Press release on the full year 2019 results

Metzingen, March 5, 2020

HUGO BOSS makes significant progress in executing its strategy –
dividend increase reflects strong improvement in free cash flow

Full year 2019

  • Currency-adjusted Group sales up 2% to EUR 2.9 billion
  • EBIT amounts to EUR 333 million*
  • Dividend increases 5 cents to EUR 2.75 per share

 

Outlook 2020

  • Spread of the coronavirus to weigh on business of HUGO BOSS, particularly in China
  • Currency-adjusted sales expected to develop in a range of 0% to +2%; EBIT forecasted between EUR 320 million and EUR 350 million

“2019 was an eventful year for HUGO BOSS. Importantly, we have made further progress in implementing our strategy”, says Mark Langer, Chief Executive Officer of HUGO BOSS AG. “We strengthened our personalized offerings, significantly expanded our online business and increased retail sales productivity in our stores. After a very good start to 2020, our business in Asia is currently being significantly impacted by the spread of the coronavirus. Nevertheless, we are firmly convinced of the great potential of our BOSS and HUGO brands in this key region.”

 

HUGO BOSS increased sales by 3% to EUR 2,884 million in fiscal year 2019, representing a currency-adjusted increase of 2%. In the Group’s own retail business, currency-adjusted sales grew 4%. As in the prior year, the online business recorded significant double-digit growth. Wholesale sales declined 3%, partly reflecting the persistently difficult market environment in the U.S.. At EUR 333 million, operating profit (EBIT) in fiscal year 2019 was 4% below the prior year level (excluding IFRS 16). This is attributable to a lower gross profit margin as well as an increase in operating expenses. The latter was primarily a result of additional investments in the Group’s own retail business.


Consistent execution of strategic initiatives pays off
In 2019, HUGO BOSS made significant progress in implementing its strategic initiatives. All of the strategic growth drivers – online, retail sales productivity, HUGO and Asia – made above-average contributions to sales growth in the past year:
 

  • Currency-adjusted sales in the own online business increased 35% to EUR 151 million, mainly driven by the expansion of online partnerships. It also reflects the growing importance of the own online store, hugoboss.com.
  • Investments in the store network are also paying off. Today the Company is already showcasing its BOSS collections in a completely new environment in around 100 of its retail stores globally. This significantly contributed to an increase of retail sales productivity in brick-and-mortar retail by a total of 4% in 2019.
  • With an increase of 5%, currency-adjusted sales of HUGO also grew at an above-average rate in 2019. This was driven by strong double-digit sales growth in HUGO’s casualwear collections.

From a regional perspective, Asia/Pacific stood out as particularly positive in the last year, contributing with currency-adjusted sales growth of 5%. The successes in this strategically important region are nowhere more evident than in mainland China, which again posted a significant double-digit sales increase in 2019.
 

Economic consequences of the coronavirus to weigh on sales and profit growth
With the spread of the coronavirus and the associated restrictions on public life, the retail environment in the Asia/Pacific region, particularly in mainland China, has been severely impacted since the end of January. Regardless of the undiminished huge mid- and long-term potential that HUGO BOSS sees in this region, in the short term, the Company expects significant sales losses over there. After a very encouraging start to the new year, more than half of the Group’s around 150 points of sale in mainland China, Hong Kong and Macau have been closed since the end of January. The remaining points of sale mostly operate with severely limited opening hours and have experienced a significant decline in visitors. In addition, the Company is currently recording a noticeable decline in sales in other key markets. 

Despite the prevailing high levels of uncertainty, as of today, HUGO BOSS expects a gradual normalization by the middle of the year. At the same time, HUGO BOSS expects the economic consequences of the spread of the coronavirus to have a significant impact on the Group’s sales and profit development in 2020, especially in the first quarter. This is taken into account in the estimates presented in the following paragraph regarding the expected business performance in 2020.


HUGO BOSS anticipates that Group sales will develop within a range of 0% to +2% in 2020, adjusted for currency effects. While the Group expects currency-adjusted sales to increase at a low single-digit percentage rate in Europe, the Americas are expected to see a largely stable development of currency-adjusted sales. Currency-adjusted sales in the Asia/Pacific region are forecasted to decline by a single-digit percentage rate. For its own retail business, the Group expects currency-adjusted sales in 2020 to grow at a low to mid-single-digit percentage rate. Currency-adjusted sales in the wholesale business are expected to decrease by a low to mid-single-digit percentage rate. This will primarily be due to the anticipated sales shift in connection with the intensification of the online concession model. Furthermore, HUGO BOSS expects EBIT of between EUR 320 million and EUR 350 million in 2020, with final sales development being crucial to the amount of EBIT that can be expected. The outlook on further performance indicators for 2020 can be found on page 10 et seq. of this release.

Higher dividend proposed for 2019
In view of the Group’s healthy balance sheet structure and the expected ongoing strong free cash flow generation, the Managing Board and Supervisory Board of HUGO BOSS AG intend to propose to the Annual Shareholders’ Meeting on May 7, 2020 a dividend of EUR 2.75 per share for fiscal year 2019 – an increase of five cents as compared to the prior year (2018: EUR 2.70). This is equivalent to a payout ratio of 93% of the consolidated net income attributable to the equity holders of the parent company in 2019 (2018: 79%). Based on the number of shares outstanding at year-end, the amount distributed will come to EUR 190 million (2018: EUR 186 million).

Further information can be found at group.hugoboss.com. The online version of the HUGO BOSS annual report can also be found there, with many interactive features and a video statement by Chief Executive Officer Mark Langer.

 

If you have any questions, please contact:

Dr. Hjördis Kettenbach
Head of Corporate Communications
Phone: +49 7123 94-83377
Email: hjoerdis_kettenbach@hugoboss.com

Christian Stöhr
Head of Investor Relations
Phone: +49 7123 94-87563
Email: christian_stoehr@hugoboss.com

 


* Without taking into account the effects of IFRS 16. The effects of IFRS 16 on the Group’s earnings development in 2019 are shown on page 5 et seq. of this press release.

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