Hugo Boss Ag · XETR:BOSS
Hugo Boss — H1 2013 Earnings Presentation
40 slides from Hugo Boss's earnings presentation, Jul 31, 2013
Slide 1: HUGO BOSS
HUGO BOS 5S
Slide 2: HUGO BOSS First Half Year Results 2013
HUGO BOSS First Half Year Results 2013 Mark Langer (CFO) Metzingen, July 31, 2013 Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 2 / 40
Slide 3: Agenda
Agenda Operational Highlights First Half Year Results Strategic Initiatives and Outlook Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 3 / 40
Slide 4: Agenda
Agenda Operational Highlights First Half Year Results Strategic Initiatives and Outlook Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 4 / 40
Slide 5: Robust increases in the second quarter drive half year sales and operating profit growth
Robust increases in the second quarter drive half year sales and operating profit growth 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) +10% +31% +3% +4% 532 102 1,
Slide 6: Continued growth in Europe despite economic headwinds
Continued growth in Europe despite economic headwinds ■ Challenging market environment Sales (in EUR million) ■ Ongoing difficult wholesale business despite 302 652 668 second quarter sales increase 267 ■ Expansion and takeovers drive strong double-digit increases in retail Q2 2012 Q2 2013 H1 2012 H
Slide 7: Attractive new store additions in Europe
Attractive new store additions in Europe BOSS Store, Glasgow BOSS Store, Vienna Ingram Street Kaerntnerstrasse Opening: June 2013 Opening: July 2013 Net size: 374 sqm Net size: 484 sqm Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 7 / 40
Slide 8: Solid sales increases in the Americas
Solid sales increases in the Americas ■ Comp store sales growth and targeted store Sales (in EUR million) expansion contribute to increases in the U.S. 126 135 248 263 ■ Central and South American business up double-digits ■ Wholesale business grows moderately against a tough comparison base Q2 2012
Slide 9: Concession business model introduced at Saks
Concession business model introduced at Saks BOSS Store Saks 5th Avenue New York City Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 9 / 40
Slide 10: Refurbishment of Columbus Circle flagship store upgrades retail footprint in New York
Refurbishment of Columbus Circle flagship store upgrades retail footprint in New York BOSS Store, New York Columbus Circle Re-Opening: July 2013 Net size: 1,084 sqm Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 10 / 40
Slide 11: Gradual improvement in China supports better sales growth in Asia
Gradual improvement in China supports better sales growth in Asia ■ Sales growth in China accelerates in second Sales (in EUR million) quarter despite continued weak market 81 83 168 169 environment on the mainland ■ Hong Kong retail business performs strongly ■ Exchange rate effects mask underlying
Slide 12: HUGO BOSS hosts spectacular fashion show in Shanghai
HUGO BOSS hosts spectacular fashion show in Shanghai BOSS fashion show, Shanghai Power Station of Art Fall/Winter 2013 Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 12 / 40
Slide 13: Strong focus on profitable retail expansion in all key markets
Strong focus on profitable retail expansion in all key markets Number of own retail stores as of June 30, 2013 (December 31, 2012: 840) TOTAL 901 (+61) Openings: 75 thereof takeovers: 42 Closings: 14 EUROPE* 522 (+53) Openings: 58 thereof takeovers: 35 Closings: 5 AMERICAS 156 (+9) ASIA/PACIFIC 223
Slide 14: Agenda
Agenda Operational Highlights First Half Year Results Strategic Initiatives and Outlook Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 14 / 40
Slide 15: Wholesale business returns to growth in the second quarter
Wholesale business returns to growth in the second quarter Sales growth by channel, y-o-y in EUR Sales growth by channel, y-o-y in EUR Q2 2013 fx-adjusted H1 2013 fx-adjusted (in %) (in %) 5 -7 Wholesale Wholesale 6 -7 13 14 Retail Retail 15 15 3 5 Royalties Royalties 3 5 10 3 Group Group 11 4 0 5 1
Slide 16: Strong gross margin improvement drives EBITDA margin increase in the first half year
Strong gross margin improvement drives EBITDA margin increase in the first half year in EUR million H1 2013 H1 2012 Change in % Net sales 1,125.2 1,092.1 3 ■ Channel mix as well as positive Gross profit 716.8 672.9 7 inventory valuation effects support in % of sales 63.7 61.6 210 bp gross margin inc
Slide 17: Mixed regional profitability developments
Mixed regional profitability developments Segment profit in EUR million H1 2013 in % of sales H1 2012 in % of sales Change in % Europe* 239.5 35.8 236.1 36.2 1 Americas 63.3 24.1 64.2 25.9 (1) Asia/Pacific 63.5 37.6 61.7 36.6 3 Royalties 20.8 83.2 21.2 88.8 (2) Segment profit operating segments 387.
Slide 18: Significant reduction of trade net working capital position
Significant reduction of trade net working capital position June 30, 2013 446 Inventories (9)% (7)% ■ Strict inventory (in EUR million) control in all markets June 30, 2012 492 fx-adjusted Trade June 30, 2013 226 receivables +6% +9% ■ Expansion of concession business (in EUR million) June 30, 2012 2
Slide 19: Lease financing agreement reached for new distribution center
Lease financing agreement reached for new distribution center ■ Off-balance sheet financing effective end of June ■ Transaction leads to balance sheet reduction of EUR 60 million ■ Operating lease obligation starting 2014 Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 19 / 4
Slide 20: Own retail and infrastructure investments drive capital expenditures
Own retail and infrastructure investments drive capital expenditures Investments Free cash flow Net debt (in EUR million) (in EUR million) (in EUR million) +100% (13)% (22)% 82 50 301 43 234 41 H1 2012 H1 2013 H1 2012 H1 2013 June 30, 2012 June 30, 2013 ■ Own retail expansion ■ Higher investments of
Slide 21: Agenda
Agenda Operational Highlights First Half Year Results Strategic Initiatives and Outlook Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 21 / 40
Slide 22: Jason Wu named Artistic Director of BOSS Womenswear
Jason Wu named Artistic Director of BOSS Womenswear Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 22 / 40
Slide 23: BOSS Jour pour Femme set to become the brand's new female fragrance blockbuster
“BOSS Jour pour Femme” set to become the brand’s new female fragrance blockbuster Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 23 / 40
Slide 24: New advertising campaign captures the BOSS womenswear brand essence
New advertising campaign captures the BOSS womenswear brand essence Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 24 / 40
Slide 25: Menswear advertising campaign conveys self-confidence, power and mastery
Menswear advertising campaign conveys self-confidence, power and mastery Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 25 / 40
Slide 26: Integrated BOSS offering hits the stores with Fall 2013 collection
Integrated BOSS offering hits the stores with Fall 2013 collection Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 26 / 40
Slide 27: HUGO BOSS introduces The Suit Style Guide
HUGO BOSS introduces The Suit Style Guide Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 27 / 40
Slide 28: HUGO BOSS outfits German national football team
HUGO BOSS outfits German national football team Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 28 / 40
Slide 29: HUGO celebrates 20 years of innovating and challenging convention
HUGO celebrates 20 years of innovating and challenging convention Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 29 / 40
Slide 30: 2013 Outlook
Full year 2013 targets reconfirmed 2013 Outlook Sales growth (currency-adjusted) High single-digit Growth of EBITDA before special items 10% to 12% Growth of EBITDA before special items High single-digit Around EUR 150 million Capex on a comparable basis Own retail network Around 50 net organic open
Slide 31: HUGO BOSS concentrates on driving healthy, long-term growth
HUGO BOSS concentrates on driving healthy, long-term growth ■ Disciplined execution of medium-term strategy key to success ■ Continued focus on further building brand equity ■ Important investments to support long- term, sustainable growth of the business Conference Call, First Half Year Results 201
Slide 32: Questions & Answers
QUESTIONS & ANSWERS Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 32 / 40
Slide 33: Backup
BACKUP Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 33 / 40
Slide 34: First half year results at a glance
First half year results at a glance Sales Gross margin (in EUR million) (in %) +210bp +3% 1,092 +4% 1,125 61.6% 63.7% fx-adjusted H1 2012 H1 2013 H1 2012 H1 2013 EBITDA before special items Net debt (in EUR million) (in EUR million) +4% (22)% 226 234 301 234 H1 2012 H1 2013 June 30, 2012 June 30, 20
Slide 35: Profit & loss statement
Profit & loss statement in EUR million Q2 2013 Q2 2012 Change in % H1 2013 H1 2012 Change in % Net sales 531.7 485.3 10 1,125.2 1,092.1 3 Cost of sales (171.9) (173.6) 1 (385.8) (397.8) 3 Direct selling expenses (10.1) (8.9) (13) (22.6) (21.4) (6) Gross profit 349.7 302.8 15 716.8 672.9 7 in % of sa
Slide 36: Trade net working capital
Trade net working capital Average trade net working capital as a percentage of sales by quarter (in %) 29.7 30 28.5 27.2 24.6 25 (180)bp 20.2 20.8 21.0 20.1 20.0 20 19.0 15 10 5 0 Q1 2009 Q2 2009 Q3 2009 Q4 2009 … Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Conference Call, First Half Year Resul
Slide 37: Retail network
Retail network Number of own retail stores: +8 (14) +9 +58 901 + 3 China + 9 USA + 3 Taiwan 840 + 2 Australia + 28 Spain + 14 UK + 3 Austria + 3 France + 3 Switzerland + 2 Italy + 2 Netherlands + 1 Belgium + 1 Germany + 1 Ireland Dec. 31, 2012 Europe* Americas Asia/Pacific Closings June 30, 2013 *Eu
Slide 38: Financial calendar 2013
Financial calendar 2013 Date Event October 31, 2013 Nine Months Results November 26, 2013 Investor Day, Hong Kong Conference Call, First Half Year Results 2013 HUGO BOSS © July 31, 2013 38 / 40
Slide 39: 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 40: HUGO BOSS
HUGO BOS 5S