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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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 3 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 4 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 5 / 38
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 Investor Day 2012 HUGO BOSS © Dec. 6, 2012 6 / 38
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 Investor Day 2012 HUGO BOSS © Dec. 6, 2012 7 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 8 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 9 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 10 / 38
Successful execution of medium-term strategy
STRIVING FOR
OPERATIONAL
EXCELLENCE
STRENGTHENING
OUR
BRANDS
EXPLOITING
GLOBAL
GROWTH
OPPORTUNITIES
MAXIMIZING
CONSUMER FOCUS
TO DRIVE RETAIL
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 11 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 12 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 13 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 14 / 38
Faster and leaner development process enables market feedback loop
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 15 / 38
Brand module architecture supports more flexible merchandise offering
“S” Module
“XL” Module
“M” Module
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 16 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 17 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 18 / 38
Systematic retail management ensures highest customer service standards
Customer ServiceTraining
Mystery Shopping
Store Operations
Manual
Incentives
sets standards
measures and monitors
improves motivate
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 19 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 20 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 21 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 22 / 38
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):
* incl. Middle East / Africa
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 23 / 38
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)
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 24 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 25 / 38
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%
�
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 26 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 27 / 38
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
* incl. Middle East / Africa
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 28 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 29 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 30 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 31 / 38
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 %
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 32 / 38
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 Investor Day 2012 HUGO BOSS © Dec. 6, 2012 33 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 34 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 35 / 38
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”)
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 36 / 38
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
HUGO BOSS Investor Day 2012 HUGO BOSS © Dec. 6, 2012 37 / 38
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.