ANNUAL REPORT 2018 - Hugo Boss

ANNUAL REPORT 2018

AT A GLANCE

+4%?

Group sales EUR 2,796 million

1 On a currency-adjusted basis.

0%

EBITDA before special items EUR 489 million

+2%

Consolidated net income EUR 236 million

+2%

Dividend per share EUR 2,70

CEO video in the online version of the annual report

Our annual report is also available online and offers many interactive features.

annualreport-2018.

14,685 59% 41%

Employees

Proportion of women

Proportion of men

Annual Report 2018

1 TO OUR SHAREHOLDERS 5 Letter to Shareholders 8 Managing Board 9 Report of the Supervisory Board 14 Supervisory Board 15 HUGO BOSS on the Capital Market

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CORPORATE GOVERNANCE 113 Corporate Governance Report including

the Corporate Governance Statement 122 Compensation Report 133 Legal Disclosures

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COMBINED MANAGEMENT REPORT 21 Group Profile 21Business Activities and

Group Structure 25 Group Strategy 34 Group Management 38 Employees 43 Research and Development 46 Sourcing and Production 49 Sustainability

51 Combined Non-Financial Statement 63 Report on Economic Position 63General Economic Situation

and Industry Development 66 Comparison of Actual and

Forecast Business Performance 68 Earnings Development 77 Net Assets

79 Financial Position 83 HUGO BOSS AG 86 Outlook 92 Report on Risks and Opportunities 111 Overall Assessment of the Managing Board on the Economic Situation and Expected Development of the Group

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CONSOLIDATED FINANCIAL STATEMENTS 137 Consolidated Income Statement 138 Consolidated Statement of Comprehensive Income 139 Consolidated Statement of Financial Position 140 Consolidated Statement of Changes in Equity 141 Consolidated Statement of Cash Flows 142 Notes to the Consolidated Financial Statements for Fiscal Year 2018 159 Notes to the Consolidated

Income Statement 167 Notes to the Consolidated

Statement of Financial Position 196 Other Notes 205 Managing Board 206 Supervisory Board 207Additional Disclosures on the

Members of the Supervisory Board and the Managing Board 208 Publication

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ADDITIONAL INFORMATION 210 Responsibility Statement 211 Independent Auditor's Report 220 Independent Auditor's Limited

Assurance Report 223 General Information 223 Forward-Looking Statements 224 Ten-Year Overview 225 Contacts 225 Legal Notice 226 Financial Calendar 2019

Due to rounding, numbers presented in this Annual Report may not add up precisely to the totals provided.

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4 To our Shareholders 20 Combined Management Report 112 Corporate Governance 136 Consolidated Financial Statements 209 Additional Information

CHAPTER 1 / 4?19

TO OUR SHAREHOLDERS

5 Letter to Shareholders 8 Managing Board 9 Report of the Supervisory Board 14 Supervisory Board 15 HUGO BOSS on the Capital Market

To our Shareholders Combined Management Report Corporate Governance Consolidated Financial Statements Additional Information Letter to Shareholders

Annual Report 2018

LETTER TO SHAREHOLDERS

"We accelerated our pace of growth and achieved our targets for 2018."

Mark Langer, Chief Executive Officer

Dear Shareholders, Dear Readers,

HUGO BOSS looks back on a successful 2018. We increased our pace of growth as planned and achieved our annual targets. Overall, sales grew by four percent on a currency-adjusted basis to EUR 2.8 billion. Even more encouraging, this growth was broad-based. Above all, our own retail business, and here in particular our online business, enjoyed dynamic growth. The latter increased at a strong double-digit rate in 2018. Our wholesale business also recorded sales growth in the past year. This positive sales development does not only show that both our new menswear and womenswear collections are very well received by customers, it also means that the consistent execution of our strategic priorities is paying off.

Sales growth accelerated noticeably in 2018 in all regions. In our home market Europe, by far the largest region, we enjoyed robust growth, driven by our consistent strength in the British market. In the Americas, our retail and wholesale businesses likewise contributed to growth. In Asia/Pacific, we continued the positive trend and once again achieved overproportional growth. In particular, the Chinese market continued to enjoy strong momentum, recording double-digit growth on a comp store and currency-adjusted basis.

Besides sales, operating income (EBITDA before special items) also turned out as we forecast at the beginning of 2018. At EUR 489 million, it remained roughly on the prior year's level. A series of investments to ensure sustainable, profitable growth were the reason why we have not yet converted sales growth into higher profits. These included especially investments in the quality of our products and in the digital transformation of our business model. The latter also contributed to the fact that we recorded significant growth in our own online business and, for the first time, achieved sales

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