Third Quarter Results 2017 German Corporate Conference 2018 HUGO BOSS January 2018 3
HUGO BOSS records solid sales increase in the third quarter Improved sales momentum in own retail Healthy increases in Europe and China Group Sales (in EUR million) +1 % +3 % fx-adjusted US retail business returns to comp store sales growth 703 711 Q3 2016 Q3 2017 German Corporate Conference 2018 HUGO BOSS January 2018 4
Pace of growth in own retail accelerates Retail Sales* +3 % +6 % fx-adjusted Wholesale Sales* (3) % (1) % fx-adjusted License Sales* +24 % +24 % fx-adjusted 398 410 289 281 16 20 Q3 2016 Q3 2017 5% comp store sales growth driven by all regions Q3 2016 Q3 2017 Decline in the Americas partly offset by growth in Europe Q3 2016 Q3 2017 Strong fragrance business boosts license sales *in EUR million German Corporate Conference 2018 HUGO BOSS January 2018 6
Sales and earnings increase in the first nine months Group Sales (Jan. - Sep. 2017) Sales by Region (Jan. - Sep. 2017) 1.998 Mio. EUR +2% +2% fx-adjusted Europe +2% +3% fx-adjusted EBITDA (before special items) 348 Mio. EUR +1% Americas (2)% (3)% fx-adjusted Net income 186 Mio. EUR +43% Asia/Pacific +4% +5% fx-adjusted German Corporate Conference 2018 HUGO BOSS January 2018 11
Group Strategy Update German Corporate Conference 2018 HUGO BOSS January 2018 14
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 German Corporate Conference 2018 HUGO BOSS January 2018 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 German Corporate Conference 2018 HUGO BOSS January 2018 16
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 German Corporate Conference 2018 HUGO BOSS January 2018 17
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% 59% CAGR +3% 49% 41% 2010 2016 Casualwear Formalwear German Corporate Conference 2018 HUGO BOSS January 2018 20
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% 700-799 31% 25% 600-699 43% 43% 595 0% Spring/Summer 2017 collection 9% Spring/Summer 2018 collection German Corporate Conference 2018 HUGO BOSS January 2018 21
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 DRESSED IMPECCABLY FOR EVERY OCCASION German Corporate Conference 2018 HUGO BOSS January 2018 22
HUGO: Refined brand positioning receives strong feedback German Corporate Conference 2018 HUGO BOSS January 2018 26
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 German Corporate Conference 2018 HUGO BOSS January 2018 29
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 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 2016 2017e 2018e 2019e 2020e 2021e German Corporate Conference 2018 HUGO BOSS January 2018 30
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 German Corporate Conference 2018 HUGO BOSS January 2018 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 +90% of European retail business omnichannel-enabled German Corporate Conference 2018 HUGO BOSS January 2018 32
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 German Corporate Conference 2018 HUGO BOSS January 2018 35
Digital transformation comprises the entire value chain Product & collection development Sourcing and production Distribution and logistics Own retail and wholesale distribution German Corporate Conference 2018 HUGO BOSS January 2018 36
Product and collection development Sourcing and production Distribution and logistics Sales New store concepts create strong link between physical and digital retailing German Corporate Conference 2018 HUGO BOSS January 2018 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 German Corporate Conference 2018 HUGO BOSS January 2018 42
Digital showroom development demonstrates adoption of new ways of working Strict focus on customer value Delegation of decision making power Use of Scrum methodology German Corporate Conference 2018 HUGO BOSS January 2018 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 German Corporate Conference 2018 HUGO BOSS January 2018 44
New Chief Financial Officer Yves Müller took office in December 2017 Responsibilities / / Controlling, Finance, Central Services, Investor Relations and IT 2006 2017: CFO at Tchibo 1999 2006: Head of group accounting and IT at Tchibo 1994 1999: Auditor at Arthur Andersen German Corporate Conference 2018 HUGO BOSS January 2018 46
Operating profit to remain on prior year level in 2017 Sales* Gross profit margin Low single-digit percentage rate increase Slight increase EBITDA before special items Consolidated net income Capital expenditure Free cash flow Largely stable Low double-digit percentage rate increase EUR 130 million to EUR 150 million Increase to around EUR 250 million Specification *on a currency-adjusted basis German Corporate Conference 2018 HUGO BOSS January 2018 50
Preliminary results reported yesterday underpin strong sales momentum Sales growth by region, y-o-y (in %, fx-adjusted) Q4 2017 FY 2017 Q4 retail comp store sales up 7% on prior year, online sales up 42% Europe* 1 2 U.S. sales grow at double-digit rate in Q4, Great Britain and China also continue to grow strongly Full year 2017 operating profit (EBITDA before special items) expected to be on previous year s level (2016: EUR 493 million) Americas Asia/Pacific Group 1 3 5 6 10 11 *Incl. Middle East and Africa German Corporate Conference 2018 HUGO BOSS January 2018
Strategy execution will drive profitable and sustainable growth Profitable and sustainable growth Stabilization 2017 Sales up 3% based on preliminary results, operating profit stable Acceleration 2018 Grow sales and operating profit 2019+ Grow sales stronger than market, increase operating profit stronger than sales German Corporate Conference 2018 HUGO BOSS January 2018 51
HUGO BOSS will further strengthen its position in the premium apparel industry BOSS and HUGO will outgrow their respective market segments Refined strategy will elevate brand desirability and customer experience Agility will become key feature of the operating model German Corporate Conference 2018 HUGO BOSS January 2018 52