Hugo Boss Ag · XETR:BOSS

Hugo Boss — J.P. Morgan Investor Conference Milan 2014

58 slides from Hugo Boss's conference presentation, Sep 30, 2014

  1. Slide 1: HUGO BOSS

    HUGO BOS 5S

  2. Slide 2: J.P. Morgan Investor Conference // Milan HUGO BOSS Company Handout

    J.P. Morgan Investor Conference // Milan HUGO BOSS Company Handout September 30, 2014 Dennis Weber, Head of Investor Relations J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 2 / 58

  3. Slide 3: Agenda

    Agenda Update on Key Strategic Initiatives Half Year Results 2014 Outlook J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 3 / 58

  4. Slide 4: Agenda

    Agenda Update on Key Strategic Initiatives Half Year Results 2014 Outlook J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 4 / 58

  5. Slide 5: Important initiatives in all areas of Group strategy

    Important initiatives in all areas of Group strategy MAXIMIZING GROWING THE BRAND ATTRACTIVENESS GROUP’S OWN RETAIL BUSINESS IMPROVING LEVERAGING OPERATIONAL PROCESSES GLOBAL GROWTH POTENTIAL J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 5 / 58

  6. Slide 6: Womenswear has built momentum

    Womenswear has built momentum J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 6 / 58

  7. Slide 7: Unprecedented editorial coverage

    Unprecedented editorial coverage J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 7 / 58

  8. Slide 8: BOSS Womenswear to leave footprint at New York Fashion Week

    BOSS Womenswear to leave footprint at New York Fashion Week J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 8 / 58

  9. Slide 9: Womenswear visibility increasing at wholesale and in own retail

    Womenswear visibility increasing at wholesale and in own retail BOSS womenswear shop, Matsuya Ginza, Tokyo BOSS womenswear shop, Printemps Haussmann, Paris BOSS womenswear floor, Columbus Circle, New York J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 9 / 58

  10. Slide 10: New BOSS Ma Vie fragrance launched

    New BOSS Ma Vie fragrance launched J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 10 / 58

  11. Slide 11: Campaign

    Campaign J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 11 / 58

  12. Slide 12: Campaign

    Campaign J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 12 / 58

  13. Slide 13: Germany celebrates epic World Cup win in BOSS

    Germany celebrates epic World Cup win in BOSS WELTMEISTERLICH! NICHT NUR AUF DEM PLATZ. Gratulation zum Titel. J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 13 / 58

  14. Slide 14: Martin Kaymer dominates US Open in BOSS

    Martin Kaymer dominates US Open in BOSS J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 14 / 58

  15. Slide 15: HUGO BOSS and Mercedes-Benz enter into international cooperation

    HUGO BOSS and Mercedes-Benz enter into international cooperation J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 15 / 58

  16. Slide 16: HUGO BOSS seizes expansion opportunities in travel retail

    HUGO BOSS seizes expansion opportunities in travel retail Hong Kong Madrid Terminal 1 Terminal 4 Heathrow Copenhagen Terminal 2 Terminal 2 J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 16 / 58

  17. Slide 17: Region Europe focus of retail expansion activities in the first half year

    Region Europe focus of retail expansion activities in the first half year Number of own retail stores as of June 30, 2014 TOTAL 1,028 (+18) (December 31, 2013: 1,010) Openings 51 thereof takeovers 14 Closings 33 Europe 588 (+12) Openings 27 thereof takeovers 1 Closings 15 Americas 201 (+1) Asia/Paci

  18. Slide 18: Extended brand control in department stores

    Extended brand control in department stores Printemps, Paris Saks 5th Avenue, New York David Jones, Adelaide J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 18 / 58

  19. Slide 19: Digital strategy progresses with improvements to hugoboss.com

    Digital strategy progresses with improvements to hugoboss.com J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 19 / 58

  20. Slide 20: Region Europe an area of strength

    Region Europe an area of strength ■ Broad based sales increases across the region in the first half year ■ Further improvement of own retail execution major growth driver ■ Focus on lifting brand presence in multi-brand environments J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30,

  21. Slide 21: Performance in the Americas improves after headwinds

    Performance in the Americas improves after headwinds at the beginning of the year ■ HUGO BOSS returns to growth in the second quarter ■ Group maintains strict pricing discipline in a still promotional market environment ■ Upgrade of shop-in-shop portfolio at Saks ongoing J.P. Morgan Investor Confere

  22. Slide 22: Asia remains Group's largest regional opportunity

    Asia remains Group’s largest regional opportunity despite ongoing challenges in China ■ Important investments in retail presence and brand perception ■ Franchise legacy thoroughly addressed ■ Suiting competence a key competitive differentiator J.P. Morgan Investor Conference // Milan HUGO BOSS © Sep

  23. Slide 23: Art of Tailoring exhibition strengthens brand perception in Asia

    Art of Tailoring exhibition strengthens brand perception in menswear clothing in Asia J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 23 / 58

  24. Slide 24: Made to Measure rollout emphasizes high-end tailoring competence

    Made to Measure rollout emphasizes high-end tailoring competence EUROPE Berlin Basel Dusseldorf Geneva Frankfurt Hamburg London Metzingen Munich Paris Stuttgart 2014: Zurich ASIA/PACIFIC 2014: Beijing Hong Kong Shanghai J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 24 / 58

  25. Slide 25: Significant upgrade of retail store universe in China

    Significant upgrade of retail store universe in China BOSS Store, Central Building, BOSS Store, Canton Road, BOSS Store, Kerry Centre, Hong Kong Hong Kong Shanghai J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 25 / 58

  26. Slide 26: HUGO BOSS acquires full control of its store network in China and Macau

    HUGO BOSS acquires full control of its store network in China and Macau ■ Remaining 40% stake in joint venture with former franchise partner Rainbow Group taken over effective June 30 ■ Grown retail sophistication and strong operational platform key enabler ■ Consolidation of distribution activities

  27. Slide 27: New flat-packed goods distribution center in Germany fully operational

    New flat-packed goods distribution center in Germany fully operational J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 27 / 58

  28. Slide 28: Agenda

    Agenda Update on Key Strategic Initiatives Half Year Results 2014 Outlook J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 28 / 58

  29. Slide 29: Robust second quarter increases drive top and bottom line growth

    Robust second quarter increases drive top and bottom line growth in the first half year Second quarter results First half year results Sales EBITDA before special items Sales EBITDA before special items (in EUR million) (in EUR million) (in EUR million) (in EUR million) +5% +8% +4% +3% 532 559 110 1

  30. Slide 30: Europe strongest growing region in first half year

    Europe strongest growing region in first half year Sales growth by region, y-o-y in EUR Sales growth by region, y-o-y in EUR Q2 2014 fx-adjusted H1 2014 fx-adjusted (in %) (in %) 10 9 Europe* Europe* 10 9 1 (3) Americas Americas 7 3 (5) (2) Asia/Pacific Asia/Pacific 2 4 5 4 Group Group 8 7 (5) 0 5 1

  31. Slide 31: Robust own retail growth drives Group sales increase

    Robust own retail growth drives Group sales increase Sales growth by channel, y-o-y in EUR Sales growth by channel, y-o-y in EUR Q2 2014 fx-adjusted H1 2014 fx-adjusted (in %) (in %) 14 15 Retail Retail 17 18 (8) (8) Wholesale Wholesale (6) (6) (2) (1) Royalties Royalties (2) (1) 5 4 Group Group 8 7

  32. Slide 32: Gross profit margin continues to expand

    Gross profit margin continues to expand Gross profit margin development Gross profit margin development Q2 2014 H1 2014 (in %) (in %) +150bp +260bp 65.2 66.7 63.4 66.0 Q2 2013 Q2 2014 H1 2013 H1 2014 ■ Distribution channel mix ■ Distribution channel mix ■ Reduction of markdowns ■ Reduction of markdo

  33. Slide 33: Healthy profit increase despite higher costs

    Healthy profit increase despite higher costs in EUR million ■ Investments in own retail, marketing H1 2014 H1 2013* Change in % and logistics main driver of higher Sales 1,171.5 1,125.2 4 selling and distribution expenses Gross profit 773.6 713.6 8 In % of sales 66.0 63.4 260 bp Selling and distribu

  34. Slide 34: Diverging margin trends by region

    Diverging margin trends by region in EUR million H1 2014 In % of sales H1 2013* In % of sales Change in % Europe** 243.0 33.5 222.5 33.3 9 Americas 61.3 24.0 57.2 21.8 7 Asia/Pacific 50.0 30.3 61.4 36.3 (19) Royalties 20.4 82.5 20.8 83.2 (2) Segment profit operating segments 374.7 32.0 361.9 32.2 4

  35. Slide 35: Higher working capital position due to inventory increase

    Higher working capital position due to inventory increase June 30, 2014 488 ■ Primarily reflects Inventories retail expansion, +12% +13% (in EUR million) takeovers and June 30, 2013 437 delivery shift fx-adjusted Trade June 30,2014 209 ■ Decrease due to receivables (8)% (6)% wholesale sales (in EUR

  36. Slide 36: Non-recurrence of prior year infrastructure investments supports free cash flow

    Non-recurrence of prior year infrastructure investments supports free cash flow generation Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) (37)% >100% (10)% 82 96 234 210 52 43 H1 2013 H1 2014 H1 2013 H1 2014 June 30, 2013 June 30, 2014 ■ Moderation despite ■ C

  37. Slide 37: Agenda

    Agenda Update on Key Strategic Initiatives Half Year Results 2014 Outlook J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 37 / 58

  38. Slide 38: Full year financial guidance reconfirmed

    Full year financial guidance reconfirmed Outlook 2014 Sales growth (currency-adjusted) High single-digit Growth of EBITDA before special items High single-digit Capex EUR 110 million - EUR 130 million Own retail network Around 50 net openings J.P. Morgan Investor Conference // Milan HUGO BOSS © Sept

  39. Slide 39: HUGO BOSS records solid financial performance in challenging market environment

    HUGO BOSS records solid financial performance in challenging market environment ■ HUGO BOSS is making good progress in business model transformation towards retail ■ Improving wholesale momentum to support achievement of full year targets ■ Important strategic initiatives to contribute to Group grow

  40. Slide 40: Backup

    BACKUP J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 40 / 58

  41. Slide 41: HUGO BOSS brand architecture

    HUGO BOSS brand architecture market segment luxury premium fashion statement casual modern modern progressive urban chic active sophisticated contemporary J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 41 / 58

  42. Slide 42: Brand portfolio

    Brand portfolio 71% of Group sales 8% of Group sales modern / sophisticated modern / active 12% of Group sales 9% of Group sales casual / urban chic progressive / contemporary J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 42 / 58

  43. Slide 43: Sales by region 2013

    Sales by region 2013 Share of Group sales* 14% Asia/Pacific Europe 24% 60% Americas *+2% Royalties. J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 43 / 58

  44. Slide 44: Five year overview sales and operating profit

    Five year overview sales and operating profit Sales and EBITDA before special items Sales (in EUR million) 2,432 EBITDA before special items 2,346 Adj. EBITDA margin 2,059 1,729 1,562 22.8% 23.2% 22.5% 20.5% 17.2% 528 565 470 354 269 2009 2010 2011 2012 2013 Target to generate EUR 3bn sales (in 2015

  45. Slide 45: Sales split by distribution channel

    Sales split by distribution channel Sales by distribution channel 49% 44% 57% 53% 64% Wholesale Retail 49% 54% 40% 45% 33% Royalties 3% 3% 2% 2% 2% 2009 2010 2011 2012 2013 Target to generate more than 60% of Group sales in retail by 2015 J.P. Morgan Investor Conference // Milan HUGO BOSS © Septembe

  46. Slide 46: Retail comp stores sales growth

    Retail comp stores sales growth Sales growth retail l-f-l* Retail l-f-l 18 16% 15 13% 12% 12 11% 11% 9 10% 6% 6 5% 4% 4% 4% 4% 3% 3 2% 2% 2% 2% 0 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 2011 2011 2011 2011 2011 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2014 2014 *fx-adjusted. J.P.

  47. Slide 47: Five year overview

    Five year overview* in EUR million 2013 2012 2011 2010 2009 Earnings Position Sales 2,432.1 2,345.9 2,058.8 1,729.4 1,561.9 Gross profit 1,579.6 1,444.1 1,252.0 1,022.4 836.2 EBITDA 561.4 523.9 468.0 340.1 226.5 EBITDA before special items 564.7 528.1 469.5 353.7 269.2 EBIT 456.2 432.0 394.6 267.9 1

  48. Slide 48: Income statement

    Income statement in EUR million Q2 2014 Q2 2013* Change in % H1 2014 H1 2013* Change in % Sales 558.9 531.7 5 1,171.5 1,125.2 4 Cost of sales (185.8) (185.0) 0 (397.9) (411.6) 3 Gross profit 373.1 346.7 8 773.6 713.6 8 In % of sales 66.7 65.2 150 bp 66.0 63.4 260 bp Selling and distribution expenses

  49. Slide 49: ROCE development

    ROCE development EBITDA margin and ROCE vs. channel mix Adj. EBITDA margin ROCE Retail Wholesale Royalties 24% 54% 73% 64% 62% 63% 49% 22.8% 23.2% 44% 22.5% 33% 31% 31% 31% 20.5% 16.7% 17.2% 15.7% 16.1% 3% 2% 2006 2007 2008 2009 2010 2011 2012 2013 J.P. Morgan Investor Conference // Milan HUGO BOSS

  50. Slide 50: Retail network

    Retail network Number of own retail stores: + 20 (33) + 27 +4 1,028 + 2 Canada + 14 Australia 1,010 + 2 Hong Kong + 2 Mexico + 11 France + 2 Taiwan + 5 Italy + 1 China + 1 Germany + 1 Japan + 1 Turkey + 4 Great Britain + 1 Switzerland + 1 Spain + 1 Sweden + 1 Finland + 1 Denmark Dec 31, 2013 Europe*

  51. Slide 51: Trade net working capital

    Trade net working capital Average trade net working capital as a percentage of sales by quarter* (in %) 22 20.7 20.1 20.6 (50)bp 19.8 19.7 20 18.6 18.0 18.1 17.9 17.9 18 16 14 12 10 8 6 4 2 0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 *Certain amounts shown here

  52. Slide 52: Dividends

    Dividends Dividend and payout ratio in EUR in %* 3.50 3.34 90 3.12 80 3.00 2.88 75% 70 2.50 70% 70% 70% 64% 60 2.02 2.00 50 1.50 40 30 1.00 0.96 20 0.50 10 0.00 0 2009 2010 2011 2012 2013 Dividend in line with policy to pay out between 60% and 80% of consolidated net profit *As a percentage of net i

  53. Slide 53: Sourcing structure

    Sourcing structure Regional split of sourcing and production volume 2013* 3% 6% Americas North Africa 10% Western Europe 49% Eastern Europe 32% Asia *80% Third party production 20% Own production J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 53 / 58

  54. Slide 54: Shareholder structure

    Shareholder structure* 39% 59% Red & Black Lux S.à r. l. Free float (Permira Ltd.) 2% Own shares *Source: Share register, as of September 5, 2014. J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 54 / 58

  55. Slide 55: Financial calendar 2014

    Financial calendar 2014 Date Date Event November 4, 2014 Nine Months Results November 19, 2014 Investor Day J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 55 / 58

  56. Slide 56: Investor Relations contact

    Investor Relations contact Dennis Weber, CFA Head of Investor Relations Phone: +49 (0) 7123 94 - 86267 E-Mail: Dennis_Weber@hugoboss.com Internet: www.hugoboss.com J.P. Morgan Investor Conference // Milan HUGO BOSS © September 30, 2014 56 / 58

  57. Slide 57: 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

  58. Slide 58: HUGO BOSS

    HUGO BOS 5S

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