Hugo Boss : Rede I EN

First Quarter 2021 Results

Metzingen, May 5, 2021

Yves Müller (CFO & Spokesperson of the Managing Board)

Christian Stöhr (Vice President Investor Relations)

- The spoken word shall prevail -

Good morning ladies and gentlemen and welcome to our first quarter 2021 financial results presentation. Today's conference call will be hosted by Yves Müller, CFO of HUGO BOSS and Spokesperson of the Managing Board. Before we get started, allow me to recall that all revenue- related growth rates will be discussed on a currency-adjusted basis, unless otherwise specified. Let me also remind you that during the Q&A session we kindly ask you to limit your questions to a maximum of two, to allow everybody to ask his or her questions. So, let's get started and over to you, Yves.

Thank you Christian, and good morning ladies and gentlemen. In the next twenty minutes, I will elaborate in detail on our operational and financial performance during the first three months of fiscal year 2021. I will also outline our broader expectations for the remainder of the year, and for Q2 in particular, notwithstanding that the environment we are operating in remains uncertain for some areas of our business.

From our quarterly statement earlier this morning, I am sure you have noticed that we have seen a solid and promising start to the year - both from a top- and bottom-line perspective. This is even more worth mentioning as we had to cope with the ongoing implications of the pandemic during the first quarter, especially when it comes to our home territory Europe.

Therefore, let me start by reviewing some of the key developments we have observed around our top line in Q1.

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Starting with a quick look at our store closing rate.

With an average of around 25% of our global store network being affected by temporary closures in the first three months of 2021, the lasting implications of the pandemic continued to put a strain on our brick-and-mortar business. This was particularly true for Europe, by far our largest region, where the store closing rate remained elevated at a level of almost 50%. Unsurprisingly, the performance of key markets such as the UK, France, and Germany remained muted in the context of persisting lockdowns.

Against this background, I am all the more encouraged by the further progress we have made in those markets, where stores have already re-opened and where we are witnessing gradual improvements in the overall retail environment and consumer spending, supported by a strong rebound in local demand. First and foremost, this includes a number of markets in Asia/Pacific such as mainland China, Australia, and Taiwan, but also the Americas region, and here in particular our important U.S. business as well as Latin America. In addition, markets such as Russia and the United Arab Emirates are also progressing strongly with their overall business recovery following the COVID-19 restrictions.

I am also pleased to report that momentum has further accelerated along our strategic initiatives. In particular, growth in our online channel has strongly accelerated, with revenues up 72% in Q1, and our casualwear offerings for both brands - BOSS and HUGO - have meanwhile returned to growth. As a consequence, we were able to limit the overall sales decline to only 8%, with Group sales amounting to 497 million euros in the first quarter.

While this represents a further noticeable pick-up in our overall business recovery as compared to previous quarters, let me also be clear that the first quarter benefitted to some extent from wholesale delivery shifts related to our Spring/Summer 2021 collections, something I will elaborate on in detail in a few minutes.

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Before we do that, let's take a closer look at our geographies.

Starting with Europe, where the lasting implications of the pandemic continued to weigh on our business, resulting in an overall sales decline of 17% in Q1. In addition to far-reaching temporary store closures, persisting social distancing measures and travel restrictions continued to limit the region's overall recovery.

This was particularly visible for markets such as the UK and Germany, which both recorded mid- double-digit sales declines in own retail, reflecting the majority of our brick-and-mortar stores being closed throughout much of Q1. While France and the Benelux countries were able to limit their sales decline in own retail to the low double-digit range, I am pleased to report that several markets in Eastern Europe returned to growth in the first quarter. This was particularly true for our business in Russia, with comp store sales up by mid-double-digits. Finally, we also enjoyed very strong momentum in the Middle East, as reflected by low to mid-double-digit comp store sales growth.

Moving over to our European wholesale business, which was up 6% in the first quarter. Now, as I already mentioned a minute ago, this development mainly reflects the robust order intake for our Spring/Summer 2021 collections, which were delivered to partners during the course of Q1, as well as shifts in the delivery of these collections.

Let's now move over to the Americas, where the gradual business recovery - which started in the middle of 2020 - has seen a further continuation also in the first quarter of 2021. Thanks to strong sequential improvements in our U.S. business as well as in Latin America, the region's overall sales decline was limited to minus 11% in Q1.

Also in the U.S. market, sales declined by 11% only, and thus considerably less than in previous quarters. This development was driven by a noticeable pick-up in local demand, reflecting a

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robust rebound in consumer sentiment. And while our stores in and around important metropolitan areas such as New York City, Chicago, Los Angeles, and San Francisco were still impacted by the lack of international tourism and the ongoing absence of commuting to and from work, a rebound in local spending helped many of our destinations in states such as Florida and Texas but also in smaller urban shopping centers to return to growth.

Let's complete the picture of the Americas with a brief look at Canada and Latin America: Revenues in Canada were still down by a low to mid-double-digit percentage rate in Q1, reflecting lasting store closures in the wake of the pandemic, in particular in the province of Ontario. On the other hand, sales in Latin America returned to pre-COVID-19 levels, led by a strong recovery of our business in Brazil and Mexico.

In Asia/Pacific too, we successfully continued our gradual business recovery, with revenues up 39% in the first quarter. This development was primarily driven by mainland China, where sales growth further accelerated to 98%, reflecting ongoing robust local demand and the successful execution of Chinese New Year in February. Compared to the first quarter of 2019, revenues in mainland China were up 29%.

Apart from mainland China, also some of the region's smaller markets saw sequential improvements. While Japan limited its sales decline to the mid-single-digit range, markets such as Australia, South Korea, and Taiwan even returned to double-digit growth, supported by a strong pick-up in local demand across all store formats. In other markets, such as Hong Kong or Singapore, the ongoing lack of international tourism continued to weigh on the overall business recovery.

Let's now turn to our sales channels, starting with our own online business, which recorded its 14th consecutive quarter of strong double-digit growth. With sales up 72%, momentum further

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accelerated in Q1, driven by strong double-digit improvements at both hugoboss.com as well as at multibrand websites operated in the concession model.

The former benefitted from strong double-digit increases in both traffic and conversion, as well as the further geographical expansion of our flagship hugoboss.com over the last twelve months. In the first quarter only, our digital offerings were expanded into twelve additional markets, including South Korea, Russia, and the United Arab Emirates, thereby increasing our global online reach to 59 markets.

As we are committed to fully exploiting the tremendous potential of .com in the years to come, further rolling out our digital offerings across the globe remains on top of our agenda. In this context, the next wave of new markets to be entered into is already scheduled for later this year.

The strong acceleration in online sales growth partly compensated for lower revenues in brick- and-mortar retail, which were attributable to the negative implications of the pandemic and the corresponding store closures in particular. Overall, revenues in own retail declined 14% in Q1, as compared to minus 24% recorded back in Q4.

Wholesale, on the other side, returned to growth, up 1% in the first three months of the year, supported by the aforementioned order intake for Spring/Summer 2021. In addition, our wholesale business benefitted from shifts in the delivery of these collections from the second quarter into the first quarter, aimed at ensuring product availability after the lifting of lockdowns. Now, excluding these delivery shift effects, wholesale revenues would have declined in Q1 and thus broadly similar to the overall performance recorded in own retail.

And speaking about wholesale, I would like to point out that we expect rather more normalized delivery patterns for the remainder of the year. That said, it will be quite difficult to compare this

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