First Quarter report January – March 2013 - HUGO BOSS

Transcription

F i rst Q ua rt e r R e p o rt
J a n u a r y – M a r c h 2 01 3
First Quarter Report 2013
Contents
2
Contents
1
3
to our shareholders
c onsolidated interim
financial statements
Letter to Shareholders p. 4
Key Figures p. 6
HUGO BOSS on the Capital Market p. 7
2
Consolidated Income Statement p. 36
Statement of Comprehensive Income p. 37
Consolidated Balance Sheet p. 38
Statement of Changes in Consolidated Equity p. 39
Consolidated Statement of Cash Flows p. 40
Condensed Notes to the Consolidated Interim
Financial Statements p. 41
c onsolidated interim management report
Group Sales and Results of Operations p. 11
• General Economic Situation p. 11
• Sector Performance p. 12
• Sales Performance p. 13
• Earnings Development p. 17
Profit Development of the Business Segements p. 20
Net Assets and Financial Position p. 24
• Balance Sheet Structure and Key Balance Sheet
Ratios p. 24
• Net Assets p. 25
• Financial Position p. 27
• Capital Expenditure p. 28
Report on Risks and Opportunities p. 29
Subsequent Events and Outlook p. 30
Summary on Earnings, Net Assets and Financial
Position p. 34
4
further information
Forward-Looking Statements p. 54
Financial Calendar 2013 p. 54
Contacts p. 54
TO OUR SHAREHOLDERS
1
Letter to Shareholders
4
Dear Shareholders,
Ladies and Gentlemen,
The economic environment remained difficult in the first few months of 2013. HUGO BOSS was unable to escape
this either. Therefore, in line with our expectations and against the backdrop of a challenging basis for comparison
from the previous year, sales and operating profit declined in the first quarter despite double-digit increases in
the Group’s own retail business. Timing differences in the delivery of collections to wholesale partners had a
significantly negative effect on this development.
The reluctance of consumers to spend in key sales markets also had an adverse impact, as it did on many of
our competitors. In many European markets, persistently recessionary macroeconomic trends are reflected in
correspondingly subdued growth rates in our sector. Even in Asia, uncertainty among buyers is perceptible in
our market segment. Despite this, we again increased our global comp store sales on a currency-adjusted basis.
The trend in sales and earnings in the first quarter is largely attributable to the different timing of product deliveries,
which will be reversed during the year. We are confident, most notably because of the expected increase in
sales in the wholesale business, that we shall return to our long-term growth course in the second quarter. We
shall, of course, continue to counteract the difficult market conditions with a policy of strict cost management.
However, at the same time, we shall continue to invest in the attractiveness of our brands and our presentation
to customers.
In March, for instance, we opened a flagship store in Amsterdam, which will be followed by a number of additional
projects in Europe and Asia in the next few months. These flagship stores will shape perception of our brands
in the next few years. They create an ideal environment for the presentation of our collections, corresponding
to the premium and luxury appeal of our collections.
We are also seeing the positive effects of stricter control of our distribution in multi-brand environments. More
and more retail partners are transferring responsibility for the HUGO BOSS brand presentation on their floors to
us. In the first quarter we thus took over additional shop-in-shops from wholesale partners in Spain and Great
Britain. Besides, we shall also manage our business in Singapore, one of the most important growth markets in
Asia, independently in future following the takeover of our largest franchise partner’s stores in August this year.
5
Ladies and Gentlemen, we expect the market environment to remain challenging over the further course of the
year. We shall counteract this challenge by offering convincing collections and attractive shopping experiences.
We therefore expect high single-digit increases in sales and operating profit for the year as a whole and see the
Group remaining on course to achieve its medium-term targets.
Sincerely yours,
Claus-Dietrich Lahrs
CEO and Chairman of the Managing Board
Key Figures
6
Key Figures
Jan. – March
2013
Jan. – March
2012 1
Change
in %
593.5
606.8
(2)
Europe incl. Middle East and Africa
366.7
385.2
(5)
Americas
127.6
121.7
5
Asia/Pacific
86.3
87.8
(2)
Royalties
12.9
12.1
6
Sales (in EUR million)
Sales by segments
Sales by distribution channel
Wholesale
301.9
350.4
(14)
Group's own retail business
278.7
244.3
14
12.9
12.1
6
367.1
370.1
(1)
61.8
61.0
80 bp
(10)
Royalties
Results of operations (in EUR million)
Gross profit
Gross profit margin in %
EBITDA
132.7
147.7
EBITDA before special items
132.6
148.4
(11)
Adjusted EBITDA margin in % 2
22.3
24.5
(220) bp
EBIT
111.4
129.4
(14)
81.6
93.9
(13)
Net income attributable to equity holders of the parent company
Net assets and liability structure as of March 31 (in EUR million)
Trade net working capital
454.4
476.1
(5)
Non-current assets
599.9
494.4
21
Equity
734.1
619.3
19
51.7
42.6
1,419.6
1,453.5
(2)
(29)
Equity ratio in %
Total assets
Financial position (in EUR million)
Free cash flow
5.1
7.2
123.6
141.0
(12)
Capital expenditure
31.4
15.1
>100
Depreciation/amortization
21.3
18.3
16
0.9
1.0
(10)
Net financial liabilities (as of March 31)
Total leverage 3 (as of March 31)
Additional factors for success
Employees (as of March 31)
11,815
10,986
8
Personnel expenses (in EUR million)
120.8
108.3
12
Number of Group's own retail stores
876
660
1.18
1.36
Shares (in EUR)
Earnings per share
Ordinary share
Preferred share
(13)
1.37
Last share price (as of March 31)
Ordinary share
87.42
Preferred share
86.24
1
86.42
Number of shares (as of March 31)
Ordinary shares
Preferred shares
70,400,000
35,860,000
34,540,000
ertain amounts shown here do not correspond to previous year figures and reflect adjustments made (as detailed in the Condensed Notes to the ConsoliC
dated Interim Financial Statements, Note 2 // Accounting policies).
2
EBITDA before special items/Sales.
3
Net financial liabilities/EBITDA before special items and expenses for the stock appreciation rights program.
1
HUGO BOSS on the Capital Market
7
Following significant gains as of the end of 2012, the German share indices continued to rise in the new year.
Above all, improved economic data and monetary policy stimulus from the United States allowed prices to
rise despite resurgent concerns over economic stability in the euro zone. The HUGO BOSS share also posted
significant share price gains in the first quarter of 2013.
01 | 01 S h a r e P r i c e P e r f o r m a n c e 2 01 3 (Index: December 31, 2012 = 100)
January
|
February
|
March
|
120
118
116
114
112
110
108
106
104
102
100
98
96
94
HUGO BOSS Ordinary Share DAX MDAX
Positive performance on stock markets in first quarter
After a healthy performance in the closing months of 2012, the German stock indices continued to grow in the
first quarter of 2013. The avoidance of the fiscal cliff in the U.S., the recovery of global leading indicators and
improved economic data from Germany, the U.S. and China supported price increases. As the quarter progressed,
however, the markets were repeatedly weighed down by Italy’s uncertain political future, the handling of the
debt crisis in Cyprus and disappointing economic data from the euro zone.
Double-digit increase of the HUGO BOSS share
The ordinary share of HUGO BOSS AG began the first quarter of 2013 with price gains. After the positive
trend at the end of last year, the share rose again sharply at the start of 2013 and reached a new all-time high of
EUR 91.97 in mid-March. Shortly after the publication of full year results 2012 the share price lost also against
the DAX and MDAX. As of the end of the quarter, however, the shares posted renewed price gains and ended
the first quarter up 10% as against the end of 2012 at EUR 87.42.
8
The DAX and, in particular, the MDAX rose in value in the opening months of 2013 as well. Overall, the DAX and
the MDAX climbed by 2% and 12% respectively in the first quarter. The shares of companies in the fashion and
luxury goods industry also posted gains on average in the first three months of 2013. The MSCI World Textile,
Apparel & Luxury Goods Index, which tracks the performance of companies operating in the area of apparel
and luxury goods, rose by 4% in the first quarter.
The performance of HUGO BOSS AG shares in the first quarter was therefore similar to or better than the German
benchmark indices and fashion and luxury goods industry shares respectively.
Weighting of HUGO BOSS share in MDAX increases
In the Deutsche Börse ranking as of the end of March 2013, the HUGO BOSS ordinary share was ranked 15 th
in the MDAX on the basis of free float adjusted market capitalization (prior to the consolidation of share classes,
the HUGO BOSS preferred share had also ranked 15th as of the end of March 2012). In terms of trading volume,
the HUGO BOSS ordinary share ranked fifth (historic preferred share at the end of March 2012: 21st). Thus, at
the end of March, the weighting of the HUGO BOSS ordinary share in the MDAX was 2.1% (weighting of the
historic preferred share at the end of March 2012: 2.0%). An average of 139,018 ordinary shares were traded
per day in the first quarter of 2013. The average number of ordinary and preferred shares traded per day in the
first quarter of 2012 was 146,767.
Voting right notifications in accordance with section 21 WpHG and section 25a WpHG
In accordance with section 21 of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act), shareholders are required to report the level of their shareholdings if they exceed or fall below certain thresholds. The
reporting thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. The Company did not receive
any such notifications in the January 1 to March 31, 2013 reporting period.
On January 24, 2013, HUGO BOSS AG was informed by Mediobanca – Banca di Credito Finanziario S.p.A., Milan,
Italy, in accordance with section 25a WpHG that it no longer holds any financial or other instruments that could
enable it to acquire voting rights.
The Company published this notification verbatim on its website www.group.hugoboss.com in the Investor
Relations section under “News and Releases”.
Shareholder structure unchanged
At the end of the first quarter of 2013, the shareholder structure of HUGO BOSS AG was unchanged as against
the previous year: 65.56% of shares are held by Permira Holdings Limited through Red & Black Holding GmbH
and 1.97% of the shares are held by HUGO BOSS AG as treasury shares. The remaining 32.47% of shares are
in free float.
Reportable securities transaction in accordance with section 15a WpHG
One reportable transaction in shares of the Company was reported to the Company by the Managing Board
and the Supervisory Board in the reporting period from January 1 to March 31, 2013. In total, members of the
Managing Board and the Supervisory Board hold less than 1% of the shares issued by HUGO BOSS AG.
Reportable securities transactions are published on the Group’s website www.group.hugoboss.com in the
Investor Relations section under “News and Releases”.
9
Higher dividend per share proposed
HUGO BOSS pursues a profit-based dividend policy under which the shareholders participate appropriately in
the Group’s profit development. Between 60% and 80% of net income is to be distributed to the shareholders
on a regular basis. On the basis of the significant increase in profits in fiscal year 2012 and the positive expectations for 2013, the Managing Board and the Supervisory Board intend to propose to the Annual Shareholders’
Meeting on May 16, 2013 a dividend of EUR 3.12 per ordinary share (2011: EUR 2.88) for fiscal 2012. The proposal
corresponds to a payout ratio of 70% of net income attributable to the shareholders of the parent company in
2012 (2011: 70%). If the shareholders approve the proposal, the dividend will be paid out on the day following
the Annual Shareholders’ Meeting, i.e. on May 17, 2013. Based on the number of shares outstanding at the end
of the year, the amount distributed will total EUR 216 million (2011: EUR 199 million).
CONSOLIDATED INTERIM MANAGEMENT REPORT
2
Group Sales and Results of O
perations
11
Group Sales and Results of
Operations
GENERAL ECONOMIC SITUATION
Mixed data from the global economy in the first quarter of 2013
Following the perceptible slowdown in the global economy at the end of last year, economic activity has not
recovered to any sustainable extent in the first quarter of 2013. While economic output in the U.S. posted further
moderate growth despite renewed budget cuts in the first quarter, growth rates in China in the first quarter
lagged behind those of the previous quarter. In Europe, economic activity is still depressed by the debt crisis.
The economic conditions for the HUGO BOSS Group therefore remain challenging.
Euro zone still depressed by the debt crisis
The euro zone remained in recession in the first quarter of 2013. Persistently high unemployment rates, weak
industrial production data, subdued private consumption in many places as well as weaker export demand
continued to dampen economic growth. The German economy performed comparatively better than the rest of
the euro zone. Here, strong data from the construction industry, retail and the export economy was offset by
somewhat weaker growth in industrial production.
American economy grows moderately
The American economy posted further moderate growth in the last quarter despite budget cuts and tax
increases. The positive trends continued on the automotive and real estate markets, private consumer expenditure
remained stable and the latest employment market data pointed to a slight recovery. Moreover, following the
fiscal and political uncertainty at the end of last year, certain investment projects that had been postponed were
implemented in the first quarter of 2013. Economic activity revived in Latin America in recent months and
benefited, among other things, from the delayed impact of previous monetary easing.
Patchy economic growth in Asia
In Asia, economic activity was mixed in the first quarter of 2013. Relatively sound domestic demand was offset
by still muted export activity. In China, economic growth at the beginning of the year slowed compared with
the previous quarter. Despite the introduction of programs to stimulate the economy, the unstable economic
environment at home and abroad depressed both private consumption and industrial production as well as export
activities. In Japan, by contrast, the economy has been recovering in the first months of 2013. The upward trend
was supported by extensive fiscal and monetary policy stimulus measures. Australian economic growth slowed
due to weaker demand at home and abroad compared with the previous quarter.
perations
12
SECTOR PERFORMANCE
Premium and luxury goods industry outperformed economy as a whole
The positive growth trend in the global premium and luxury goods industry continued in the current fiscal year
despite difficult economic conditions and a weak consumer environment in many key markets. Overall, the sector
posted stronger growth than the economy as a whole.
The consumer environment remained difficult in Europe on account of the persistent concern over the future
of the euro zone. Robust growth in Eastern European markets partly compensated for weaker performances in
Western and most noticeably Southern Europe. In the metropolitan regions of Western and Southern Europe
especially, demand from tourists, predominantly from Asia, also supported market growth. In virtually all the
region’s markets, however, the long winter had a negative impact on demand for clothing. The industry expanded
in America thanks to continuing positive consumer sentiment in the relevant market segment. This growth was
supported by a stable performance at U.S. department stores and consistently strong consumer demand in South
America. Demand for premium and luxury goods products remained subdued in Asia in the first quarter of 2013.
The consumer environment remained difficult in China, in particular, with Hong Kong performing somewhat better
on average than the Chinese mainland.
perations
13
Sales performance
Sales development
Sales in the first quarter slightly down on the previous year
HUGO BOSS generated sales of EUR 593 million in the first three months of fiscal year 2013, which means that
sales in Group currency, as in local currencies, were down 2% on the previous year's level (previous year: EUR
607 million). Changes to delivery cycles in preorder business led to a decrease in sales achieved with wholesale
partners compared with the same quarter in the previous year. Double-digit sales growth in the Group’s own
retail business was not sufficient to compensate for this effect entirely. Takeovers of shop-in-shop units previously
operated by Wholesale partners produced a shift in sales from wholesale business to the Group’s own retail
business.
SALES BY REGION
(in EUR million)
Jan. – March
2013
in % of Jan. – March
sales
2012
in % of
sales
Change
in %
Currency
adjusted
change
in %
Europe1
366.7
61.8
385.2
63.5
(5)
(5)
America
127.6
21.5
121.7
20.0
5
6
Asia/Pacific
86.3
14.5
87.8
14.5
(2)
1
Royalties
12.9
2.2
12.1
2.0
6
6
593.5
100.0
606.8
100.0
(2)
(2)
TOTAL
1
Including Middle East and Africa.
Sales trend shows regional differences
Sales in Europe including the Middle East and Africa amounted EUR 367 million and were consequently 5%
down on the level of the previous year in both reporting currency and in local currencies (previous year: EUR
385 million). Key factors here were the changes to delivery cycles in the wholesale business, in particular, as
well as the long winter. In the Americas, sales in reporting currency increased by 5% year-on-year to EUR 128
million (previous year: EUR 122 million). Sales growth of 6% was posted in local currencies in the first quarter.
Continuing positive consumer sentiment in the relevant market segment supported this dynamic performance.
After the first three months of fiscal year 2013, sales in Asia/Pacific in reporting currency were down 2% on the
previous year's level, at EUR 86 million (previous year: EUR 88 million). This performance reflects the persistently
difficult market environment in China in particular. In local currencies, sales rose by 1% as against the same
period of the previous year.
perations
14
SALES BY DISTRIBUTION CHANNEL
(in EUR million)
Jan. – March
2013
Wholesale
301.9
Group´s own retail business
Directly operated stores
in % of Jan. – March
sales
2012
in % of
sales
Change
in %
Currency
adjusted
change
in %
57.7
(14)
(14)
15
50.8
350.4
278.7
47.0
244.3
40.3
14
183.2
30.9
163.4
26.9
12
14
81.1
13.7
69.6
11.5
17
18
Online
14.4
2.4
11.3
1.9
28
28
Royalties
12.9
2.2
12.1
2.0
6
6
593.5
100.0
606.8
100.0
(2)
(2)
Outlet
TOTAL
Changes to delivery cycles and takeovers dominate sales development in the wholesale channel
In the first quarter of 2013, sales in the wholesale channel in both reporting currency and in local currencies were
down 14% on the level of the previous year and totaled EUR 302 million (previous year: EUR 350 million). Firstly,
compared with the same quarter in the previous year, a greater proportion of the current spring collection was
delivered to wholesale partners in the fourth quarter of fiscal year 2012 in Europe in particular. Secondly, there is
a shift in sales in favor of the second quarter due to the boost to wholesale partners' budget favoring the summer
collection delivered in this quarter. The takeover of shop-in-shops previously operated by franchisees, particularly
in Spain, Switzerland and China, also caused a shift in sales from the wholesale business towards the Group’s
own retail business. Replenishment, with which HUGO BOSS can react to short-term surges in demand from
trading partners, posted a stable performance in the past quarter.
The share of the wholesale channel in sales decreased from 58% in the same period of the previous year to
51% in the reporting period.
In the Group’s own retail business, double-digit growth rates were achieved in the first three months of fiscal year
2013, as in previous years. The expansion of the store network enhanced by the opening and takeover of new
stores and the continuing professionalization of retail activities led to an increase in sales of 14% in reporting
currency to EUR 279 million (previous year: EUR 244 million). This is equivalent to a 15% increase in sales after
adjustment for currency effects. Sales from the Group’s own retail business therefore amounted to 47% of total
sales in the reporting period (previous year: 40%). Retail comp store sales increased by 1% year-on-year in Group
currency and 2% in local currencies.
perations
15
Sales by retail format
Sales from directly operated stores (DOS) increased by 12% to EUR 183 million (previous year: EUR 163 million)
and 14% after adjustment for currency effects in the first quarter of fiscal year 2013. Therein included are sales of
own freestanding stores as well as sales generated with concesseion partners. In the concession model the Group
operates self-contained HUGO BOSS shop-in-shop units on the sales floor of the retail partner. Optimization of
product arrangement, a raise in service quality and the acceptance of responsibility for the floor's replenishment
constitute important leverage for an increase in selling space productivity.
With sales growth of 17% in reporting currency to EUR 81 million, outlet stores also contributed to the positive
development of sales in the retail channel in the first quarter of fiscal year 2013 (previous year: EUR 70 million).
Adjusted for currency effects, this corresponds to an increase of 18%.
Sales generated by the Group’s own online stores increased by 28% in total in both reporting currency and in
local currencies to EUR 14 million (previous year: EUR 11 million). Sales generated by the newly opened online
store in China are included therein.
NUMBER OF Group'S OWN RETAIL STORES
Expansion focused on Europe in the first quarter of 2013
The total number of the Group’s own retail stores increased by 36 in net terms to 876 in the first three months
of fiscal year 2013 (December 31, 2012: 840).
The Group's own retail network was strengthened in particular by the takeover of 31 stores previously operated
by wholesale partners. This way, the concession model in Spain could be expanded among other things. In
addition, the Group continued its expansion strategy through 14 organic new store openings in the first quarter.
This was balanced by nine closings in the same period.
0 2 | 01 d e V ELOP M ENT O F g ROUP ' S O W N RETAIL STORES
December 31, 2012
Europe1
+41
Americas
+1
Asia/Pacific
+3
Closings
March 31, 2013
( 9)
876
840
1
In Europe in particular, the retail network was further strengthened by the takeover of 31 shop-in-shop units
from wholesale partners as well as through ten new openings. Here, the Group expanded its presence in the
Spanish and British markets in particular. Taking into account two closings, there was a net rise in the number
of retail stores in Europe of 39 to currently 508 (December 31, 2012: 469).
The number of directly operated stores in the Americas rose in the past quarter as a result of the opening of the
HUGO store in San Diego to currently 148 stores at the end of the quarter (December 31, 2012: 147).
perations
16
Two new stores in China and an additional store in Australia were added to the store network in Asia/Pacific in
the first quarter of fiscal year 2013. Taking account of the closure of seven locations in this region, the number
of directly operated stores stood at 220 at the end of the quarter (December 31, 2012: 224).
ROYALTY SALES
Royalty business developed positively in the first quarter of 2013. Products manufactured by partners include
fragrances, eyewear, watches, children's fashion, motorcycle helmets, cell phones, mobile accessories and home
textiles. Sales with external licensees increased by 6% as against the previous year to EUR 13 million (previous
year: EUR 12 million). Substantial growth was generated in sales with licensees for fragrances and eyewear in
particular.
SALES BY BRAND
In the first quarter of fiscal year 2013, the core brand BOSS posted a decrease in sales of 1% in comparison
with the same period in the previous year. The brands BOSS Green and BOSS Orange were also down on the
level of the previous year, by 3% and 10% respectively. By contrast, the brand HUGO posted sales growth of
4% compared to the previous year.
In the past quarter, Menswear sales were 2% down on the level of the same period in the previous year and
totaled to EUR 532 million (previous year: EUR 542 million). This corresponds to a 90% share of total sales
(previous year: 89%). Womenswear sales were 5% down on the level of the same period last year at EUR 62
million (previous year: EUR 65 million). Womenswear sales therefore accounted for 10% of total sales (previous
year: 11%).
Group Sales and Results of Operations
17
Earnings d e ve lopm e nt
I ncom e stat em e nt
(in EUR million)
Jan. – March
2013
Net sales
Cost of sales
Direct selling expenses
Gross Profit
Selling and distribution expenses
in % of
sales
Jan. – March
2012 1
in % of
sales
Change
in %
(2)
593.5
100.0
606.8
100.0
(213.9)
(36.0)
(224.2)
(36.9)
5
(12.5)
(2.1)
(12.5)
(2.1)
0
367.1
61.8
370.1
61.0
(1)
(199.0)
(33.5)
(189.2)
(31.2)
(5)
Administration costs and other operating
income/expenses
(56.7)
(9.6)
(51.5)
(8.5)
(10)
Operating result (EBIT)
111.4
18.8
129.4
21.3
(14)
Interest income/expenses
(3.8)
(0.6)
(3.3)
(0.5)
(15)
Other financial items
(1.2)
(0.2)
(0.9)
(0.1)
(33)
(5.0)
(0.8)
(4.2)
(0.7)
(19)
Earnings before taxes
Financial result
106.4
17.9
125.2
20.6
(15)
Income taxes
(24.4)
(4.1)
(30.0)
(4.9)
19
Net income
82.0
13.8
95.2
15.7
(14)
81.6
13.7
93.9
15.5
(13)
0.4
0.1
1.3
0.2
(69)
82.0
13.8
95.2
15.7
(14)
Attributable to:
Equity holders of the parent company
Non-controlling interests
Net income
Earnings per share (EUR)
2
Common share
Preferred share
1.18
1.36
EBITDA
Special items EBITDA
EBITDA before special items
Income tax rate in %
(13)
1.37
3
132.7
22.4
147.7
24.3
(0.1)
0.0
0.7
0.1
132.6
22.3
148.4
24.5
23
(10)
(11)
24
Certain amounts shown here do not correspond to previous year figures and reflect adjustments made (as detailed in the Condensed Notes to the Consolidated Interim Financial Statements, Note 2 // Accounting policies).
2
Basic and diluted earnings per share.
3
Preferred shares were converted into ordinary shares on 15 June, 2012 after stock market trading.
1
perations
18
Notes to the income statement
Gross profit margin rises to 61.8%
In the first three months of fiscal year 2013, the gross profit margin increased by 80 basis points to 61.8% (previous
year: 61.0%). This positive development is mainly due to the expansion of the Group's own retail business and
the positive development of the royalty business. Higher discounts in the wholesale business and in the Group’s
own retail business partly offset this effect. At the end of the first quarter of 2013, with EUR 367 million, the
gross profit was almost on the previous year’s level (previous year: EUR 370 million). .
Expansion of Group's own retail business causes higher distribution expenses
At EUR 199 million, selling and distribution expenses were up 5% on the previous year's figure of EUR 189 million
in the first three months of fiscal year 2013. In relation to sales, selling and distribution expenses rose from 31%
to 34%. As a result of the global expansion in the Group's own retail business in particular, distribution expenses
increased by EUR 19 million in the first quarter of 2013 and were therefore up 16% on the previous year's level.
This includes the additional expenses for net 36 new locations in the reporting period within the global expansion
of this distribution channel. Marketing expenses decreased by 14% as a consequence of a modified distribution
of the marketing budget over the year. In relation to sales, logistics expenses were reduced from 5% to 4% as
against the same period of the previous year. This was aided by the optimization of global warehouse capacity
initiated in fiscal year 2011. Allowances for doubtful accounts and bad debt losses played only a minor role in the
2013 reporting period thanks to the ongoing systematic receivables management.
Administrative costs up year-on-year as a percentage of sales
At EUR 57 million, administrative expenses and the balance of other operating income and expenses were up
10% on the previous year's level in the first three months of fiscal year 2013 (previous year: EUR 52 million). In
relation to sales, administrative expenses and the balance of other operating income and expenses rose from
8% to 10%. As a result of the increased personnel expenses in particular, the research and development costs
incurred to create the collections rose by 11% or EUR 2 million in absolute terms to EUR 16 million (previous year:
EUR 14 million). As in the same period of the previous year, special items did not play a role in the reporting period.
The internal performance indicator EBITDA before special items decreased by 11% compared to the same period
in the previous year to EUR 133 million (previous year: EUR 148 million). The adjusted EBITDA margin fell by 220
basis points year-on-year to 22.3% (previous year: 24.5%). The improvement in the gross profit margin did not
fully offset the higher operating expenses in distribution and marketing as well as in administration.
Depreciation and amortization increased by 17% as compared to the previous year's level to EUR 21 million
(previous year: EUR 18 million). This was due to greater investment intensity for the Group's own retail business.
EBIT amounted to EUR 111 million in the first quarter of fiscal year 2013, down 14% on the previous year's figure
(previous year: EUR 129 million).
As the total of net interest income less other net financial income, the financial result fell by EUR 1 million to
EUR 5 million (previous year: EUR 4 million). Net interest expenses rose by 14% compared with the same period
in the previous year to EUR 4 million (previous year: EUR 3 million). This is mainly attributable to lower interest
income from time deposits because of the low market interest rate. The other financial items amounted to a net
expense of EUR 1 million and consequently matched the previous year’s figure of a net expense of EUR 1 million.
perations
19
Earnings before taxes thus fell by 15% to EUR 106 million (previous year: EUR 125 million). At 23%, the tax rate
was 1% below the previous year's level of 24%. Regionally different profit share of the domestic and foreign
subsidiaries of the HUGO BOSS Group in connection with slightly decreasing international corporate tax rates
led to a reduction of the Group tax rate.
Net income 14% down on the level of the previous year
Net income in the first quarter of fiscal year 2013 was 14% down, at EUR 82 million, on the previous year’s
figure of EUR 95 million. The net income attributable to equity holders of the parent company amounted to EUR
82 million, 13% lower than the previous year's figure (previous year: EUR 94 million). Non-controlling interests
fell to EUR 0 million in the same period (2011: EUR 1 million) and primarily related to the 40% share held by the
Rainbow Group in the "joint venture" companies in China.
Earnings per ordinary share decreased by 13% year-on-year to EUR 1.18 (previous year: EUR 1.36). The conversion
of preferred shares into ordinary shares became effective when trading closed on June 15, 2012. Since June 18,
2012, the HUGO BOSS shares are traded as registered ordinary shares via the electronic trading system XETRA,
on the Frankfurt Stock Exchange and on all regional stock exchanges in Germany under the ticker symbol BOSS.
Earnings per preferred share amounted to EUR 1.37 in the previous year.
Profit Development of the Business Segments
20
Profit Development of the Business
Segments
EuropE
0 2 / 0 2 S a l e s d e v e lo p m e n t E u r o p e
(in EUR million)
0 2 / 0 3 P r o f i t d e v e lo p m e n t E u r o p e
(in EUR million)
Jan.-March 2012
Jan.-March 2012
Jan.-March 2013
385.2
366.7
- 5%
Jan.-March 2013
148.7
133.7
- 10 %
Sales in Europe including the Middle East and Africa amounted to EUR 367 million in the first quarter of the
2013 fiscal year, down 5% on the previous year’s level in both reporting currency and local currencies (previous
year: EUR 385 million).
Sales performance in Europe impacted by changes in wholesale delivery cycles and long winter
At EUR 94 million, sales in Germany were 3% below the previous year’s level (previous year: EUR 97 million). The
positive performance in the Group’s own retail business was unable to fully offset the decline in the wholesale
business caused by the change in delivery cycles. In France and Great Britain, meanwhile, the double-digit sales
growth in the Group’s own retail business compensated for the drop in sales generated with wholesale partners
in the first quarter. Thus, sales in France matched the previous year’s level at EUR 49 million (previous year:
EUR 49 million). In Great Britain as well, sales were on par with the previous year at EUR 46 million (previous
year: EUR 46 million). In local currency sales rose by 2% here. In the Benelux countries, sales were down
12% on the level for the same period of the previous year at EUR 42 million (previous year: EUR 48 million).
Sales in the Group’s own retail business in Europe increased by 19% in the past quarter to EUR 152
million (previous year: EUR 127 million). This corresponds to a rise of 20% in local currencies. Sales with
wholesale customers declined by 17% over the same period to EUR 215 million in reporting and local
currencies (previous year: EUR 258 million). This development was influenced significantly by the change
in delivery cycles in preorder business. Takeovers of shop-in-shop units previously operated by wholesale
partners resulted in a shift in sales from the wholesale business towards the Group’s own retail business.
Segment earnings down on previous year due to higher distribution and marketing expenses
The segment profit of EUR 134 million in Europe was 10% below the previous year’s level of EUR 149 million.
Higher sales deductions especially in the Group's own retail business as well as higher selling and marketing
expenses were not fully offset by the rise in the gross profit margin. The adjusted EBITDA margin therefore
declined to 36.5% (previous year: 38.6%).
21
Americas
0 2 / 0 4 S a l e s d e v e l o p m e n t Am e r i c a s
(in EUR million)
Jan.-March 2012
0 2 / 0 5 P r o f i t d e v e l o p m e n t Am e r i c a s
(in EUR million)
Jan.-March 2013
127.6
121.7
+ 5%
Jan.-March 2012
Jan.-March 2013
34.9
32.1
- 8%
In the Americas, sales in reporting currency climbed by 5% year-on-year to EUR 128 million (previous year: EUR
122 million). Sales growth of 6% was generated in local currencies in the first quarter. This dynamic performance
was aided by consistently positive consumer sentiment in the relevant market segment.
U.S. still Group’s largest single market
In the U.S., sales rose by 5% in reporting currency and at EUR 97 million were again higher than the previous
year’s figure (previous year: EUR 93 million). Sales growth of 6% was achieved in local currency. Sales increases
on existing retail space and selective new store openings again resulted in double-digit sales growth in the
Group’s own retail business in the U.S. in the past quarter. Thus, the U.S. held its position as both the Group’s
largest individual market and the biggest sales market for the Group’s own retail business in the first quarter
of the 2013 fiscal year. In Canada, sales were down 8% on the level for the same period of the previous year
at EUR 17 million (previous year: EUR 18 million). Owing to a challenging market environment, especially in the
wholesale channel, sales contracted by 7% year-on-year after adjustment for currency effects. Aided by the
general economic recovery, sales in Central and South America rose by 27% in reporting currency to EUR 14
million (previous year: EUR 11 million), with business continuing to develop positively in Brazil in particular. A
sales increase of 29% was generated in local currencies as well.
Sales in the Group’s own retail business increased by 18% in reporting currency in the past quarter to EUR 60
million (previous year: EUR 51 million). Adjusted for currency effects, this corresponds to a growth of 20%. In the
wholesale channel, sales of EUR 67 million were generated in the same period (previous year: EUR 71 million).
Sales therefore declined by 5% in Group currency and 4% in local currencies.
Deterioration in segment profit year-on-year
The segment profit of EUR 32 million in the Americas region were 8% below the previous year’s level of EUR
35 million. Negative effects from higher sales deductions in wholesale and the Group's own retail business and
disproportional rises in fixed costs caused a deterioration in segment profit. After the first three months of 2013,
the adjusted EBITDA margin in this region was therefore 25.2% (previous year: 28.6%).
22
Asia/Pacific
0 2 / 0 6 S a l e s d e v e l o p m e n t A s i a / Pa c i f i c
(in EUR million)
Jan.-March 2012
0 2 / 0 7 E a r n i n g s d e v e lo p m e n t A s i a / Pa c i f i c
(in EUR million)
Jan.-March 2013
87.8
86.3
- 2%
Jan.-March 2012
Jan.-March 2013
33.2
30.1
- 9%
After the first three months of the 2013 fiscal year, sales in Asia/Pacific were 2% below the previous year’s level
in reporting currency at EUR 86 million (previous year: EUR 88 million). In local currencies, sales rose by 1% as
against the same period of the previous year.
Slight decline in sales due to persistently challenging market environment
Sales in China rose in both reporting currency and local currencies by 1% to EUR 54 million (previous year: EUR
53 million). The consistently difficult consumer environment in China had a tangible impact on sales performance
in the first quarter. In Oceania, sales declined by 5% from the previous year’s level to EUR 12 million (previous
year: EUR 13 million). After currency adjustment, sales declined by 3% due to the persistently challenging market
environment. At EUR 10 million, sales in Japan were down 8% on the previous year’s level (previous year: EUR
11 million). This development was largely influenced by the depreciation of the Japanese yen against the euro.
After adjustment for currency effects, there was a year-on-year increase in sales of 8% driven by the positive
performance of the Group’s own retail business.
In reporting currency, sales in Asia/Pacific in the Group's own retail business climbed by 1% to EUR 67 million
(previous year: EUR 66 million). A sales increase of 4% was generated in local currencies. By contrast, sales with
wholesale customers were down 9% on the previous year’s level in Group currency at EUR 20 million (previous
year: EUR 22 million). After currency adjustment, sales fell by 8% as against the figure for the same period of
the previous year.
Deterioration of segment profit compared to prior year due to higher sales deductions
With sales decreasing slightly, segment profit in Asia/Pacific of EUR 30 million was lower than in the previous
year (previous year: EUR 33 million). The decline was caused by higher sales deductions in the Group's own
retail business as well as slightly increased fixed costs. At 34.9%, the adjusted EBITDA margin in this region
was therefore 300 basis points below the previous year’s level (previous year: 37.9%).
23
Royalties
0 2 / 0 8 S a l e s d e v e l o p m e n t R oya lt i e s
(in EUR million)
Jan.-March 2012
0 2 / 0 9 E a r n i n g s d e v e l o p m e n t R oya lt i e s
(in EUR million)
Jan.-March 2013
12.9
12.1
+ 6%
Jan.-March 2012
Jan.-March 2013
11.6
11.0
- 6%
Royalty business continues positive development
Royalty business continued to perform well in the first quarter of 2013. Products manufactured by partners include
fragrances, eyewear, watches, children’s fashion, motorcycle helmets, cell phones, mobile accessories and home
textiles. Sales with external licensees increased by 6% as against the previous year to EUR 13 million (previous
year: EUR 12 million). In particular, high growth was achieved in sales with licensees for fragrances and eyewear.
The successful launch of the fragrance HUGO Red contributed to this development.
In spite of a higher gross profit margin, the royalty segment profit was 6% below the previous year’s level at EUR
11 million (previous year: EUR 12 million). The result for the first quarter of the 2012 fiscal year included other
income generated by the sale of the trademark rights to the “Baldessarini” fragrance.
Net Assets and Financial Position
24
Refinancing successfully concluded
In February 2013, HUGO BOSS AG tasked a group of banks with setting up a syndicated loan amounting to EUR
450 million, which was signed in March 2013. The new syndicated loan is divided into a fixed tranche of EUR 100
million and a revolving tranche of EUR 350 million. The new syndicated loan has a five-year term. The syndicated
loan agreement was concluded with an international banking syndicate consisting of 14 banks. The lead managers
are UniCredit Bank AG, Landesbank Baden-Württemberg and DZ Bank AG Deutsche Zentrale-Genossenschaftsbank. The new syndicated loan replaces the existing syndicated loan amounting to EUR 450 million, which was
repaid prematurely and replaced on March 27. It includes standard covenants requiring compliance with certain
performance indicators. As of March 31, 2013 only the fixed tranche of EUR 100 million and EUR 10 million of
the revolving tranche of the new syndicated loan had been drawn.
Balance sheet structure and key balance sheet ratios
Certain amounts shown here do not correspond to the figures reported in previous years and reflect adjustments
made. Condensed Notes to the Consolidated Interim Financial Statements, Note 2 // Accounting Policies
In the first quarter of fiscal year 2013, total assets declined by 2% to EUR 1,420 million (March 31, 2012: EUR
1,453 million). This change is in particular attributable to significantly lower utilization of external finance as part
of the new syndicated loan concluded in March.
0 2 / 10 B a l a n c e s h e e t s t r u c t u r e - A s s e t s (in %)
Assets
March 31 March 31
2012
2013
Property, plant and equipment and intangible assets
29
Inventories
29
36
28
Trade receivables
16
Other assets
11
Cash and cash equivalents
15
18
14
4
TOTAL
Assets (in EUR million)
100 100
1,453.5 1,419.6
The share of current assets decreased from 66% in the previous year to 58% as of March 31, 2013. By contrast,
the share of non-current assets rose year-on-year to 42% (March 31, 2012: 34%).
25
0 2 / 11 b a l a n c e s h e e t s t r u c t u r e - e q u i t y a n d l i a b i l i t i e s (in %)
equity and liabilities
March 31 March 31
2012
2013
Equity
43
52
Provisions
and deferred taxes
10
Trade payables
13
Other liabilities
8
Financial liabilities
26
10
14
11
13
TOTAL
Equity and liabilities (in EUR million)
100 100
1,453.5 1,419.6
The structure of equity and liabilities also changed as against the previous year. The share of financial liabilities
decreased from 26% in the previous year to 13% at the end of the reporting period. This development is
predominantly attributable to the repayment of the fixed tranche of the syndicated loan and lower utilization of
the credit line of the follow-up financing. By contrast, the share of equity increased.
As a consequence of the repayment of the syndicated loan, the equity ratio increased to 52% year-on-year
(March 31, 2012: 43%).
Net assets
Under assets, non-current assets climbed by 21% to EUR 512 million as of the end of the fiscal year (March 31,
2012: EUR 422 million). Investment in the extension of logistics capacity, further expansion and modernization of
the Group’s own retail business as well as the construction of an administrative building at the Metzingen location.
Decrease in inventories essentially driven by optimization of inventory management
As of the end of the reporting period, inventories were down 5% at EUR 400 million (March 31, 2012: EUR
422 million). Adjusted for currency effects, inventories fell by 7% year-on-year. Effective measures to optimize
inventory management were the key drivers of this development.
Increase in trade receivables driven by expansion of the concession model
Trade receivables rose by 5% year-on-year to EUR 250 million (March 31, 2012: EUR 238 million). Adjusted for
currency effects, this marks an increase of 4%. Key driver for this development were higher trade receivables
due to the expansion of the concession model.
Other assets increased by 24% year-on-year to EUR 201 million (March 31, 2012: EUR 161 million). This increase
is largely attributable to the rise in deferred tax assets as well as increased advance payments to suppliers and
tax authorities.
Cash and cash equivalents amounted to EUR 57 million as of the end of the reporting period (March 31, 2012:
EUR 211 million). The fall is mainly attributable to the repayment of the syndicated loan.
26
Under equity and liabilities, provisions and deferred tax liabilities were down 4% on the previous year's level at
EUR 143 million (March 31, 2012: EUR 149 million EUR). This includes provisions for pensions and other personnel
expenses of EUR 77 million (March 31, 2012: EUR 76 million). It also includes other provisions totaling EUR 47
million (March 31, 2012: EUR 53 million) and deferred tax liabilities of EUR 19 million (March 31, 2012: EUR 20
million).
Trade payables were up 6% year-on-year at EUR 195 million (March 31, 2012: EUR 184 million). This corresponded
to an increase of 6% also after adjustment for currency effects.
As of the end of the reporting period, the total of current and non-current financial liabilities decreased by 50%
to EUR 188 million (March 31, 2012: EUR 376 million). The decline in non-current financial liabilities of EUR 194
million is mainly due to the reduction in utilization associated with the syndicated financing concluded in March.
In addition to the set tranche of the syndicated loan, financial liabilities include negative fair values of interest
and currency hedges with a total amount of EUR 7 million (March 31, 2012: EUR 18 million)..
Other liabilities increased by 26% year-on-year to EUR 159 million (March 31, 2012: EUR 127 million). The key
driver of this development was the increase in income tax and value added tax liabilities and accrued liabilities
for overtime and vacation entitlement. The item also increased because of higher accrued liabilities from lease
obligations for the Group’s own retail business as a consequence of the expansion.
Trade net working capital as percentage of sales slightly below prior year level
Trade net working capital is the HUGO BOSS Group's key performance indicator for measuring the efficient use
of capital. The only three components involved in calculating this figure are the operating figures for inventories,
trade receivables and trade payables.
As against the previous year, trade net working capital decreased by 5% to EUR 454 million (March 31, 2012: EUR
476 million). The rise in trade receivables was offset by the decline in inventories and the rise in trade payables.
The disproportionate rise in relation to sales is due, in particular, to effective measures to reduce inventories.
At 20.0%, the twelve-month moving average of trade net working capital as a percentage of sales was slightly
below the previous year level (2012: 20.2%).
27
Financial position
0 2 / 1 2 F r e e C a s h f l o w (in EUR million)
Jan.-March 2012
0 2 / 1 3 N e t f i n a n c i a l l i a b i l i t i e s (in EUR million)
Jan.-March 2013
7.2
March 31, 2012
March 31, 2013
141.0
123.6
5.1
- 29 %
- 12 %
Statement of cash flows
The statement of cash flows is presented in accordance with IAS 7. The cash and cash equivalents shown here
are the same as the item of the same name in the consolidated balance sheet.
Cash flow from operating activities up slightly year-on-year
At EUR 36 million, the cash flow from operating activities was up on the previous year's level of EUR 22 million.
The change in the collection cycle and the measures taken to reduce inventories resulted in a year-on-year decline
in cash outflow from current net working capital to EUR 43 million (previous year: EUR 92 million). A key factor
in this was the lower cash outflow generated by the change in trade payables as well as other liabilities of EUR
33 million (previous year: cash outflow of EUR 66 million).
At EUR 31 million, cash outflow from investing activities was higher than in the previous year (previous year:
EUR 15 million). Key factors for this development were investments in the extension of logistics capacity, further
expansion and modernization of the Group’s own retail business as well as the construction of an administrative
building at the Metzingen location.
The free cash flow, calculated from the cash provided by operating activitiesand cash used for investing activities,
decreased by EUR 2 million in the first three months of fiscal year 2013 to EUR 5 million (previous year: EUR 7
million).
The cash outflow from financing activities amounted to EUR 203 million in total in the first quarter of 2013
(previous year: cash inflow of EUR 4 million) and is essentially dominated by the repayment of the fixed tranche
of the replaced syndicated loan of EUR 300 million. This is partly offset by the cash inflow from utilization of
the follow-up financing less the associated transaction costs. The cash inflow in the same period of the previous
year was the result of local, short-term refinancing transactions.
Cash and cash equivalents amounted to EUR 57 million as of the end of the reporting period (March 31, 2012:
EUR 211 million). The decrease was mainly influenced by the repayment of the fixed tranche of the syndicated
loan of EUR 300 million.
28
Net financial liabilities
Net financial liabilities are the total of all financial liabilities due to banks less cash and cash equivalents.
Improvement in net financial liabilities
At EUR 181 million, financial liabilities due to banks were significantly below the previous year’s level (March 31,
2012: EUR 352 million). This development was largely due to the repayment of the fixed tranche of the syndicated
loan of EUR 300 million. However, this effect was offset by utilization of EUR 110 million of the follow-up financing
concluded in March 2013.
The cash and cash equivalents decreased from EUR 211 million in the previous year to EUR 57 million as of March
31, 2013. The decline is mainly due to the repayment of the syndicated loan that has been replaced.
Net financial liabilities therefore improved by a further EUR 17 million from EUR 141 million to EUR 124 million
as of March 31, 2013.
Capital expenditure
Significant increase in capital expenditure in the first quarter of 2013
In the first quarter of fiscal year 2013, the total capital expenditure by the HUGO BOSS Group on property, plant
and equipment and intangible assets amounted to EUR 31 million, a significant increase on the previous year's
level (previous year: EUR 15 million).
In the first three months of fiscal year 2013, the global expansion and modernization of the Group’s own retail
business accounted for 38% of total investments (previous year: 63%). Investments in new stores amounted
to EUR 7 million (previous year: EUR 3 million).
In Europe, a store was opened at Heathrow Airport in London and a flagship store was opened on Leidestraat
in Amsterdam among other places. In the Americas, HUGO BOSS opened an attractive location in San Diego.
In addition, a further EUR 5 million were invested in the renovation and modernization of existing retail locations
in the U.S. in particular (previous year: EUR 6 million). A large part of the total is attributable to the renovation of
retail stores at Columbus Circle in New York, in the Dadeland Mall in Miami and in the Mall of Millenia in Orlando.
Administrative investments amounted to EUR 5 million and therefore increased by EUR 2 million as against
the previous year (previous year: EUR 3 million). This figure includes capital expenditure of EUR 2 million for an
additional administrative building. Investments in IT infrastructure and other administrative investments contributed
EUR 3 million to the investment volume.
Investments in the production, logistics and distribution structure and for research and development amounted
to EUR 14 million (previous year: EUR 3 million). Of particular note are the investments in setting up a new
distribution center in Filderstadt totaling EUR 11 million.
Report on Risks and Opportunities
29
Report on Risks and Opportunities
HUGO BOSS has a comprehensive risk management system enabling Management to identify and analyse
opportunities and risks as well as to take appropriate measures at an early stage. The risk situation has not changed
materially compared to the reporting year 2012. A detailed overview of risks and opportunities can be found in
the annual report 2012. All statements included therein regarding risks and opportunities continue to be valid.
Subsequent Events and Outlook
30
HUGO BOSS is forecasting continuing profitable growth in 2013. The implementation of the medium-term growth
strategy will help the Group increase sales and earnings to new record levels. Sales and operating profit (EBITDA
before special items) are each expected to grow at a high single-digit rate.
Subsequent Events
In the middle of April the new founded subsidiary in Singapore, H.BOSS SOUTH EAST ASIA PTE. LTD., signed
a contract to take over four stores from the most important franchise partner in Singapore. Subject of this
contract is the takeover of four own retail stores in Singapore effective of August 1, 2013. The purchase price
for the acquisition of the location and the assets involved amounts to approx. EUR 4.7 million (SGD 7.5 million).
The takeover of the locations, run by the local franchsie partner, is an important expansion of the Group´s own
retail network in the Asian market.
Between the end of the first quarter of 2013 and the publication of this report, there were no further material
macroeconomic, socio-political, sector-related or company-specific changes that the management expects to
have a significant influence on the results of operations, net assets, and financial position of the Group.
Outlook
The following report sets out the HUGO BOSS Management’s forecasts for the future business performance
and describes the anticipated development of the main economic and sector conditions. It reflects the current
knowledge of the management at the time the report was prepared, while also aware that the actual development
may differ considerably from these forecasts, either positively or negatively, due to the occurrence of risks
and opportunities as described in the report on risks and opportunities in the 2012 annual report. Other than
the statutory publication requirements, the HUGO BOSS Group does not assume any obligation to update the
statements contained in this report.
As an international fashion company, the performance of HUGO BOSS is influenced by global economic conditions
and industry-specific developments. It is therefore very important for the Group to identify macroeconomic
and industry-specific trends at an early stage so that it can react to them in good time with suitable measures.
Moderate growth in global economy in 2013
The forecasts for global economic growth in 2013 continue to be subject to uncertainty. The extent to which the
recurring setbacks in the fight against the euro debt crisis can be stemmed and a lasting solution can be found
for the budget problems in the United States will be of great significance to the development of the global
economy. Opportunities for the economy are primarily arising from the monetary and fiscal policy stimulus
measures planned and in some cases already implemented in many emerging economies. Overall, experts are
anticipating moderate global economic growth in 2013 with an increase roughly at the level of the previous year.
Economic environment in the euro zone expected to remain difficult
The economic prospects for 2013 have improved slightly as against the previous year in Europe, though a
downturn in economic performance is still anticipated for 2013 as a whole. Among other things, this is due to the
political instability in Italy and questions concerning the future of Cyprus in the euro zone. High unemployment
and restrictive government financial policy will continue to weigh on private consumer spending in many places.
Over the year, the recovery of the global economy and the associated rise in international demand are expected
31
to support a return to positive growth rates. Germany is expected to grow slightly in 2013 and therefore perform
better compared to the region as a whole. This development should be aided by its low unemployment, robust
private consumption, stable domestic demand and exports.
Continued moderate growth of American economy
If a lasting solution can be found to reduce its high public debt, conditions for growth in the United States
are likely to remain positive in 2013. A significant upturn in private consumer spending and increased corporate
investments should contribute to this. Overall, economic growth of almost 2% is expected in the U.S. After a
mixed performance in the past year, economists are forecasting a substantial recovery in growth rates in Latin
America in 2013. Among other things, this trend will likely be supported by an upturn in the export sector. Chile,
Colombia and Peru are expected to contribute significantly to growth in the region, and the Brazilian economy
should also pick up given the considerable monetary policy stimuli.
Continuing high rate of growth in Asia
The Asian economy is likely to see slightly stronger growth in 2013 than in the previous year. Growth is expected
to reach almost 7% and benefit from an improved export environment and stable domestic demand. Experts
are predicting economic growth of just over 8% in China in 2013, representing a slight year-on-year acceleration.
Consumer spending should benefit from wage increases and an improvement on the labor market in the short
term. Further growth stimulus will emerge from a robust housing market and a gradual upturn in the export
climate. The government’s aggressive fiscal and monetary policies should allow a moderate upswing in Japan.
Meanwhile, growth on the Australian economy is expected to slow slightly due to the difficult situation in the
real estate sector and restrained private consumption.
Continued sector growth expected
The growth trend in the premium and luxury goods sector is expected to continue in 2013. According to industry
experts, the currency-neutral growth rate should be in the mid single-digit range and is thus widely expected to
outperform the economy as a whole.
All regions are expected to contribute to sector growth in 2013, and this will be aided in particular by rising demand
in the emerging economies. This demand will probably boost sales performance in Europe and the Americas
in the form of tourism. Growth in Western Europe and particularly in Southern Europe will most probably still
be affected by muted consumer confidence due to the debt crisis. However, this is likely to be offset by robust
growth in Eastern Europe and the Middle East in particular. Demand in the Americas is still considered stable
as consumer confidence has increased again. The Central and South American markets will make an above
average contribution to the region's moderate growth prospects. Despite the slowdown in growth observed in
the past year, the highest growth rates for the sector are forecasted in Asia. In China, the sector environment
is expected to recover again over the course of 2013 following the marked downturn in 2012. The extent of this
recovery will depend to a large extent on the relevant consumer segment's confidence in the future economic
and political development of the country.
32
Sales to increase at a high single-digit rate on a currency-adjusted basis
HUGO BOSS expects to increase its currency-neutral sales in the high single-digit range in 2013. The Group
anticipates that this growth will exceed the expansion rates for the global economy and the luxury goods sector.
OUTLOO K 2 01 3
SALES GROWTH
(CURRENCY-NEUTRAL)
High single-digit
GROWTH IN
EBITDA BEFORE SPECIAL ITEMS
High single-digit
CAPITAL EXPENDITURE
Increase on a comparable basis
OWN RETAIL NETWORK
Around 50 net organic openings
Growth anticipated in all regions
HUGO BOSS is assuming that all regions will contribute to the forecasted sales increase for the Group as a
whole in 2013. Growth is expected in all major markets in Europe. Strong increases are predicted in Eastern
Europe in particular. In the comparatively much smaller markets of Southern Europe, the effects of the debt
crisis and the difficult consumer environment could lead to weaker growth rates. In the Americas, a continued
positive development is anticipated, still driven primarily by the strength of the U.S. market. In Asia, the Group
is planning to generate stronger currency-neutral growth as against the previous year. This should be supported
by a gradual improvement in growth rates on the key Chinese market. Sales in the royalties segment are also
expected to develop positively.
Group’s own retail business to drive sales growth
The own retail business will be the main sales driver for the Group as a whole in 2013. Its retail sales are expected
to increase at a double-digit rate, mainly as a result of strong growth in directly operated stores and online. In
addition to the positive effects of the expansion of the Group’s own store network, comp store sales are also
forecasted to rise. The Group is benefiting here from the further professionalization of its retail activities and
the strong appeal of its brands. The takeover of HUGO BOSS shop-in-shops previously managed by wholesale
partners in Germany and Spain will make a moderate contribution to the sales increase in own retail. For the
wholesale business, a roughly stable sales development is forecasted on a currency-neutral basis. This projection
is based on the development of incoming orders, feedback from trading partners on the new collections and
expectations regarding the development of the replenishment business.
Continued selling space expansion in own retail
The HUGO BOSS Group will continue to expand its own retail activities and increase the number of new stores
by around 50 in net terms in 2013. Based on an analysis of its global market penetration, the Group believes
that there are opportunities to profitably increase its selling space in all regions. In 2013, HUGO BOSS plans in
particular to tap the Russian market with its own retail business. In addition to organic new store openings, the
Group also aims to take over around 50 HUGO BOSS shop-in-shops previously managed by wholesale partners
in Germany and Spain.
Operating profit projected to increase at a high single-digit range
HUGO BOSS is planning to increase its operating profit (EBITDA before special items) at a high single-digit range
in 2013. The main factors driving profit growth will be the expansion and improved management of the Group's
own retail business. Given the rising share of this distribution channel, the gross profit margin is expected to
increase as against the previous year. Operating expenses will grow, mainly due to the further expansion of the
Group’s own retail activities and higher marketing expenses. The increase in other operating expenses should be
below sales growth. As a result of the improved EBITDA before special items, net income is also expected to rise.
33
Strict management of trade net working capital
Strict management of trade net working capital is a high priority in order to generate improvements in
operating cash flow. Particular attention is paid to reducing the cash conversion cycle. Potential for improvement is seen in reducing days inventories outstanding in particular. The Group is therefore aiming to reduce
days inventories outstanding, particularly in its own retail business, by the more frequent renewal of the
product range as a result of the changed collection cycle and improved planning of merchandise flows. Overall,
the Group expects trade net working capital to grow more slowly than sales in 2013.
Investing activities to focus on own retail business
Capital expenditure in 2013 will focus on expanding the Group’s own retail activities and renovating existing stores
and shops. On a comparable basis, i.e. without taking into account the expenses incurred in the past year in
connection with the ongoing construction of a new distribution center for flat-packed goods, capital expenditure
will therefore be up on the previous year’s level in 2013.
Continuing strong cash flow development
The Group anticipates that cash flow will develop strongly in 2013, primarily due to the planned increase in
earnings, strict management of trade net working capital and disciplined investment activity. In addition to the
dividend payment, excess funds are to be used to further reduce debt. Accordingly, the Company expects net
financial liabilities at the end of the year to be lower than in the previous year.
Higher dividend proposed
HUGO BOSS pursues a profit-based dividend policy under which the shareholders participate appropriately in the
Group’s profit development. Between 60% and 80% of net income is to be distributed to the shareholders on
a regular basis. On the basis of the significant increase in profit in fiscal year 2012 and the positive expectations
for 2013, the Managing Board and Supervisory Board intend to propose to the Annual Shareholders’ Meeting on
May 16, 2013 a dividend of EUR 3.12 per ordinary share (2011: EUR 2.88 per ordinary share and EUR 2.89 per
preferred share) for fiscal year 2012. The proposal corresponds to a payout ratio of 70% of net income attributable
to the equity holders of the parent company in 2012 (2011: 70%). Provided the shareholders approve the proposal,
the dividend will be paid out on the day following the Annual Shareholders’ Meeting, i.e. on May 17, 2013. Based
on the number of shares outstanding at the end of the year, the amount distributed will total EUR 216 million
(2011: EUR 199 million).
Ambitious medium-term growth plans
The Group is planning to generate significant sales and earnings increases in the medium term. The Group
strategy is based on organic growth of the existing brand portfolio. Sales are expected to reach EUR 3 billion
in 2015. Operating profit is set to rise to EUR 750 million in the same year. The Group expects to make further
progress towards achieving these goals in 2014. Sales and operating profit are forecasted to rise further. A
continued recessionary economic environment, particularly in major European core markets, cost inflation in
sourcing processes and a loss of appeal of the Group’s brands could jeopardize the achievement of these goals.
The Group has taken precautions to limit the probability of these or other risks occurring and their impact if they
do. Details can be found in the risk report in the 2012 annual report.
Summary on Earnings, Net Assets and Financial Position
34
Summary on Earnings, Net Assets and
Financial Position
In summary, earnings, net assets and the financial position indicate that HUGO BOSS Group continued to be in
a sound financial position at the time that this report for the first three months of fiscal year 2013 was prepared.
Metzingen, April 17, 2013
HUGO BOSS AG
The Managing Board
Christoph Auhagen
Mark Langer
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
3
Consolidated Income Statement
36
Consolidated Income Statement
of the HUGO BOSS Group for th e peri o d f ro m Ja n ua ry 1 to M a rc h 3 1 , 2 01 3
(in EUR million)
2013
Net sales
Cost of sales
2012 1
593.5
606.8
(213.9)
(224.2)
(12.5)
(12.5)
Gross Profit
367.1
370.1
in % of Sales
Selling and distribution expenses
61.8
61.0
(199.0)
(189.2)
Administration costs and other operating income/expenses
(56.7)
(51.5)
Operating result (EBIT)
111.4
129.4
in % of Sales
18.8
21.3
Net interest income/expense
(3.8)
(3.3)
(1.2)
(0.9)
Financial result
(5.0)
(4.2)
Earnings before taxes
106.4
125.2
Income taxes
(24.4)
(30.0)
Net income
82.0
95.2
81.6
93.9
Attributable to:
Equity holders of the parent company
Net income
Earnings per share (EUR)
Ordinary share
Preferred share
0.4
1.3
82.0
95.2
2
1.18
3
ertain amounts shown here do not correspond to previous year figures and reflect adjustments made (as detailed in the Condensed Notes to the Consolidated Interim
C
Financial Statements, Note 2 // Accounting policies).
2
3
Preferred shares were converted into ordinary shares on 15 June, 2012 after stock market trading.
1
1.36
1.37
Consolidated Statement of Comprehensive Income
37
Consolidated Statement of Comprehensive
Income
of the HUGO BOSS Group for th e peri o d f ro m Ja n ua ry 1 to M a rc h 3 1 , 2 01 3
(in EUR million)
2013
20121
82.0
95.2
Remeasurement of defined benefit plans
0.0
0.0
Income taxes
0.0
0.0
8.9
(1.8)
Net income
Items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Differences arising from currency differences
4.7
1.8
Income taxes
Gains/losses from market valuation of hedges
(1.2)
(0.5)
Other comprehensive income, net of tax
12.4
(0.5)
Total comprehensive income
94.4
94.7
93.2
94.1
Attributable to:
Equity holders of the parent
Total comprehensive income
1
1.2
0.6
94.4
94.7
C
Consolidated Balance Sheet
38
Consolidated Balance Sheet
of the HUGO BOSS Group as of M A rch 3 1 , 2 01 3
(in EUR million)
Assets
March 31, 2013
March 31, 20121
Dec. 31, 20121
Intangible Assets
140.5
139.4
142.2
January 1, 20121
141.1
Property, plant and equipment
371.4
282.1
357.5
285.5
Deferred tax assets
67.5
54.1
66.7
55.9
Non-current financial assets
15.7
13.5
14.5
13.8
Non-current tax receivables
2.1
2.7
2.1
2.7
Other non-current assets
2.7
2.6
2.6
2.7
501.7
Non-current assets
599.9
494.4
585.6
Inventories
400.0
421.9
430.3
457.9
Trade receivables
249.7
237.8
214.9
174.6
Current tax receivables
15.4
10.4
10.9
8.2
Current financial assets
17.9
25.8
26.6
17.5
Other current assets
79.4
52.2
61.3
65.5
57.3
211.0
254.6
200.4
Current assets
Total assets
Equity and Liabilities
Subscribed capital
Own shares
Capital reserve
Retained earnings
Accumulated other comprehensive income
Profit attributable to equity holders of the parent company
Equity attributable to equity holders of
the parent company
Group Equity
Non-current provisions
819.7
959.1
998.6
924.1
1,419.6
1,453.5
1,584.2
1,425.8
March 31, 2013
March 31, 20121
Dec. 31, 20121
January 1, 20121
70.4
70.4
70.4
70.4
(42.3)
(42.3)
(42.3)
(42.3)
0.4
0.4
0.4
0.4
595.3
493.1
287.9
208.3
2.9
(20.7)
(8.7)
(20.9)
81.6
93.9
307.4
284.9
708.3
594.8
615.1
500.7
25.8
24.5
24.6
23.8
734.1
619.3
639.7
524.5
53.4
34.0
53.1
39.5
154.8
348.9
63.3
355.0
Deferred tax liabilities
18.9
20.3
19.6
20.9
Other non-current liabilities
12.3
13.8
14.0
15.6
239.4
417.0
150.0
431.0
Non-current financial liabilities
Non-current liabilities
Current provisions
71.0
94.3
90.3
89.8
Current financial liabilities
32.7
26.5
332.2
33.5
Income tax payables
Trade payables
Other current liabilities
Current liabilities
Total equity and liabilities
1
53.2
45.3
51.2
41.9
195.3
183.6
227.5
225.1
93.9
67.5
93.3
80.0
446.1
417.2
794.5
470.3
1,419.6
1,453.5
1,584.2
1,425.8
C
Statement of Changes in Consolidated Equity
39
Statement of Changes in Consolidated Equity
o f t h e HUGO BOSS Group for the period f ro m Ja n ua ry 1 to M a rch 3 1 , 2 01 3
(in EUR million)
Accumulated other comprehensive
income
Retained earnings
January 1, 2012 (as reported)
Subscribed
Capital
Own
Shares
Capital
Reserve
Legal
Reserve
Other
Reserves
70.4
(42.3)
0.4
6.6
200.3
Change in accounting policies
January 1, 2012 (adjusted)1
Differences
arising form
currency Market valuation
of hedges
translation
(9.5)
(11.4)
1.3
70.4
(42.3)
0.4
6.6
201.6
Non-controlling
interests
Group
Equity
499.4
23.8
523.2
23.8
524.5
1.3
500.7
1.3
(9.5)
(11.4)
93.9
1.3
95.2
(1.1)
1.3
0.1
(0.6)
(0.5)
Net income
Other income
Equity attributable to equity
holders of the
parent company
Changes in scope of consolidation
Allocated to retained earnings
284.9
March 31, 20121
70.4
(42.3)
0.4
6.6
486.5
(10.6)
(10.1)
594.8
24.5
619.3
January 1, 2013 (as reported)
70.4
(42.3)
0.4
6.6
279.5
(5.2)
(3.5)
613.3
24.6
637.9
24.6
639.7
81.6
0.4
82.0
11.6
0.8
12.4
Change in accounting policies
1.8
281.3
(5.2)
(3.5)
Other income
0.0
8.1
3.5
Changes in scope of consolidation
0.0
January 1, 2013 (adjusted)1
70.4
(42.3)
0.4
6.6
1.8
Net income
Allocated to retained earnings
March 31, 2013
1
615.1
1.8
0.0
0.0
307.4
70.4
(42.3)
0.4
6.6
588.7
2.9
0.0
708.3
Certain amounts shown here do not correspond to previous year figures and reflect adjustments made (as detailed in the Condensed Notes to the Consolidated Interim Financial Statements, Note 2 // Accounting policies).
25.8
734.1
Consolidated Statement of Cash Flows
40
Consolidated Statement of Cash Flows
Of the HUGO BOSS Group for th e peri o d f ro m Ja n ua ry 1 to M a rc h 3 1 , 2 01 3
(in EUR million)
2013
20121
Net income
82.0
95.2
21.3
18.3
Unrealized net foreign exchange gain/loss
0.0
3.7
Other non-cash transactions
0.1
(3.6)
Income tax expense/refund
24.4
30.0
Interest income and expenses
3.8
3.3
33.3
31.8
Change in receivables and other assets
(42.6)
(58.3)
Change in trade payables and other liabilities
(33.4)
(65.9)
Result from disposal of non-current assets
0.7
0.1
Change in provisions for pensions
0.9
1.1
Change in other provisions
(22.0)
(1.8)
Income taxes paid
(28.6)
(28.1)
Change in inventories
Cash flow from operations
39.9
25.8
Interest paid
(4.4)
(4.6)
Interest received
Cash flow from operating activities
0.6
0.9
36.1
22.1
(30.1)
(12.4)
Investments in intangible assets
(1.3)
(2.7)
Payment for changes in scope of consolidation
(0.3)
0.0
Cash receipts from sales of PPE2 and intangible assets
(0.1)
0.2
Cash flow from investing activities
(31.0)
(14.9)
Change in current financial liabilities
(310.7)
3.5
108.0
0.0
(0.5)
0.4
Investments in PPE2
Cash receipts of non-current financial liabilities
Repayment of non-current financial liabilities
Cash flow from financing activities
Exchange rate-related changes in cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
(203.2)
3.9
0.8
(0.5)
(197.3)
10.6
254.6
200.4
57.3
211.0
Certain amounts shown here do not correspond to previous year figures and reflect adjustments made (as detailed in the Condensed Notes to the Consolidated Interim
2
Property, plant and equipment.
1
Condensed Notes to the Consolidated Interim Financial Statements
41
Condensed Notes to the Consolidated
Interim Financial Statements
1 // GENERAL INFORMATION
The interim financial report of HUGO BOSS AG as of March 31, 2013, was prepared pursuant to Section 37x of
the Securities Trading Act in accordance with the International Financial Reporting Standards (IFRS) and their
interpretations that were valid as of the balance sheet date. The regulations of IAS 34 on Interim Financial
Reporting were applied in particular.
The consolidated interim management report and the consolidated interim financial statements were not audited
in line with Article 317 of the German Commercial Code nor were they subjected to a review on the part of a
person authorized to conduct an audit. The condensed consolidated interim financial statements and consolidated
interim management report of HUGO BOSS AG, Metzingen, were authorized for issue to the Supervisory Board by
the Managing Board on April 17, 2013. Before publication the condensed consolidated interim financial statement
and the consolidated interim management report was discussed with the supervisory board’s audit committee.
2 // aCCOUNTING pOLICIES
All interim reports of companies included in the consolidated interim report were prepared with uniform accounting
policies. A detailed description of the applied accounting and consolidation methods can be found in the notes
to the 2012 consolidated financial statements. The adoption of revised or new standards on January 1, 2013
resulted in the following changes in accounting policies.
Accounting Policies adopted f o r t h e f i rst t i m e
IAS 19 – Employee Benefits (revised 2 011 , IAS 19 R )
As of January 1, 2013, the HUGO BOSS Company adopted IAS 19, Employee Benefits (revised 2011, IAS 19R),
which was published by the IASB in June 2011. The standard is effective for fiscal years beginning on or after
January 1, 2013. The standard was adopted retroactively. The amendment was in endorsed European law by
the EU in June 2012. The following changes to IAS 19R affect the net assets, financial position and results of
operations of the HUGO BOSS Company:
IAS 19R replaces interest expense and the expected return on plan assets with a net interest income amount.
That is derived by multiplying the net pension obligation by the discounting rate on which the measurement
of the gross pension obligation (defined benefit obligation) is based. The net defined benefit liability (asset)
comprises the interest income on plan assets and the interest expense on the DBO. The difference between
the interest income on plan assets and the return on plan assets is reported in other comprehensive income in
the consolidated statement of comprehensive income.
IAS19R also more precisely defines the concept of risk sharing between the employees and the employer. This
more precise definition affects the calculation of pension obligations under plans with future employee contributions effectively rising over their remaining working life. In particular, this concerns pension plans that feature
backloading in later years. The previous IAS 19 provided for the calculation of a total obligation including future
employee-funded benefit increases. In accordance with IAS 19R, the allocation of vesting benefits is calculated
on the basis of the net obligation exclusively of future employee-funded benefit increases. This resulted in a
reduction in the DBO and a different allocation of service cost over working life.
42
A lesser effect results from the recognition of the administration costs of providing benefits not related to the
administration of plan assets.
The recognition of non-vested past service cost as it arises rather than recognizing it over the period until vesting
does not affect the HUGO BOSS Company.
Similarly, the abolition of the corridor method does not require any adjustment at HUGO BOSS.
The new regulation on the recognition of bonus payments for German early partial retirement plans also means a
change in the recognition and classification of expense. In the past, provisions for bonus payments were recognized
in full immediately on conclusion of an early partial retirement agreement and classified as a termination benefit.
The regulations of IAS 19R clarify that these bonus payments no longer constitute a settlement and instead
employees earns their claim to them through their work. Thus, the provision must accrue over the vesting period.
This resulted in a reduction in the provision previously recognized in full for partial early retirement bonuses and
an accrual over the active phase of the partial early retirement arrangement.
The retroactive adoption of IAS 19R resulted in the following effects in the opening balance as of January 1,
2012 and the prior-year period:
(in EUR million)
December 31, 2012
Assets
Thereof deferred tax assets
Non-current liabilities
Thereof non-current provisions
Group equity
Before
adjustment
January 1, 2012
Adjustment
After
adjustment
Before
adjustment
Adjustment
After
adjustment
1,584.5
(0.3)
1,584.2
1,425.9
(0.2)
1,425.8
67.0
(0.3)
66.7
56.1
(0.2)
55.9
152.1
(2.1)
150.0
432.5
(1.5)
431.0
55.2
(2.1)
53.1
41.0
(1.5)
39.5
637.9
1.8
639.7
523.2
1.3
524.5
Thereof retained earnings
286.6
1.3
287.9
206.9
1.3
208.2
Thereof net income
311.5
0.0
311.5
291.4
0.0
291.4
5.4
0.5
5.9
12.1
0.0
12.1
Thereof total comprehensive income
The retroactive adoption of IAS 19R had only an insignificant effect on the consolidated income statement and
the statement of comprehensive income in the first quarter of 2013 as well in the comparative quarter of 2012.
Therefore the effect on the consolidated balance sheet as of March 31, 2013 was insignificant in comparison to
the consolidated balance sheet as of December 31, 2012.
43
New and amended ACCOUNTING POLICIES
Changes of IAS 1 "Presentation of finacial statements" require that other comprehensive income must be broken
down so that other items that will later be reclassified to the income statement are reported seperately from
items that will remain in other comprehensive income.
The adoption of new accounting regulations IAS 1, IAS 32, IAS 34 and the first time adoption of IFRS 13 did not
materially affect the Group´s results of operations, net assets or net financial position.
CHANGE IN ACCOUNTING METHOD/ CHANGE IN PRESENTATION
Changes in accounting method and changes in presentation described in the consolidated financial statements
2012 were also taken into account as of March 31, 2013. The prior-year figures were adjusted retroactively in
accordance with the regulations of IAS 8.
3 // CURRENCY TRANSLATION
The exchange rates of currencies used in the interim statements changed relation to the euro in the reporting
period as follows:
Currency
Country
1 EUR =
Average Rate
Jan.– March
2013
Jan. – March
2012
Closing Rate
Jan. – Dec.
2012
March 31,
2013
March 31,
2012
Dec. 31,
2012
Australia
AUD
1.2714
1.2423
1.2412
1.2308
1.2836
1.2712
Brazil
BRL
2.6378
2.3154
2.5081
2.5703
2.4323
2.7036
Canada
CAD
1.3310
1.3130
1.2848
1.3021
1.3311
1.3137
China
CNY
8.2209
8.2677
8.1085
7.9600
8.4089
8.2207
Denmark
DKK
7.4590
7.4349
7.4437
7.4553
7.4399
7.4610
Great Britain
GBP
0.8506
0.8345
0.8111
0.8456
0.8339
0.8161
Hong Kong
HKD
10.2425
10.1710
9.9714
9.9420
10.3705
10.2260
JPY
121.6651
103.8248
102.5697
120.8700
109.5600
113.6100
Japan
Macau
MOP
10.5437
10.4735
10.2750
10.2520
10.6382
10.53625
Mexico
MXN
16.7118
17.0293
16.9091
15.8146
17.0222
17.1845
Norway
NOK
7.4277
7.5884
7.4767
7.5120
7.6040
7.3483
Sweden
SEK
8.4979
8.8523
8.7070
8.3553
8.8455
8.5820
Switzerland
CHF
1.2281
1.2080
1.2053
1.2195
1.2045
1.2072
U.S.A.
USD
1.3206
1.3106
1.2854
1.2805
1.3356
1.3194
4 // ECONOMIC AND SEASONAL INFLUENCES
As a global company, the HUGO BOSS Group is exposed to various economic developments. Industry-specific
seasonal fluctuations are typical for HUGO BOSS. However, HUGO BOSS’ operations have changed fundamentally in past years. While the business used to be dominated by two preorder seasons (spring/summer and fall/
winter) with orders being placed accordingly early, it has now become increasingly complex. Preorder business
now consists of four seasonal sales every year. In addition, the significance of seasonal influences is decreasing
as a result of the global expansion of the Group´s own retail business. Furthermore, HUGO BOSS also makes
every effort to increase efficiency through greater use of replenishment business to service less fashion-oriented
items. The number of monthly theme-oriented deliveries is also climbing continuously. These effects are steadily
reducing the seasonality over the course of HUGO BOSS’ business.
44
5 // Scope of CONSOLIDATION
The number of companies included in consolidation rose from 54 in the consolidated financial statements as of
December 31, 2012 to 55 in the January 1 to March 31, 2013 reporting period. The new company founded in fiscal
year 2012, HUGO BOSS RUS LLC, Moscow, Russia, was not included in the consolidated financial statements
as of December 31, 2012 owing to immateriality. The wholly owned subsidiary was included in consolidation for
the first time in the first quarter of 2013.
6 // MINORITY INTERESTS
The consolidated financial statements include companies in which HUGO BOSS AG holds less than 100% of
the equity. In accordance with IAS 27, these minority interests are reported in equity separately from the equity
held by the shareholders of HUGO BOSS AG in the consolidated balance sheet.
7 // NOTES TO THE CONSOLIDATED INCOME STATEMENT
Cost of Sales and Direct sellin g e x pen s e s
(in EUR million)
Jan. – March 2013 Jan. – March 2012
Cost of purchase
198.2
207.7
Cost of conversion
15.7
16.5
12.5
12.5
226.4
236.7
TOTAL
Direct selling expenses primarily include sales commissions, freight and duties charges as well as credit card fees.
Selling and Distribution Expen ses
(in EUR million)
Expenses for Group´s own retail business, indirect sales
and marketing organization
140.2
120.9
Marketing spendings
33.2
38.4
Logistics expenses
26.4
29.1
Bad Debts/Losses
TOTAL
(0.8)
0.8
199.0
189.2
Alongside personnel expenses, rental expenses are the largest item in the expenses for the Group’s own retail
business, indirect sales and marketing organization. In addition to staff and rental expenses for wholesale
distribution, the expenses for the Group´s own retail business, indirect sales and marketing organization also
include other expenses for retail services and regional sales management.
45
Administrative costs and othe r o p e r at i n g e x pen s e s / i n c o m e
(in EUR million)
General administration costs
40.8
36.4
Research and development costs
16.0
14.4
Secial items
(0.1)
0.7
TOTAL
56.7
51.5
General administrative costs consist largely of rent for premises, maintenance costs, IT operating costs, legal
and consulting fees, as well as the personnel expenses of the respective functional areas. In the HUGO BOSS
Group, research and development expenses are incurred primarily for the creation of fashion collections.
Personnel expenses
(in EUR million)
Wages and salaries
Social security
Expenses and income for retirement benefits and aid
TOTAL
102.9
91.6
16.6
14.9
1.3
1.8
120.8
108.3
Employees
March 31, 2013
Dec. 31, 2012
Industrial employees
4,269
4,303
Commercial and administrative employees
7,546
7,549
11,815
11,852
TOTAL
Depreciation
(in EUR million)
Non-current Assets
Tangible Assets
17.2
Intangible Assets
4.1
4.1
21.3
18.3
TOTAL
Cost of Materials
The cost of materials in the first quarter of 2013 amounted to EUR 177 million (2012: EUR 185 million).
14.2
46
8 // Earnings per share
(in EUR million)
Net income attributable to equity holders of the parent company
81.6
93.9
69,016,167
35,331,445
Average number of shares outstanding1
Ordinary shares
33,684,722
Preferred shares2
EPS ordinary shares in EUR3
1.18
1.36
1.37
EPS preferred shares in EUR2,3
Regardless own shares.
2
Preferred sahres were converted in ordinary shares on June 15, 2012 after stock market trading.
3
1
Pursuant to IAS 33, earnings per share (EPS) are calculated by dividing the net income or loss for the period by
the weighted average number of shares outstanding during the period. There were no shares outstanding that
could have diluted earnings per share either as of March 31, 2013 or as of March 31, 2012.
9 // Treasury shares
In the first three months of fiscal year 2013, HUGO BOSS AG did not purchase any treasury shares. HUGO BOSS
AG holds a total of 1,383,833 ordinary shares. This corresponds to a share of 1.97% or EUR 1,383,833 of the
share capital. The total of treasury shares include 855.278 former preferred shares, which were transferred to
ordinary shares on June 15, 2012. The transfer of all preferred shares to ordinary shares was approved at HUGO
BOSS annual shareholders’ meeting on May 3, 2012.
10 // Provisions For pensions and similar obligations
Provisions for Pensions
(in EUR million)
Provisions for pensions
Provisions for similar obligations
TOTAL
March 31, 2013
Dec. 31, 2012
26.5
27.4
4.6
4.5
31.1
31.9
The acturial calculation used to determine the present value of the defined benefit obligations also included
relevant influeced factors, the planned service cost and the expected return on plan assets. Parameters like
discount rate, rate of compensation increase, expected salary increase and the expected rate of return of plan
assets remain equal in the first three month of fiscal year 2013 in comparison to fiscal year 2012.
47
pensions expenses
(in EUR million)
Jan.- March 2013
Jan.- March 2012
Current service cost for the period
1.5
1.4
Net interest costs
0.2
0.2
Thereof interest expense from DBO
0.8
0.8
Thereof net interests from asset ceiling
0.0
0.1
(0.6)
(0.7)
1.7
1.6
Thereof interest income from plan assets
Pensions expenses for the period
Pensions expenses consist of current service cost of the period and net interest costs. Net interest costs comprise
of interest expenses, net interests from asset ceiling and interest income from plan assets.
11 // CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There were no material changes in contingent liabilities as against December 31, 2012. There were no contingent
assets as of March 31, 2013.
12 // CASH FLOW STATEMENT
The HUGO BOSS Group’s cash flow statement shows the changes that occurred in cash and cash equivalents
during the year under review on the basis of cash transactions. Pursuant to IAS 7, cash flows are reported separately
according to source and application in operating activities, investing activities, and financing activities. Cash flows
are derived indirectly based on the Group’s net income. Changes in the balance sheet items presented in the
cash flow statement cannot be derived directly from the balance sheet due to adjustments for currency effects.
48
13 // Segment Repo rting
(in EUR million)
Europe
Americas
1
Asia/Pacific
Jan. – March
2013
Jan. – March
2012
Jan. – March
2013
Jan. – March
2012
Jan. – March
2013
Total
operating segments
Royalties2
Jan. – March
2012
Jan. – March
2013
Jan. – March
2012
Jan. – March
2013
Jan. – March
2012
606.8
Net sales
366.7
385.2
127.6
121.7
86.3
87.8
12.9
12.1
593.5
Segment profit
133.7
148.7
32.1
34.9
30.1
33.2
11.0
11.6
206.9
228.4
in % of net sales
36.5%
38.6%
25.2%
28.6%
34.9%
37.9%
85.1%
95.6%
34.9%
37.6%
Segment assets
232.2
225.4
174.2
164.7
69.5
70.5
12.4
12.6
488.3
473.2
Capital expenditures
4.5
4.9
7.6
4.9
3.1
1.8
0.0
0.0
15.2
11.6
Impairments
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Thereof tangible assets
Thereof intangible assets
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Depreciation/Amortization
(6.4)
(5.6)
(3.8)
(3.0)
(4.1)
(3.1)
0.0
0.0
(14.3)
(11.7)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
SAR expenses and hedging
2
Previous year figures were adjusted.
1
49
Reconciliation
Net Sales
(in EUR million)
Net sales – operating segments
593.5
606.8
Corporate units
0.0
0.0
Consolidation
0.0
0.0
593.5
606.8
TOTAL
Operating income
(in EUR million)
Segment profit – operating segments
206.9
229.5
Depreciation/Amortization – operating segments
(14.3)
(11.7)
Impairments – operating segments
0.0
0.0
Special items – operating segments
0.0
0.0
Operating income (EBIT) – operating segments
192.6
217.8
Corporate units
(81.2)
(87.1)
Consolidation
0.0
(0.3)
Operating income (EBIT) HUGO BOSS Group
111.4
129.4
Net interest income/expense
(3.8)
(3.3)
(1.2)
(0.9)
106.4
125.2
March 31, 2013
Dec. 31, 2012
Capital expenditures – operating segments
15.2
98.0
Corporate units
16.2
67.8
Earnings before taxes HUGO BOSS Group
Capital Expenditures
(in EUR million)
Consolidation
TOTAL
0.0
0.0
31.4
165.8
(in EUR million)
Depreciation/Amortization – operating segments
Corporate units
Consolidation
TOTAL
(14.3)
(11.7)
(7.0)
(6.6)
0.0
0.0
(21.3)
(18.3)
50
Impairment
(in EUR million)
Impairment – operating segments
0.0
0.0
Corporate units
0.0
0.0
Consolidation
0.0
0.0
TOTAL
0.0
0.0
SAR-expenses and Hedging
(in EUR million)
SAR – expenses and hedging – operating segments
0.0
0.0
Corporate units
0.3
0.2
Consolidation
0.0
0.0
TOTAL
0.3
0.2
Segment Assets
(in EUR million)
March 31, 2013
March 31, 2012
Dec. 31, 2012
Segment assets – operating segments
488.3
473.2
442.8
Corporate units
161.4
186.4
202.4
0.0
0.0
0.0
15.4
10.4
10.9
Current financial assets
17.9
25.8
26.5
Other current assets
79.4
52.2
61.3
57.3
211.0
254.6
Current assets HUGO BOSS Group
819.7
959.1
998.6
Non current assets
599.9
494.4
585.9
1,419.6
1,453.5
1,584.5
Consolidation
Current tax receivables
Total assets HUGO BOSS Group
51
Geographic information
(in EUR million)
Third party sales
Jan.- March
Jan.- March
2013
2012
Germany
Other European markets
Non-currents assets
March 31,
March 31,
2013
2012
94.1
97.2
210.4
201.5
272.3
288.1
160.5
164.4
40.2
U.S.A.
97.4
93.0
44.9
Other North- and Latinamerica markets
30.1
28.8
17.9
16.8
China
53.8
53.0
38.5
38.1
Other Asian Markets
32.8
34.5
29.4
29.2
Royalties
12.9
12.1
15.1
15.1
593.5
606.8
516.6
505.3
TOTAL HUGO BOSS Group
14 // EVENTS AFTER THE END OF THE REPORTING PERIOD
In the middle of April the new founded subsidiary in Singapore, H.BOSS SOUTH EAST ASIA PTE. LTD., signed
a contract to take over four stores from the most important francise partner in Singapore.
Subject of this contract is the takeover of four own retail stores in Singapore effective of August 1, 2013. The
purchase price for the acquisition of the location and the assets involved amounts to approx. EUR 4.7 million
(SGD 7.5 million). The takeover of the locations, run by the local franchsie partner, is an important expansion of
the Group´s own retail network in the Asian market.
15 // Information Concerning The Majority Shareholder
In accordance with Section 21 of the Securities Trading Act (WpHG), shareholders are required to report the level
of their shareholdings if they exceed or fall below certain thresholds. The thresholds for reporting are 3 %, 5 %,
10 %, 15 %, 20 %, 25 %, 30 %, 50 % and 75 %.
On January 24, 2013 HUGO BOSS was notified of the following voting rights announcement pursuant to section
25a WpHG (German Securities Trading Act) of Mediobanca – Banca di Credito Finanziario S.p.A., Milan, Italy:
“We hereby notify you pursuant to section 25a para. 1 WpHG that since 21 January 2013 we no longer hold
any financial or other instruments pursuant to section 25a para. 1 WpHG which are structured in a manner that
enables us to acquire voting rights in HUGO BOSS AG. Therefore, on 21 January 2013 we have fallen below the
thresholds of 30%, 25%, 20%, 15%, 10% and 5% pursuant to section 25a para. 1 WpHG.
Further shares of voting rights that need to be notified in accordance with sections 21, 22, 25 WpHG are neither
held by nor attributable to us. The aggregate number of shares of voting rights that need to be notified in accordance with sections 21, 22, 25, 25a WpHG corresponds to the number disclosed above.”
52
The Company published these notifications verbatim on its “Investor Relations” website.
Metzingen, April 17, 2013
HUGO BOSS AG
The Managing Board
Christoph Auhagen
Mark Langer
FURTHER INFORMATION
4
Forward-Looking Statements
54
Forward-Looking Statements
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 or 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.
Financial calendar 2013
May 1 6
Annual Shareholders' Meeting
Ju ly 31
Publication of the First Half Year Report 2013
October 31
Publication of the Nine Months Report 2013
Contacts
Inve stor R el ati o n s
Phone
Email
+49 (0) 7123 94 - 80903
[email protected]
Denni s W eber
Head of Investor Relations
Phone +49 (0) 7123 94 - 86267
Fax
+49 (0) 7123 94 - 886267
DR . HJÖ RDI S KETTENBAC H
Head of Corporate Communication
Phone +49 (0) 7123 94 - 2375
Fax
+49 (0) 7123 94 - 2051
Reque st f o r an n ual rep o rt s
www.group.hugoboss.com/Order Service

First Quarter report January – March 2013 - HUGO BOSS

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