Hugo Boss Ag · XETR:BOSS
Hugo Boss — Warburg Highlights 2018
43 slides from Hugo Boss's conference presentation, Jun 22, 2018
Slide 1: HUGO BOSS
HUGO BOSS
Slide 2: Warburg Highlights 2018
Warburg Highlights 2018 Yves Müller, CFO Hamburg, June 22, 2018 Investor Meeting Presentation HUGO BOSS © June 2018 2
Slide 3: Group Strategy
G R O U P STRATE GY Investor Meeting Presentation HUGO BOSS © June 2018 3
Slide 4: 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 Investor Meeting Presentation HUGO BOSS © June 2018 4
Slide 5: 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 Investor Meeting Presentation HUGO BOSS © June 2018 5
Slide 6: Two brands: BOSS and HUGO
Two brands: BOSS and HUGO #THISISBOSS #IAMHUGO TWO BRANDS TWO TARGET CUSTOMERS TWO BRAND IDENTITIES Investor Meeting Presentation HUGO BOSS © June 2018 6
Slide 7: 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, STYLE Fashion-forward, sophisticated contemporary, progressive Highest quality, Latest fashion trends, EXPECTS personal assistance ur
Slide 8: Athleisure influence runs through the core of the BOSS collection
Athleisure influence runs through the core of the BOSS collection Split of BOSS brand sales by segment In EUR billion ~2.0 CAGR ~1.4 +8% 51% 61% CAGR +1% 49% 39% 2010 2017 Casualwear Formalwear Investor Meeting Presentation HUGO BOSS © June 2018 8
Slide 9: Global pricing architecture implemented to ensure global brand positioning
Global pricing architecture implemented to ensure global brand positioning Americas Europe Asia Pricing remained All European countries Price gap narrowed virtually unchanged now fully aligned to European levels Investor Meeting Presentation HUGO BOSS © June 2018 9
Slide 10: 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 Investor Meeting Presentation HUGO BOSS © June 2018 10
Slide 11: Three key distribution priorities
Three key distribution priorities Exploit the full potential Increase own retail sales Further integrate distribution 1 of online 2 productivity 3 across all channels hugoboss.com Fulfillment onlinepureplay.com Focus on concessions Partner (insourced in 2016) departmentstore.com CUSTOMER Focus o
Slide 12: Three key distribution priorities: retail sales productivity
Three key distribution priorities Exploit the full potential Increase own retail sales Further integrate distribution 1 of online 2 productivity 3 across all channels Retail sales productivity ~13,000 In EUR/m2 11,100 10,900 Better and broader offering at entry price points Expansion of casual a
Slide 13: Omnichannel services link online and physical retailing
Omnichannel services link online and physical retailing Exploit the full potential Increase own retail sales Further integrate distribution 1 of online 2 productivity 3 across all channels Investor Meeting Presentation HUGO BOSS © June 2018 13
Slide 14: Store renovations will upgrade own retail network
Store renovations will upgrade own retail network Openings Closures Renovations 15-20 freestanding store Store closures based on Renovations to account for openings will strengthen the expiration of rental contract the bulk of retail investments network This includes the opening of around 10
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 Investor Meeting Presentation HUGO BOSS © June 2018 15
Slide 16: 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 Investor Meeting Presentation HUGO BOSS © June 2018 16
Slide 17: HUGO will launch first fully digitally designed capsule
HUGO will launch first fully digitally designed capsule /////////// DIGITAL [ e ] VOLUTION ///////////////////////////////////// Investor Meeting Presentation HUGO BOSS © June 2018 17
Slide 18: 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 Investor Meeting Presentation HUGO BOSS © June 2018 18
Slide 19: 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 20: Financial Performance Q1 2018
FINANCIAL PERFORMANCE Q1 2018 Investor Meeting Presentation HUGO BOSS © June 2018 20
Slide 21: HUGO BOSS records solid currency-adjusted sales growth in the first quarter
HUGO BOSS records solid currency-adjusted sales growth in the first quarter Group sales (in EUR million) +5% fx-adjusted 0% 651 650 Q1 2017 Q1 2018 Investor Meeting Presentation HUGO BOSS © June 2018 21
Slide 22: All regions contribute to currency-adjusted Group sales growth
All regions contribute to currency-adjusted Group sales growth Europe Sales* Americas Sales* Asia/Pacific Sales* +3% fx-adjusted +7% fx-adjusted +12% fx-adjusted +1% 412 416 (6)% +2% 125 118 97 100 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 ■ Sales increase primarily driven ■ U.S. comp store sa
Slide 23: First quarter performance confirms good momentum in own retail
First quarter performance confirms good momentum in own retail Comp store sales growth Retail sales (fx-adjusted) (in EUR million) +7% +8% fx-adjusted 8 7 7 +2% 6 5 371 378 4 3 2 0 -2 (3) (3) -4 (6) -6 (8) -8 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2016 2016 2016 2017 2017 2017 2017 2018 Q1 2017 Q1 2018 Investor Me
Slide 24: Mixed sales trends in the wholesale channel
Mixed sales trends in the wholesale channel ■ Wholesale sales decline in the U.S. due to shop-in-shop Wholesale sales takeovers now accounted for as own retail (in EUR million) ■ Online outperforms the physical channel +1% fx-adjusted (3)% 263 256 Q1 2017 Q1 2018 Investor Meeting Presentation HUGO B
Slide 25: Casualwear grows disproportionately at both brands
Casualwear grows disproportionately at both brands ■ Collection upgrade drives growth of BOSS Casualwear +7% fx-adjusted (6)% fx-adjusted ■ Strategic distribution changes impact HUGO sales +1% 554 562 ■ Menswear up 6%, womenswear down 3% (9)% 97 88 Q1 2017* Q1 2018* Q1 2017* Q1 2018* *in EUR million
Slide 26: Operating expense decline supports EBITDA growth
Operating expense decline supports EBITDA growth Gross margin EBITDA (before special items) (40)bp 64.0 % 99 EUR million +1% Selling & distribution EBIT expenses (4)% +8% 272 EUR million 70 EUR million Administration expenses Net income 74 EUR million +2% 50 EUR million +3% Investor Meeting Presenta
Slide 27: Financial and Operational Outlook
F I NAN C IAL AN D O PE RATI O NAL O UTLO O K Investor Meeting Presentation HUGO BOSS © June 2018 27
Slide 28: Outlook 2018 reconfirmed
Outlook 2018 reconfirmed Group sales Consolidated net income Increase at a low to mid single-digit Increase at a low to mid single-digit percentage rate (fx-adjusted) percentage rate Gross profit margin Capital expenditure Largely stable EUR 170 million to EUR 190 million EBITDA (before special item
Slide 29: Strategy execution will drive profitable and sustainable growth
Strategy execution will drive profitable and sustainable growth Profitable and sustainable growth 2019+ Acceleration Stabilization Grow sales stronger 2018 than market, increase 2017 operating profit Sales forecasted to stronger than sales Sales up 3%*, stable increase in the low to mid operat
Slide 30: Backup
Backup Investor Meeting Presentation HUGO BOSS © June 2018 30
Slide 31: Sales by region and major markets
Sales by region and major markets Share of Group sales* Europe Americas Asia/Pacific (incl. Middle East/Africa) 62% 21% 14% Germany: 18% U.S.: 15% China: 8% Great Britain: 12% Canada: 3% Oceania: 2% France: 6% Central & Japan: 2% Benelux: 5% South America: 3% Other: 2% Other: 21% *as of 2017, +3% Li
Slide 32: Sales by distribution channel
Sales by distribution channel 38% 35% 34% 44% 41% 49% Wholesale Retail 62% 63% 57% 60% 54% 49% Licenses 2% 2% 2% 2% 3% 3% 2012 2013 2014 2015 2016 2017 Investor Meeting Presentation HUGO BOSS © June 2018 32
Slide 33: Number of Group's own retail stores by region
Number of Group’s own retail stores by region As of 31/03/2018 Freestanding stores 191 Shop-in-Shops 315 Europe Outlets 64 570 Freestanding stores 89 Americas Shop-in-Shops 96 234 Asia/Pacific Outlets 49 289 Group Freestanding stores 155 1,093 Shop-in-Shops 87 Outlets 47 Investor Meeting Presentatio
Slide 34: Retail comp stores sales
Retail comp stores sales Retail l-f-l sales development* +2% (6)% +3% 8 6% 6 5% 7% 7% 3% 4 3% 2 0% 0 (2) (1)% (4) (6)% (3)% (3)% (6) (8)% (6)% (8) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 *FX-adjusted Investor Meeting Presentation HUGO B
Slide 35: Dividend policy
Dividend policy Dividend per share and payout ratio* (in EUR) (in %) 4.00 100 85% 3.62 3.62 3.34 79% 3.12 93% 80 3.00 2.88 64% 2.60 2.65** 75% 75% 78% 70% 70% 70% 60 2.02 2.00 1.37 40 0.96 1.00 20 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Dividend policy of paying out between 60% and 8
Slide 36: (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 1.3x 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 0.0x 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Operating leases = Future committed operating l
Slide 37: Sourcing and production structure
Sourcing and production structure* Americas: Western 2% Europe: 12% Own production: 18% Eastern Europe: 44% Asia: 38% Third party production: North 82% Africa: 4% *as of 2017, in value terms Investor Meeting Presentation HUGO BOSS © June 2018 37
Slide 38: Multi-Year overview
Multi-Year overview 2017 2016 2015 2014 2013 Sales 2.733 2.693 2.809 2.572 2.432 Gross profit 1.808 1.777 1.853 1.699 1.580 Gross profit margin in % 66,2 66,0 66,0 66,1 64,9 EBITDA 499 433 590 572 561 EBITDA before special items 491 493 594 591 565 Adjusted EBITDA margin in %1 18,0 18,3 21,2 23,0 23
Slide 39: Analyst coverage
Analyst coverage The HUGO BOSS AG share is covered by the following financial analysts: Institution Analyst Institution Analyst Baader Bank Volker Bosse Hauck & Aufhäuser Christian Salis Bankhaus Lampe Peter Steiner HSBC Antoine Belge Bank of America Merrill Lynch Ashley Wallace Intermonte Daniele A
Slide 40: 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 May 2018) Investor Meeting Presentation HUGO BOSS © June 2018 40
Slide 41: Financial Calendar 2018 and Investor Relations contact
Financial Calendar 2018 and Investor Relations contact Date Event August 2, 2018 Second Quarter Results 2018 & First Half Year Report 2018 November 6, 2018 Third Quarter Results 2018 November 15, 2018 Investor Day in London Investor Relations Contact Christian Stöhr Frank Böhme Head of Investor Rela
Slide 42: 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 43: HUGO BOSS
HUGO BOSS