Investor Meeting Presentation

Transcription

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2 Investor Meeting Presentation Q Investor Meeting Presentation HUGO BOSS Q

3 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 Q

4 HUGO BOSS records robust sales growth in the second quarter Group sales (in EUR million) +6% fx-adjusted +3% Q Q Investor Meeting Presentation HUGO BOSS Q

5 Strong momentum in own retail continues Comp store sales growth (fx-adjusted) Retail sales (in EUR million) +5% +5% fx-adjusted % (3) (3) (8) (6) Q Q Q Q Q Q Q Q Q Q Q Investor Meeting Presentation HUGO BOSS Q

6 Online business continues to grow at a strong double-digit rate Investor Meeting Presentation HUGO BOSS Q

7 New BOSS store concept improves in-store experience BOSS Store Munich, Germany Investor Meeting Presentation HUGO BOSS Q

8 First HUGO store with new store concept opened HUGO Store Amsterdam, Netherlands Investor Meeting Presentation HUGO BOSS Q

9 Wholesale revenues supported by strong replenishment business and delivery shifts Double-digit sales increases in Europe supported by strong replenishment business and delivery shifts Wholesale sales (in EUR million) +10% fx-adjusted Mid-single digit sales declines in the Americas reflect challenging market environment Online marketplaces continue to outperform physical retailing % 194 Q Q Investor Meeting Presentation HUGO BOSS Q

10 License business negatively impacted by timing effects License sales (in EUR million) (6)% fx-adjusted 18 (6)% 17 Q Q Investor Meeting Presentation HUGO BOSS Q

11 Europe and Asia/Pacific drive Group sales growth Europe Sales* +9% fx-adjusted Americas Sales* 0% fx-adjusted Asia/Pacific Sales* +7% fx-adjusted +7% (8)% % Q Q Sales increase primarily driven by UK, Benelux and France Q Q U.S. comp store sales growth in the low single digits Q Q Business in all major markets including China, Hong Kong and Macau continues to grow strongly *in EUR million Investor Meeting Presentation HUGO BOSS Q

12 BOSS and HUGO benefit from trend towards casualization Collection upgrade drives growth at both BOSS Casualwear and Businesswear Strategic distribution changes continue to impact HUGO sales Menswear sales up 7%; womenswear sales down 2% due to reduction of retail selling space +8% fx-adjusted (4)% fx-adjusted +4% (6)% Q2 2017* Q2 2018* Q2 2017* Q2 2018* *in EUR million Investor Meeting Presentation HUGO BOSS Q

13 Gross margin negatively impacted by channel mix effect Gross margin EBIT 66.9 % 74 EUR million (80)bp (8)% Selling & distribution expenses 289 EUR million +1% EBITDA (before special items) 106 EUR million (1)% Administration expenses Net income 73 EUR million +7% 54 EUR million (7)% Investor Meeting Presentation HUGO BOSS Q

14 Elevated inventory levels weigh on trade net working capital Inventory levels expected to normalize during the remainder of 2018 Inventories (in EUR million) +13% +16% fx-adjusted Average trade net working capital as percentage of sales (in %) (40) bp Trade net working capital up 12% on a currency-adjusted basis Average trade net working capital to sales ratio below prior-year level June 30, 2017 June 30, 2018 LTM 2017 LTM 2018 Investor Meeting Presentation HUGO BOSS Q

15 Working capital build-up temporarily affects free cash flow development Decline in capex due to phasing effects and fewer store openings Working capital increase weighs on free cash flow generation Free cash flow development to improve in the second half of 2018 Capital expenditure (in EUR million) (10)% 132 Free cash flow (in EUR million) (76)% Jan. June 30, 2017 Jan. June 30, 2018 Jan. June 2017 Jan. June 2018 Investor Meeting Presentation HUGO BOSS Q

16 Half-year sales and earnings in line with full-year guidance Group sales* (H1 2018) Sales by region* (H1 2018) 1,303 EUR million +5% +1% reported Europe +6% +4% reported EBITDA (before special items) 205 EUR million 0% Americas +3% (7)% reported Net income 103 EUR million (2)% Asia/Pacific +9% +2% reported *On a currency-adjusted basis. Investor Meeting Presentation HUGO BOSS Q

17 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 Q

18 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 Investor Meeting Presentation HUGO BOSS Q

19 Key principles of financial management reconfirmed Sales productivity growth Cost-efficiency improvements Maximization of free cash flow Continuation of dividend policy Investor Meeting Presentation HUGO BOSS Q

20 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 Q

21 G R O U P S T R A T E G Y Investor Meeting Presentation HUGO BOSS Q

22 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 Q

23 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 Q

24 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 Q

25 BOSS and HUGO customers have different attitudes towards fashion Status-oriented, traditional, rational ATTITUDE Open-minded, individual, spontaneous Classic, modern, sophisticated STYLE Fashion-forward, contemporary, progressive Highest quality, personal assistance EXPECTS 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 Q

26 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. Investor Meeting Presentation HUGO BOSS Q

27 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 Investor Meeting Presentation HUGO BOSS Q

28 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 Investor Meeting Presentation HUGO BOSS Q

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 Investor Meeting Presentation HUGO BOSS Q

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 Investor Meeting Presentation HUGO BOSS Q

31 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 Q

32 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 Q

33 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 Q

34 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 Q

35 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 Q

36 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 Q

37 Product and collection development Sourcing and production Distribution and logistics HUGO will launch first fully digitally designed capsule /////////// DIGITAL [ e ] VOLUTION ///////////////////////////////////// Investor Meeting Presentation HUGO BOSS Q

38 Product and collection development Sourcing and production Distribution and logistics 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 Investor Meeting Presentation HUGO BOSS Q

39 Product and collection development Sourcing and production Distribution and logistics 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 Investor Meeting Presentation HUGO BOSS Q

40 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 Q

41 HUGO contributes to the transformation of the Group s culture Agile management Investor Meeting Presentation HUGO BOSS Q

42 HUGO digital showroom rolled out in more European markets Investor Meeting Presentation HUGO BOSS Q

43 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 Q

44 Backup Investor Meeting Presentation HUGO BOSS Q

45 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 Q

46 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 Q

47 Number of Group s own retail stores by region As of 30/06/2018 Freestanding stores 191 Shop-in-Shops 314 Europe 569 Outlets 64 Freestanding stores 88 Americas 230 Asia/Pacific 291 Shop-in-Shops Outlets Group Freestanding stores 156 1,090 Shop-in-Shops 88 Outlets 47 Investor Meeting Presentation HUGO BOSS Q

48 Retail comp stores sales Retail l-f-l sales development* +2% (6)% +3% % 6% 3% 5% 7% 7% 5% 2 0 0% (2) (4) (6) (1)% (6)% (8)% (6)% (3)% (3)% (8) Q Q Q Q Q Q Q Q Q Q Q Q Q Q *FX-adjusted Investor Meeting Presentation HUGO BOSS Q

49 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 Investor Meeting Presentation HUGO BOSS Q

50 (Adjusted) financial leverage x x x 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 Q

51 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 Q

52 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. Investor Meeting Presentation HUGO BOSS Q

53 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 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 Elena Mariani Leopold Authie Piral Dadhania Thierry Cota Fred Speirs Investor Meeting Presentation HUGO BOSS Q

54 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 2018) Investor Meeting Presentation HUGO BOSS Q

55 Financial Calendar and Investor Relations contact Date Event November 6, 2018 Third Quarter Results 2018 November 15, 2018 Investor Day in London March 7, 2019 Full Year Results 2018 May 2, 2019 First Quarter Results 2019 May 16, 2019 Annual Shareholders Meeting 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 Q

56 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 Q

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