INVESTOR MEETING PRESENTATION March – May 2 INVESTOR MEETING PRESENTATION
Company Overview
THECOMPANY
KEYPRIORITIES SUSTAINABILITY
One of the leading companies in Create Sustainability the premium apparel segment brand heat & product desire as integral part of operations
Two iconic brands Exploit Clearly defined BOSS & HUGO global sales opportunities goals & KPI‘s
Group sales of Drive Top ranked EUR 2 billion in 2020 operational excellence in DJSI World / Europe 3 INVESTOR MEETING PRESENTATION
AGENDA
1 About HUGO BOSS
2 FY/2020 Results
3 Strategic Priorities
4 Sustainability 4 INVESTOR MEETING PRESENTATION
HUGO BOSS A GLOBAL FASHION & LIFESTYLE COMPANY 5 INVESTOR MEETING PRESENTATION
OUR BRANDS 6 INVESTOR MEETING PRESENTATION
BOSS DRESSES THE DRIVE BRAND VALUES Status-oriented customer in the upper MASCULINITY/FEMININITY premium segment who wants to dress in a SEXINESS modern, sophisticated way. 85% From classic business outfits to a wide range SUCCESS of modern and stylish leisure looks. STYLE of Group sales PRECISION 7 INVESTOR MEETING PRESENTATION
HUGO IS THE PLATFORM OF BRAND VALUES SELF-EXPRESSION Expressive customer in the premium segment. GLOBALLY ENGAGED Casual- and businesswear collections in the 15% contemporary fashion segment characterized ALWAYS CURIOUS by progressive designs. of Group sales AUTHENTICALLY EXPRESSIVE 8 INVESTOR MEETING PRESENTATION
Global sales distribution across 127 countries
SHARE OF GROUP SALES*
EUROPE AMERICAS ASIA/PACIFIC (INCL. MIDDLE EAST/AFRICA)
63% 16% 18%
GERMANY: 14% U.S.: 11% CHINA: 11%
GREAT BRITAIN: 13% CANADA: 2% OCEANIA: 2%
FRANCE: 6% CENTRAL & SOUTH JAPAN: 2% AMERICA: 3% BENELUX: 5% OTHER: 3%
OTHER: 25%
* AS OF 2020; 3% LICENSES 9 INVESTOR MEETING PRESENTATION
Distribution via own retail and wholesale channel
3% LICENSES 11% ONLINE RETAIL 66% RETAIL 31% WHOLESALE 55% B&M RETAIL FY2020
Own online sales account for 11% of Group sales, up from 5% in 2019 10 INVESTOR MEETING PRESENTATION
Well diversified store portfolio across regions*
Freestanding stores 212
Shop-in-Shops 302
Outlets 75 Europe 589 Freestanding stores 92
Americas Shop-in-Shops 105 251 Asia/Pacific Outlets 54 317
Freestanding stores 141 Group 1,157 Shop-in-Shops 105 Outlets 71
GROUP 445 512 200 Freestanding stores Shop-in-Shops Outlets *AS OF 30/12/2020 11 INVESTOR MEETING PRESENTATION
Sourcing and production focused on Europe and Asia*
44% ASIA 6% NORTH AFRICA 12% WESTERN EUROPE 36% EASTERN EUROPE 01% AMERICAS
17% OWN PRODUCTION
83% THIRD PARTY PRODUCTION
* NUMBERS AS OF 2020, IN VALUE TERMS 12 INVESTOR MEETING PRESENTATION
AGENDA
1 About HUGO BOSS
2 FY/2020 Results
3 Strategic Priorities
4 Sustainability 13 INVESTOR MEETING PRESENTATION
Key priorities while managing the pandemic
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020
MANAGING THE PANDEMIC
Executing measures to maintain financial stability and flexibility
Gradual recovery of business
Execution of strategic initiatives 14 INVESTOR MEETING PRESENTATION
Successful execution of comprehensive measures to protect financial stability
Strict cost Postponement management of investments ~ EUR 200 million* ~ EUR 70 million
• Significant payroll as well as rental savings achieved • Postponement of store openings and renovations • Lower marketing spend due to postponement of events • Non-essential IT investments halted • Elimination of non-business-critical operating expenses
Protection of Retention of inventory position net profit ~ EUR 300 million ~ EUR 190 million
• Significant cutback in merchandise inflow • Suspension of the dividend payment except for the • Cautious approach with regard to never-out-of-stock legal minimum dividend business • Retention of net profit strengthens financial • Own production adjusted to lower demand flexibility
* VS. BUDGET. 15 INVESTOR MEETING PRESENTATION
Strong free cash flow generation in 2020
FY 2020 Successful execution of comprehensive measures safeguards free cash flow
EUR Revolving syndicated loan of EUR 633 million only utilized in the amount of EUR 105 million
Additional credit commitments totaling 164 EUR 275 million not drawn yet MILLION Net financial debt only slightly above the prior-year level 16 INVESTOR MEETING PRESENTATION
~20% of global store network closed on average in fiscal year 2020
100%
75%
50% STORE OPENING RATE*
25%
Q1 2020 Q2 2020 Q3 2020 Q4 2020 0% ~85% ~50% ~95% ~85% * NUMBER OF OWN RETAIL POINTS OF SALE NOT AFFECTED BY TEMPORARY CLOSINGS DIVIDED BY TOTAL NUMBER OF OWN RETAIL POINTS OF SALE 17 INVESTOR MEETING PRESENTATION
RETAIL
(30)%*
Temporary store closures due to lockdowns weigh on own retail sales, in particular in the second and fourth quarter
Lower deliveries to wholesales partners reflect cautious order behavior in light of the pandemic
(34)%* WHOLESALE
Negative implications of the pandemic weigh on brick-and-mortar business
* CURRENCY-ADJUSTED 18 INVESTOR MEETING PRESENTATION
* Own online sales of EUR 221 million + % achieved in 2020 49 Share of own online business more than doubles to 11% of Group sales
Successful expansion of hugoboss.com to 32 additional markets
Third consecutive year with strong double-digit online sales growth
* CURRENCY-ADJUSTED 19 INVESTOR MEETING PRESENTATION
EUROPE SALES **
Major markets, including the UK, Germany, and ( )%* France with low to mid-double-digit sales declines 31
Markets in southern Europe particularly hit by lower tourist flows in light of international travel restrictions
On average, around 25% of own stores temporarily closed in 2020
Renewed lockdowns in Europe weigh on sales towards year end * CURRENCY-ADJUSTED **INCLUDING MIDDLE EAST AND AFRICA 20 INVESTOR MEETING PRESENTATION
AMERICAS SALES
Business in the U.S. and Canada severely impacted ( )%* by lockdown-related store closures and lower tourist 42 flows
Sequential business recovery in the U.S. continues in Q4, supported by robust local demand
Latin America returns to growth in the fourth quarter
Gradual business recovery in the Americas continues
* CURRENCY-ADJUSTED 21 INVESTOR MEETING PRESENTATION
ASIA/PACIFIC SALES
Mainland China continues its double-digit growth ( )%* trajectory in Q4 with sales up 24% 20
Markets such as Australia and Japan record sequential improvements in the fourth quarter
Lower tourist flows continue to negatively impact business in Hong Kong and Macao
Recovery in Asia/Pacific driven by double-digit sales growth in mainland China
* CURRENCY-ADJUSTED 22 INVESTOR MEETING PRESENTATION
Casualwear benefits from ongoing trend towards casualization
(32)% HUGO
BOSS (27)%
* CURRENCY-ADJUSTED 23 INVESTOR MEETING PRESENTATION
Execution of comprehensive cost-saving measures limit EBIT decline in 2020
Group sales Gross margin Operating expenses** EBIT ** Net income **
EUR EUR EUR EUR 1,946 61.0 1,313 (126) (131)
MILLION % MILLION MILLION MILLION
(31)%* (400) bp (14)% <(100)% <(100)%
YOY YOY YOY YOY YOY
* CURRENCY-ADJUSTED ** EXCLUDING NON-CASH IMPAIRMENT CHARGES IN THE AMOUNT OF EUR 110 MILLION 24 INVESTOR MEETING PRESENTATION
AGENDA
1 About HUGO BOSS
2 FY/2020 Results
3 Strategic Priorities
4 Sustainability 25 INVESTOR MEETING PRESENTATION
BE THE MOST DESIRABLE PREMIUM VISION FASHION & LIFESTYLE BRAND 26 INVESTOR MEETING PRESENTATION
Our strategic priorities for future growth
CREATE E X P L O I T D R I V E
BRAND HEAT & GLOBAL SALES OPERATIONAL PRODUCT DESIRE OPPORTUNITIES EXCELLENCE 27 INVESTOR MEETING PRESENTATION
EMOTIONALIZE THE BRANDS Emotionalize the brands and deliver inspiring storytelling
DOMINATE CLOTHING Leverage strengths in clothing segment CREATE to increase market share PUSH BRAND HEAT & CASUALIZATION Leverage trend towards casualization and PRODUCT DESIRE exploit opportunities 28 INVESTOR MEETING PRESENTATION
Marketing initiatives to drive brand desirability
EVENTS PERSONALITIES COLLABORATIONS 29 INVESTOR MEETING PRESENTATION
Community engagement on social media further accelerates
AVERAGE NUMBER OF INSTAGRAM LIKES PER POST FOLLOWERS
MORE THAN GROW
double2x doubledouble-digit-dgi
2020 VS. 2019 2020 VS. 2019 30 INVESTOR MEETING PRESENTATION
Serving our customers across all wearing occasions 31 INVESTOR MEETING PRESENTATION
New interpretation of formalwear with strong focus on casual tailoring
BROAD BOMBER CASUAL SUIT TAILORING 32 INVESTOR MEETING PRESENTATION
Chris Hemsworth is the global face of BOSS 33 INVESTOR MEETING PRESENTATION
BOSS x AJBXNG gains further momentum
FATHER‘S DAY CAMPAIGN 34 INVESTOR MEETING PRESENTATION
Successful launch of exclusive BOSS x NBA capsule 35 INVESTOR MEETING PRESENTATION
CREATING A BUZZ WITH THE LAUNCH OF 36 INVESTOR MEETING PRESENTATION
HUGO x Liam Payne supports “Cotton made in Africa” 37 INVESTOR MEETING PRESENTATION
LEVERAGE ONLINE & OC EXPERIENCE
#onlinefirst: Aggressively invest in online growth and omnichannel services
EXPLOIT EXPLOIT GROWTH POTENTIAL IN CHINA
China first: Elevate product offering, increase GLOBAL SALES brand hype, push retail productivity, increase OPPORTUNITIES space and grow online 38 INVESTOR MEETING PRESENTATION
Exploiting the full potential of mainland China
Momentum continues into 2021, supported by strong activation around Chinese New Year
Local brand ambassadors drive awareness among younger customers
Leveraging full potential through moderate space expansion and strong focus on online
GROUP SALES CAGR CONTROLLED “TAILORED” 2016-2020 DISTRIBUTION SHARE
10% +8% >95% >30% BASED on FY SALES ML CHINA OWN RETAIL OF 2020 SHARE PRODUCT MIX 39 INVESTOR MEETING PRESENTATION
Leveraging sales opportunities in mainland China
Robust retail footprint Concession business on Tmall and JD 1 across tier 1 and tier 2 cities 1 with strong double-digit growth
2 White spot opportunities, 2 Tapping in to additional e-com opportunities especially in tier 2 and tier 3 cities to support momentum
Upsizing opportunities Implementation of WeChat Work 3 in prime locations 3 to exploit social commerce 40 INVESTOR MEETING PRESENTATION
Well on track to achieve 2022 online sales target
Online sales to grow to more than EUR 400 million by 2022 x4 Online sales (in EUR million)
>400 EUR 300 million mark to be crossed before year-end 2021
221 151 110 CAGR of >40% achieved 76 79 between 2018 and 2020
2016 2017 2018 2019 2020 2022e 41 INVESTOR MEETING PRESENTATION
Geographical rollout of hugoboss.com in full swing
hugoboss.com hugoboss.com markets 2020 markets 2021
At the end of 2020, hugoboss.com is available in ~ 50 markets 42 INVESTOR MEETING PRESENTATION
LEVERAGE SCALE AT OPERATIONS
Implement a lean & flexible supply chain
Drive digitalization across all Operations activities
DRIVE Continue simplification journey Realize COGS savings through sourcing OPERATIONAL optimization without compromising quality EXCELLENCE 43 INVESTOR MEETING PRESENTATION
AGENDA
1 About HUGO BOSS
2 FY/2020 Results
3 Strategic Priorities
4 Sustainability 44 INVESTOR MEETING PRESENTATION
RESPONSIBILITY
The aim of the Company’s sustainability activities is to ensure its long-term success through continuous improvement and anticipatory management of environmental, social as well as economic opportunities and SUSTAINABILITY risks.
is an integral part of business operations at HUGO BOSS 45 INVESTOR MEETING PRESENTATION
Clearly defined KPI’s to measure progress in sustainability
ORGANIZATIONAL PROCESSES KPIS AND STRUCTURE AND TOOLS INCENTIVES
▪ Global sustainability ▪ Clear guidelines, policies and ▪ Clearly defined KPIs to measure department steering the topic tools to ensure sustainable improvement in sustainability business practices ▪ Responsible managers for ▪ Sustainability criteria as part of sustainability in different ▪ Established data collection, and the long-term performance departments reporting processes related compensation of the Managing Board ▪ Continuous meetings with the ▪ Data management tools to Management Board to discuss track progress on targets ▪ Progress awarded by DJSI targets and progress World and DJSI Europe inclusion 46 INVESTOR MEETING PRESENTATION
Sustainability commitment ingrained in the concept TODAY. TOMORROW. ALWAYS.
TOMORROW ALWAYS TODAY Tomorrow contains the Always encompasses our Today stands for the concrete goals we have set overall sustainability milestones achieved so far ourselves for the future principles 47 INVESTOR MEETING PRESENTATION
TODAY. TOMORROW. ALWAYS. embedded in our three focus areas
PRODUCT PEOPLE & SOCIETY ENVIRONMENT
In addition to design, Adherence to high social We are committed to the quality, and durability, our standards forms the basis introduction and further products meet high for our relationships. development of more standards with regards to A commitment to social environmentally and health, environmental, and welfare is an integral part of climate-friendly processes. animal welfare. our corporate responsibility. 48 INVESTOR MEETING PRESENTATION
Product Strive for highest quality and longevity
ALWAYS. Our ongoing commitment to serve conscious customer segment: Offering more sustainable products through the use of more sustainable materials while at the same time respecting animal welfare and ensuring product safety.
TODAY. RESPONSIBLE styles* outperform in the collection with a higher sell-through PRODUCT *All products that contain at least 60% more sustainable raw materials will show the RESPONSIBLE label. RESPONSIBLE Styles also meet other environmental and social criteria regarding processing, transport and packaging. 49 INVESTOR MEETING PRESENTATION
Product
TODAY. Increasing responsible product offering
2018 2019
2020 2021 PF18 FW19 PS20 SR20 FW20 SR21 PF21 FW21
RESPONSIBLE TAILORING RESPONSIBLE: Today. Tomorrow. Always.
PRODUCT BOSS: THE JOURNEY HUGO: Piñatex® sneaker CLEAN UP BOSS Menswear YOUR ACT
Traceable Wool Circular Design Continuation of BOSS: BOSS: Capsule Collection Capsule Traceable Wool THE JOURNEY THE JOURNEY BOSS Men´s Business BOSS Menswear Capsule NATURAL FIBERS BOSS Mens- & cotton, linen, Continuation of Womenswear Vegan Suit HUGO: hemp, wool HUGO: Piñatex® sneaker BOSS Men´s CLEAN UP CLEAN UP YOUR ACT BOSS Mens- & Business YOUR ACT Liam Payne & CmiA Womenswear Capsule Olivenleder® Capsule Collection Kapok Capsule Collection BOSS & HUGO BOSS Men´s Casualwear 50 INVESTOR MEETING PRESENTATION
Product TOMORROW. Our main goals by 2025
SDGs MAIN GOAL STATUS 2019 (Sustainable Development Goals of the United Nations)
100% sustainably sourced cotton 61%
≥ 50% recycled synthetic fibers First update in May 2021
≥ 30% of offered styles are RESPONSIBLE* ~ 15% As of 2020
100% of plastic packaging out of 31% recycled or sustainable sources
*ALL PRODUCTS THAT CONTAIN AT LEAST 60% MORE SUSTAINABLE RAW MATERIALS WILL SHOW THE RESPONSIBLE LABEL. RESPONSIBLE STYLES ALSO MEET FURTHER ENVIRONMENTAL AND SOCIAL CRITERIA REGARDING PROCESSING, TRANSPORT, AND PACKAGING. 51 INVESTOR MEETING PRESENTATION
People & Society Taking responsibility for the people we work with
ALWAYS. Our ongoing commitment to motivate employees and take responsibility along the supply chain: Assuming responsibility for employees and suppliers to ensure safe and healthy jobs. Developing together in long-term, trusting partnerships to ensure social compliance and reduce risks.
TODAY. Started with the “Living wages” initiative as part of the Partnership for Sustainable Textiles with the aim to achieve collective solutions for living wages in countries of PEOPLE & SOCIETY production 52 INVESTOR MEETING PRESENTATION
People & Society TOMORROW. Our main goals by 2025
SDGs MAIN GOAL STATUS 2019 (Sustainable Development Goals of the United Nations)
75 % employee satisfaction according to the Great Place to Work® survey 70%
All goods sourced from suppliers with satisfying or better performance in social audits 93%
All directly contracted fabrics and trimmings suppliers are integrated in social compliance program 10%
All finished goods suppliers have an adequate 66% governance model for their own supply chains of strategic suppliers 53 INVESTOR MEETING PRESENTATION
Environment Reducing our environmental impact
ALWAYS. Our ongoing commitment to reduce our environmental impact while saving costs: We continuously minimize our impacts on climate change, reduce the consumption of resources and use chemicals responsibly.
TODAY. We saved around 4,000 MWh annual electricity through energy efficiency measures such as e.g. LED lighting ENVIRONMENT 54 INVESTOR MEETING PRESENTATION
Environment: TOMORROW. Our main goals
SDGs MAIN GOAL STATUS 2019 (Sustainable Development Goals of the United Nations)
Climate neutrality in the whole value chain until 2050
Scope 1+2: Reduction of 24% Reduction of CO2 emissions in the whole value Scope 3: Reduction of 12% in inbound logistics chain by 30% (base year 2018) until 2030 Energy reduction of 8% in own buildings (in relation to sqm
Reduction of own water consumption (externally sourced water) in relation to Group sales by 40% compared with 17% the base year 2016 until 2025
100% of suppliers with high environmental impact comply 24% with the HUGO BOSS environmental requirements until 2025 55 INVESTOR MEETING PRESENTATION
DJSI World FTSE4Good DJSI Europe
Index member since Index member since 2016 2017 (World) & 2020 (Europe)
STOXX Global Euronext Vigeo ESG Leaders Europe 120 DAX 50 ESG Eurozone 120 Leaders
Index member since 2020 Index member since 2019
HUGO BOSS sustainability achievements recognized in many sustainability indices 56 INVESTOR MEETING PRESENTATION
Financial Calendar & Investor Relations contact
MAY Christian Stöhr 5 First Quarter Results Senior Head of E-Mail: [email protected] 2021 Investor Relations 2021 Phone: +49 (0) 7123 94 - 80903
MAY Frank Böhme Senior Investor E-Mail: [email protected] 11 Annual Shareholders’ Relations Manager 2021 Meeting Phone: +49 (0) 7123 94 - 80903 57 INVESTOR MEETING PRESENTATION
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.