Annual Report 2020

Overall assessment of the Managing Board on the economic situation and expected development of the Group

After a very encouraging start to fiscal year 2020, the rapid spread of COVID-19 led to a significant impact on the global business of HUGO BOSS. In particular, widespread temporary store closures in light of global lockdowns, large-scale restrictions on public life including extensive social distancing measures, and international travel restrictions put a significant strain of sales, EBIT and free cash flow. The implications of the pandemic became particularly evident in Europe, the Group’s largest region by far, and the Americas. In Asia, however, the swift recovery of business in mainland China compensated for some of the declines in the region’s other markets. Comparison of Actual and Forecast Business Performance, Earnings Development

Despite the noticeable negative impact of the pandemic on its business, HUGO BOSS continued to make significant progress in 2020 with its strategic growth drivers China and Online, where sales either returned quickly to double-digit growth or accelerated even further. From a brand perspective, further increasing the desirability of BOSS and HUGO was a clear focus of all of the Company’s initiatives. Thanks to a variety of digital events, exclusive collaborations with brands and ambassadors and a strong focus on casualwear, the attractiveness of both brands was further enhanced. At the same time, HUGO BOSS succeeded in further improving the efficiency and flexibility of its operational processes in 2020 – largely reflecting its consistent focus on driving digitization across the entire value chain. Group Strategy

Overall, Group sales decreased by 31%, adjusted for currency effects, totaling EUR 1,946 million. In addition to temporary store closures in light of the lockdowns, large-scale restrictions on public life as well as extensive travel restrictions negatively impacted sales development. In addition to the significant decline in sales, a lower gross margin reflecting increased markdown activity, also weighed on operating result. Excluding non-cash impairments of non-current assets related to the pandemic, operating result (EBIT) therefore amounted to minus EUR 126 million (2019 excluding impairment charges: EUR plus 355 million). Thanks to the successful implementation of comprehensive measures with a total volume of at least EUR 600 million, aimed at protecting cash flow, HUGO BOSS has achieved significant cost savings and secured the financial stability and flexibility of the Company at any time during the pandemic. HUGO BOSS thus ended the year 2020 with a positive free cash flow of EUR 164 million (2019: EUR 457 million). Earnings Development, Financial Position

In light of the persisting high degree of uncertainty regarding the further development of the pandemic and the high risk surrounding the expectations on the further development of the global economy and industry, HUGO BOSS, at this point in time, cannot provide a precise outlook for fiscal year 2021. While the implications of the pandemic are expected to continue to weigh on the business of HUGO BOSS in particular in the first half of the year, the Company is confident that the global retail environment will gradually improve over the course of 2021. This is also expected to positively support the recovery of the business of HUGO BOSS, in particular in the second half of the year. For fiscal year 2021, the Company therefore expects that Group sales will be significantly above the level of 2020. Also for the EBIT, the Company forecasts a strong increase as compared to the prior year. At the same time, HUGO BOSS will continue to work consistently on the implementation of its strategic initiatives this year. In addition, the Company intends to host an Investor Day in the second half of 2021. In this context, the Group will outline its strategic ambition in detail. Outlook, Group Strategy

In light of the very challenging nature of fiscal year 2020 as well as the persisting high uncertainty with regard to the further development of the pandemic, the Managing Board and Supervisory Board of HUGO BOSS intend to propose to the Annual Shareholders’ Meeting to only pay the legal minimum dividend of EUR 0.04 per share for fiscal year 2020. In doing so, the Company aims at further strengthening its internal financing capability. However, on the basis of the Company’s ongoing business recovery as well as strong cash flow generating business model, HUGO BOSS remains confident to continue to generate significantly positive free cash flow in the future. This, in turn, shall enable the Company to return to an attractive dividend policy. In light of its healthy balance sheet structure and strong free cash flow generation, HUGO BOSS continues to be in a sound financial position at the time this report was prepared. Outlook

Metzingen, March 5, 2021

The Managing Board

Yves Müller
Dr. Heiko Schäfer
Oliver Timm
Ingo Wilts

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