Equita European Conference 2018

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2 Equita European Conference 2018 M I L A N M A Y 3 0, Equita European Conference 2018 HUGO BOSS May

3 F I N A N C I A L P E R F O R M A N C E Q Equita European Conference 2018 HUGO BOSS May

4 HUGO BOSS records solid currency-adjusted sales growth in the first quarter Group sales (in EUR million) +5% fx-adjusted 0% Q Q Equita European Conference 2018 HUGO BOSS May

5 All regions contribute to currency-adjusted Group sales growth Europe Sales* +3% fx-adjusted Americas Sales* +7% fx-adjusted Asia/Pacific Sales* +12% fx-adjusted +1% (6)% % Q Q Sales increase primarily driven by UK, Benelux and France Q Q U.S. comp store sales growth in the double digits Q Q Strong recovery in Hong Kong and Macau contributes to sales increase in China *in EUR million Equita European Conference 2018 HUGO BOSS May

6 First quarter performance confirms good momentum in own retail Comp store sales growth (fx-adjusted) +7% Retail sales (in EUR million) +8% fx-adjusted % (3) (3) (8) (6) Q Q Q Q Q Q Q Q Q Q Equita European Conference 2018 HUGO BOSS May

7 Mixed sales trends in the wholesale channel Declines in the Americas offset by Europe Online outperforms the physical channel Challenging overall market conditions set to continue Wholesale sales (in EUR million) +1% fx-adjusted (3)% Q Q Equita European Conference 2018 HUGO BOSS May

8 Sales decline in the quarter masks positive outlook for license business License sales (in EUR million) (1)% fx-adjusted 17 (1)% 16 Q Q Equita European Conference 2018 HUGO BOSS May

9 Casualwear grows disproportionately at both brands Collection upgrade drives growth of BOSS Casualwear Strategic distribution changes impact HUGO sales Menswear up 6%, womenswear down 3% +7% fx-adjusted (6)% fx-adjusted +1% (9)% Q1 2017* Q1 2018* Q1 2017* Q1 2018* *in EUR million.. Equita European Conference 2018 HUGO BOSS May

10 Operating expense decline supports EBITDA growth Gross margin 64.0 % (40)bp Selling & distribution expenses 272 EUR million (4)% Administration expenses EBITDA (before special items) 74 EUR million +2% 99 EUR million +1% EBIT Net income 70 EUR million +8% 50 EUR million +3% Equita European Conference 2018 HUGO BOSS May

11 Margin in Asia/Pacific expands strongly Europe (in %) (120) bp Americas (in %) (220) bp Asia/Pacific (in %) +270 bp *Incl. Middle East and Africa. Q Q Q Q Q Q Equita European Conference 2018 HUGO BOSS May

12 Inventory development normalizes following significant declines in 2017 Inventory growth to support future sales increases in own retail Inventories (in EUR million) +5% +11% fx-adjusted Average trade net working capital as percentage of sales (in %) (130) bp Trade net working capital up 3% on a currency-adjusted basis Ratio of working capital to sales still significantly below prior-year level March 31, 2017 March 31, 2018 LTM 2017 LTM 2018 Equita European Conference 2018 HUGO BOSS May

13 Working capital build-up affects free cash flow in seasonally small quarter Capital expenditure (in EUR million) (23)% Free cash flow (in EUR million) <(100)% Net financial liabilities (in EUR million) (50)% Jan. March 2017 Jan. March 2018 Jan. March 2017 Jan. March 2018 March 31, 2017 March 31, 2018 (47) Decline due to phasing effects and fewer store openings *Incl. Middle East and Africa. Working capital increase weighs on cash flow generation Decline due to strong cash flow generation in 2017 Equita European Conference 2018 HUGO BOSS May

14 Exchange rate effects are impacting the Group s financial results Translation of foreign subsidiary results and split of sourcing operations create currency risks Net exposure by currency, EBITDA before special items (indicative) Impact from euro appreciation versus British pound and Chinese yuan Impact on EBITDA before special items amounted to around EUR 20 million in 2017, around EUR 10 million in 2018e Other CHF, HKD CNY GBP Short USD Long Equita European Conference 2018 HUGO BOSS May

15 G R O U P S T R A T E G Y Equita European Conference 2018 HUGO BOSS May

16 Group strategy focuses on four fields of action D I G I T A L I. REFOCUS THE BRAND III. DRIVE THE DIGITAL TRANS- FORMATION G L O B A L A G I L E II. REFINE THE WAY WE SELL C U S T O M E R - C E N T R I C IV. INNOVATE THE WAY WE OPERATE S U S T A I N A B L E Equita European Conference 2018 HUGO BOSS May

17 Strategic Fields of Action D I G I T A L I. REFOCUS THE BRAND III. DRIVE THE DIGITAL TRANS- FORMATION G L O B A L A G I L E II. REFINE THE WAY WE SELL C U S T O M E R - C E N T R I C IV. INNOVATE THE WAY WE OPERATE S U S T A I N A B L E Equita European Conference 2018 HUGO BOSS May

18 Two brands: BOSS and HUGO # T H I S I S B O S S # I A M H U G O TWO BRANDS TWO TARGET CUSTOMERS TWO BRAND IDENTITIES Equita European Conference 2018 HUGO BOSS May

19 BOSS and HUGO customers have different attitudes towards fashion Status-oriented, traditional, rational ATTITUDE Open-minded, individual, spontaneous Classic, modern, sophisticated Highest quality, personal assistance STYLE EXPECTS Fashion-forward, contemporary, progressive Latest fashion trends, urban atmosphere Retail & department stores, online SHOPPING Online, mobile, retail & department stores DEMANDING QUALITY SEEKER OPEN-MINDED LIFE ENTHUSIAST Equita European Conference 2018 HUGO BOSS May

20 BOSS and HUGO are distinct brands based on a common set of values BOSS STANDS FOR: MASCULINITY/FEMININITY SEXINESS & SUCCESS STYLE & PRECISION BOSS dresses the drive. For men on their way to greatness. For women making bold moves. SHARED VALUES & BENEFITS INNOVATION PREMIUM QUALITY AND PERFECT FIT SUSTAINABILITY TRUSTWORTHINESS AUTHENTICITY HUGO STANDS FOR: CONTEMPORARY DESIGN PROGRESSIVE LOOKS FASHION - FORWARD HUGO is the platform of self-expression. Prepare to embrace the possible. Equita European Conference 2018 HUGO BOSS May

21 BOSS: Upgrade of casualwear and new interpretation of formalwear Split of BOSS brand sales by segment In EUR billion ~2.0 ~1.4 CAGR +8% 51% 61% CAGR +1% 49% 39% Casualwear Formalwear Equita European Conference 2018 HUGO BOSS May

22 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% % 43% 595 0% Spring/Summer 2017 collection 9% Spring/Summer 2018 collection Equita European Conference 2018 HUGO BOSS May

23 BOSS Menswear collection spans three wearing occasions B U S I N E S S C A S U A L A T H L E I S U R E BOSS DRESSES THE DRIVE FOR EVERY OCCASION Equita European Conference 2018 HUGO BOSS May

24 BOSS Womenswear collection consists of Business and Casual B U S I N E S S C A S U A L BOSS DRESSES THE DRIVE FOR EVERY OCCASION Equita European Conference 2018 HUGO BOSS May

25 Business and Casual form HUGO Menswear B U S I N E S S C A S U A L HUGO IS THE PLATFORM OF SELF-EXPRESSION FOR EVERY OCCASION Equita European Conference 2018 HUGO BOSS May

26 and HUGO Womenswear collections B U S I N E S S C A S U A L HUGO IS THE PLATFORM OF SELF-EXPRESSION FOR EVERY OCCASION Equita European Conference 2018 HUGO BOSS May

27 Positive feedback on BOSS fashion shows Equita European Conference 2018 HUGO BOSS May

28 Florence fashion show marks the start of a new era for HUGO Equita European Conference 2018 HUGO BOSS May

29 HUGO has grown significantly above industry average in recent past HUGO sales split by channel In EUR million 153 CAGR +15% % Strong position in central European markets Short-term growth focus on other European markets Ambition to grow in the US and key Asian markets 56% 50% 37% 7% 3% Wholesale Retail Licenses Equita European Conference 2018 HUGO BOSS May

30 Strategic Fields of Action D I G I T A L I. REFOCUS THE BRAND III. DRIVE THE DIGITAL TRANS- FORMATION G L O B A L A G I L E II. REFINE THE WAY WE SELL C U S T O M E R - C E N T R I C IV. INNOVATE THE WAY WE OPERATE S U S T A I N A B L E Equita European Conference 2018 HUGO BOSS May

31 Three key distribution priorities 1 Increase own retail sales productivity 2 Exploit the full potential of online Further integrate distribution 3 across all channels Retail sales productivity In EUR/m 2 ~13,000 10,900 11,100 Better and broader offering at entry price points Expansion of casual and athleisure offering in stores Rollout of omnichannel services Investment in retail staff training Optimization of retail network e Equita European Conference 2018 HUGO BOSS May

32 Three key distribution priorities 1 Increase own retail sales productivity 2 Exploit the full potential of online Further integrate distribution 3 across all channels hugoboss.com Fulfillment Partner (insourced in 2016) onlinepureplay.com departmentstore.com C U S T O M E R Social commerce Equita European Conference 2018 HUGO BOSS May

33 Improvements to hugoboss.com site will propel growth of online business 1 Increase own retail sales productivity 2 Exploit the full potential of online Further integrate distribution 3 across all channels Equita European Conference 2018 HUGO BOSS May

34 Omnichannel services link online and physical retailing 1 Increase own retail sales productivity 2 Exploit the full potential of online Further integrate distribution 3 across all channels Equita European Conference 2018 HUGO BOSS May

35 Store renovations will upgrade own retail network Openings freestanding store openings will strengthen the network This includes the opening of around 10 HUGO stores Closures Store closures based on expiration of rental contract Renovations Renovations to account for the bulk of retail investments Around 150 POS renovations planned in 2018 Own retail selling space will remain largely stable going forward Equita European Conference 2018 HUGO BOSS May

36 Strategic Fields of Action D I G I T A L I. REFOCUS THE BRAND III. DRIVE THE DIGITAL TRANS- FORMATION G L O B A L A G I L E II. REFINE THE WAY WE SELL C U S T O M E R - C E N T R I C IV. INNOVATE THE WAY WE OPERATE S U S T A I N A B L E Equita European Conference 2018 HUGO BOSS May

37 Digital transformation comprises the entire value chain Product & collection development Sourcing and production Distribution and logistics Own retail and wholesale distribution Equita European Conference 2018 HUGO BOSS May

38 Product and collection development Sourcing and production Distribution and logistics Sales HUGO will launch first fully digitally designed capsule /////////// DIGITAL [ e ] VOLUTION ///////////////////////////////////// Equita European Conference 2018 HUGO BOSS May

39 Product and collection development Sourcing and production Distribution and logistics Sales Production facility in Izmir is developing into a smart factory Robotics 3D spaceplanning Big data analysis Smart factory Real time production data Voice command Augmented reality Artificial intelligence Connect Collect Analyze Predict Equita European Conference 2018 HUGO BOSS May

40 Product and collection development Sourcing and production Distribution and logistics Sales Key elements of logistics infrastructure upgraded or renewed European flat-packed goods distribution center Filderstadt, Germany US distribution center Midway (Georgia), United States New construction completed in 2014 SAP implementation completed in European e-com and B-pool distribution center Wendlingen, Germany Refurbishment completed in 2016 Equita European Conference 2018 HUGO BOSS May

41 Product and collection development Sourcing and production Distribution and logistics Sales New store concepts create strong link between physical and digital retailing Equita European Conference 2018 HUGO BOSS May

42 Strategic Fields of Action D I G I T A L I. REFOCUS THE BRAND III. DRIVE THE DIGITAL TRANS- FORMATION G L O B A L A G I L E II. REFINE THE WAY WE SELL C U S T O M E R - C E N T R I C IV. INNOVATE THE WAY WE OPERATE S U S T A I N A B L E Equita European Conference 2018 HUGO BOSS May

43 HUGO contributes to the transformation of the Group s culture Agile management Equita European Conference 2018 HUGO BOSS May

44 HUGO digital showroom rolled out in more European markets Equita European Conference 2018 HUGO BOSS May

45 Speed drives commercial success Replenish sold-out bestsellers in-season Adjust collection content based on short-term trends Become more flexible in our approach towards seasons Demand-driven supply Supplement the regular collection development process with a fast track concept which reduces the time to market to weeks rather than months Equita European Conference 2018 HUGO BOSS May

46 F I N A N C I A L A N D O P E R A T I O N A L O U T L O O K Equita European Conference 2018 HUGO BOSS May

47 Key principles of financial management reconfirmed Sales productivity growth Cost-efficiency improvements Maximization of free cash flow Continuation of dividend policy Equita European Conference 2018 HUGO BOSS May

48 All regions and distribution channels will contribute to sales growth in 2018 Europe Increase at a low to mid single-digit percentage rate Americas Increase at a low single-digit percentage rate Asia/Pacific Increase at a mid to high single-digit percentage rate Retail Increase at a mid single-digit percentage rate Wholesale Increase at a low single-digit percentage rate Licenses Increase at a mid single-digit percentage rate *fx-adjusted Equita European Conference 2018 HUGO BOSS May

49 Outlook 2018: Growth set to accelerate compared to 2017 levels Group sales Consolidated net income Increase at a low to mid single-digit percentage rate (fx-adjusted) Gross profit margin Increase at a low to mid single-digit percentage rate Capital expenditure Largely stable EUR 170 million to EUR 190 million EBITDA (before special items) Free cash flow Development within a range of 2% to +2% EUR 150 million to EUR 200 million Equita European Conference 2018 HUGO BOSS May

50 Strategy execution will drive profitable and sustainable growth Profitable and sustainable growth Acceleration Stabilization 2017 Sales up 3%*, stable operating profit 2018 Sales forecasted to increase in the low to mid single-digits*, broadly in line with the market, operating profit should remain approximately stable Grow sales stronger than market, increase operating profit stronger than sales *fx-adjusted Equita European Conference 2018 HUGO BOSS May

51 Backup Equita European Conference 2018 HUGO BOSS May

52 Sales by region and major markets Share of Group sales* Europe (incl. Middle East/Africa) 62% Americas 21% Asia/Pacific 14% Germany: 18% Great Britain: 12% France: 6% Benelux: 5% Other: 21% U.S.: 15% Canada: 3% Central & South America: 3% China: 8% Oceania: 2% Japan: 2% Other: 2% *as of 2017, +3% Licenses Equita European Conference 2018 HUGO BOSS May

53 Sales by distribution channel 49% 44% 41% 38% 35% 34% Wholesale Retail 49% 54% 57% 60% 62% 63% Licenses 2% 2% 2% 2% 3% 3% Equita European Conference 2018 HUGO BOSS May

54 Number of Group s own retail stores by region As of 31/03/2018 Freestanding stores 191 Shop-in-Shops 315 Europe 570 Outlets 64 Freestanding stores 89 Americas 234 Asia/Pacific 289 Shop-in-Shops Outlets Group Freestanding stores 155 1,093 Shop-in-Shops 87 Outlets 47 Equita European Conference 2018 HUGO BOSS May

55 Retail comp stores sales Retail l-f-l sales development* +2% (6)% +3% % 6% 3% 5% 7% 7% 2 0 0% (2) (1)% (4) (6)% (3)% (3)% (6) (8) Q Q Q Q (6)% Q (8)% Q Q Q Q Q Q Q Q *FX-adjusted Equita European Conference 2018 HUGO BOSS May

56 Dividend policy Dividend per share and payout ratio* (in EUR) (in %) % 64% 75% % % % % % 93% 79% ** Dividend policy of paying out between 60% and 80% of consolidated net income reconfirmed * As a percentage of net income attributable to shareholders ** Proposal for fiscal year 2017 Equita European Conference 2018 HUGO BOSS May

57 (Adjusted) financial leverage x x 1.6x 1.3x 1.2x 1.2x 1.3x 1.4x 1.5x 1.3x Net debt / EBITDA Net debt incl. operating leases / EBITDAR x x 0.2x 0.1x 0.1x 0.1x 0.2x 0.0x Operating leases EBITDAR = Future committed operating lease obligations capitalized according to S&P methodology = EBITDA + minimum rents + contingent rents Equita European Conference 2018 HUGO BOSS May

58 Sourcing and production structure* Americas: 2% Western Europe: 12% Own production: 18% Eastern Europe: 44% North Africa: 4% Asia: 38% Third party production: 82% *as of 2017, in value terms Equita European Conference 2018 HUGO BOSS May

59 Multi-Year overview Sales Gross profit Gross profit margin in % 66,2 66,0 66,0 66,1 64,9 EBITDA EBITDA before special items Adjusted EBITDA margin in % 1 18,0 18,3 21,2 23,0 23,2 EBIT Net income Trade net working capital Non-current assets Shareholders equity Equity ratio in % Total assets Free cash flow Net debt Capex Depreciation/amortization Total leverage 2 0,0 0,2 0,1 0,1 0,1 Dividend EBITDA before special items/sales. 2 Net financial liabilities/ebitda before special items. 3 Dividend proposal. Equita European Conference 2018 HUGO BOSS May

60 Analyst coverage The HUGO BOSS AG share is covered by the following financial analysts: Institution Analyst Institution Analyst Baader Bank Bankhaus Lampe Bank of America Merrill Lynch Berenberg Bank Bloomberg Intelligence Bryan Garnier Citigroup Commerzbank Credit Suisse Deutsche Bank DZ Bank equinet Equita Evercore ISI Exane BNP Paribas Goldman Sachs Hamburger Sparkasse Volker Bosse Peter Steiner Ashley Wallace Zuzanna Pusz Chris Chaviaras Cédric Rossi Thomas Chauvet Andreas Riemann Guillaume Gauville Warwick Okines Herbert Sturm Mark Josefson Fabio Fazzari Omar Saad Luca Solca Alberto D Agnano Christian Hamann Hauck & Aufhäuser HSBC Intermonte Invest Securities J.P. Morgan Kepler Cheuvreux LBBW M.M. Warburg Macquarie MainFirst Mirabaud Securities Morgan Stanley Oddo BHF RBC Société Générale UBS Christian Salis Antoine Belge Daniele Alibrandi Peter Farren Melanie Flouquet Jürgen Kolb Thomas Hofmann Jörg Philipp Frey Andreas Inderst John Guy Alessandro Migliorini Elena Mariani Nicolas Kieffer Piral Dadhania Thierry Cota Fred Speirs Equita European Conference 2018 HUGO BOSS May

61 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) Equita European Conference 2018 HUGO BOSS May

62 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 Dennis Weber, CFA Head of Investor Relations Phone: +49 (0) Frank Böhme Senior Investor Relations Manager Phone: +49 (0) Equita European Conference 2018 HUGO BOSS May

63 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 identify forward-looking statements. Such statements are subject to risks and uncertainties. If any of these or other risks and uncertainties occur, or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made. Equita European Conference 2018 HUGO BOSS May

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