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Overall assessment of the Managing Board on the economic situation of the Group

HUGO BOSS was able to continue on its growth trajectory in 2015 again. However, general economic and industry-specific conditions were more challenging than originally expected, particularly in the second half of the year. The Group’s sales and earnings growth therefore fell short of the expectations expressed in the Annual Report 2014.

Currency-adjusted sales growth matched the growth of the overall economy but slightly exceeded that of the global premium and luxury goods industry. This was chiefly due to solid growth in Europe. However, sales in the Americas and Asia declined on a currency-adjusted basis contrary to the original forecast. Broken down by sales channel, sales in the Group’s own retail business rose more sharply compared with the Group as a whole but fell somewhat short of expectations. Wholesale business declined and was thus at the lower end of the expected range.

Operating profit (EBITDA before special items) rose by 1 % due to the increase in sales. However, this rate of growth was slower than expected. Reflected in this is the slight contraction in the gross profit margin, which was affected by higher rebates due to a market environment conducive to heavy discounting, and a further increase in expenses to support the Group’s medium and long-term growth. Group Earnings Development

Considerable capital spending in connection with the transition to a business model increasingly focusing on the Group’s own retail business and higher trade net working capital also affected free cash flow. Despite this, free cash flow was substantially positive. Financial Position

With its low financial liabilities, the Group is in an exceedingly solid economic condition. The challenging market environment, especially in China and the United States, and the continued investments in the Group’s growth potential will depress earnings in 2016, however. Subsequent Events and Outlook

Metzingen, February 23, 2016

The Managing Board

Claus-Dietrich Lahrs
Christoph Auhagen
Mark Langer

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