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Solid increase in Group sales expected

HUGO BOSS anticipates sales to increase solidly in 2015, despite the challenging economic and industry situation in many markets. In this context, the Group assumes that growth will exceed the rate of expansion in the global economy and the luxury goods industry.

Sales growth forecast in all regions

In 2015, all regions should contribute to the forecast solid increase in overall Group sales. In this context, the Group assumes that the growth rates in the individual regions will not differ significantly from one another. Growth is expected in all important European markets and will be underpinned by increasing focus on own retail. The Americas should see growth underpinned by gains not only in the U.S. market but also substantial improvement in Central and South America. The Group also plans to increase sales in Asia. In the Chinese market in particular, HUGO BOSS is working to implement various measures to accelerate growth over the prior year. Sales in the license segment should similarly see growth.

Group’s own retail business expected to grow at an above-average rate

Sales in the Group’s own retail business are likely to grow at an above-average rate in 2015 in comparison to the Group as a whole. Alongside growth in its own retail stores, online in particular will contribute to this.

Expansion of store network through new openings and takeovers

The Group plans to expand its store network in 2015. Based on an analysis of its market penetration, the Group sees opportunities for profitable expansion in all regions. Apart from opening freestanding stores, HUGO BOSS intends to further grow its shop-in-shop portfolio both by opening new shop-in-shops at retail partners and by assuming the management of existing floor space in department stores. The Group will also take over stores from franchise partners. For example, an agreement has been reached with the existing franchise partner in South Korea to take over all 17 franchise stores in the market from March 1, 2015. However, the Group also intends to close points of sale as part of its efforts to enhance the quality of its store portfolio particularly in Asia. In many cases, this development is associated with the relocation and merging of existing stores to form higher-quality and larger sales points.

Focus on boosting selling-space productivity

In addition to the expansion of its own store network and takeovers, the focus is on increasing sales productivity in the Group’s own retail business. Important levers in this respect are the expansion of brand communication activities, intensified customer relationship management and the implementation of various measures for improving retail management.

Takeover and consolidation effects impact sales in the wholesale segment

Sales in the wholesale business are expected to develop weaker in comparison to the Group as a whole. This is primarily due to the takeovers of shop-in-shops from retail partners and from franchise stores. After the takeover, the sales generated at these sales points are accounted for as retail instead of wholesale. The ongoing consolidation of the customer portfolio and the associated decline in business with smaller business partners will also have a negative impact on sales through this distribution channel. On the other hand, HUGO BOSS is planning to further grow its business with major department stores above all. This outlook is based on trends in order intake, feedback from business partners on the new collections and expectations as to the replenishment business.

Gross profit margin is expected to increase further

HUGO BOSS expects a further improvement in its gross profit margin in 2015. While efficiency gains in production and sourcing activities are likely to be offset by rising labor costs, the growing share of sales generated by the Group’s own retail business will support this increase. The gross profit margin generated through this distribution channel is higher than in wholesale.

Operating expenses rise primarily on account of retail expansion

The Group’s operating expenses will increase primarily on account of the ongoing expansion of its own retail business. HUGO BOSS will also further expand its brand communication activities in order to strengthen customer demand. Marketing expenses will accordingly increase at least as strong as Group revenues. The share of research and development expenses in Group sales should remain more or less stable. Efficiency gains in connection with the flat-packed goods distribution center, which went into operation in 2014, will have a positive impact on logistics costs. Finally, the Group will cap the increase in administration expenses by means of stringent cost management.

Solid earnings growth expected

The anticipated growth in sales and the gross profit margin will support a solid increase in operating profit (EBITDA before special items). The Group’s net income and earnings per share are also expected to improve. Alongside the increase in EBITDA, another contribution to this will come from a decrease in net financial expenses on account of a decline in the average level of liabilities. However, depreciation and amortization expense will rise in comparison to the previous year.

Trade net working capital expected to decrease relative to sales

Strict management of trade net working capital continues to be given high priority in order to support improvements to operating cash flow. In 2015, the Group is striving to reduce trade net working capital as a percentage of sales. Further potential for improvement has specifically been identified in a reduction of days inventories outstanding. Optimized merchandise flow planning and increased replenishment flexibility and speed thanks to the new distribution center will help to reduce days inventories outstanding particularly in the Group’s own retail business.

Capital expenditure focuses on Group’s own retail business

Expanding the Group’s own retail business and the renovation of existing stores and shops will be the focal point of the Group’s capital expenditure in 2015. Furthermore, the Group plans to reinforce its operating infrastructure primarily in the areas of IT and logistics. Special consideration is being given to the implementation of measures for the introduction of omnichannel services. Accordingly, capital expenditure will come to between EUR 200 million and EUR 220 million in 2015.

Free cash flow development supports achievement of positive net financial position

The Group anticipates a significantly positive free cash flow in 2015 primarily on account of the forecast earnings growth, strict management of trade net working capital and value-enhancing capital expenditure. The free cash flow should exceed the dividend payment. Surplus funds are to be retained as a liquidity reserve. The Group is correspondingly working on the assumption that cash and cash equivalents will exceed gross financial liabilities as of year-end. Particularly against the backdrop of the Group’s strong internal financing power and the long-term financing in the form of a syndicated loan taken out at favorable conditions, the Group is not planning any material financing activities in 2015.

Dividend per share on the rise

HUGO BOSS pursues a profit-based distribution policy that allows the shareholders to participate appropriately in the Group’s earnings development. The policy is to distribute to shareholders between 60% and 80% of consolidated net income on a regular basis. On account of the rise in profits in the past fiscal year, the Company’s strong financial position and its financial outlook for 2015, the Managing Board and Supervisory Board intend to propose to the Annual Shareholders’ Meeting to be held on May 12, 2015 a dividend of EUR 3.62 per share for fiscal year 2014 (2013: EUR 3.34). The proposal is equivalent to a payout ratio of 75% of the consolidated net income attributable to the shareholders of the parent company in 2014 (2013: 70%). Assuming that the shareholders approve the proposal, the dividend will be paid out on the day after the Annual Shareholders’ Meeting, on May 13, 2015. On the basis of the number of shares outstanding at year-end, the amount distributed will come to EUR 250 million (2013: EUR 231 million).

Further sales and earnings improvements in 2016 and beyond

The Group intends to generate further increases in sales and earnings in 2016 and beyond. Its strategy is oriented towards organic growth of the existing brand portfolio. It aims to grow Group sales at a high single-digit percentage rate annually in the period until 2020. More than 75% of sales are expected to be generated by the Group’s own retail business in 2020. HUGO BOSS has also set itself the objective of earning an adjusted operating margin (EBITDA before special items in relation to sales) of 25% in the same period. Adverse macroeconomic and sector-specific developments in key sales markets, rising costs in sourcing processes or a loss of appeal of the Group’s brands could jeopardize the ability to meet these targets. The Group has contingency plans in place to limit the likelihood and impact of these and other risks. Details are presented in the risk report. Risk report

Target achievement and outlook



Targets 2014


Result 2014


Outlook 2015


On a currency-adjusted basis.

Group sales1


High single-digit increase




Solid increase

Sales by region1


Growth in all regions




Solid growth in all regions






















Sales by distribution channel1







Group’s own retail business


Double-digit growth




Above-average development relative to overall Group



Roughly stable development




Below-average development relative to overall Group








EBITDA before special items


High single-digit increase




Solid increase

Trade net working capital


Roughly stable development relative to sales


Increase by 120 basis points to 19.1% of sales


Decline relative to sales

Capital expenditure


EUR 110 million to EUR 130 million


EUR 135 million


EUR 200 million to EUR 220 million

Group’s own retail stores


Opening of about 50 new stores


Opening of 66 new stores, total number of stores rises by 31 on a net basis to 1,041


Continued expansion

Free cash flow


Ongoing strong development


Free cash flow increases by EUR 38 million to EUR 268 million


Generation of strongly positive free cash flow

Net financial liabilities


Attainment of positive net financial position at year-end


Net debt reduction by 37% to EUR 36 million


Attainment of positive net financial position at year-end

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