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Significant increase in Group sales expected

HUGO BOSS anticipates that it will increase its sales in 2014 by a high single-digit percentage, adjusted for currency effects, despite the still challenging economic and industry situation in many markets. In this context, the Group assumes that growth will exceed the growth rates seen in the global economy and the luxury goods industry.

Growth forecast in all regions

In 2014, it is anticipated that all regions will contribute to the forecast increase in sales of the Group as a whole. Growth is expected in all important European markets, which will be borne by increasing orientation in the region to the Group’s own retail business. Positive development is forecast for the Americas region, with the U.S. market making the biggest contribution. The Group is also budgeting for growth in Asia. On the vital Chinese market in particular, HUGO BOSS is working to implement various measures to accelerate growth on the prior year. Sales in the royalties segment should similarly see positive developments.

Group’s own retail business expected to see double-digit growth

In 2014, sales in the Group’s own retail business are expected to return a clear double-digit increase. Alongside growth in own retail stores, the online business will contribute above-average growth rates. In addition to the positive sales effect from floor space growth, retail comp store sales are also forecast to rise. Comp store sales increases will be supported by more intense market communication activities and implementation of various measures to improve retail management. Takeovers of mono-brand retail areas previously managed by retail partners or franchisees will have a moderately positive impact on the development of Group sales. Broadly stable sales development is forecast for the wholesale business. This outlook is based on the development of order intake, feedback from business partners on the new collections and expectations as to the replenishment business. Ongoing consolidation of the customer portfolio and the associated decline in business with smaller business partners will have a negative impact on sales through this distribution channel.

Network of retail stores continues to grow

Once again in 2014, the HUGO BOSS Group will continue to expand its own retail business and open some 50 new stores. Based on an analysis of its market penetration, the Group sees opportunities for profitable expansion in all regions. Alongside organic growth from new stores, the Group intends to take over HUGO BOSS shop-in-shops in Australia that were previously managed by a retail partner. As part of quality enhancement of its store portfolio first and foremost in Asia, the Group also intends to close sales points. In many cases, this development is associated with the relocation and merging of existing stores to form higher quality and larger sales points.

Gross profit margin is to further increase

HUGO BOSS expects a further increase in its gross profit margin in 2014. While efficiency gains in production and sourcing activities are likely to be offset by rising labor costs, the rising share of sales generated by the Group’s own retail business will support this increase. The gross profit margin generated through this distribution channel is higher than in the wholesale business.

Operating expenses rise on account of retail expansion and higher marketing expenses

The Group’s operating expenses will increase primarily on account of the ongoing expansion of its own retail business. In addition, the Group is planning to significantly increase its marketing expenses in comparison to the prior year with a view to boosting customer demand. Logistics expenses will rise due to the new flat-packed goods distribution center in Germany going into operation. The non-recurring cost effects associated with the migration of existing locations in the first half of the year will override the positive effects from falling handling costs. Research and development costs are expected to see a moderate rise. All in all, administration expenses are expected to grow at a slower rate than sales, however.

Operating result forecast to rise at high single-digit rate

The forecast growth in sales and gross profit margin will support a high single-digit rise in the operating result (EBITDA before special items). The adjusted operating margin is therefore likely to remain stable. A high single-digit rise is also anticipated for Group net income and earnings per share. Alongside the increase in the operating result, another contribution to this will come from a decrease in net finance costs on account of a decline in the average level of liabilities.

Strict management of trade net working capital

Strict management of trade net working capital continues to be given high priority in order to boost improvements to operating cash flow. In 2014, the Group aims to repeat the significant progress achieved in 2013 and keep the ratio of trade net working capital to sales roughly at the same level as at year end. Further potential for improvement has been identified specifically in reducing days inventories outstanding. For example, implementation of a more frequent product turn as a consequence of the change in the rhythm of collections, and improved merchandise flow planning are intended to reduce days inventories outstanding, specifically in the Group’s own retail business.

Capital expenditure focuses on Group’s own retail business

Expanding the Group’s own retail business and the renovation of existing stores and shops will be the focal point of the Group’s capital expenditure in 2014. Furthermore, the Group plans to reinforce its operating infrastructure in the areas of IT, logistics and production. On account of the non-recurrence of expenses incurred in the prior year in connection with the new flat-packed goods distribution center as well as the comprehensive expansion of the flagship store portfolio, however, capital expenditure will decrease in 2014 amounting to between EUR 110 million and EUR 130 million.

Healthy cash flow development supports achievement of positive net financial position

The Group anticipates a healthy cash flow in 2014 primarily on account of the forecast earnings growth, strict management of trade net working capital and value-enhancing capital expenditure. Surplus funds in excess of the dividend payment are to be kept on hand as a liquidity reserve. The Group is correspondingly working on the assumption that cash and cash equivalents will exceed gross financial liabilities as of year-end. In light of the Group’s strong internal financing power and the long-term financing in the form of a syndicated loan taken out at favorable conditions, the Group is not planning any material financing activities in 2014.

Dividend per share on the rise

HUGO BOSS pursues a profit-based distribution policy that allows the shareholders to participate appropriately in the Group’s earnings development. The policy is to distribute to shareholders between 60% and 80% of consolidated net income on a regular basis. On account of the rise in profits in the past fiscal year, the Company’s strong financial position and positive expectations for 2014, the Managing Board and Supervisory Board intend to propose to the Annual Shareholders’ Meeting to be held on May 13, 2014 a dividend of EUR 3.34 per share for fiscal year 2013 (2012: EUR 3.12). The proposal is equivalent to a payout ratio of 70% of the consolidated net income attributable to the shareholders of the parent company in 2013 (2012: 70%). Assuming that the shareholders approve the proposal, the dividend will be paid out on the day after the Annual Shareholders’ Meeting, May 14, 2014. On the basis of the number of shares outstanding at year-end, the amount distributed will come to EUR 231 million (2012: EUR 215 million).

Further sales and earnings improvements in 2015 and beyond

The Group intends to generate further increases in sales and earnings in 2015 and beyond. The Group's strategy is oriented at organic growth of the existing brand portfolio. In 2015, Group sales are expected to reach EUR 3 billion, with more than 60% of sales expected to be generated in the Group’s own retail business. The Group also assumes that, in future, it will generate a larger share of sales in emerging markets, which would lead to a regionally more balanced distribution of its sales. HUGO BOSS has also set itself the objective of earning an adjusted operating margin (EBITDA before special items in relation to sales) of 25% in the medium term. The Group plans to make further progress along these lines in 2015. Adverse macroeconomic and sector-specific developments in key sales markets, cost inflation in sourcing processes or a loss of appeal of the Group's brands could jeopardize the ability to meet these objectives. The Group has contingency plans in place to limit the likelihood of and impact in the event of occurrence of these and further risks. Details are presented in the risk report. Risk Report

Target achievement and outlook










Targets 2013


Result 2013


Outlook 2014


On a currency-adjusted basis.

Group sales1


Further increase




High single-digit increase

Sales by region1


Growth in all regions




Growth in all regions






















Sales by distribution channel1







Group's own retail business


Double-digit growth




Double-digit growth



Roughly stable development




Roughly stable development








EBITDA before special items


Stronger growth than sales


Growth of 7% exceeds sales increase, adjusted EBITDA margin increases by 70 basis points to 23.2%


High single-digit increase

Trade net working capital


Decrease relative to sales


Decrease by 190 basis points to 17.9% of sales


Roughly stable development relative to sales

Capital expenditure


At previous year's level excluding special projects (EUR 166 million in 2012)


EUR 185 million (including EUR 34 million related to special projects)


EUR 110 million to EUR 130 million

Group's own retail stores


Ongoing expansion in floor space


Net increase by 170 stores to 1,010, including 115 takeovers


Opening of about 50 new stores

Free cash flow


Ongoing strong development


Free cash flow increases by EUR 9 million to EUR 229 million


Ongoing strong development

Net financial liabilities


Further reduction


Reduction of EUR 73 million to EUR 57 million


Attainment of positive net financial position

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