 Future Developments Annual Press Conference HUGO BOSS © March 26th, 2009 3 / 47
Slide 4: Today's Agenda
Today’s Agenda Strategic direction Main areas of change Financial Performance 2008 Future Developments Annual Press Conference HUGO BOSS © March 26th, 2009 4 / 47
Slide 5: Our heritage is based upon men's wear, business wear, and suits
Our heritage is based upon men‘s wear, business wear, and suits Annual Press Conference HUGO BOSS © March 26th, 2009 5 / 47
Slide 6: Since decades HUGO BOSS has created a portfolio of strong brands
Since decades HUGO BOSS has created a portfolio of strong brands oscillating between elegant, casual, and avant-garde High brand awareness ~ 90 - 100% among target consumers High share of buyers within target group ~ 40 - 60% at BOSS Black/Selection/HUGO ~ 15 - 30% at BOSS Orange/Green Annual Press
Slide 7: HUGO BOSS brands and products are highly regarded by consumers and trade partners
HUGO BOSS brands and products are highly regarded by consumers and trade partners "HUGO BOSS is elegant, chic, and modern" "HUGO BOSS has still the best value Consumer for money in suits in the premium market" "HUGO BOSS is one of the best brands in customer communication Consumer and organizing gre
Slide 8: The HUGO BOSS culture is one of our strongest assets
The HUGO BOSS culture is one of our strongest assets "HUGO BOSS is a unique company and this you feel even more once you spent time outside the brand" "HUGO BOSS is like a big family – and a Former Senior Manager family always sticks together" Brand Management "We will be facing turbulent times, but
Slide 9: Five-Year development with a solid financial performance of growth
Five-Year development with a solid financial performance of growth in EUR mill. EBITDA before EBIT before Net Sales extraordinary items extraordinary items +10% +13% +14% 1.686 287 226 1.168 173 135 2004 2008 2004 2008 2004 2008 CAGR Annual Press Conference HUGO BOSS © March 26th, 2009 9 / 47
Slide 10: Annual Press Conference HUGO BOSS © March 26th, 2009
Annual Press Conference HUGO BOSS © March 26th, 2009 10 / 47
Slide 11: Annual Press Conference HUGO BOSS © March 26th, 2009
Annual Press Conference HUGO BOSS © March 26th, 2009 11 / 47
Slide 12: Strategic growth areas
Strategic growth areas Further leverage our existing strengths to continue growth with BOSS Black in premium men's wear Expand the share of business done with … … BOSS Selection to underline our core competence in men’s wear (full-canvas) … Women’s wear – make sure that women get the same attention
Slide 13: Brand repositioning to sharpen our image
Brand repositioning to sharpen our image In the past the HUGO BOSS brand architecture showed product overlaps and similar price positions. To avoid cannibalization, we now focus on the stand-alone positioning of each brand. from to Luxury Luxury BOSS Selection BOSS Selection Price Price Premium BOSS
Slide 14: We are unlocking potential by developing dedicated retail channel strategies
We are unlocking potential by developing dedicated retail channel strategies to … FOCUS ON CHANNEL DEVELOPMENT Be less dependent on wholesale channel Gain more control over brand and product presentation … gain more control over brand and product presentation to consumer Be more closely in tou
Slide 15: Focusing on geographical expansion to drive our business outside Central Europe
Focusing on geographical expansion to drive our business outside Central Europe to … … be less dependent on mature markets in Central and Western Europe, but even there is still market share to gain … benefit from double-digit growth of emerging markets in Asia (without Japan) and Russia/Eastern Eur
Slide 16: Delivering sustainable and profitable growth
Delivering sustainable and profitable growth by … … monitoring and improving profitability of own retail … managing trade partner profitability more stringently … reducing net working capital to a healthy level … decreasing complexity in operations, sourcing and manufacturing as well as supply chain
Slide 17: Performance initiatives launched in second half of 2008
Performance initiatives launched in second half of 2008 anticipating weakening market conditions Strengthening cost cautiousness and tight monitoring of cost drivers Retail turnaround Sourcing & manufacturing Fine-tuning the regional pricing structure Net working capital optimization Annual Press Co
Slide 18: Key observations of 2008 show impacts on our global market operations
Key observations of 2008 show impacts on our global market operations Toughest global economic development since decades Key markets are under pressure Increasingly challenging business environment Retailers adjusting strategies Consumer behavior is changing Annual Press Conference HUGO BOSS © March
Slide 19: Therefore organizational changes have been implemented in 2008
Therefore organizational changes have been implemented in 2008 Redefining organizational structure of headquarters to speed up internal decisions and establish clear responsibilities Introducing regional responsibilities for Europe incl. Africa/Middle East, Americas, and Asia/Pacific to simplify and
Slide 20: The redesign of the top management structure is nearly finished
The redesign of the top management structure is nearly finished Management Board CEO CFO COO Claus-Dietrich Norbert N.N. Lahrs Unterharnscheidt Extended Board Regional Brand/Creative Brand/Creative Global Management Management Own Production Management Replenishment Europe incl. BOSS Black/ BOSS Ora
Slide 21: Communication BOSS Black – Vogue (Germany), October 2008
Communication BOSS Black – Vogue (Germany), October 2008 Annual Press Conference HUGO BOSS © March 26th, 2009 21 / 47
Slide 22: Communication BOSS Selection – GQ (Taiwan), September 2008
Communication BOSS Selection – GQ (Taiwan), September 2008 Annual Press Conference HUGO BOSS © March 26th, 2009 22 / 47
Slide 23: Communication BOSS Green – Vogue Sport (Italy), January 2008
Communication BOSS Green – Vogue Sport (Italy), January 2008 Annual Press Conference HUGO BOSS © March 26th, 2009 23 / 47
Slide 24: Sport Sponsoring – Formula 1
Sport Sponsoring – Formula 1 Annual Press Conference HUGO BOSS © March 26th, 2009 24 / 47
Slide 25: Sport Sponsoring – Sailing
Sport Sponsoring – Sailing Annual Press Conference HUGO BOSS © March 26th, 2009 25 / 47
Slide 26: Sport Sponsoring – Golf
Sport Sponsoring – Golf Annual Press Conference HUGO BOSS © March 26th, 2009 26 / 47
Slide 27: Celebrity Dressing BOSS Black
Celebrity Dressing BOSS Black – Julianne Moore (HUGO BOSS Prize), Tom Cruise (Valkyrie Premiere New York), Princess Mary (in Thailand) Annual Press Conference HUGO BOSS © March 26th, 2009 27 / 47
Slide 28: Art Sponsoring – HUGO BOSS Prize 2008
Art Sponsoring – HUGO BOSS Prize 2008 Annual Press Conference HUGO BOSS © March 26th, 2009 28 / 47
Slide 29: BOSS Selection collection portfolio supplemented by the TAILORED LINE
BOSS Selection collection portfolio supplemented by the TAILORED LINE Full-canvas interpretations using contemporary design Superlative quality and craftsmanship Produced in Germany and Italy Annual Press Conference HUGO BOSS © March 26th, 2009 29 / 47
Slide 30: Successful brand extensions into lifestyle accessories continued
Successful brand extensions into lifestyle accessories continued HUGO BOSS Samsung SGH-F480 BOSS Selection HB-212 Limited Edition Annual Press Conference HUGO BOSS © March 26th, 2009 30 / 47
Slide 31: Annual Press Conference HUGO BOSS © March 26th, 2009
Annual Press Conference HUGO BOSS © March 26th, 2009 31 / 47
Slide 32: Go-live of HUGO BOSS online store in September 2008 in the UK
Go-live of HUGO BOSS online store in September 2008 in the UK Annual Press Conference HUGO BOSS © March 26th, 2009 32 / 47
Slide 33: Today's Agenda
Today’s Agenda Strategic direction Main areas of change Financial Performance 2008 Future Developments Annual Press Conference HUGO BOSS © March 26th, 2009 33 / 47
Slide 34: 2008 was the best year in history of HUGO BOSS
2008 was the best year in history of HUGO BOSS, nevertheless Net Profit was influenced by restructuring activities in EUR mill. Net Sales 1,686 + 6% (fx-adj.) + 3% Gross Profit 1,011 + 7% Gross Profit Margin 60% + 2 ppt. EBITDA before extraordinary items 287 + 4% EBIT before extraordinary items 226
Slide 35: 2008 showed again a good operating performance
2008 showed again a good operating performance Net Sales resulting from Wholesale operations + 4% fx-adjusted Net Sales resulting from Retail operations + 12% fx-adjusted High improvement of marginal contribution, due to cost-optimized sourcing, higher share of DOS, and country-specific pricing effe
Slide 36: HUGO BOSS increased sales in all regions
HUGO BOSS increased sales in all regions Sales development with a positive track record in all regions Increase of Net Sales share in Asia/Pacific due to intensified directly operated stores operations (new stores and franchise take-overs) Strategic realignment is based on a regional structure strea
Slide 37: Positive sales trend of all brands continued
Positive sales trend of all brands continued Sales of BOSS Black (representing ~ 68% of total sales) rose by 4% fx-adjusted BOSS Selection and BOSS Green continued its dynamic performance HUGO (representing ~ 9% of total sales) reached a fx-adjusted sales growth of 11% HUGO EUR 158 mill. + 11 % FX.a
Slide 38: Share of controlled space is constantly growing
Share of controlled space is constantly growing Growing monobrand distribution with ~ 1.400 freestanding stores and shop- in-shops including 330 directly operated stores at the end of 2008 Share of sales via own retail network rose to 16% of total sales Outlet/VIP-Shop 11 % Royalties 3 % DOS 16 % Mo
Slide 39: Segment reporting established in line with regional responsibilities
Segment reporting established in line with regional responsibilities EBITDA before extraordinary items reached EUR 287 mill. Segment profit in Europe was influenced by write-offs on inventories and expenses from DOS expansion Europe incl. Middle East/ Operations and others Africa EUR 125 mill. EUR 5
Slide 40: The balance sheet structure changed during previous year
The balance sheet structure changed during previous year Total assets were up 12 % to EUR 1,162 million The equity ratio of total assets decreased to 17 % due to payment of the special dividends Assets Liabilities In EUR mill. 2008 2007 2008 2007 Property, plants and equipment Shareholder‘s equity a
Slide 41: Positive Cash Flow development
Positive Cash Flow development Operating cash flow was significantly above previous year and had off-set funding for investing and financing activities in EUR mill. 2008 2007 Cash flow from operating activities 165 110 Cash flow from investing activities -117 -77 Cash flow from financing activities
Slide 42: High investment volume to strengthen existing and future market leadership
High investment volume to strengthen existing and future market leadership Distribution centre for hanging goods for leveraging process efficiency and consolidating logistics locations Continuing investment in strengthening the own retail network Other investments Logistics infrastructure EUR 19 mil
Slide 43: Annual Press Conference HUGO BOSS © March 26th, 2009
Annual Press Conference HUGO BOSS © March 26th, 2009 43 / 47
Slide 44: Outlook for 2009 still influenced by global economic downturn
Outlook for 2009 still influenced by global economic downturn Net Sales expected to decrease on a year-on-year comparison due to global market conditions, but targeting to outperform competitors Several cost initiatives already launched in 2008 delivering a positive impact on the cost structure to p
Slide 45: We are preparing for 2010 to unlock the full potential of our brands
We are preparing for 2010 to unlock the full potential of our brands 1 2 3 Intensifying retail channel Strengthening brand Driving process and activities portfolio operational efficiency Increasing share of BOSS Orange Establishing and sales within dynamic relaunch on track for maintaining cos
Slide 46: Fashion Show BOSS Black – Berlin January 2009
Fashion Show BOSS Black – Berlin January 2009 Annual Press Conference HUGO BOSS © March 26th, 2009 46 / 47
Slide 47: HUGO BOSS
HUGO BOSS