HUGO BOSS AG

HUGO BOSS AG is the parent company of HUGO BOSS Group. Its annual financial statements are prepared in accordance with the provisions of the HGB [“Handelsgesetzbuch”: German Commercial Code]. In addition to the operating business, the results of HUGO BOSS AG are predominately driven by the management of the central functions. Material items in this context include the allocation of costs for services rendered to Group companies and the investment income resulting from its holding function. Due to its close relationships with the Group companies and its relevance for the Group, the expectations for HUGO BOSS AG are largely reflected in the Group’s outlook. In addition, business performance of HUGO BOSS AG is, to a large degree, also subject to the same risks and opportunities as those applicable to the Group. Consequently, statements with regard to the Group’s outlook as well as within the Group’s Report on Risks and Opportunities also apply to HUGO BOSS AG. Outlook, Report on Risks and Opportunities

Earnings development

Sales of HUGO BOSS AG primarily comprise brick-and-mortar retail, brick-and-mortar wholesale, and digital revenues generated in Germany and Austria as well as intercompany sales with its international subsidiaries.

The strong business performance of HUGO BOSS in fiscal year 2022, fueled by the successful execution of “CLAIM 5”, also had a noticeably positive impact on HUGO BOSS AG. In EMEA, HUGO BOSS AG recorded significant double-digit growth, while in the Americas sales almost doubled. Also in Asia/Pacific, the Company recorded double-digit sales increases. At EUR 497 million, sales generated by HUGO BOSS AG in Germany were 38% above the prior-year level (2021: EUR 360 million).

While both brands, BOSS and HUGO, posted significant double-digit sales growth, supported by the successful branding refresh initiated at the beginning of 2022, the Company also recorded a robust increase in sales from other services. This was due to higher intercompany charges passed on to subsidiaries, in particular related to service, IT, and marketing.

At 29.6%, the gross margin of HUGO BOSS AG was below the prior-year level (2021: 33.1%), mainly reflecting higher freight and duty costs which more than offset favorable effects from a higher share of full-price sales. The increase in distribution expenses largely reflects higher marketing investments as well as higher fulfillment costs. General administration expenses also grew year over year, mainly due to an increase in personnel expenses in line with the Company’s strategic claim “Organize for Growth.” The increase in other operating income was largely due to higher income from charging costs and services to affiliated companies. Other operating expenses were also above the prior-year level and mainly included research and development costs as well as allowances for doubtful accounts and exchange rate effects.

At EUR 84 million, the income from investments in affiliated companies in 2022 was in line the prior-year level (2021: EUR 84 million). The income from affiliates primarily reflects the annual profits of HUGO BOSS Trade Mark Management GmbH & Co. KG, which are credited to the loan account of its limited partner HUGO BOSS AG in accordance with company regulations. The income from profit and loss transfer agreements of EUR 81 million is attributable to HUGO BOSS Internationale Beteiligungs-GmbH (2021: EUR 0 million).

Net assets and financial position

Property, plant and equipment, and intangible assets increased by 3% compared to the prior year totaling EUR 969 million (December 31, 2021: EUR 944 million), mainly reflecting a step up in investment activity in 2022.

The noticeable increase in inventories is primarily aimed at supporting the Group’s future top-line growth, as HUGO BOSS AG is the main supplier for the Group’s global distribution companies. While trade receivables of HUGO BOSS AG were below the prior-year level, the Company recorded an increase in trade payables, primarily reflecting a higher utilization of the supplier financing program that HUGO BOSS established back in 2020. As the latter only partly compensated for the increase in inventories, trade net working capital (TNWC) of HUGO BOSS AG ended fiscal year 2022 above the prior-year level.

At EUR 61 million, receivables from affiliated companies at the end of fiscal year 2022 were slightly above the prior-year level (December 31, 2021: EUR 59 million). Liabilities to affiliated companies decreased to EUR 289 million, mainly due to repayments of loans to HUGO BOSS International B.V. (December 31, 2021: EUR 331 million). Provisions slightly increased to EUR 154 million at the end of the year (December 31, 2021: EUR 151 million). At EUR 60 million, liabilities to credit institutions at year-end were below the prior-year level (December 31, 2021: EUR 70 million).

As of December 31, 2022, cash and cash equivalents, defined as the total of cash on hand and bank balances, amounted to EUR 3 million and were thus below the prior-year level (December 31, 2021: EUR 24 million). The decline primarily reflects a lower cash flow from operating activities compared to the prior year, which is mainly due to the higher inventory position.