Hugo Boss Ag · XETR:BOSS
Hugo Boss — Non-Deal Roadshow (May 2015)
47 slides from Hugo Boss's roadshow presentation, May 13, 2015
Slide 1: HUGO BOSS
HUGO BOS S§S
Slide 2: Roadshow London // KeplerCheuvreux: HUGO BOSS Company Handout
ROADSHOW LONDON // KeplerCheuvreux HUGO BOSS Company Handout London, May 13, 2015 Mark Langer, CFO I Dennis Weber, Head of Investor Relations Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 2
Slide 3: Agenda
Agenda Financial Review First Quarter 2015 Strategic Outlook 2015 Financial Outlook 2015 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 3
Slide 4: Agenda
Agenda Financial Review First Quarter 2015 Strategic Outlook 2015 Financial Outlook 2015 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 4
Slide 5: HUGO BOSS grows top line whereas operating profit remains stable
HUGO BOSS grows top line whereas operating profit remains stable Sales EBITDA before special items (in EUR million) (in EUR million) +9% 0% 668 131 132 613 Q1 2014 Q1 2015 Q1 2014 Q1 2015 (+3% fx-adjusted) Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 5
Slide 6: All three regions contribute to Group sales growth
All three regions contribute to Group sales growth Sales growth by region, y-o-y in EUR Q1 2015 fx-adjusted (in %) 4 Europe* 3 21 Americas 2 17 Asia/Pacific 1 9 Group 3 0 4 8 12 16 20 24 ■ UK and Germany strongest growing major markets in Europe ■ US market up 4% currency-adjusted, exceeding overall
Slide 7: Like-for-like growth acceleration drives solid retail sales development
Like-for-like growth acceleration drives solid retail sales development Sales growth by channel, y-o-y in EUR Q1 2015 fx-adjusted (in %) 15 Retail 6 2 Wholesale (2) 6 Licenses 6 9 Group 3 (5) 0 5 10 15 ■ Improved comp store sales growth of 3% contributes to retail sales increase ■ Cautious ordering
Slide 8: Gross profit margin improves moderately
Gross profit margin improves moderately Gross profit margin (in %) +10bp 65.4 65.5 Q1 2014 Q1 2015 ■ Tough comparison base ■ Positive distribution channel mix partly offset by negative inventory valuation effects ■ Neutral impact from rebate management Roadshow London // KeplerCheuvreux HUGO BOSS ©
Slide 9: Group EBITDA remains stable compared to the prior year
Group EBITDA remains stable compared to the prior year in EUR million ■ Currency translation Q1 2015 Q1 2014 Change in % effects impact operating Sales 667.5 612.6 9 expense development Gross profit 436.9 400.6 9 ■ Retail and marketing In % of sales 65.5 65.4 10 bp expenses grow at Selling and distr
Slide 10: Currency translation effects distort regional profitability development
Currency translation effects distort regional profitability development Segment profit in EUR million Q1 2015 in % of sales Q1 2014 in % of sales Change in % Europe* 131.3 32.0 136.6 34.6 (4) Americas 32.1 22.4 25.0 21.0 28 Asia/Pacific 31.2 31.0 26.5 30.7 18 Licenses 10.7 78.0 10.7 82.8 0 Segment p
Slide 11: Increase of trade net working capital mainly due to higher inventories
Increase of trade net working capital mainly due to higher inventories ■ Expansion of retail Mar. 31, 2015 539 business Inventories (in EUR million) +25% +12% ■ Slower than Mar. 31, 2014 430 expected sell- fx-adjusted through Trade Mar. 31, 2015 244 ■ Development in line receivables +6% (3)% with wh
Slide 12: Higher investments affect free cash flow development
Higher investments affect free cash flow development Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) +90% +59% 40 43 (126)% 31 27 21 Q1 2015 Q1 2014 Q1 2015 Q1 2014 Mar. 31, 2014 Mar. 31, 2015 (8) ■ Increase primarily driven by ■ Decline due to lower profits ■
Slide 13: Agenda
Agenda Financial Review First Quarter 2015 Strategic Outlook 2015 Financial Outlook 2015 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 13
Slide 14: Growth strategy 2020 defines 2015 priorities
Growth strategy 2020 defines 2015 priorities Elevate the Exploit growth Leverage the Build BOSS core opportunities in brand’s potential omnichannel to brand by under- in womenswear drive own retail engaging penetrated and shoes & online and offline consumers markets accessories emotionally Further b
Slide 15: Increasingly differentiated portfolio to support BOSS brand elevation
Increasingly differentiated portfolio to support BOSS brand elevation Future brand positioning LUXURY RETAIL PREMIUM WHOLESALE authentic innovative confident progressive lighthearted dynamic sophisticated contemporary Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 15
Slide 16: HUGO and BOSS Green to replace BOSS in category business
HUGO and BOSS Green to replace BOSS in category business RETAIL WHOLESALE Own stores to increasingly focus on BOSS core brand Presence of BOSS core brand to become limited to exclusively shop-in-shops Category business focused on HUGO and BOSS Green Roadshow London // KeplerCheuvreux HUGO BOSS © May
Slide 17: Category migration one important lever to narrow global price gaps
Category migration one important lever to narrow global price gaps ■ Euro devaluation has widened global price gaps most recently ■ BOSS brand elevation in Europe and the Americas as well as collection upgrades in China will narrow global price gaps ■ Further gradual refinements of global pricing ar
Slide 18: BOSS Womenswear maintains strong momentum
BOSS Womenswear maintains strong momentum BOSS Womenswear sales up 11% currency-adjusted in the first quarter Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 18
Slide 19: Continuous expansion and upgrade of retail store portfolio
Continuous expansion and upgrade of retail store portfolio Number of own retail stores TOTAL 1,060 (+19) as of March 31, 2015 Openings 49 (December 31, 2014: 1,041) thereof takeovers 28 Closings 30 Europe* 596 (+1) Openings 22 thereof takeovers 5 Closings 21 Americas 201 (-3) Asia/Pacific 263 (+21)
Slide 20: Takeovers remain important part of retail expansion
Takeovers remain important part of retail expansion South Korea China ■ Key fashion and trend-setting market in ■ Takeover of last remaining franchise Southeast Asia partner allows full brand control and simplifies distribution structure ■ Takeover effective March 1, 2015 ■ Takeover effective April
Slide 21: Momentum in online business accelerates
Momentum in online business accelerates Online sales up 14% currency-adjusted in the first quarter Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 21
Slide 22: Omnichannel model geared to the demands of today's consumer
Omnichannel model geared to the demands of today’s consumer Phase 2: hugoboss.com Phase 4: Completion of omni- relaunch online and mobile channel implementation 2014 2015 2016 Phase 1: Frontend Phase 3: Building the takeover digital flagship store Implementation of omnichannel business model under w
Slide 23: Key digital initiatives defined
Key digital initiatives defined Initiative Description and rationale Status Launch of own store Takeover of Demandware software from former Done frontend fulfillment partner enabling full control Relaunch of Migration of formerly separate eCom and brand Done hugoboss.com worlds driving traffic to st
Slide 24: Mixed regional outlook
Mixed regional outlook Europe* Americas Asia/Pacific ■ Challenging market ■ Promotional retail ■ Good momentum in environment persists environment continues Australia and Japan ■ Group outperforms ■ Improving retail execution ■ Chinese market overall market remains challenging ■ Upgrade of logistica
Slide 25: New flat-packed goods distribution center operational since July 2014
New flat-packed goods distribution center operational since July 2014 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 25
Slide 26: Launch of new systems refines retail management
Launch of new systems refines retail management Retail Merchandise Planning Retail Assortment Planning ■ Systems-based planning process ■ SAP-based assortment planning based on sales, margins and approach based on store capacity, Purpose stock levels location characteristics and product lifecycles ■
Slide 27: Agenda
Agenda Financial Review First Quarter 2015 Strategic Outlook 2015 Financial Outlook 2015 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 27
Slide 28: 2015 financial outlook reconfirmed
2015 financial outlook reconfirmed Outlook 2015 Sales growth (currency-adjusted) Mid-single-digit rate Growth of 5% - 7% EBITDA before special items Capex EUR 200 million – EUR 220 million Own retail network Around 50 openings (excl. takeovers) Roadshow London // KeplerCheuvreux HUGO BOSS © May 13,
Slide 29: HUGO BOSS to be one of the winning brands in a tough environment
HUGO BOSS to be one of the winning brands in a tough environment ■ Apparel industry in tough competition for share of consumer’s wallet ■ Maximization of emotional brand appeal a key focus ■ Retail excellence and omnichannel to increasingly differentiate HUGO BOSS from competitors BOSS Store Tokyo,
Slide 30: Backup
BACKUP Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 30
Slide 31: Brand portfolio
Brand portfolio 72%* of Group sales 8%* of Group sales modern / sophisticated modern / active 10%* of Group sales 10%* of Group sales casual / urban chic progressive / contemporary *as of FY 2014 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 31
Slide 32: Sales by region 2014
Sales by region 2014 Share of Group sales* 14% Asia/Pacific Europe (incl. Middle East and Africa) 23% 61% Americas *+2% Licenses Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 32
Slide 33: Sales by distribution channel
Sales by distribution channel 44% 41% 53% 49% 64% 57% Wholesale Retail 54% 57% 45% 49% 40% 33% Licenses 3% 3% 2% 2% 2% 2% 2009 2010 2011 2012 2013 2014 Retail to account for at least 75% of Group sales by 2020 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 33
Slide 34: Retail comp stores sales growth
Retail comp stores sales growth Retail l-f-l Sales growth retail l-f-l* 12 11% 10 8 6% 6 5% 4% 4% 4% 4 4% 3% 4% 3% 3% 2 2% 2% 2% 2% 0% 0 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2014 2014 2014 2014 2014 2015 *fx-adjusted Roadshow London // Kep
Slide 35: Income statement
Income statement in EUR million Q1 2015 Q1 2014 Change in % 2014 2013 Change in % Sales 667.5 612.6 9 2,571.6 2,432.1 6 Cost of sales (230.6) (212.0) (9) (872.5) (852.5) (2) Gross profit 436.9 400.6 9 1,699.1 1,579.6 8 In % of sales 65.5 65.4 10 bp 66.1 64.9 120 bp Selling and distribution expenses
Slide 36: 5-Year Overview
5-Year Overview in EUR million 2014 2013 2012 2011 2010 Earnings Position Sales 2,571.6 2,432.1 2,345.9 2,058.8 1,729.4 Gross profit 1,699.1 1,579.6 1,444.1 1,252.0 1,022.4 EBITDA 571.5 561.4 523.9 468.0 340.1 EBITDA before special items 590.8 564.7 528.1 469.5 353.7 EBIT 448.7 456.2 432.0 394.6 267
Slide 37: EBITDA margin and ROCE vs. channel mix
EBITDA margin and ROCE vs. channel mix Adj. EBITDA margin ROCE Retail Wholesale Royalties 24% 57% 73% 64% 62% 63% 60% 49% 22.8% 41% 22.5% 33% 31% 31% 31% 20.5% 23.2% 23.0% 17.2% 16.7% 15.7% 16.1% 3% 2% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13
Slide 38: Trade net working capital
Trade net working capital Average trade net working capital as a percentage of sales by quarter* (in %) +180 bp 22 20.7 20.1 20.6 19.8 19.7 19.7 20 18.6 18.7 19.1 18.0 17.9 17.9 18.1 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 Q3 2014 Q4 2
Slide 39: Adjusted financial leverage
Adjusted financial leverage 2.4 2.2x 2.0 1.6x 1.6 1.4x 1.3x 1.3x 1.2x 1.2x 1.2 0.8 0.6x 0.4 0.3x 0.2x 0.1x 0.1x 0.0 2009 2010 2011 2012 2013 2014 Net debt / EBITDA Net debt incl. operating leases / EBITDAR Operating leases = Future committed operating lease obligations capitalized according to S&P m
Slide 40: Dividend and payout ratio
Dividend and payout ratio in EUR in %* 4.00 100 3.62 90 3.50 3.34 3.12 80 3.00 2.88 75% 75% 70 2.50 70% 70% 70% 64% 60 2.02 2.00 50 40 1.50 30 1.00 0.96 20 0.50 10 0.00 0 2009 2010 2011 2012 2013 2014** Proposal in line with dividend policy of 60% to 80% payout of consolidated net profit *As a perce
Slide 41: Sourcing and production structure 2014
Sourcing and production structure 2014 4% 5% 20% own Americas North Africa production* 11% Western Europe 47% Eastern Europe 33% Asia 80% third party production* *Percentage based on procurement volumes Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 41
Slide 42: Retail network
Retail network Number of own retail stores + 26 (30) + 22 +1 1,060 1,041 + 1 USA + 24 Korea + 1 Australia + 6 France + 1 China + 6 Spain + 4 Germany + 3 Russia + 2 Italy + 1 Greece Dec 31, 2014 Europe* Americas Asia/Pacific Closings Mar 31, 2015 *Europe incl. Middle East and Africa Roadshow London /
Slide 43: Shareholder structure
Shareholder structure* 7% PFC S.r.l. / Zignago Holding S.p.A. (Marzotto family) 2% Own shares 91% Free float *Based on ad-hoc announcement dated March 16, 2015 Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 43
Slide 44: Financial calendar 2015
Financial calendar 2015 Date Event May 12, 2015 Annual Shareholders’ Meeting August 4, 2015 First Half Year Results November 3, 2015 Nine Months Results November 24, 2015 Investor Day Roadshow London // KeplerCheuvreux HUGO BOSS © May 13, 2015 44
Slide 45: Investor Relations contact
Investor Relations contact Dennis Weber, CFA Dr. Kay Hofmann Head of Investor Relations Investor Relations Manager Phone: +49 (0) 7123 94 - 86267 Phone: +49 (0) 7123 94 - 87581 E-Mail: Dennis_Weber@hugoboss.com E-Mail: Kay_Hofmann@hugoboss.com Internet: group.hugoboss.com Internet: group.hugoboss.co
Slide 46: 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 47: HUGO BOSS
HUGO BOS S§S