HUGO BOSS AG

HUGO BOSS AG is the parent company of HUGO BOSS Group. Its annual financial statements are prepared in accordance with the rules set out in the HGB [“Handelsgesetzbuch”: German Commercial Code]. In addition to the operating business, the results of HUGO BOSS AG are predominately shaped by the management of the central functions. Material items in this regard are 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. Therefore, 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 the retail, wholesale and digital sales generated in Germany and Austria as well as intercompany sales with its international subsidiaries.

The significant business recovery of HUGO BOSS in fiscal year 2021 also had a noticeably positive impact on HUGO BOSS AG. For the full year, sales of HUGO BOSS AG in Europe and Asia/Pacific posted significant double-digit growth, and even tripled in the Americas. At EUR 360 million, sales generated by HUGO BOSS AG in Germany were 30% above the prior-year level (2020: EUR 276 million).

While both brands, BOSS and HUGO, posted significant double-digit sales growth, the Company also recorded an 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 33.1%, the gross margin was well above the prior-year level (2020: 19.5%). This development mainly reflects non-recurring negative inventory valuation effects in the prior-year period, which more than compensated for an increase in sourcing costs. The latter is primarily related to pandemic-related shortages in global production and logistics capacities and the related increase in material, production, and freight costs. The increase in distribution expenses mainly reflects higher logistics costs and license fees as well as an increase in marketing investments. General administration expenses also grew as compared to the prior year, mainly due to higher personnel expenses in light of the positive business performance. The increase in other operating income compared to the prior year was largely due to higher income from charging costs and services to affiliated companies as well as government grants in light of the pandemic. Other operating expenses were below 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 2021 was higher than in the prior year (2020: EUR 41 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, as well as the dividend payments of HUGO BOSS Textile Industry Ltd.

Net assets and financial position

Property, plant and equipment, and intangible assets declined by 3% compared to the prior year totaling EUR 944 million (December 31, 2020: EUR 974 million), mainly reflecting lower investment activity compared to pre-pandemic levels.

The increase in inventories mainly reflects a higher level of finished goods to support the acceleration in sales momentum over the course of the year. HUGO BOSS AG is a supplier for the Group’s global distribution companies. As a result of the significant recovery in the wholesale business in Germany and Austria in fiscal year 2021, trade receivables of HUGO BOSS AG at the end of the year also significantly exceeded the prior-year level. The Company also recorded a noticeable increase in trade payables, primarily resulting from increased utilization of the supplier financing program that HUGO BOSS successfully established in 2020. Overall, at year-end, trade net working capital (TNWC) of HUGO BOSS AG was thus significantly below the prior-year level.

At EUR 59 million, receivables from affiliated companies at the end of fiscal year 2021 were slightly above the prior-year level (December 31, 2020: EUR 51 million). Liabilities to affiliated companies decreased to EUR 331 million, mainly due to lower transfer pricing adjustments on deliveries of goods compared to the prior year (December 31, 2020: EUR 440 million). Provisions increased to EUR 151 million at the end of the year (December 31, 2020: EUR 141 million). At EUR 70 million, liabilities to credit institutions at year-end were below the prior-year level (December 31, 2020: EUR 83 million).

As of December 31, 2021, cash and cash equivalents, defined as the total of cash on hand and bank balances, amounted to EUR 24 million (December 31, 2020: EUR 1 million). The increase mainly reflects the higher cash flow from operating activities compared to the prior year. The latter particularly benefited from the positive business performance in 2021 as well as the improvements in trade net working capital.