Annual Report 2023

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Group Management

Sustainable increase in enterprise value as guiding principle of HUGO BOSS

Sales and EBIT as key performance indicators for maximizing free cash flow

Group planning, reporting, and investment controlling form core elements of Group management

Key performance indicators

HUGO BOSS aims at sustainably increasing its enterprise value. The Group’s internal management system is intended to support the Managing Board and the management of the respective business units in aligning all business activities with this objective. In order to increase its enterprise value, the Group focuses on maximizing free cash flow over the long term. By consistently generating positive free cash flow, the Group is confident of safeguarding the liquidity of HUGO BOSS at all times while, at the same time, facilitating the long-term growth of the business.

Definition Free cash flow

Cash flow from operating activities

+ Cash flow from investing activities

= Free cash flow

Increasing sales and operating profit (EBIT) is key to improving free cash flow over the long term. In addition, a strict management of trade net working capital and a value-oriented capital expenditure approach support the development of free cash flow. HUGO BOSS has therefore identified four key performance indicators for increasing free cash flow. Unchanged to previous years, these comprise sales, EBIT, trade net working capital, and capital expenditure. The 2024 guidance for these key performance indicators and the underlying assumptions are presented in the “Outlook” section of this Annual Report. Outlook

Four key performance indicators

Sales EBIT Trade net working capital Enterprise value Free cash flow Capital expenditure

While fiscal year 2023 was characterized overall by ongoing high levels of geopolitical and macroeconomic uncertainty, HUGO BOSS continued its strong momentum, recording robust top- and bottom-line improvements. This development was once again driven by the successful execution of our “CLAIM 5” growth strategy introduced in 2021. At its Capital Markets Day in June 2023, HUGO BOSS consequently provided an update of “CLAIM 5” thereby raising its 2025 financial ambition. Further details on the financial development of HUGO BOSS in fiscal year 2023 can be found in the chapters "Earnings Development," "Net Assets," and "Financial Position" of this Annual Report. Group Strategy, Earnings Development

Development of key performance indicators (in EUR million)












Group sales











Operating result (EBIT)











Trade net working capital
as a percentage of sales











Capital expenditure











“CLAIM 5” aims to strongly accelerate the relevance of BOSS and HUGO and drive superior top-line growth. In doing so, the Company is committed to continuing its market-share-winning trajectory also in the years to come. At the same time, our strategy is intended to further ensure a sustainable increase in profitability as well as strong free cash flow generation. All initiatives aimed at driving sales growth are therefore also measured by their potential to sustainably grow operating profit (EBIT). In this context, and as part of “CLAIM 5,” we aim to realize further efficiency gains, in particular in brick-and-mortar retail, to compensate for further investments into our business. Group Strategy

Definition EBIT

Earnings before taxes

− Financial result

= Operating profit (EBIT)

For HUGO BOSS, trade net working capital is the most important performance indicator for managing the efficient deployment of capital.

Definition trade net working capital


+ Trade receivables

− Trade payables

= Trade net working capital

Management of inventories as well as trade receivables is the main responsibility of our subsidiaries and the respective operating central departments. The latter are also responsible for managing trade payables. These three balance sheet items are primarily managed by reference to the days of inventories outstanding, days of sales outstanding, and days of payables outstanding. Besides this, there is a specific approval process for the purchase of inventories for our retail business in order to constantly optimize inventory levels. This process takes into account sales quotas as well as expected sales growth and markdown levels.

The senior management of HUGO BOSS is jointly and directly responsible for driving profitable growth. As a result, the short-term incentive program (STI) of managers at all four management levels below the Managing Board is linked to the achievement of specific sales and EBIT targets. The ratio of trade net working capital to sales is the third component of the STI. The compensation scheme for management at the two levels below the Managing Board also includes a long-term incentive program (LTI), whose design matches that for the Managing Board. The LTI includes both financial targets and non-financial ESG (environment, social, governance) targets. The latter is related to employee satisfaction as well as our Company’s performance in the area of sustainability. Consequently, the LTI is intended to ensure that senior management of HUGO BOSS pursues a sustainable business policy that is aligned to the interests of the Company. Employee and Teams, Sustainability

Investment activity is primarily focused on our own retail network, the digitalization of our business model, as well as the expansion of our global logistic capacities. As part of our strategic claim “Drive Omnichannel,” we are pushing ahead with the further optimization and modernization of our global store network, with the vast majority of our own stores being refreshed by the end of 2025. In line with our claim “Lead in Digital,” digital investments are pushed along the entire value chain – from digital trend detection and product creation to digital showrooms, the continuous enhancement of our own online business, to our general IT infrastructure. Going forward, as part of our claim “Organize for Growth,” HUGO BOSS also aims to step up investments into its global logistic capacities. This also includes the strategic expansion of one of our key logistic hubs near our headquarters in Metzingen initiated in late 2023. A specific approval process exists for material investment projects. Apart from qualitative analyses, e.g., with respect to potential store locations, this also includes an analysis of each project’s net present value. Financial Position, Capital Expenditure, Group Strategy

In light of the anticipated top- and bottom-line improvements, HUGO BOSS is confident of generating strong free cash flow in the future. This is to be supported by improved management of trade net working capital and the efficient use of capital expenditure. The majority of expected accumulated free cash flow will either be reinvested into the Company or distributed to shareholders via regular dividend payments. In doing so, HUGO BOSS is pursuing a profit-based dividend policy aimed at allowing shareholders to participate appropriately in the Group’s earnings development. The Company’s payout ratio until 2025 is projected to be in a range of between 30% and 50% of net income attributable to shareholders (2023: 36%). In line with our vision of being the leading premium tech-driven fashion platform worldwide, we are also considering strategic investments. In addition, in the event of excess liquidity, we also consider special dividends and share buybacks as viable alternatives to return cash to our shareholders. We analyze our balance sheet structure at least once a year to determine its efficiency and ability to support future growth and to simultaneously provide sufficient safety in the event that the Company’s business performance falls short of expectations. Financial Position, Capital Structure and Financing

HUGO BOSS is structured by region, with our business segments being EMEA, the Americas, Asia/Pacific, and the license business. Within the three regions, individual markets are grouped into hubs, with local management reporting directly to the Chief Sales Officer (CSO), while the global license business is part of the Chief Executive Officer (CEO) resort. In doing so, we ensure close alignment between individual markets and central functions as well as short decision-making processes. In fiscal year 2023, all segments contributed to the robust increase in sales and EBIT. Business Activities and Group Structure, Earnings Development, Sales and Earnings Development of the Business Segments

Core elements of the Group’s internal management system

The Group’s planning, management, and monitoring activities focus on optimizing the key performance indicators described above. The core elements of our internal management system are Group planning, Group-wide, IT-enabled financial reporting, and investment controlling.

Group planning at HUGO BOSS generally refers to a rolling multiyear period and is prepared as part of the annual, Group-wide budget process, taking into account the current business situation and the underlying “CLAIM 5” strategy. Based on targets set by the Managing Board, our Group’s subsidiaries prepare sales, earnings, and investment budgets as well as forecasts for trade net working capital for their respective markets or divisions. Based on this, our product development and sourcing units derive mid-term capacity planning. The Business Planning & Analysis division, which reports into the CFO/COO, reviews these plans for plausibility and aggregates them to form the overall Group planning. The latter is updated on a regular basis, taking into account the actual business performance as well as any opportunities and risks.

Additionally, HUGO BOSS regularly conducts liquidity assessments, based on the expected cash flow development for any given year. This aims to identify financial risks at an early stage and to take appropriate measures concerning financing and investment requirements. Financial Position

On a monthly basis, the Managing Board and management of Group subsidiaries are informed about the operational business performance through standardized, IT-enabled reports of varying detail, supplemented by ad hoc analyses. Actual data compiled by our Group-wide, IT-based reporting system is compared against budget data on a monthly basis. Any deviations are analyzed and planned countermeasures are discussed. In addition, developments with a significant impact on the Group’s net assets, financial position, and results of operations are immediately reported to the Managing Board.

The Company is particularly focused on monitoring early indicators suitable for obtaining an indication of future business performance. In this context, the sales performance in our own retail business, the wholesale order intake, and the performance of our replenishment business are analyzed on a weekly basis. In addition, benchmarking against relevant competitors is performed at regular intervals. The continuous monitoring of early indicators is intended to enable us to identify deviations from the budget at an early stage and take appropriate countermeasures.

The Group’s investment controlling appraises planned investment projects with respect to their contribution to our Company’s overall profitability targets. This ensures that projects are only launched in case of an expected positive contribution to enhancing the Group’s economic profile. In addition, subsequent analyses are conducted at regular intervals to verify the profitability of projects that have already been realized. Appropriate countermeasures are taken in the event of any negative deviations from the initial profitability targets.

In light of heightened levels of geopolitical and macroeconomic uncertainty, in 2023 there was a particular close dialog between the Managing Board, Business Planning & Analysis, the management of our central divisions, and our Group’s subsidiaries. Corporate planning was regularly reviewed and updated throughout the year. In doing so, both the various negative macroeconomic factors and their potential business implications as well as the stronger than initially anticipated top- and bottom-line performance were regularly taken into account. In light of our robust business performance, we raised our initial full-year 2023 sales and earnings forecast as published in March 2023 twice during the course of fiscal year 2023, and successfully achieved our twice-revised sales and earnings targets. Report on Economic Position, Comparison of Actual and Forecast Business Performance

Comparison of actual and forecast development of key performance indicators



Results 2022


Initial forecast 20231


Results 2023

Group sales


EUR 3,651 million


Increase at a mid-single-digit percentage rate


Increase by 15% to EUR 4.2 billion

Operating result (EBIT)


EUR 335 million


EUR 350 million to EUR 375 million


Increase by 22% to EUR 410 million

Trade net working capital as a percentage of sales






Increase by 580 bp to 20.8%

Capital expenditure


EUR 192 million


EUR 200 million to EUR 250 million


Increase by 55% to EUR 298 million


As published on March 9, 2023. The outlook was updated twice over the course of the year. Further details can be found in the chapter "Comparison of Actual and Forecast Business Performance" of this Annual Report.