improved retail expertise drives execution of medium-term ...€¦ · 6/12/2012 · hugo boss...

HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 2 / 38

HUGO BOSS Investor Day 2012Group Financial Performance and Strategy

Mark Langer, Chief Financial OfficerDecember 6, 2012


Improved retail expertise drives execution of medium-term strategy

Free cash flow maximization is core of Group financial management

HUGO BOSS grows stronger than industry and overall economy

Agenda

Focus on further improvement of trading liquidity





Agenda



Continued strong top and bottom line momentum

750

469350

267272275

+19%

2015e

3,000

�2011

2,059

2010

1,729

2009

+34%

1,562

2008

1,686

2007

1,632

EBITDA before special items

SalesSales and EBITDA before special items(in EUR million)


HUGO BOSS grows stronger than overall industry (I//II)

-8

-4

0

4

8

12

16

20

2015e�2012e

10%

2011

11%

19%

2010

13%

11%

2009

-8%

-7%

2008

-2%

3%

2007

9%

2006

8%

15%

2005

8%

12%

2004

6%

11%

2003

-4%

-4%

2002

0%

0%

7%

Annual growth rates HUGO BOSS vs. luxury goods market

Source: Fondazione Altagamma / Bain & Company *CAGR Luxury Goods Market

Luxury goods market

HUGO BOSS

CAGR* 2012-2015

+4-6%


HUGO BOSS grows stronger than overall industry (II//II)

-10

-5

0

5

10

15

20

2013e

6%

2012e

10%

2011

8%

19%

2010

12%

11%

2009

-10%

-7%

HUGO BOSS

Luxury apparel market

Annual growth rates HUGO BOSS vs. luxury apparel market

Source: Fondazione Altagamma / Bain & Company


Economic environment has deteriorated significantly with only moderate recovery

expected for 2013

10.0

8.0

6.0

4.0

2.0

0.0

-2.02013e

8.1%

2.0%

1.0%

0.1%

2012e

7.7%

2.2%

0.9%

-0.5%

2011

9.3%

1.8%

3.0%

1.4%

2010

10.4%

2.4%

4.2%

2.0%

China

U.S.

Germany

EurozoneAnnual real GDP growth rates

Source: Bloomberg





Agenda



Successful execution of medium-term strategy

STRIVING FOR

OPERATIONAL

EXCELLENCE

STRENGTHENING

OUR

BRANDS

EXPLOITING

GLOBAL

GROWTH

OPPORTUNITIES

MAXIMIZING

CONSUMER FOCUS

TO DRIVE RETAIL


Own retail key contributor to Group performance

0

10

20

30

40

50

0

5

10

15

20

25

30

Q3

2012

15%

2%

Q2

2012

16%

4%

Q1

2012

27%

11%

FY

2011

35%

12%

Q4

2011

28%

10%

Q3

2011

30%

13%

Q2

2011

47%

16%

Q1

2011

38%

11%

FY

2010

30%

8%

Q4

2010

36%

8%

Q3

2010

36%

12%

Q2

2010

22%

6%

Q1

2010

24%

5%

Retail

Retail l-f-lSales growth retail and retail l-f-l*

*Both fx-adjusted


Introduction of four season cycle has made HUGO BOSS a true retailer (I/II)

December January February March April

June July August September October

Spring 2012 Summer 2012

Fall 2012

Winter 2012


Introduction of four season cycle has made HUGO BOSS a true retailer (II/II)

Winter

12%8%

Fall

40%

46%

Summer

11%7%

Spring

37%39%

2012

2011Seasonal split of wholesale pre-order business

■ Fresher merchandise offering

■ Better adjustment to seasonal differences in

consumer demand

■ Immediate relevance at the point-of-sale

■ Working capital advantages

Development of collection complexity

-7%

2012e2011


Faster and leaner development process enables market feedback loop


Brand module architecture supports more flexible merchandise offering

“S” Module

“XL” Module

“M” Module


Core range has demonstrated superior performance

0

10

20

30

40

50

60

70

0

5

10

15

20

25

30

35

40

Fall 2012

70%

33%

Spring 2012

67%

28%

Fall 2011

45%

15%

Core range style/color(s/c)

as % of total collection s/c

Value share of core rangeShare of core range Units sold per style (Fall 2012)

x 4.7

Core rangeNon core range


Heat mapping technology newest in-store design innovation

Purpose Benefits

Enhances understanding of consumer behavior to drive operational performance

■ Generates traffic map

showing the actual

footpath of consumers

in the store over the

course of the day

■ Overlay with

transactional data

offers insights into

correlation between

traffic and sales per

product category

■ Optimizes product

and campaign

positioning

■ Supports optimization

of space utilization

and staff allocation

■ Assesses visual

merchandising

effectiveness

Window Window

Suit wall Shirt wallBodywear

Shoes / A

ccess

Tie table

BeltKnitwearOuterwear

Knitwear

Entrance


Systematic retail management ensures highest customer service standards

Customer ServiceTraining

Mystery Shopping

Store Operations

Manual

Incentives

sets standards

measures and monitors

improves motivate


Retail training activities stepped up significantly

■ Roll-out of standardized multi-language

online training solution

■ Focus on systematic strengthening of product

competence, selling skills, and store

management capabilities

■ Supplemented by targeted face-to-face

training sessions

YTD 2012

29,500

2011

22,100

2010

15,800

2009

14,100

Number of online training sessions completed


IT and system upgrades improve retail performance management

■ Retail operations almost entirely on SAP

■ Implementation of global retail merchandise

planning solution under way

■ In-store systems provide basis for systematic

performance measurement


Enhanced logistics infrastructure caters to growing retail business

■ Flat-packed goods distribution center Europe

Filderstadt, Germany

� New construction

� Start of operation: 2014

■ Regional distribution centers Asia

Shanghai and Hong Kong

� Relocation and consolidation

� Operational since 2011

■ Distribution center Mexico

Mexico City, Mexico

� New setup


Store base more than doubled since 2009

* incl. Middle East / Africa

Number of own retail stores as of September 30, 2012

(December 31, 2009: 364):


TOTAL

Dec. 2009: 364

Sep. 2012: 791

= +427EUROPE*

Dec. 2009: 189

Sep. 2012: 428

= +239

ASIA/PACIFIC

Dec. 2009: 100

Sep. 2012: 221

= +121

AMERICAS

Dec. 2009: 75

Sep. 2012: 142

= +67


Brand penetration analysis points to significant retail expansion potential

436493

566567593607635639643660667

863917

Belgrade

Oslo

Amsterdam

Vienna

Tel Aviv

Stockholm

Stuttgart

Cologne

Copenhagen

Hamburg

Lisbon

Ljubiljana

Porto

Helsinki

1,024

Hong Kong

1,055

Munich

1,148

Salzburg

1,197

Dusseldorf

1,256

Frankfurt

1,787

Zurich

2,731

Spent for HUGO BOSS products per EUR million GDP(in EUR)


Retail sophistication opens new doors in wholesale partnerships

Numbers of

Accounts

Concession business model

Levers for

productivity

increases

■ Optimized merchandise assortment

■ Upgraded brand presentation

■ Improved replenishment capabilities

■ Dedicated staff

Rationale■ Grown retail sophistication enables HUGO BOSS to

manage brand space independent from retail partners

Benefits

■ Better brand presentation

■ Sales productivity improvements

■ Positive top and bottom line contribution


Share of retail sales set to grow further

Wholesale

Retail

Royalties

Sales by distribution channel

2005

3%

75%

22%

2010

3%

57%

40%

2011

2%

53%

45%

2015e

2%

43%

55%

�


Wholesale remains an important distribution channel

■ 40+ year business relationships

■ Reliable sell-through performance

■ Grown retail competence

■ Industry-leading delivery and service levels

HUGO BOSS is best positioned for further growthD

Ddespite structural headwinds

■ Limited space expansion

■ Mono-brand nature of fast growing emerging markets

■ Ongoing consolidation

■ Franchise takeovers

+7%

20112010

Average net sales per wholesale POS

45% // Retail

53% // Wholesale

2% // Royalties

38% // Multibrand

15% // Franchise

Sales by distribution channel 2011


Significant growth opportunities in all three regions

Europe*

Royalties

Americas

Sales by region

2005

3%

71%

18%

8%

2010

3%

62%

22%

13%

2011

2%

61%

22%

15%

2015e

2%

54%

23%

21%

�

Asia/Pacific






Agenda



Continued focus on profitable growth

2011 2015e CAGR

Sales 2,059 3,000 10%

Gross profit 1,265

in % of sales 61.4

Selling and distribution

expenses

(682.1)

Administration costs and

other operating

income/expenses

(188.6)

EBIT 394

in % of sales 19.1

EBITDA before special

items

469 750 12.5%

in % of sales 22.8 25.0

■ Space expansion and comp store sales growth

■ Growth across all regions

■ Above-average increases in underpenetrated

categories

■ Distribution channel mix to benefit

gross margin

■ Comp store sales growth to leverage

retail cost base

■ Marketing expenditures between 6%

and 7% of Group sales

■ Below-average growth of all other

operating expenses


Working capital management key focus to maximize free cash flow

Average trade net working capital as a percentage of sales at year-end(in %)

19.9

20112010

19.2

2009

24.6

2008

29.2

2007

28.2


Dividend strategy confirmed

0

10

20

30

40

50

60

70

80

90

2.50

2.00

1.50

1.00

0.50

0.00

2011

2.88

70%

2010

2.02

75%

2009

0.96

64%

2008

1.37

85%3.00

1.45

65%

2006

1.19

64%

2005

1.00

65%

2004

0.84

67%

2003

0.78

67%

2002

0.75

71%

2007

Dividend* and payout ratio**

* Excluding special dividend // ** As a percentage of net profit attributable to the shareholders of the parent company

Dividend policy stipulates distribution of 60% to 80% of consolidated net profit

Payout ratio

Dividend

in EUR in %


Strong cash flow generation to support further debt reduction

Free cash flow(in EUR million)

Net debt(in EUR million)

149

201

379

583

174

20112010200920082007

193

246

300

4833

20112010200920082007


HUGO BOSS on track for achievement of 2015 targets

■ 2012 another step towards achievement of medium-term

targets

■ Transformation from wholesale-minded to consumer-

focused company well under way

■ Good progress in all four pillars

of medium-term growth strategy





Agenda



Share class conversion offers advantages to all shareholders

Conversion of

preferred and

ordinary shares� 35,860,000

Red & Black Free Float*

Ordinary Shares

HUGO BOSS

70,400,000

65.56%

Red & Black Free Float* Red & Black Free Float*

Ordinary Shares Preferred Shares

HUGO BOSS

42.25% 57.75%11.98%

34,540,000

* Includes 1,383,833 treasury shares (528,555 ordinary shares and 855,278 preferred shares)

34.44%88.02%

�offers short- und

long-term benefits

■ Simplified share structure

■ Positive liquidity effect

■ Higher index weighting

■ Improved Corporate Governance standards

(“one share - one vote”)


Launch of Level I ADR program planned for early 2013

Definition

■ Level I ADRs are negotiable securities issued by a

depositary bank that represent an issuer’s publicly traded

equity. These securities are denominated in US dollars and

trade on the OTC market.

Benefits for

US investors

■ Potential reduction of transaction and custody costs

■ Enables foreign investment in home market currency

■ Provides full shareholder benefits including voting rights

Timeline ■ Launch planned for early 2013


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.

improved retail expertise drives execution of medium-term ...€¦ · 6/12/2012 · hugo boss...

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