Sales and earnings development of the business segments

Europe

Currency-adjusted sales in Europe, including the Middle East and Africa, were down 31% in 2020. The COVID-19 pandemic and the corresponding temporary store closures weighed strongly on the region’s overall sales development, especially during the second and fourth quarter. The decline in international tourism in the wake of the pandemic put an additional strain on regional sales. On a comp store and currency-adjusted basis, the own retail business recorded a sales decline in the low to mid-double-digit percentage range.

All core markets in Europe, including Germany, Great Britain, France and the Benelux countries, recorded sales declines in the low to mid-double-digit percentage range. Overall, the sales development in own retail in Europe was in line with that in wholesale. The latter was particularly affected by lower deliveries to partners during the pandemic. In addition, the expansion of the online concession model in 2019 led to a shift in sales from wholesale to own retail.

At EUR 87 million, segment profit in Europe was well below the prior-year level (2019: EUR 456 million). This corresponds to an EBIT margin of 7.1% (2019: 25.3%). Non-cash impairment charges of EUR 50 million weighed on segment earnings (2019: EUR 7 million). Excluding these impairment charges, EBIT totaled EUR 137 million (2019 excluding impairment charges: EUR 463 million), as significant cost savings were able to partially offset the decline in sales as well as negative inventory valuation effects and increased markdown activity. Accordingly, the EBIT margin excluding impairment charges amounted to 11.1% (2019 excluding impairment charges: 25.7%). Notes to the Consolidated Financial Statements, Note 24

Americas

The far-reaching implications of the pandemic were also clearly felt in the Americas region. In particular, the temporary closure of the majority of retail stores as well as significantly lower tourist flows, burdened the regional sales development. Consequently, currency-adjusted sales were down by 42% in fiscal year 2020. On a comp store and currency-adjusted basis, the own retail business recorded a sales decline in the low to mid-double-digit percentage range.

Besides the negative implications of the pandemic, unrest and demonstrations towards the middle of the year also had a negative impact on business in the U.S. – by far the most important market in the region. While sales in Canada developed broadly in line with those in the U.S., the decline in Latin America was significantly lower, with own retail sales developing relatively robust. Overall, the decline in sales in the Americas region was less pronounced in own retail than in wholesale. The economic consequences of the pandemic led to significantly lower deliveries to partners in this context.

Segment profit in the Americas amounted to minus EUR 97 million in the reporting period and was thus well below the prior-year level (2019: plus EUR 60 million). This corresponds to an EBIT margin of minus 31.6% (2019: plus 10.8%). Also in this region, non-cash impairment charges of EUR 36 million had a negative impact on earnings (2019: EUR 2 million). Excluding those charges, EBIT amounted to minus EUR 61 million (2019 excluding impairment charges: EUR 63 million). Lower operating expenses were only partly able to offset the decline in sales as well negative inventory valuation effects and higher markdown activity. This corresponds to an EBIT margin of minus 19.7%, excluding impairment charges (2019 excluding impairment charges: plus 11.2%). Notes to the Consolidated Financial Statements, Note 24

Asia/Pacific

After a very encouraging start to 2020, the retail environment in the Asia/Pacific region deteriorated sharply towards the end of January, as the region was hit first by the pandemic and related temporary store closures. While mainland China was able to return to growth swiftly, other markets in the region experienced a comparably slower recovery. Overall, the region recorded a currency-adjusted sales decline of 20% in 2020. On a comp store and currency-adjusted basis, the own retail business recorded a sales decline in the low double-digit percentage range.

Following the lockdown in the first quarter, business in mainland China – a strategically important market for HUGO BOSS – had already recovered noticeably from the end of March and finally returned to double-digit growth in June. Significantly higher conversion rates in brick-and-mortar retail as well as strong double-digit growth in the own online business contributed positively to sales growth in this market. Growth was further fueled by a repatriation of local demand in China. Overall, sales in Mainland China were 5% above the prior-year level, whereas other markets in the region, including Japan, Oceania and South-East Asia, recorded double-digit sales declines in 2020. Business in Hong Kong and Macau also suffered from significantly lower tourist flows.

Segment profit in the Asia/Pacific region amounted to EUR 32 million in fiscal year 2020 (2019: EUR 94 million). This corresponds to an EBIT margin of 9.3% (2019: 21.4%). Excluding non-cash impairment charges of EUR 23 million (2019: EUR 1 million), EBIT amounted to EUR 55 million (2019 excluding impairment charges: EUR 94 million), representing an EBIT margin of plus 16.2% (2019 excluding impairment charges: 21.6%). Also in this region, significant cost savings positively impacted the earnings development in the reporting period. Notes to the Consolidated Financial Statements, Note 24

Licenses

The license business was also negatively impacted by the economic consequences of the pandemic, in particular due to a weak travel retail business. As a consequence, currency-adjusted sales in fiscal year 2020 came in 23% below the prior-year level. Earnings Development, Sales by Distribution Channel

As a result of the sales decline, the license segment profit decreased by 23% to EUR 54 million (2019: EUR 70 million).