Warburg Highlights 2018

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2 Warburg Highlights 2018 Yves Müller, CFO Hamburg, June 22, 2018 Investor Meeting Presentation HUGO BOSS June

3 G R O U P S T R A T E G Y Investor Meeting Presentation HUGO BOSS June

4 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 Investor Meeting Presentation HUGO BOSS June

5 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 Investor Meeting Presentation HUGO BOSS June

6 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 Investor Meeting Presentation HUGO BOSS June

7 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 Investor Meeting Presentation HUGO BOSS June

8 Athleisure influence runs through the core of the BOSS collection Split of BOSS brand sales by segment In EUR billion ~2.0 ~1.4 CAGR +8% 51% 61% CAGR +1% 49% 39% Casualwear Formalwear Investor Meeting Presentation HUGO BOSS June

9 Global pricing architecture implemented to ensure global brand positioning Americas Pricing remained virtually unchanged Europe All European countries now fully aligned Asia Price gap narrowed to European levels Investor Meeting Presentation HUGO BOSS June

10 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 Investor Meeting Presentation HUGO BOSS June

11 Three key distribution priorities 1 Exploit the full potential of online 2 Increase own retail sales productivity 3 Further integrate distribution across all channels hugoboss.com Fulfillment Partner (insourced in 2016) onlinepureplay.com Focus on concessions departmentstore.com Focus on concessions C U S T O M E R Social commerce Investor Meeting Presentation HUGO BOSS June

12 Three key distribution priorities 1 Exploit the full potential of online 2 Increase own retail sales productivity 3 Further integrate distribution 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 Investor Meeting Presentation HUGO BOSS June

13 Omnichannel services link online and physical retailing 1 Exploit the full potential of online 2 Increase own retail sales productivity 3 Further integrate distribution across all channels Investor Meeting Presentation HUGO BOSS June

14 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 Own retail selling space will remain largely stable going forward Investor Meeting Presentation HUGO BOSS June

15 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 Investor Meeting Presentation HUGO BOSS June

16 Digital transformation comprises the entire value chain Product & collection development Sourcing and production Distribution and logistics Own retail and wholesale distribution Investor Meeting Presentation HUGO BOSS June

17 HUGO will launch first fully digitally designed capsule /////////// DIGITAL [ e ] VOLUTION ///////////////////////////////////// Investor Meeting Presentation HUGO BOSS June

18 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 Investor Meeting Presentation HUGO BOSS June

19 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 Investor Meeting Presentation HUGO BOSS June

20 F I N A N C I A L P E R F O R M A N C E Q Investor Meeting Presentation HUGO BOSS June

21 HUGO BOSS records solid currency-adjusted sales growth in the first quarter Group sales (in EUR million) +5% fx-adjusted 0% Q Q Investor Meeting Presentation HUGO BOSS June

22 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 Investor Meeting Presentation HUGO BOSS June

23 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 Investor Meeting Presentation HUGO BOSS June

24 Mixed sales trends in the wholesale channel Wholesale sales decline in the U.S. due to shop-in-shop takeovers now accounted for as own retail Online outperforms the physical channel Wholesale sales (in EUR million) +1% fx-adjusted (3)% Q Q Investor Meeting Presentation HUGO BOSS June

25 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. Investor Meeting Presentation HUGO BOSS June

26 Operating expense decline supports EBITDA growth Gross margin EBITDA (before special items) 64.0 % (40)bp 99 EUR million +1% Selling & distribution expenses 272 EUR million (4)% EBIT 70 EUR million +8% Administration expenses Net income 74 EUR million +2% 50 EUR million +3% Investor Meeting Presentation HUGO BOSS June

27 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 Investor Meeting Presentation HUGO BOSS June

28 Outlook 2018 reconfirmed 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 Investor Meeting Presentation HUGO BOSS June

29 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 Investor Meeting Presentation HUGO BOSS June

30 Backup Investor Meeting Presentation HUGO BOSS June

31 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 Investor Meeting Presentation HUGO BOSS June

32 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% Investor Meeting Presentation HUGO BOSS June

33 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 Investor Meeting Presentation HUGO BOSS June

34 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 Investor Meeting Presentation HUGO BOSS June

35 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 Investor Meeting Presentation HUGO BOSS June

36 (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 Investor Meeting Presentation HUGO BOSS June

37 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 Investor Meeting Presentation HUGO BOSS June

38 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. Investor Meeting Presentation HUGO BOSS June

39 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 Investor Meeting Presentation HUGO BOSS June

40 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

41 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 Head of Investor Relations Phone: +49 (0) Frank Böhme Senior Investor Relations Manager Phone: +49 (0) Investor Meeting Presentation HUGO BOSS June

42 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. Investor Meeting Presentation HUGO BOSS June

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