Company Presentation Q3 06.11 - HUGOBOSSgroup.hugoboss.com/files/IR_Praesentation_1107.pdfAgenda...
Transcript of Company Presentation Q3 06.11 - HUGOBOSSgroup.hugoboss.com/files/IR_Praesentation_1107.pdfAgenda...
Company Presentation November 2007 HUGO BOSS AG © 2 / 51
Company Presentation
Third Quarter Update
November 2007
Agenda
Investment highlights
Nine months figures 2007 - Key developments
Nine months figures 2007 - Financials
Outlook
Backup
Company Presentation November 2007 HUGO BOSS AG © 4 / 51
Investment highlights
• Leading international high-end mens-/ womenswear company
• Strong profitable track record
• Focus on organic growth drivers
• Growth strategy supported by Columbus
Europe
~4400 POS
657 BOSS Stores
102 DOS
25 Showrooms
Asia/other regions
~500 POS
281 BOSS Stores
76 DOS
3 Showrooms
Americas
~950 POS
113 BOSS Stores
32 DOS
3 Showrooms
Company Presentation November 2007 HUGO BOSS AG © 5 / 51
Leading international high-end mens-/ womenswear company
• Market leadership in high-end menswear business
• Strong market penetration with growing mono-brand distribution
• Market presence in 106 countries with a total of 5,900 points of sale (POS), 1,051 mono-brand stores/shops including 210 directly operated stores (DOS)
• Mono-brand distribution increased to 36% share of sales in 2006 and includes:
�375 freestanding stores
�676 shop-in-shops
Figures as of December 31, 20061
1
Company Presentation November 2007 HUGO BOSS AG © 6 / 51
Successful brand world of HUGO BOSS
BOSS Black
Comprehensive spectrum of elegant business
ensembles, casual sports clothing and evening
wear.
BOSS Selection
Premium tier of the BOSS brand, implementing
best materials and finest workmanship.
BOSS Orange
Casual fashion for men and women, unusual
materials, vibrant colors and intricate details.
BOSS Green
Fashion-oriented collection that promises optimum
performance for sports and fashion.
HUGO
Self-confident men’s and women’s collection that
combines creativity and individuality into an un-
conventional and avant-garde fashion.
Menswear
Womenswear
Accessories
Menswear
Accessories
Menswear
Womenswear
Accessories
Menswear
Sports Accessories
Menswear
Womenswear
Accessories
• Sales nearly tripled since 1996 achieving a CAGR of 11%
• Net income development exceeded sales trend growing with a CAGR of 15%
• Share price grew at a CAGR of 16% while delivering a strong dividend yield
Sales in EUR million
Company Presentation November 2007 HUGO BOSS AG © 7 / 51
Strong profitable track record
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
+11%
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0German GAAP (HGB)
International Accounting Standards (IFRS)
Key initiatives of the Group
Company Presentation November 2007 HUGO BOSS AG © 8 / 51
• Directly Operated Stores• BOSS Womenswear • Shoes & Leather
Accessories
Focus on organic growth drivers
• BOSS Womenswear
�completes the HUGO BOSS lifestyle world
� leverages existing showroom network and customer relationships
�covers a market that is twice the size of the comparable menswear segment
• Within three years sales grew by over 200% reaching EUR 162.2 million at the end of 2006
• Market presence in 69 countries with over 1,200 POS (apparel only)
• Within three years share of sales grew by 6 p.p. to 11% by the end of 2006
Company Presentation November 2007 HUGO BOSS AG © 9 / 51
Growth driver - BOSS Womenswear
Company Presentation November 2007 HUGO BOSS AG © 10 / 51
Growth driver - Shoes & Leather Accessories
• Shoes & Leather Accessories
�sharpen the style and identity of our collections
�complete especially the womenswearcollections
� represent more than 20% of the luxury segment for consumer goods
• Within three years sales grew by 175% reaching EUR 150.9 million at the end of 2006
• Sales split: Menswear 81%, Womenswear 19%
• Within three years share of sales grew by 5 p.p. to 10% by the end of 2006
Company Presentation November 2007 HUGO BOSS AG © 11 / 51
Growth driver - Directly Operated Stores
• Our Directly Operated Stores
�are show-case for the presentation of the HUGO BOSS brand world to the consumer
�give first-hand feedback through consumer contact
�show top line growth potential
• Within three years number of DOS grew by 129 own stores to 210 at the end of 2006
• Within three years DOS sales grew by over 130% reaching EUR 192 million at the end of 2006
• Within three years share of sales grew by 5 p.p. to 13% by the end of 2006
Company Presentation November 2007 HUGO BOSS AG © 12 / 51
Focus on organic growth drivers
• Strong growth with distribution gains in North America
• China as key luxury growth market in Asia is driving HUGO BOSS growth
• Market leadership position is driving growth in Eastern Europe
Further regional expansion
Company Presentation November 2007 HUGO BOSS AG © 13 / 51
Growth strategy supported by Columbus
• Value chain initiative Columbus will be completed by end of 2007 with the roll-in of all brands into new system
• Key objectives of Columbus:
�Redefinition of supply chain processes
�Establishment of matrix organization
�Full integration of IT-platform based on SAP
• Implications:
� Immediate impacts on delivery performance and gross margin improvement
�Scalable platform for external growth
Company Presentation November 2007 HUGO BOSS AG © 14 / 51
• Permira, one of the leading European buy-out funds, has acquired via the acquisition vehicle Red & Black Lux Sàrl a majority stake of Valentino Fashion Group
• In July 2007, Red & Black Lux Sàrl launched a voluntary tender offer to all HUGO BOSS shareholders
• After the tender offer and the transfer of shares to V.F.G. International N.V., Permira controls 72% of HB share capital (88% of voting shares and 55% of preferred shares)
• Permira has confirmed the existing strategy for HUGO BOSS and therefore the change in ownership has no immediate implications
• In October 2007, HUGO BOSS announced the new composition of the Supervisory Board with five Permiramembers
Existing growth strategy supported by new majority shareholder
Free Float 12%
V.F.G. International N.V.
88%
Ordinary Shares*
Preferred Shares**
Free Float 45%
V.F.G. International N.V.
55%
* Total of 35,860,000 ordinary shares
**Total of 34,540,000 preferred shares
Company Presentation November 2007 HUGO BOSS AG © 15 / 51
Nine months figures 2007 - Key developments
Company Presentation November 2007 HUGO BOSS AG © 16 / 51
Nine months figures 2007 - Business highlights
• HUGO BOSS continued to gain market share in key markets in the first nine months of 2007
• Group sales rose by 12% currency-adjusted, 9% in euro
• Third quarter sales growth of 8% currency-adjusted stayed below first half due to higher deliveries of the fall/winter collection early in June and
• Sales of BOSS Womenswear increased by 32%
• Sustained positive sales development in all regions
• Earnings before taxes increased by 14% to EUR 212 million and net income improved by 16% to EUR 153 million
Company Presentation November 2007 HUGO BOSS AG © 17 / 51
Positive sales trend remains for all brands
Jan. - Sept. Jan. - Sept. Change in % of
Sales in € million 2007 2006 in % Net Sales
BOSS 1,213 1,099 10 91
Menswear 1,047 973 8 79
Womenswear 166 127 32 13
HUGO 112 106 6 9
Others 2 10 (76)
Total 1,328 1,216 9 100
Company Presentation November 2007 HUGO BOSS AG © 18 / 51
BOSS Womenswear growth continues
• Sales of BOSS Womenswear increased by 32% to EUR 166 million for nine months 2007
• Sustained increase in profitability with EBIT margin of 12.7% for nine months 2007 vs. 7.7% in prior-year period
• Net income rose to EUR 12.6 million up 114% vs. nine months 2006
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
Sales 166.4 126.5 32
EBIT 21.2 9.8 116
EBIT margin 12.7 7.7
Company Presentation November 2007 HUGO BOSS AG © 19 / 51
Shoes & Leather Accessories maintains growth momentum
• With an increase of 17% to EUR 147 million shoes and leather accessories product group reported strong growth again
• Shoes & Leather Accessories success is driven by an increased distribution footprint and expansion of dedicated Group owned stores
Company Presentation November 2007 HUGO BOSS AG © 20 / 51
56 DOS openings in first three quarters 2007
• Number of Directly Operated Stores further increased bringing the total number of DOS to 266 (+63 versus prior-year period)
• DOS also played an instrumental role for the growth in sales with an increase of 26% to EUR 165.2 million in nine months 2007 (nine months 2006: EUR 131.1 million)
• Major openings in third quarter in France, Netherlands, Spain and USA
HUGO BOSS Flagship Store, Paris, France
Company Presentation November 2007 HUGO BOSS AG © 21 / 51
Double-digit sales growth in all regions
Jan. - Sept. Jan. - Sept. Change in % in % of
Sales in € million 2007 2006 FX-adjusted Net Sales
Europe 945 863 10 71
Americas 225 205 18 17
Asia/other regions 126 119 12 9
Royalties 32 28 13 3
Total 1,328 1,216 12 100
Company Presentation November 2007 HUGO BOSS AG © 22 / 51
Sales growth in Europe across all major markets
• Double-digit sales growth in most European
countries
• Sales trend in Europe driven by good
performance of womenswear business and
sales through DOS
• Sales trend in the Central and Eastern
European markets was especially remarkable
at 39% FX-adjusted
• Strong sales development in Benelux (+11%)
and Spain (+15%) driven by DOS business
Company Presentation November 2007 HUGO BOSS AG © 23 / 51
Strong performance of major American markets continued
• Sales in USA increased by 20% currency-adjusted (reporting currency growth: 11%) with double-digit growth in wholesale (+21%)and DOS (+19%)
• Canada achieved a sales increase of 13% in local currency (reporting currency growth: 7%)
• In Central and South America sales in local currencies were 12% higher than in the prior-year period (+ 5% in euro)
• Strong like-for-like DOS sales growth in the Americas (FX-adjusted: Brazil +22.2%, Canada +10.8%, USA +9.3%) as well as sales expansion due to new stores
BOSS Store, Chicago
Company Presentation November 2007 HUGO BOSS AG © 24 / 51
China remains key growth market in Asia
• Sales in Asia and other regions grew by 12% on a currency-adjusted basis and by 6% in euro
• Sales continued to expand in People’s Republic of China (+ 22% in reporting currency and 33% on a currency-adjusted basis)
• Market environment and consolidation strategy lead to 3% lower sales in Japan
• Own retail stores in Australia are performing very well in first year of operation
BOSS Store Beijing, Shin Kong Place
Company Presentation November 2007 HUGO BOSS AG © 25 / 51
Ongoing growth in license business
• Royalty income of the HUGO BOSS Group increased by 13% to EUR 32.1 million
• Royalties from fragrances and cosmetics were up 6% due to very successful launches of ‘HUGO XX’ and ‘HUGO XY’ in third quarter
• Royalties from watches and eyewear developed very successful in first year of operation with new partners
• Jewelry will be launched with the SwarovskiGroup in 2008
Company Presentation November 2007 HUGO BOSS AG © 26 / 51
Nine months figures 2007 - Financials
Company Presentation November 2007 HUGO BOSS AG © 27 / 51
Key figures reflect significant increase in earnings
• Double-digit sales growth on a currency-adjusted basis (+12% FX-adjusted, 9% in euro)
• Gross margin further improved by 1.6 percentage points to 57.3% due to higher share of sales via DOS and the continued optimization of the worldwide production and procurement structures of the Group
• EBIT increased above sales growth mainly driven by gross margin improvement
• Tax rate declined by 1.1 percentage points to 27.7% due to the continued internationalization of the business
• Net income was up 16% in line with EBIT development to EUR 153.2 million
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
Earnings Position
Sales 1,328 1,216 9
Gross margin 761 677 12
Gross margin ratio in % 57.3% 55.7%
EBIT 218 188 16
EBIT margin in % 16.4% 15.5%
Earnings before taxes 212 186 14
Net income 153 133 16
Company Presentation November 2007 HUGO BOSS AG © 28 / 51
Net working capital is up due to retail expansion and system transition
• Trade receivables development (+7%) in line with business growth
• Increase in other assets due to one-time item resulting from relocation of 5th Avenue store
• Increase in inventories (+22%) was mainly driven by expansion of own retail and system overlap
• Payables declined modestly by 1%
• Net working capital overall below objective of proportional increase
1 Payable within one year.
September 30, September 30, Change
in € million 2007 2006 in %
Trade receivables1
308 287 7
Other assets1
68 46 49
Inventories 288 237 22
Trade payables and
other liabilities1
(179) (182) 1
Current provisions (45) (44) (1)
Net working capital 441 344 28
Company Presentation November 2007 HUGO BOSS AG © 29 / 51
Outlook
Company Presentation November 2007 HUGO BOSS AG © 30 / 51
Outlook
• Currency-adjusted sales should increase by 10-12% for 2007 as a whole compared to 2006
• Sales of BOSS Womenswear should increase by 25% on a currency-adjusted basis for full year 2007
• DOS sales are expected to rise by 25% on a currency-adjusted basis
• Earnings before taxes should grow by 12-15%
• New record results from sales and earnings are expected for 2008
Company Presentation November 2007 HUGO BOSS AG © 31 / 51
Backup - Nine months figures 2007
Company Presentation November 2007 HUGO BOSS AG © 32 / 51
Sales by region
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
Germany 287.5 277.6 4
Other European
countries 657.0 585.0 12
Americas 225.0 205.3 10
Asia/other regions 126.1 119.3 6
Royalties 32.1 28.4 13
Total 1,327.7 1,215.6 9
Company Presentation November 2007 HUGO BOSS AG © 33 / 51
Sales by brand
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
BOSS 1,212.9 1,099.4 10
Menswear 1,046.5 972.9 8
Womenswear 166.4 126.5 32
HUGO 112.4 106.1 6
Others 2.4 10.1 (76)
Total 1,327.7 1,215.6 9
Company Presentation November 2007 HUGO BOSS AG © 34 / 51
Income statement
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
Sales 1,327.7 1,215.6 9
Cost of materials including
changes in inventories (566.9) (539.0) (5)
Gross margin 760.8 676.6 12
in % of sales 57.3 55.7
Other operating income and
expenses (257.5) (249.4) (3)
Personnel expenses (230.3) (201.4) (14)
Depreciation/amortization (55.3) (37.5) (47)
EBIT 217.7 188.3 16
Net financial result (5.7) (2.3) 0
Earnings before taxes 212.0 186.0 14
Taxes on income (58.8) (53.5) (10)
Net income 153.2 132.5 16
Company Presentation November 2007 HUGO BOSS AG © 35 / 51
Analysis of financial requirements
September 30, September 30, December 31,
in € million 2007 2006 2006
Trade receivables, other assets1
376.5 332.6 215.0
Inventories 287.9 236.9 290.2
Trade payables and
other liabilities1
(179.2) (181.6) (174.1)
Current provisions (44.5) (44.3) (32.4)
Net current assets 2
440.7 343.6 298.7
Fixed assets 324.5 327.8 343.6
Other non-current assets 29.9 32.0 28.9
Non-current provisions (61.0) (40.7) (54.2)
Other non-current liabilities (30.9) (25.6) (33.3)
Net deferred taxes 31.9 23.0 27.7
Medium- and long-term net assets 294.4 316.5 312.7
Net assets 735.1 660.1 611.4
Balance of cash at banks and due to banks 188.8 156.7 117.0
Group equity 546.3 503.4 494.4
Net asset coverage 735.1 660.1 611.4
1 Payable within one year.
2 Net working capital.
Company Presentation November 2007 HUGO BOSS AG © 36 / 51
Free cash flow
Jan. - Sept. Jan. - Sept. Change
in € million 2007 2006 in %
Net income 153.2 132.5 16
Depreciation/amortization 55.3 37.5 47
Change in pension provisions 6.6 3.3 0
Cash flow 215.1 173.3 24
Net additions to fixed assets (36.2) (62.0) 42
Change in remaining net capital invested (149.4) (64.1) (133)
Share repurchase (11.2) (19.0) 41
Currency translation and other
equity changes (7.6) (7.6) 0
Free cash flow before dividends 10.7 20.6 (48)
Dividend payment (82.5) (70.2) (18)
Free cash flow (71.8) (49.6) (45)
Company Presentation November 2007 HUGO BOSS AG © 37 / 51
Backup - Share price development
Company Presentation November 2007 HUGO BOSS AG © 38 / 51
Share price development (01/2004 – 09/2007)
Preferred Shares
Common Shares
DAX (indexed: Preferred Shares in January 2000)
MDAX (indexed: Preferred Shares in January 2000)
July 12, 2007 Public Offer
02.01.2004
12.03.2004
25.05.2004
03.08.2004
12.10.2004
21.12.2004
03.03.2005
16.05.2005
25.07.2005
03.10.2005
12.12.2005
21.02.2006
05.05.2006
14.07.2006
22.09.2006
01.12.2006
14.02.2007
27.04.2007
10.07.2007
18.09.2007
0
10
20
30
40
50
60
EUR
September 7, 2007 end of
Public Offer
Company Presentation November 2007 HUGO BOSS AG © 39 / 51
Backup - Financials 2006
Company Presentation November 2007 HUGO BOSS AG © 40 / 51
Sales by region
2006 2005 Change
EUR mill. EUR mill. in %
Germany 346.9 318.4 9
Other European countries 681.9 582.5 17
Americas 273.6 233.4 17
Asia/other regions 150.1 134.2 12
Royalties 43.0 40.9 5
Total 1,495.5 1,309.4 14
Company Presentation November 2007 HUGO BOSS AG © 41 / 51
Sales by brand
2006 2005 Change
EUR mill. EUR mill. in %
BOSS 1,347.9 1,167.5 15
Menswear 1,185.7 1,071.8 11
Womenswear 162.2 95.7 69
HUGO 136.2 124.5 9
Others 11.4 17.4 (34)
Total 1,495.5 1,309.4 14
Company Presentation November 2007 HUGO BOSS AG © 42 / 51
Income statement
in EUR million 2006 2005 Change in %
Sales 1,495.5 1,309.4 14 0.0 0.0 0
Cost of materials incl.
changes in inventories (641.0) (577.7) (11) 0.0 0.0 0
Gross margin 854.5 731.7 17
in % of sales 57.1 55.9 0.0 0.0 0
Other operating income and
expenses (343.3) (289.3) (19) , ,
Personnel expenses (277.8) (238.2) (17) 0.0 0.0
Depreciation / amortization 1
(49.0) (41.3) (19)
EBIT 184.4 162.9 13
Net financial result (4.5) (5.7) 21 0.0 0.0 0
Earnings before taxes 179.9 157.2 14 0.0 0.0 0
Taxes on income (51.2) (49.0) (4) 0.0 0.0 0
Net income
- total 128.7 108.2 19
- per share (EUR) 2
common stock 1.84 1.54 19
preferred stock 1.86 1.55 20
1 Including Impairments.1 Stock Options Program: only phantom stocks issued, so no dilution of number of outstanding shares.
Company Presentation November 2007 HUGO BOSS AG © 43 / 51
Income development
EUR mill.
Net income 2005 108.2
Change in gross margin 122.8
Effect of sales volume on gross margin 100.2
Effect from changes in the gross margin percentage 20.5
Change in royalties 2.1
Change in operating expenses and depreciation/amortization (101.3)
from other operating expenses (54.0)
from personnel expenses (39.6)
from depreciation/amortization (7.7)
Change in financial result 1.2
Change in taxes (2.2)
Change in earnings before tax (7.1)#BEZUG!
Other tax effects 4.9
Net income 2006 128.7
Company Presentation November 2007 HUGO BOSS AG © 44 / 51
Analysis of financial requirements
in EUR million 2006 2005 Change in %
Trade receivables, other assets1
215.0 196.8 9
Inventories 290.2 265.7 9
Trade payables and
other liabilities1
(174.1) (146.6) (19)
Current provisions (32.4) (36.4) 11
Net current assets 298.7 279.5 7
Fixed Assets 343.6 303.3 13
Other non-current assets 28.9 26.0 11
Non-current provisions (54.2) (31.0) (75)
Other non-current liabilities (33.3) (22.3) (49)
Net deferred taxes 27.7 19.4 43
Medium- and long-term net assets 312.7 295.4 6
Net assets 611.4 574.9 6
Balance of cash at banks and due to banks 117.0 107.1 9
Shareholders' equity 494.4 467.8 6
Net asset coverage 611.4 574.9 6
1 Payable within one year.
Company Presentation November 2007 HUGO BOSS AG © 45 / 51
Free cash flow
in EUR million 2006 2005 Change absolut
Net income 128.7 108.2 21
Depreciation/amortization 49.0 41.3 8
Change of pension provisions 7.8 4.4 3
Cash Flow 185.5 153.9 32
Net additions to fixed assets (89.3) (75.7) (14)
Change in remaining net capital invested (4.0) 25.5 (30)
Share repurchase (19.0) (10.0) (9)
Currency translation and other
equity changes (12.9) 13.2 (26)
Free cash flow - before dividend 60.3 106.9 (47)
Dividend payment (70.2) (59.2) (11)
Free cash flow (9.9) 47.7 (58)
Company Presentation November 2007 HUGO BOSS AG © 46 / 51
Employees – by region
Change
Employees (Full-time equivalents) 2006 2005 in %
- by region
Germany 2,104 1,911 10
Other European countries 4,795 4,262 13
Americas 1,167 1,063 10
Asia/other regions 375 348 8
Total 8,441 7,584 11
Company Presentation November 2007 HUGO BOSS AG © 47 / 51
Employees – by function
Change
Employees (Full-time equivalents) 2006 2005 in %
- by function
Production/Logistics 5,334 4,992 7
Sales/Creation/Marketing 2,441 2,025 21
Administration 666 567 17
Total 8,441 7,584 11
Company Presentation November 2007 HUGO BOSS AG © 48 / 51
Appendix
Company Presentation November 2007 HUGO BOSS AG © 49 / 51
Financial calendar / Contact
Financial calendar
March 27, 2008 Annual Press and Analyst Conference
April 30, 2008 Publication of the First Quarter Report 2008
May 08, 2008 Annual Shareholders’ Meeting
July 31, 2008 Publication of the Half Year Report 2008
October 30, 2008 Publication of the Third Quarter Report 2008
Contact
Investor Relations
Tel: + 49 (0) 7123 94-2552
Fax: + 49 (0) 7123 94-2035
Email: [email protected]
For further information please refer to our website www.group.hugoboss.com
Company Presentation November 2007 HUGO BOSS AG © 50 / 51
Disclaimer
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.