- All regions, distribution channels and brands contributed to the Company’s growth in 2012
- Sales in own retail exceed wholesale sales for the first time
- Dividend proposal of EUR 3.12 corresponds to payout ratio of 70%
- Group anticipates high-single-digit currency-adjusted sales and earnings growth in 2013
- Medium-term goals confirmed
Metzingen, March 14, 2013. In spite of the challenging economic environment, HUGO BOSS posted significant increases in sales and earnings in 2012 and thus achieved the targets it had set itself. For 2013, the management plans further profitable growth.
“Our success in the past year is based primarily on the appeal of our brands and our business model”, comments Claus-Dietrich Lahrs, CEO of HUGO BOSS AG. “We also see major opportunities to continue to grow profitably and further enhance the perception of our brands in 2013, particularly by means of strong growth in the Group’s own retail business.”
Double-digit growth in sales and earnings in fourth quarter of 2012
Sales rose by 18% in the fourth quarter of 2012 after adjustment for currency effects. In euro, the Group posted an increase of 22% to EUR 607 million (Q4 2011: EUR 499 million). Europe and the Americas in particular contributed to this development, with significant double-digit growth rates after adjustment for currency effects (Europe +24%, Americas +18%, Asia/Pacific +3%). In the wholesale business, currency-neutral growth of 19% was driven by positive effects from the new delivery cycle. Currency-adjusted sales generated by the Group’s own retail activities (including outlets and online stores) also increased by 19%. On a like-for-like basis, the increase in the Group’s own retail business amounted to 4% before currency effects. Higher discounts in own retail as a result of the highly competitive market environment, together with an increased share of outlet sales as compared to the previous year, led to a decline in the gross profit margin of 170 basis points to 64.5% in the fourth quarter (Q4 2011: 66.2%). Due to the substantial sales growth and strict management of operating expenses, however, EBITDA before special items climbed by 42% to EUR 138 million (Q4 2011: EUR 97 million). The adjusted EBITDA margin therefore increased by 330 basis points to 22.7% in the fourth quarter (Q4 2011: 19.4%). Despite the negative impact of currency effects on net financial result, the net income attributable to equity holders rose by 30% to EUR 70 million in the fourth quarter (Q4 2011: EUR 54 million).
EBITDA before special items up 13% in 2012
The positive development of the Group in 2012 was driven by all regions, distribution channels and brands. Overall, sales rose by 14% to EUR 2,346 million (2011: EUR 2,059 million), equivalent to a currency-neutral growth rate of 10%. Boosted by substantial increases in the UK and the United States, Europe and the Americas posted double-digit growth of 10% and 14% respectively after adjustment for currency effects. At a currency-adjusted growth rate of 4%, sales in Asia grew comparatively moderate, which primarily reflected the difficult environment on the Chinese market. Sales generated in the wholesale business climbed by 2%, excluding currency effects. Own retail sales were up 19% on the previous year’s figure. The Group’s own retail business therefore posted higher sales than the wholesale business for the first time. On a comp store basis and after adjustment for currency effects, the increase in own retail amounted to 5%. The own retail network was expanded by 218 stores in net terms to a total of 840 in 2012 (2011: 622). The strong sales growth in this channel and continued efficiency improvements in the sourcing process led to an increase in the gross profit margin of 50 basis points to 61.9% (2011: 61.4%). EBITDA before special items rose by 13% to EUR 529 million (2011: EUR 469 million). As a result of higher operating expenses in distribution and marketing, the adjusted EBITDA margin decreased slightly by 20 basis points to 22.6% (2011: 22.8%). Net income attributable to equity holders amounted to EUR 307 million in fiscal 2012, 8% higher than the previous year's figure of EUR 285 million.
Earnings growth supports reduction of debt
The growth in trade net working capital, which rose by 3% to EUR 418 million (2011: EUR 407 million), was considerably lower than the growth in sales. This was due in particular to a 6% decline in inventories. In addition to the continued expansion of the Group’s own retail activities, the construction of an office building at the Metzingen location as well as the expansion of the Group’s logistics capacity led to an increase in capital expenditure to EUR 166 million (2011: EUR 108 million). In spite of this, net debt declined by another EUR 19 million to EUR 130 million at the end of the year (2011: EUR 149 million).
Dividend of EUR 3.12 per share proposed
The Managing Board and Supervisory Board of HUGO BOSS AG have resolved to again propose an increase in the dividend to the Annual Shareholders’ Meeting. The dividend per ordinary share for fiscal 2012 is to increase by 8% to EUR 3.12 (2011: EUR 2.88). The proposal corresponds to a payout ratio of 70% of consolidated net profit attributable to the shareholders of the parent company in 2012 (2011: 70%).
Management forecasts further increases in sales and earnings
HUGO BOSS expects to generate a high single-digit currency-adjusted increase in sales in 2013. All regions are projected to contribute to this growth. The Group anticipates continued double-digit growth in its own retail business, while the wholesale channel is expected to record an approximately stable development. The Group plans to expand its store network with around 50 new stores excluding takeovers. Capital expenditure in 2013 will increase compared to the prior year on a comparable basis, excluding expenditures for the current construction of a new flat-packed goods distribution center, and will focus primarily on the planned expansion and renovation of the Group’s own store network. EBITDA before special items is expected to rise at a high-single-digit rate. Based on the anticipated sales and earnings increases in 2013, the Group considers itself to be on track to achieve its medium-term goals.
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