Hugo Boss Ag · XETR:BOSS
Hugo Boss — Non-Deal Roadshow (September 2017)
64 slides from Hugo Boss's roadshow presentation, Sep 12, 2017
Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Investor Meeting Presentation
Investor Meeting Presentation HAUCK & AUFHÄUSER ROADSHOW ZURICH, SEPTEMBER 12, 2017 DENNIS WEBER, HEAD OF INVESTOR RELATIONS Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 2
Slide 3: Second Quarter Results 2017
Second Quarter Results 2017 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 3
Slide 4: HUGO BOSS records sales increase in the second quarter
HUGO BOSS records sales increase in the second quarter Group Sales (in EUR million) ■ Brand repositioning reaches important milestones +2 % ■ Comp store sales performance in own retail turns positive +3 % fx-adjusted ■ Robust growth in key markets UK and China 622 636 Q2 2016 Q2 2017 Hauck & Aufhäus
Slide 5: The Americas and Asia/Pacific drive Group sales growth
The Americas and Asia/Pacific drive Group sales growth HUGO BOSS Europe Sales* HUGO BOSS Americas Sales* HUGO BOSS APAC Sales* (2) % +5 % +11 % 0 % fx-adjusted +3 % fx-adjusted +10 % fx-adjusted 378 372 149 98 142 88 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 ■ Different timing of wholesale ■ S
Slide 6: Like-for-like sales performance in own retail turns positive
Like-for-like sales performance in own retail turns positive Retail Sales* Wholesale Sales* License Sales* +5 % (6) % +27 % +6 % fx-adjusted (6) % fx-adjusted +27 % fx-adjusted 436 193 18 415 182 14 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 ■ Own retail sales up 3% on a ■ Shift in timing of or
Slide 7: Sales up at BOSS and HUGO
Sales up at BOSS and HUGO ■ Athleisure drives BOSS sales +2 % +6 % ■ Growth at HUGO impacted by +2 % fx-adjusted +6 % fx-adjusted timing effects in wholesale 537 545 91 86 ■ Menswear outperforms womenswear Q2 2016* Q2 2017* Q2 2016* Q2 2017* *in EUR million. Hauck & Aufhäuser Roadshow // Zurich HUGO
Slide 8: Operating profit stable despite higher marketing expenses and investments in digital
Operating profit stable despite higher marketing expenses and investments in digital Gross margin Selling & Distribution expenses 67.7 % 10bp 287 EUR million 2% Administration expenses EBITDA (before special items) 0% 69 EUR million 5% 108 EUR million Special items Net income attributable to equity
Slide 9: Profitability in Asia/Pacific improves significantly
Profitability in Asia/Pacific improves significantly Europe Americas Asia/Pacific (in %) (in %) (in %) (140) bp +30 bp +340 bp 30.0 28.6 23.7 24.0 23.3 19.9 *Incl. Middle East and Africa. Q2 2016 Q2 2017 Q2 2016 Q2 2017 Q2 2016 Q2 2017 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017
Slide 10: Sales and earnings increase in the first half year
Sales and earnings increase in the first half year Group Sales (H1 2017) Sales by Region (H1 2017) +2 % 0 % 1.287 Mio. EUR +2% fx-adjusted Europe +2% fx-adjusted EBITDA (before special items) +2 +1 % 205 Mio. EUR % Americas (2)% fx-adjusted Net income attributable to equity holders of the parent com
Slide 11: Group inventories continue to be tightly controlled
Group inventories continue to be tightly controlled Inventories Average trade net working capital (in EUR million) as percentage of sales (in %) ■ Double-digit inventory declines in (4) % the Americas and Asia/Pacific (3) % fx-adjusted (40) bp ■ Trade net working capital down 566 19.6 8% in currency
Slide 12: Investment activity moderates compared to the prior year
Investment activity moderates compared to the prior year Capital expenditure Free cash flow Net financial liabilities (in EUR million) (in EUR million) (in EUR million) (28) % >100 % (41) % 79 132 281 57 166 54 H1 2016 H1 2017 H1 2016 H1 2017 June 30, 2016 June 30, 2017 ■ Own retail investments decl
Slide 13: Group Strategy Update
Group Strategy Update Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 13
Slide 14: 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 14
Slide 15: Strategic Fields of Action
Strategic 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 15
Slide 16: Two brands: BOSS and HUGO
Two brands: BOSS and HUGO #THISISBOSS #IAMHUGO TWO BRANDS TWO TARGET CUSTOMERS TWO BRAND IDENTITIES Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 16
Slide 17: BOSS and HUGO customers have different attitudes towards fashion
BOSS and HUGO customers have different attitudes towards fashion Status-oriented, Open-minded, ATTITUDE traditional, rational individual, spontaneous Classic, modern, Fashion-forward, STYLE sophisticated contemporary, progressive Highest quality, Latest fashion trends, EXPECTS personal assistance ur
Slide 18: BOSS and HUGO are distinct brands based on a common set of values
BOSS and HUGO are distinct brands based on a common set of values EXCLUSIVE CHARACTERISTICS EXCLUSIVE CHARACTERISTICS SHARED MODERN DESIGN VALUES & BENEFITS CONTEMPORARY DESIGN EFFORTLESS LOOKS PROGRESSIVE LOOKS INNOVATION SHARP TAILORING AND PREMIUM QUALITY AND FASHION - FORWARD REFINED CASUALWEAR
Slide 19: BOSS: Upgrade of casualwear and new interpretation of formalwear
BOSS: Upgrade of casualwear and new interpretation of formalwear Split of BOSS brand sales by segment In EUR billion ~2.0 CAGR ~1.4 +8% 51% 59% CAGR +3% 49% 41% 2010 2016 Casualwear Formalwear Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 19
Slide 20: BOSS: Rebalanced offer takes advantage of core strength in upper premium
BOSS: Rebalanced offer takes advantage of BOSS core strength in upper premium Suit offer by price point Based on number of styles offered in France, in % of total >800 26% 23% 25% 700 - 799 31% 43% 600 - 699 43% 595 9% 0% Spring/Summer Spring/Summer 2017 collection 2018 collection Hauck & Aufhäuser
Slide 21: BOSS Menswear collection spans three wearing occasions
BOSS Menswear collection spans three wearing occasions BUSINESS CASUAL AT H L E I S U R E DRESSED IMPECCABLY FOR EVERY OCCASION Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 21
Slide 22: BOSS Womenswear collection consists of Business and Casual
BOSS Womenswear collection consists of Business and Casual BUSINESS CASUAL DRESSED IMPECCABLY FOR EVERY OCCASION Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 22
Slide 23: Business and Casual form HUGO Menswear
Business and Casual form HUGO Menswear… BUSINESS CASUAL GLOBALLY ENGAGED – ALWAYS CURIOUS – AUTHENTICALLY EXPRESSIVE Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 23
Slide 24: HUGO Womenswear collections
…and HUGO Womenswear collections BUSINESS CASUAL GLOBALLY ENGAGED – ALWAYS CURIOUS – AUTHENTICALLY EXPRESSIVE Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 24
Slide 25: HUGO: Refined brand positioning receives strong feedback
HUGO: Refined brand positioning receives strong feedback Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 25
Slide 26: HUGO has grown significantly above industry average in recent past
HUGO has grown significantly above industry average in recent past HUGO sales split by channel In EUR million 380 Strong position in central European markets CAGR Short-term growth focus on other European markets +16% 50% Ambition to grow in the US and key Asian markets 153 57% 47% 37% 7% 2% 2
Slide 27: Full calendar of events to drive excitement around HUGO
Full calendar of events to drive excitement around HUGO Pitti Uomo Reversed Vogue’s Fashion logo capsule Night Out 6/2017 1/2018 Zac Efron – M.I.A. Pop-up store Brand ambassador cooperation Bread & Butter High Snobiety Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 27
Slide 28: Strategic Fields of Action
Strategic 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 28
Slide 29: Three key distribution priorities: own retail productivity
Three key distribution priorities Increase own retail sales Exploit the full potential of online Further integrate distribution 1 productivity 2 3 across all channels Retail sales productivity ~13,000 In EUR/m2 10,900 Better and broader offering at entry price points Expansion of casual and athl
Slide 30: Three key distribution priorities: online potential
Three key distribution priorities Increase own retail sales Exploit the full potential of online Further integrate distribution 1 productivity 2 3 across all channels hugoboss.com Fulfillment onlinepureplay.com Partner (insourced in 2016) departmentstore.com CUSTOMER Social commerce Hauck & Aufhäuse
Slide 31: Three key distribution priorities: integrate channels
Three key distribution priorities Increase own retail sales Exploit the full potential of online Further integrate distribution 1 productivity 2 3 across all channels + 90 % of European retail business omnichannel-enabled 31 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017
Slide 32: Positive reaction from wholesale partners to new Spring/Summer 2018 collection
Positive reaction from wholesale partners to new Spring/Summer 2018 collection Orders for athleisure wear up at double-digit rates HUGO orders up solidly driven by double-digit increase in casualwear Overall order book broadly stable y-o-y, outperforming the global wholesale market Hauck & Auf
Slide 33: Store renovations will upgrade own retail network
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 34: Strategic Fields of Action
Strategic 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 34
Slide 35: Digital transformation comprises the entire value chain
Digital transformation comprises the entire value chain Product & collection Sourcing Distribution Own retail and development and production and logistics wholesale distribution Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 35
Slide 36: Increasing use of virtual prototyping accelerates collection development
Product and collection development │ Sourcing and production │ Distribution and logistics │ Sales Increasing use of virtual prototyping accelerates collection development Improved communication flow with suppliers Reduction of mock-ups and prototypes 100% of HUGO shirt, neckwear and knitwear o
Slide 37: Production facility in Izmir is developing into a smart factory
Product and collection development │ Sourcing and production │ Distribution and logistics │ Sales Production facility in Izmir is developing into a “smart factory” 3D space- Big data Smart Robotics planning analysis factory Real time Voice Augmented Artificial production command reality intelligence
Slide 38: Key elements of logistics infrastructure upgraded or renewed
Product and collection development │ Sourcing and production │ Distribution and logistics │ Sales Key elements of logistics infrastructure upgraded or renewed European flat-packed goods US distribution center distribution center Midway (Georgia), Filderstadt, Germany United States New construction S
Slide 39: New store concepts link physical and digital retailing
Product and collection development │ Sourcing and production │ Distribution and logistics │ Sales New store concepts create strong link between physical and digital retailing Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 39
Slide 40: HUGO digital showroom with full order functionality starting October 2017
Product and collection development │ Sourcing and production │ Distribution and logistics │ Sales HUGO digital showroom with full order functionality starting October 2017 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 40
Slide 41: Strategic Fields of Action
Strategic 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 41
Slide 42: Digital showroom development demonstrates adoption of new ways of working
Digital showroom development demonstrates adoption of new ways of working Strict focus on customer value Delegation of decision making power Use of Scrum methodology Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 42
Slide 43: 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 44: Senior management changes bring new expertise to the company
Senior management changes bring new expertise to the company Tony Lucia President and CEO, USA (G-Star, Escada) Filippo Bernasconi Linda Dauriz Director Brand & Director Customer Creative Management Experience & Corporate Shoes and Leather Development (formerly at Bally) (McKinsey & Company) Dr. Mar
Slide 45: Yves Müller appointed Chief Financial Officer
Yves Müller appointed Chief Financial Officer Responsibilities / / Controlling, Finance, Central Services, Investor Relations and IT 2006 – 2017: CFO at Tchibo 1999 – 2006: Head of group accounting and IT at Tchibo 1994 – 1999: Auditor at Arthur Andersen Hauck & Aufhäuser Roadshow // Zurich HUGO BOS
Slide 46: Financial and Operational Outlook
Financial and Operational Outlook Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 46
Slide 47: Group sales outlook confirmed
Group sales outlook confirmed Sales by channel* Sales by region* Increase of up to mid single-digit percentage Europe Stable Retail rate, comp store sales -3% to +3% Decline at a low Slight Wholesale to mid single-digit Americas decline percentage rate Solid Slight Licenses growth Asia/Pacific incre
Slide 48: Financial outlook remains largely unchanged
Financial outlook remains largely unchanged Sales* Largely stable Unch. Gross profit margin Slight increase Unch. EBITDA before special items -3% to +3% Unch. Consolidated net income Low double-digit percentage rate increase Unch. Capital expenditure EUR 130 million to EUR 150 million Free cash flow
Slide 49: Strategy execution will drive profitable and sustainable growth
Strategy execution will drive profitable and sustainable growth Profitable and sustainable growth 2019+ Acceleration Stabilization 2018 Grow sales stronger than market, increase 2017 operating profit Grow sales and stronger than sales Financial outlook operating profit confirmed Sales and op
Slide 50: HUGO BOSS will further strengthen its position in the premium apparel industry
HUGO BOSS will further strengthen its position in the premium apparel industry BOSS and HUGO will outgrow their respective market segments Refined strategy will elevate brand desirability and customer experience Agility will become key feature of the operating model Hauck & Aufhäuser Roadshow // Zur
Slide 51: Backup
Backup Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 51
Slide 52: 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 53: 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 53
Slide 54: Number of Group's own retail stores by region
Number of Group’s own retail stores by region As of 30/06/2017 Freestanding Shop-in-Shops Outlets Total stores Europe 189 344 63 596 Americas 93 105 49 247 Asia/Pacific 156 87 42 285 Total 438 536 154 1,128 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 54
Slide 55: Retail comp stores sales
Retail comp stores sales Retail l-f-l sales development* 8 6% 6% 6 4% 4% 4 3% 3% 3% 2% 4% 2 3% 2% 0% 0 0% (3)% (3)% (2) (1)% (4) (6)% (6)% (6)% (6) (8)% (8) Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 2013 2013 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2016 2016 2016 201
Slide 56: 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% an
Slide 57: (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 58: 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 Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 58
Slide 59: 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 60: 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 61: 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 August 2017) Hauck & Aufhäuser Roadshow // Zurich HUGO BOSS © September 2017 61
Slide 62: Financial Calendar 2017/2018 and Investor Relations contact
Financial Calendar 2017/2018 and Investor Relations contact Date Event November 2, 2017 Publication of the Third Quarter Results March 8, 2018 Full Year Results 2017 & Press and Analysts’ Conference May 2, 2018 First Quarter Results 2018 Investor Relations Contact Dennis Weber, CFA Frank Böhme Head
Slide 63: 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 64: HUGO BOSS
HUGO BOSS