Comparison of actual and forecast business performance

HUGO BOSS looks back on a successful 2018. The Group has achieved its targets set for fiscal year 2018. At the same time, it has made considerable progress in the implementation of its strategic priorities. Besides the successful realignment of the BOSS and HUGO brands, which became visible to customers for the first time with the launch of the Spring/Summer 2018 collection, the Group also successfully further developed its distribution strategy in 2018, especially in the online business. Moreover, HUGO BOSS has perceptibly driven forward the digitization of its business model. The consistent implementation of its strategic priorities and continued strict cost management had a positive impact on the Group’s course of business. The Group also benefited from the positive development of the global economy and the industry in 2018. In particular, the strong demand from Chinese customers for premium and luxury goods together with the benefits from U.S. tax reform, providing stimulus to the industry’s growth, had a positive impact on the Group’s overall sales performance. Group Strategy General Economic Situation and Industry Development

With a currency-adjusted increase of 4%, Group sales were within the initial forecast range. In addition to the accelerating sales momentum in the Group’s own retail business, growth in the wholesale business also contributed to this development. Earnings Development, Sales Performance

In the third quarter of 2018, the overall challenging market environment resulted in higher markdowns and thus in a significant decline in the gross profit margin. As a result, HUGO BOSS adjusted its outlook for the gross profit margin in November and assumed a decline in the gross profit margin of 50 to 100 basis points compared to the prior year. With a decline of 90 basis points to 65.2%, the gross profit margin in fiscal year 2018 was finally within the adjusted forecast range. For the operating profit (EBITDA before special items), the Group expected a development within a range of −2% to +2% compared to the prior year level. At EUR 489 million, EBITDA before special items remained stable, and was thus in the middle of the forecast range. The Group’s net income amounted to EUR 236 million, representing an increase of 2%, and was therefore in line with the forecast range. Earnings Development, Income statement

With the publication of the results for the third quarter of 2018, the Group also adjusted its outlook for capital expenditure for 2018 and henceforth anticipated an amount of between EUR 150 million and EUR 170 million. The reduction of the original forecast primarily resulted from a different phasing of investments. In fiscal year 2018, capital expenditure finally amounted to EUR 155 million and was thus within the adjusted forecast range. Free cash flow amounted to EUR 170 million and was likewise within the original forecast range. Net Assets Financial Position

The targets for fiscal year 2019 are presented in the section Outlook. Outlook