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Overall assessment of the Managing Board on the economic situation of the Group

HUGO BOSS looks back at a solid development of its business in 2014. However, the general economic and sector-specific conditions were more challenging than originally expected, particularly in the second half of the year. The Group’s sales and earnings growth was therefore slightly lower than the expectations presented in the Annual Report 2013.

Sales growth outperformed both the development of the economy as whole and the growth of the global premium and luxury goods industry. As forecast, all regions made a contribution to this development after currency adjustments. An analysis by distribution channel shows that sales in the Group’s own retail business exhibited double-digit growth, in line with the original forecast. The wholesale business declined slightly and was at the lower end of the expectation range.

The operating result (EBITDA before special items) increased by 5%. This development was supported by a better-than-anticipated development of the gross profit margin. However, the expansion of the Group’s own retail business and intensified marketing activities in particular had an adverse impact on the development of costs, meaning that earnings growth was lower than sales growth. Group earnings development

Despite extensive investment in the Company’s long-term growth and a higher-than-expected increase in trade net working capital, the development of free cash flow was better than ever before in the history of the Company. Net financial liabilities were almost fully depleted. Financial position

The Group is thus in an exceedingly healthy economic condition that offers a good basis for further growth. Against this backdrop, HUGO BOSS expects that consolidated sales and earnings will continue to grow in 2015 and anticipates a further positive development of the Company overall also beyond the current year. Subsequent Events and Outlook

Metzingen, February 19, 2015

The Managing Board

Claus-Dietrich Lahrs
Christoph Auhagen
Mark Langer

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