Company Presentation

Transcription

1 Company Presentation September

2 Brands Page The Brands at a Glance 3 The BOSS Brand 5 The HUGO Brand 11 The BALDESSARINI Brand 15 Vision and Core Competencies 18 Financial Developments First Half Developments The BOSS Shops 44 Forecast Appendix 58 2

3 The Brands at a Glance Sales EUR mill. Average sustainable growth rate 4% p.a. * Market Core brand Business driven, innovative fashion Entry to luxury market High margins 98.2 EUR mill EUR mill. 6-8% p.a. 2-4% p.a. * only BOSS Man Fashion brand Fashion driven, cutting edge and trendy Entry to luxury market Luxury brand Quality and handicraft driven 3

4 HUGO BOSS 2002 Net sales EUR 1,093 million (-0.1% vs. prev. year, currency adj. +1.3%) Net profit EUR 75 million (-30.6% vs. prev. year) Free Cashflow EUR 61 million (prev. year EUR -47 million) Market presence in 108 countries 581 HUGO BOSS Shops in 70 countries achieve 26% of net sales (prev. year: 520 Shops achieve 25% of net sales) Market presence with own showrooms in 16 countries 4

5 5

6 BOSS (Man) Net sales EUR 938 million (-0.3% vs. prev. year) Sales split - Business wear 59% (1995: 71%) - Leisure wear 41% (1995: 29%) 13% worldmarket share in high-end Men's Apparel Market 4,300 Points of Sale in 108 countries 442 BOSS Man Shops and 39 BOSS Man & Woman Shops in 70 countries BOSS Shops achieve 26% of BOSS Man sales 6

7 BOSS (Woman) Net sales EUR 37 million (-23.7% vs. prev. year) 527 Points of Sale in 49 countries 64 BOSS Woman Shops and 39 BOSS Man & Woman Shops in 30 countries BOSS Shops achieve 57% of BOSS Woman sales 7

8 BOSS (Woman) Integration of the BOSS Woman business in the existing HUGO BOSS organization is completed Redirection of fashion statement, fitting, quality, production and logistical structure on track Achieving break-even in the second half of

9 Brand Extension Fragrances Bodywear Watches Eyewear Shoes Leather Accessories 9

10 Brand Extension Product is: Innovative Quality Leading Menswear / Womenswear Price is: Competitive Affordable Value for money Place is: Business-driven Casual-driven Metropolitan Promotion is: Innovative / Proactive Young Sporty / Class 10

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12 HUGO Net sales EUR 98 million (+15.8% vs. prev. year) Sales growth - HUGO Man 14% - HUGO Woman 21% Sales split - HUGO Man 72% - HUGO Woman 28% 860 HUGO Man Points of Sale and 360 HUGO Woman Points of Sale in 44 countries 34 HUGO Shops in 14 countries HUGO Shops achieve 16% of HUGO sales 12

13 Brand Extension Fragrances Eyewear Shoes Bodywear 13

14 Brand Extension Product is: Innovative / Trendy Young / Emotional Leading New Menswear / New Womenswear Price is: Competitive Affordable Value for money Place is: Fashion-driven Metropolitan Emotional Promotion is: Innovative / Proactive / Cutting Edge Aggressive / Young Music / Movie / Party 14

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16 BALDESSARINI Net sales EUR 20 million (0% vs. previous year) 140 Points of Sale in 32 countries 2 BALDESSARINI Shops and presence in 23 BOSS Shops BOSS / BALDESSARINI Shops achieve 44% of BALDESSARINI sales 16

17 Brand Extension Product is: Handicraft Luxury Leading Top Menswear Price is: Competitive Value for money Place is: Quality-driven Metropolitan Emotional Promotion is: Proactive Young Class 17

18 Vision and Core Competencies 18

19 Vision "Consumers and Retailers appreciate HUGO BOSS as the leading international high-end menswear / womenswear company." We outperform constantly in the areas of Product Leadership Market Intimacy Operational Excellence - Distinct, innovative fashion statement - Value for money products - Strong links to customers in all markets - Know-how, superior business systems and processes to understand and manage the markets - Reliable production and logistic performance - Competitive cost structure in production 19

20 Key Drivers for Future Growth Today Tomorrow Menswear Menswear / Womenswear Wholesale Wholesale / Retail Fashion - 2 Seasons Concept Fashion - 4 Seasons Concept / Replenishment 20

21 Future Strategy 1. Further increase of market share. 2. Maintain current market and price positioning. 3. Balancing brand between accessibility and exclusivity. 4. Further improvement of delivery performance. 5. Improve the competitive positioning of certain product groups. 6. Further developing our competence in sportswear. 7. Increase the number of BOSS Shops. 8. Continue to address the special needs and requirements of the US market. 21

22 Strategic targets 2003 BOSS Woman - Achieve break-even in H2 / Further improve fitting and collection statement Season Concept Retail - Logistical change - Replenishment - Development of IT-systems supporting multiple seasons concept - Improve merchandising 22

23 Financial Developments

24 Net Sales Development ,400 1,200 1,095 1,093 1, Development 4% 8% -5% -11% 1% 5% 10% 14% 18% 10% 23% 19% 0% German GAAP (HGB) International Accounting Standards (IAS) 24

25 Net sales by brand Change EUR mill. EUR mill. in % BOSS (1) Man Woman (24) HUGO BALDESSARINI Total 1, ,

26 Net sales by region Change EUR mill. EUR mill. in % Prop. of sales in % Germany (7) 25 Rest of Europe Americas (12) 20 Other regions Royalties Total 1, ,

27 Net sales 2002 * by region: Europe (EUR 720 mill.) Rest of the World EUR mill. 30% 27% Germany EUR mill. Rest of Europe EUR mill. 18% Italy EUR 42.7 mill. 4% 4% 7% 10% Netherlands EUR 41.7 mill. UK EUR 71.9 mill. France EUR mill. * without royalties 27

28 Net sales 2002 * by region: The Americas (EUR 221 mill.) Rest of World EUR mill. 78% 15% USA EUR mill. 1% 4% Canada EUR 38.6 mill. * without royalties Rest of the Americas EUR 4.4 mill. Brazil EUR 6.6 mill. Mexico EUR 14.8 mill. 28

29 Licences Royalties EUR mill. +25% % 20% 45% 57% H U G O B O S S % 71% Sales +29% % 77% Textile Bodywear (integr.05/2003) Knitwear (integr. 01/2004) Socks (integr. 07/2003) Cosmetics 29% % % % 2002 Non-Textile Glasses Shoes Watches 29

30 Net Profit Development Development -22% 29% 28% 9% 8% 11% 10% 27% 19% 12% 77% 9% -31% German GAAP (HGB) International Accounting Standards (IAS) Figures 1993, 1996, 2000 and 2001 adjusted for the tax effect of the special dividend (Consolidated Net Profit for: EUR Mill EUR Mill EUR Mill EUR Mill. ) 30

31 Profit and Loss Statement Change EUR mill. EUR mill. in % Sales 1, ,094.7 (0) Gross margin (2) in % of sales Operating income (29) Net financial result (4.3) (3.4) (27) Extraordinary items (17.0) (14.4) (18) Taxes on income and other taxes (22.6) (41.9) 46 Net profit -adjusted (31) Tax effect of the special dividend Net profit (37) 31

32 Development of result 2002 EUR mill. Consolidated net profit Change in gross margin Increase in royalties 13 Effect of sales volume on gross margin (7) Effect from changes in the gross margin percentage (18) Provision for risks and doubtful accounts Logistics, sales, new products, DOS BOSS Woman Marketing 108 (12) (12) (41) 10 6 Deviation of non-recurring items/net result Deviation of income tax and other taxes (4) 20 Consolidated net profit Adjusted for the tax effect of EUR 9.9 million special dividend 75 32

33 Analysis of Financial Requirements Change EUR mill. EUR mill. in % Accounts receivables, other assets, (8) balances with factoring companies Inventories 218, (5) Fixed assets Trade payables and other liabilities (54.6) (61.4) 11 Accruals, balance of prepaid expenses (87.1) (100.2) 13 and deferred income Net capital invested Balance of cash at banks and due to banks (5) Shareholders' equity Coverage of net capital invested

34 Free Cash Flow Change EUR mill. EUR mill. in % Consolidated net profit (36) Depreciation Change of pension accruals (1.8) 3.6 Cash flow (30) Net additions to fixed assets (51.9) (91.6) Changes in remaining net capital invested 14.0 (105.7) Currency exchange and other equity changes (6.2) (0.1) Free cash flow before dividend 61.0 (46.8) Dividend payment (53.1) (93.5) Free cash flow 7.9 (140.3) 34

35 Free Cash Flow Development Free Cash Flow (3) (47) (82) German GAAP (HGB) International Accounting Standards (IAS) 35

36 Ratios IAS Change Earnings per share EUR (31) Operating margin in % Return on sales in % Return on capital employed in % in % 36

37 Employees by Function Average Employee Numbers Change in % Production/ Logistics 2,867 2,639 9 thereof own production facilities 2,057 1,902 8 thereof others Sales/ Creation/ Marketing 1,407 1, thereof own retail thereof others Administration Total 4,754 4,

38 First Half Developments

39 Net sales by brand January - June Change EUR mill. EUR mill. in % BOSS (5) Man (7) Woman HUGO (4) BALDESSARINI (4) Total (5) 39

40 Net sales by region January - June Change EUR mill. EUR mill. in % Germany Rest of Europe Americas Other regions Royalties (8) (19) (11) Total (5) 40

41 Profit and Loss Statement January - June Change EUR mill. EUR mill. in % Sales (5) Gross margin (7) in % of sales Operating income Net financial result (2.0) (1.4) (43) Extraordinary items (1.9) (9.6) 80 Income before taxes Taxes on income and other taxes (13.1) (2.9) Consolidated net income

42 Analysis of Financial Requirements January - June Change EUR mill. EUR mill. in % Accounts receivable, other assets, (4) balances with factoring companies Inventories (8) Fixed assets Trade payables and other liabilities (35.0) (50.5) 31 Accruals, balance of prepaid expenses (82.2) (70.7) (16) and deferred income Net capital invested (4) Balance of cash at banks and due to banks (15) Shareholders' equity Coverage of net capital invested (4) 42

43 Free Cash Flow January - June Change EUR mill. EUR mill. in % Consolidated net income Depreciation Change of pension accruals (0.9) (1.4) 36 Cash flow Net additions to fixed assets (14.4) (27.2) Changes in remaining net capital invested (8.2) (20.1) Currency exchange and other equity changes (8.5) (0.5) Free cash flow before dividend Dividend payout (53.1) (53.1) Free cash flow (29.5) (52.6) 44 43

44 The BOSS Shops 44

45 Hamburg Berlin Friedrichstrasse 45

46 Number of HUGO BOSS Shops Directly operated Shops Franchise Shops E 46

47 HUGO BOSS Shops by region 2003 FC Germany Rest of Europe Americas Other regions Total Proportion of group sales in % Thereof HUGO BOSS Shops Proportion of group sales in %

48 HUGO BOSS Shops Concentrating on DOS investment, where it generates on-top-of business Developing DOS into a profitable and relevant new business system Gaining a new level of expertise in Supply Chain Management, Retail Know How and Sales Floor Planning 48

49 HUGO BOSS Shop Minimum requirements Applies to Freestanding Shops only: Terminology: HUGO BOSS Shop Concept: Brand/label specific Net size: 120 sqm for BOSS Man Black Label shop concept Size for additional concepts (label/gender): 60 sqm Entrance area: Merchandise rotation by brand Flooring and lighting: Generic BOSS/HUGO Costs: approx. EUR 2,300 / sqm - Separate entrance for HUGO and/or dedicated window with HUGO facade concept - Entrance logo in absence of separate HUGO entrance: HUGO BOSS 49

50 HUGO BOSS Shop Singapore (Ngee Ann City) Brands: BOSS Man BOSS Woman HUGO Opening: March 2003 Total net size: 387 sqm HUGO Entrance BOSS Woman BOSS Man 50

51 HUGO BOSS Shop Tokyo (Roppongi) Brands: BOSS Man BOSS Man Sportswear BOSS Woman HUGO Opening: April 2003 Total net size: 375 sqm Entrance HUGO BOSS Woman BOSS Man 51

52 Shop Concept Development BOSS Man Orange Label Traveller Minimum requirements Net sales space (nss): 40 sqm Storage space: 20 % of nss Room height: 2.8 meters Display capacity: > 20 pieces / sqm incl. stock capacity (and more possibilities for accessories presentation) 52

53 Shop Concept Development BOSS Man Orange Label e.g.: Freestanding Shop, Vilamoura (Portugal) - March

54 Forecast

55 Sales and Result Forecast 2003 Sales at previous year's level if exchange rates remain stable The gross margin is expected to grow Net profit expectation: double digit growth 55

56 Sales at previous year's level at 2002 exchange rates EUR million H U G O B O S S E Sales 2002 Royalties DOS Wholesale Mainly BOSS Woman Sales 2003 currency adjusted 56

57 Development of results Consolidated net profit EUR mill EUR mill. 75 Change in gross margin (12) Increase in royalties 13 Effect of sales volume on gross margin (7) Effect from changes in the gross margin percentage (18) Provision for risks and doubtful accounts Logistics, sales, new products, DOS BOSS Woman Marketing (12) (41) 10 6 Deviation of non-recurring items/net result Deviation of income tax and other taxes (4) 20 Consolidated net profit 1 Adjusted for the tax effect of EUR 9.9 million special dividend % 57

58 Appendix 58

59 Collection Presentation H U G O B O S S The nature of the HUGO BOSS business Stock Order Business Inhouse Orders Production Delivery Sales Stock Business Delivery Sales Orders May Jun July Aug Sept Oct Nov Dec Jan Feb Mar Apr Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct 59

60 Development of the Dividend H U G O B O S S EUR mill Special Dividend Dividend EUR Common stock Preferred stock Special dividend

61 Projections inevitably entail risks Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. Any statement in this report that states our intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These statements are based on plans, estimates and projections as they are currently available to the management of HUGO BOSS. Forward-looking statements therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. A number of important factors could therefore cause actual results to differ materially from those contained in any forward-looking statement. 61

62 Financial Calendar 2003 July 30, 2003 Publication of the Interim Report 2003 September 2, 2003 DVFA-Analysts' Conference November 5, 2003 Publication of the Third Quarter Report 2003 February 19, 2004 Publication of the provisional results

63 HUGO BOSS Webpage - Financial Data Address Contents Languages Annual Report Interim Report Financial Presentations Investor Relations Calendar Stock Prices Press Releases German English 63