Investor Meeting Presentation

Transcription

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2 Investor Meeting Presentation Roadshow Paris MainFirst July 4, 2017 Dennis Weber, Head of Investor Relations MainFirst Roadshow // Paris HUGO BOSS July

3 First Quarter Results 2017 MainFirst Roadshow // Paris HUGO BOSS July

4 HUGO BOSS starts the year with sales increase Difficult market environment continues in Q1 Good performance in core markets UK and China HUGO BOSS Sales (in EUR million) 1 % 1 % fx-adjusted Sales growth in Europe and Asia more than compensates for declines in the Americas Q Q MainFirst Roadshow // Paris HUGO BOSS July

5 Solid sales growth in Europe and Asia/Pacific HUGO BOSS Europe Sales* 2 % 3 % fx-adjusted HUGO BOSS Americas Sales* (4) % (7) % fx-adjusted HUGO BOSS APAC Sales* 3 % 1 % fx-adjusted Q Q Different timing of wholesale deliveries supports regional sales performance Q Q Performance in the U.S. improves sequentially but sales still down year-on-year Q Q Strong volume growth drives double-digit comp store sales increase in Mainland China *in EUR million MainFirst Roadshow // Paris HUGO BOSS July

6 Wholesale and license businesses up solidly HUGO BOSS Retail Sales* 0 % 0 % fx-adjusted HUGO BOSS Wholesale Sales* 3 % 2 % fx-adjusted HUGO BOSS License Sales* 5 % 5 % fx-adjusted Q Q Sales down 3% on a comp store basis, momentum improves over the course of the quarter Q Q Wholesale sales benefit from delivery shift effect in Europe Q Q Fragrance business up doubledigits *in EUR million MainFirst Roadshow // Paris HUGO BOSS July

7 Non-recurrence of prior year special items and strict cost discipline drive profit growth Gross margin 64.4 % 30bp Selling & Distribution expenses 283 EUR million 3%1% Administration expenses EBITDA (before special items) 72 EUR million 0% 97 EUR million 4% Special items (0) EUR million >100% Net income attributable to equity holders of the parent company 48 EUR million 25% MainFirst Roadshow // Paris HUGO BOSS July

8 Profitability in Asia/Pacific improves significantly Segment earnings In EUR million Q In % of sales Q In % of sales Change in % Europe* Americas (42) Asia/Pacific Licenses Earnings of operating segments Corporate units/consolidation (83.5) (81.8) (2) EBITDA before special items *Incl. Middle East and Africa MainFirst Roadshow // Paris HUGO BOSS July

9 Group inventories continue to be well controlled Average trade net working capital as a percentage of sales (in %) Currency-adjusted inventory growth, y-o-y Trade net working capital 30bp Trade net working capital as a percentage of sales 20% 15% 10% 19.5% 19.6% 19.7% 19.8% 19.8% Currency-adjusted inventory growth, y-o-y down 1% in currencyadjusted terms Inventories decrease in all three regions Double-digit inventory declines in the Americas and Asia/Pacific 5% 1% 2% 1% 0 (5)% Q Q (1)% Q Q (4)% Q MainFirst Roadshow // Paris HUGO BOSS July

10 Different timing of investments supports free cash flow performance Capital expenditure (in EUR million) Free cash flow (in EUR million) Net financial liabilities (in EUR million) +23% (38)% >100% Q Q (5) Q Q Q Q Decline reflects different timing of retail projects compared to the prior year Increase due to profit growth, working capital improvements and lower investments Increase due to dividend payment in May 2016 MainFirst Roadshow // Paris HUGO BOSS July

11 G R O U P S T R AT E G Y MainFirst Roadshow // Paris HUGO BOSS July

12 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 MainFirst Roadshow // Paris HUGO BOSS July

13 REFOCUS THE BRAND MainFirst Roadshow // Paris HUGO BOSS July

14 Focus on two clearly positioned brands MainFirst Roadshow // Paris HUGO BOSS July

15 Two strong brands with distinctive cores Brand values Brand message & USP Brand personality Superior quality, sharp tailoring, craftsmanship BOSS offers sharp tailoring in businesswear and refined casual- and athleisurewear to a qualityseeking customer who wants to be dressed impeccably for every occasion Successful, confident, sophisticated Pricing Upper premium Premium Progressive & contemporary design, fashion-forward HUGO stands for progressive looks, an edgy, urban attitude and offers contemporary design trends (24-hour look) Edgy, individual, spontaneous MainFirst Roadshow // Paris HUGO BOSS July

16 BOSS dresses the demanding customer for all 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 (Early) summer 2017: Sell in of Spring/Summer 2018 collection to wholesale partners End of 2017: Spring/Summer 2018 collection in stores MainFirst Roadshow // Paris HUGO BOSS July

17 New York Fashion Show showcases the elements fundamental to BOSS #NYCFASHIONSHOWFALL/WINTER 2017 MainFirst Roadshow // Paris HUGO BOSS July

18 Marketing strategy prioritizes digital and menswear Marketing split Online/Print 50% 60% 70% e Online Print Marketing split Menswear/Womenswear 40% 50% 70% e Menswear Womenswear MainFirst Roadshow // Paris HUGO BOSS July

19 Womenswear continues to be an important part of the BOSS business MainFirst Roadshow // Paris HUGO BOSS July

20 HUGO represents an exciting long-term growth opportunity CASUAL BUSINESS MainFirst Roadshow // Paris HUGO BOSS July

21 BOSS and HUGO operate in two separate competitive environments Upper Premium Premium MainFirst Roadshow // Paris HUGO BOSS July

22 Attractive pricing will contribute to the expansion of HUGO across all regions Entry price point for suits United States (in USD) Euro Countries (in EUR) China (in CNY) ,700 5,600 Global sales share by brand, FY 2016 (in %) 14% 86% Average HUGO prices are up to 30% below BOSS MainFirst Roadshow // Paris HUGO BOSS July

23 R E F I N E T H E WAY W E S E L L MainFirst Roadshow // Paris HUGO BOSS July

24 Wholesale partners welcome clarity and consistency of refined brand positioning Positive overall feedback from wholesale partners on refined brand strategy Order intake for Fall/Winter 2017 in line with expectations, positive momentum in casualwear Group committed to align global selling prices further MainFirst Roadshow // Paris HUGO BOSS July

25 Target to increase own retail sales productivity by 20% in the next five years 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 MainFirst Roadshow // Paris HUGO BOSS July

26 Store renovations will upgrade own retail network Openings freestanding store openings will strengthen the network First HUGO pilot stores planned for 2018 Closures Remaining circa 15 store closures to be completed by the end of the year Some additional 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 in 2017 MainFirst Roadshow // Paris HUGO BOSS July

27 New BOSS pricing architecture clears up historical imbalances Americas BOSS prices to remain virtually unchanged Around 20% above European levels Europe Single-digit % increase overall All Euro countries fully aligned Asia Mid-teens % decline overall Max. 30% above European levels The effect of BOSS price adjustments will be neutral on a global level MainFirst Roadshow // Paris HUGO BOSS July

28 D R I V E T H E D I G I TA L T R A N S F O R M AT I O N MainFirst Roadshow // Paris HUGO BOSS July

29 Online and physical retailing are becoming one MainFirst Roadshow // Paris HUGO BOSS July

30 Online business set to return to growth after disappointing start to the year 2017 Search engine optimization CRM Mobile Page load performance User experience Merchandising MainFirst Roadshow // Paris HUGO BOSS July

31 The Group s digital roadmap Enable the cultural transformation Set the foundations Takeover of website frontend management Insourcing of European online fulfilment hugoboss.com and app (re)launches Omnichannel pilots Improve performance Rollout of omnichannel services Commercial optimization of hugoboss.com and app Develop the model Digitization of existing business model Addition of new business models July 2017 MainFirst Roadshow // Paris HUGO BOSS July

32 I N N O VAT E T H E WAY W E O P E R AT E MainFirst Roadshow // Paris HUGO BOSS July

33 Agility is the basis of innovation Drive active change Foster entrepreneurial thinking Create cross-functional teams MainFirst Roadshow // Paris HUGO BOSS July

34 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 MainFirst Roadshow // Paris HUGO BOSS July

35 F I N A N C I A L A N D O P E R AT I O N A L O U T L O O K MainFirst Roadshow // Paris HUGO BOSS July

36 Important milestones on the return to profitable growth ahead HUGO Fashion Show BOSS Fashion Show Wholesale Sell in of Spring/Summer 2018 collection Stores June 2017 Until August 2017 Starting end of 2017 July 2017 MainFirst Roadshow // Paris HUGO BOSS July

37 Group sales to remain largely stable in 2017 Sales by region* Sales by channel* Europe Stable Retail Increase of up to mid single-digit percentage rate, comp store sales -3% to +3% Americas Slight decline Wholesale Decline at a low to mid single-digit percentage rate Asia/ Pacific Slight increase Licenses Solid growth * On a currency-adjusted basis MainFirst Roadshow // Paris HUGO BOSS July

38 Financial outlook expects stabilization of operational performance in 2017 Sales* Largely stable Gross margin EBITDA before special items Net income Capex Free cash flow Slight increase -3% to +3% Low double-digit percentage rate increase EUR 150 million to EUR 170 million Largely stable * On a currency-adjusted basis MainFirst Roadshow // Paris HUGO BOSS July

39 HUGO BOSS continues to be focused on profitable and sustainable growth Improved speed-tomarket and agility Refocusing of BOSS and HUGO Acceleration in Asia Future Growth Drivers Further enhancement of retail management Solid growth in established key markets Online and omnichannel Low- to mid-single-digit retail comp store sales growth needed to expand operating margin MainFirst Roadshow // Paris HUGO BOSS July

40 Disciplined cost management will continue to support profitability Key influencing factors on gross margin and major cost items, medium-term trend as a % sales OPEX Gross profit margin Retail costs Marketing & CX 1 G&A Channel mix Reduction of rebates Reduction of collection complexity Wage cost inflation Brand investments Growing share of online CX investments IT and digital Wage cost inflation Quality investments Easing rent pressures Growing share of online Increased effectiveness Reduction of organizational complexity Strict overhead cost management Mediumterm trend Group confident to maintain current gross margin level and limit future cost inflation 1 CX = Customer Experience MainFirst Roadshow // Paris HUGO BOSS July

41 2017 A year of stabilization and strategy implementation MainFirst Roadshow // Paris HUGO BOSS July

42 B A C K U P MainFirst Roadshow // Paris HUGO BOSS July

43 Sales by region and major markets Share of Group sales* Europe (incl. Middle East/Africa) 61% Germany: 17% Great Britain: 12% France: 6% Benelux: 5% Other: 21% Americas 22% U.S.: 16% Canada: 3% Central & South America: 2% Other: 1% Asia/Pacific 14% China: 8% Oceania: 2% Japan: 2% Other: 2% * As of 2016, +3% Licenses MainFirst Roadshow // Paris HUGO BOSS July

44 Sales by distribution channel 53% 49% 44% 41% 38% 35% Wholesale Retail 45% 49% 54% 57% 60% 62% Licenses 2% 2% 2% 2% 2% 3% MainFirst Roadshow // Paris HUGO BOSS July

45 Number of Group s own retail stores by region As of 31/03/2017 Freestanding stores Shop-in-Shops Outlets Total Europe Americas Asia/Pacific Total ,126 MainFirst Roadshow // Paris HUGO BOSS July

46 Retail comp stores sales Retail l-f-l sales development* (2) 2% 4% 3% 2% 6% 4% 4% 0% 3% 3% 6% 0% (1)% 2% (3)% (3)% (4) (6) (8) Q Q Q FY 2013 Q Q Q Q FY 2014 Q Q Q Q FY 2015 (6)% Q (8)% Q (6)% Q Q (6)% FY 2016 Q *FX-adjusted MainFirst Roadshow // Paris HUGO BOSS July

47 Dividend policy Dividend per share and payout ratio (in EUR) (in %**) % 1.45* 85% % 75% % % % % % 93% Dividend policy of paying out between 60% and 80% of consolidated net income reconfirmed * Excluding special dividend of 5.00 per share ** As a percentage of net income attributable to shareholders MainFirst Roadshow // Paris HUGO BOSS July

48 (Adjusted) financial leverage x x x 1.3x 1.2x 1.2x 1.3x 1.4x 1.5x Net debt / EBITDA 1.2 Net debt incl. operating leases / EBITDAR x x 0.2x 0.1x 0.1x 0.1x 0.2x Operating leases = Future committed operating lease obligations capitalized according to S&P methodology EBITDAR = EBITDA + minimum rents + contingent rents MainFirst Roadshow // Paris HUGO BOSS July

49 Sourcing and production structure* Americas: 2% Western Europe: 12% Own production: 20% Eastern Europe: 46% North Africa: 4% Asia: 36% Third party production: 80% *As of 2016, in value terms MainFirst Roadshow // Paris HUGO BOSS July

50 Multi-Year overview In EUR million Sales 2, , , , , ,058.8 Gross profit 1, , , , , ,252.0 EBITDA EBITDA before special items EBIT Net income Free cash flow Net debt Capex Depreciation/amortization Dividend 179.4*** Total assets 1, , , , , ,419.6 Shareholders equity Trade net working capital Non-current assets Gross profit margin in % Adjusted EBITDA margin in %* Total leverage** Equity ratio in % *EBITDA before special items/sales **Net financial liabilities/ebitda before special items ***Dividend proposal MainFirst Roadshow // Paris HUGO BOSS July

51 Analyst coverage The HUGO BOSS AG share is covered by the following financial analysts: Institution Analyst Aurel BGC David Da Maia Baader Bank Volker Bosse Bankhaus Lampe Peter Steiner Bank of America Merrill Lynch Sophie Park Barclays Julian Easthope Berenberg Bank Zuzanna Pusz Bryan Garnier Cédric Rossi Citigroup Thomas Chauvet Commerzbank Andreas Riemann Credit Suisse Guillaume Gauville Deutsche Bank Warwick Okines DZ Bank Herbert Sturm Equita Fabio Fazzari Equinet Mark Josefson Evercore ISI Omar Saad Exane BNP Paribas Luca Solca Goldman Sachs Alberto D Agnano Hamburger Sparkasse Christian Hamann Institution Hauck & Aufhäuser HSBC Intermonte Invest Securities J.P. Morgan Kepler Cheuvreux LBBW M.M. Warburg Macquarie MainFirst Mirabaud Securities Morgan Stanley Nord LB Oddo Seydler RBC Société Générale UBS Analyst Christian Salis Antoine Belge Daniele Alibrandi Peter Farren Melanie Flouquet Jürgen Kolb Thomas Hofmann Jörg Philipp Frey Andreas Inderst John Guy Alessandro Migliorini Louise Singlehurst Wolfgang Vasterling Martin Decot Piral Dadhania Thierry Cota Fred Speirs MainFirst Roadshow // Paris HUGO BOSS July

52 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 July 2017) MainFirst Roadshow // Paris HUGO BOSS July

53 Financial Calendar 2017 and Investor Relations contact Date Event August 2, 2017 HUGO BOSS Investor Day 2017 August 2, 2017 November 2, 2017 Publication of the First Half Year Report Publication of the Third Quarter Results Investor Relations Contact Dennis Weber, CFA Head of Investor Relations Phone: +49 (0) Frank Böhme Investor Relations Manager Phone: +49 (0) MainFirst Roadshow // Paris HUGO BOSS July

54 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. MainFirst Roadshow // Paris HUGO BOSS July

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