Hugo Boss AG (ETR:BOSS)

Q2 & Investor Day 2017

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Aug 2, 2017

Good morning, everybody, and a warm welcome to the Investor Day 2017. My name is Dennis Weber, and I head up the Investor Relations activities here at HUGO BOSS. It's great to see so many people in the room, but I also don't want to forget about those following the event over the webcast. So also a very good morning to you. Unfortunately, you'll miss out on our attractive on-site program in the afternoon. But at least we'll give you the opportunity for the first time to submit your questions to the Q and A sessions electronically. Let me give you some more detail of what we have planned for today. So in a second, I'll present you our Q2 results, followed by a Q and A session on the results and then a short coffee break. After the coffee break, we'll have the entire Managing Board with us. So first of all, our Chief Executive Officer, Marc Lange, is going to update you on group strategy, followed by a presentation of our Chief Brand Officer, Ingo Wills, on the implementation of our 2 brand strategy. Finally, I'll have a discussion with Bernd Harker, our Chief Sales Officer on distribution strategy. And afterwards, you will have plenty of time to ask your questions to the entire Managing Board before we then head into the lunch break. In the afternoon, we'll have different tours. First of all, through our free showrooms, so that is for BOSS menswear, BOSS Womenswear and also the HUGO brand. All tours will be led by the respective brand and creative directors. On top, there will be a tour through our new Boss Lab store. This will be led by our Director of Retail Operations. All tours will be accompanied by a member of the Investor Relations team. So you'll see the pictures right up on the screen. You will have realized that there is a colored button on your name tag. So please make sure that you recognize which group you're in and that you look out for the respective team members at the end of the lunch break. So we've got a pretty tight program and a bit of walking to do in between the showrooms. So please make sure that you're on time. And last but not least, we have also included feedback form in the bag that we have handed out to you this morning. It would be great if you could fill out this feedback form and return it to us ideally by the end of today. So many thanks in advance for that. Having said this, let's start with the presentation of Q2 results 2017. So in the last 3 months, we not only reached important milestones in the repositioning of our brands, but also returned to positive comp store sales growth in own retail, ending a series of 6 quarters of declines. Robust growth in our key markets, U. K. And China, drove the improvement. As a result, 2nd quarter sales increased 3%, excluding currency effects for the group. In euro terms, revenues were up 2%. By region, Europe held up well in the period. 2nd quarter sales remained stable on a currency adjusted basis despite a high single digit decline in the region's wholesale business. This was due to a shift in the timing of customer orders. Compared to the previous year, a larger share of springsummer collection deliveries in Europe fell into the 1st 3 months of the year, supporting Q1 results at the expense of the second. In own retail, however, performance improved sequentially. This was particularly true for the U. K. Where overall sales increased at a low double digit rate in the 2nd quarter. Growth was attributable to good local demand as well as robust increases in our business with tourists, Backed by calm trading, also after the anniversary of the Brexit decision last year, we continue to be confident that our UK business will grow solidly in the second half of the year as well. In Germany, trends in home rental remained unchanged compared to the beginning of the year, while the wholesale business suffered somewhat from the delivery shifts. The business in France was down at a low double digit rate as a consequence of timing effects in wholesale, a later start of the season end sale period as well as a difficult market environment. In the Benelux, however, trading improved. Our American business returned to growth for the first time since mid-twenty 15. In the Q2, regional sales were up 5% in euro terms and 3% excluding currency effects. Sales in the U. S. Increased 2% as a result of improvements in home retail and wholesale alike. Laforma benefited from a stabilization of customer traffic trends and an uptick on conversion rates in directly operated stores. Online sales rose at a double digit rate. As a result, the full price retail business performed almost in line with the outlet channel, which had started recovering already towards the end of last year. Overall, on retail like for like sales in the U. S. Were hence stable. The U. S. Wholesale business returned to slight growth in the second quarter as we are now largely behind the cleanup of distribution initiated in spring 2016 during which we discontinued all business with pure off price retailers. However, keep in mind that this performance comes on the back of a particularly weak comparative in the Q2 last year. That is why we still expect sales in our U. S. Wholesale business to decline at a high single digit rate in 2017, impacted by weakness in our formalwear business in particular. Nonetheless, this represents a slightly more positive outlook compared to our original expectation of a low double digit decline. Finally, sales in Asia Pacific recorded a 10% increase in currency adjusted terms in the 2nd quarter. This represents a sequential improvement compared to the beginning of the year, driven by better trends in Southeast Asia and the Pacific. Performance in Greater China remains strong. Sales in the market were up 14% in local currencies. Keep in mind that the price adjustments we implemented at the beginning of 2016 had virtually no impact on our performance anymore. The improvement was rather driven by good brand momentum and better retail execution, supporting conversion rates in particular. As a result, like for like sales in Mainland China continued to grow at double digit rates. In addition, a stabilization of trends in Hong Kong and Macau contributed to the performance. In Japan and Australia, the next largest markets in the region, trends picked up compared to earlier in the year, driven by improved retail execution and better tourist demand. Our distribution channel on retail sales increased 5% in euro terms and 6 percent in local currencies in the 2nd quarter. On a common store basis, the business was up 3%. Remember that in the Q1, it had still been down 3%. This reflects sequential improvements in all three regions. Like for like sales in Asia were up at the mid single digit rate. In Europe and the Americas, the increase amounted to a low single digit rate. In all three regions, better conversion rates and higher volumes drove growth. Average selling prices declined slightly as a consequence of the outperformance of casual wear over formal wear and gradual changes in the merchandising mix where we are strengthening our offer at commercially important entry price points. Better performance in online also had a positive impact on like for like sales. In the Q2, the own e commerce business returned to growth after a disappointing start to the year. Sales were up 9%. You may remember that we flagged a number of drivers for this improvement already in our last earnings call. At the end of the Q1, we had reduced page loading times significantly, for example. We also started to make better use of CRM opportunities. A stronger focus on performance marketing as well as progress in search engine optimization also contributed to growth. Nonetheless, there continues to be further work to do to achieve our target of growing online sales also in the full year. Above all, we are adapting our product offer more closely to the specific needs of the online customer with the launch of the fallwinter 2017 collection. New space made a low single digit contribution to retail sales growth in the second quarter. The number of freestanding stores declined compared to the end of last year as we closed 14 locations in various markets and opened 10. However, the shop in shop network grew due to a takeover in the Canadian market, so that overall retail space expanded slightly in the 1st 6 months. Turning to the wholesale channel. 2nd quarter sales were down 6%, largely due to the aforementioned delivery shifts in our European business that we had flagged in May already. Based on the order book for fallwinter2017, we expect trends in Europe to be better again in the second half of the year. In the Americas, however, weak demand, in particular in our U. S. Formalwear business will continue to pressure sales. We also remain very disciplined when it comes to selling into the U. S. Department store channel in order to avoid excessive inventories and clearance sales. So U. S. Wholesale sales will decline year over year also in the second half of the year. Last but not least, the license business had a stellar performance again in the second quarter. Sales were up 27% due to strong double digit growth in the Fragrance business in particular. Strength was broad based across the product portfolio, including BOSS and HUGO as well as our men's and women's fragrances. Looking ahead to the remainder of the year, we expect growth rates to normalize as we'll start to lapse the strong increases seen since the takeover of the fragrance business by Coty in autumn last year. However, a full innovation pipeline should ensure good momentum. For example, we will launch BOSS percent in 10th in August, accompanied by a comprehensive cross media campaign featuring British actor Theo James and German model Anna Evers. Sales in the total BOSS business increased 2% in the 2nd quarter. This includes the BOSS Green and BOSS Orange lines, which will be integrated into the BOSS brand going forward. Performance was particularly strong in BOSS Green, which grew at strong double digit rates. Gluber sales were up 6%. This represents lower growth compared to the beginning of the year, primarily due to the timing effects in our European wholesale business to which HUGO has a relatively larger exposure than BOSS. Please be reminded that the upcoming changes in the positioning of both brands had no effect yet on performance in the quarter as the new collections will hit the stores only towards the very end of this year. By general, the overall menswear business was up 3%, outperforming the womenswear business where sales declined 4%. While we remain committed to also growing the latter, this reflects the attention and resources dedicated to Minsberg so that the core of our business returns to growth as quickly as possible. Turning below the top line, gross margin was up slightly in the 2nd quarter even on the back of a strong increase last year. This was largely due to channel mix that means the outperformance of the owned retail business over wholesale. However, the positive effect was partially offset by currency effect predominantly in relation to the British pound. All other factors had a neutral impact. This includes rebate management, where gains in Asia were balanced by slightly higher markdowns in Europe and the Americas. Operating expenses remains highly controlled over the effects of some cost saving initiatives implemented last year are now tapering off. Nonetheless, the far more moderate pace of retail expansion as well as the renegotiation of rental contracts limited the increase of selling and distribution expenses, which was largely due to higher marketing investments in the context of the branch repositioning. G and A expenses increased as we expanded our digital teams and systems infrastructure. As a result, 2nd quarter EBITDA before special items remained unchanged compared to the prior year at €108,000,000 In contrast, we have recorded a significant swing in special items. Last year, we booked more than €50,000,000 of provisions and impairments related to planned store closures. Including some additional charges in connection with management changes, special items amounted to €57,000,000 back then. This year, we recorded income of €6,000,000 as we negotiated better than forecasted exit terms with landlords. As a consequence, we were able to release some of the provisions booked last year. The prime example in this respect is our KAIC center store in Shanghai, where we exited just one selling floor while maintaining the rest. As a result, the store has turned profitable, while the exiting costs for just one floor were markedly below plan. Taking these effects into consideration, net profit was significantly above prior year levels amounting to €58,000,000 in the 2nd quarter. From a regional perspective, profitability in Europe suffered from the sales shortfall in wholesale. Operating expenses remained stable. In the Americas, the slight sales improvement in the 2nd quarter went hand in hand with a slight margin expansion. And in Asia, segment profitability benefited from the combination of robust sales growth and good cost control in own retail operations in particular. Ladies and gentlemen, I'll focus my comments on the Q2 in order to give you a good understanding of most current trends. Let me also summarize where we stand after the 1st 6 months of the year. So group sales were up 2% on a currency adjusted basis. Europe performed in line with that. Sales in the Americas declined 2%. Sales in Asia Pacific were 5% ahead of the prior year, both in currency adjusted terms. In line with sales, EBITDA before special items was up 2% too. Better gross margin was offset by slightly higher operating expenses in relation to sales. Net profit more than doubled following the non recurrence of prior year onetime expenses. So before outlining our expectations for the rest of the year, let me give you some more color on key balance sheet items and cash flow performance. At the end of the first half year, inventories continued to be well controlled. Group inventories were down 4% in euro terms and 3% in local currencies, driven by double digit declines in the Americas and Asia Pacific. Additionally, supported by a decline of receivables and an increase of payables, trade net working capital was down 8% in adjusted terms. The rolling average of trade net working capital over sales declined to 19.2%, the lowest level since the end of 2014. Investments were down significantly compared to the prior year period. The decrease was almost entirely due to own retail. Year to date, we spent 30% less in this area, reflecting fewer new store openings but also phasing effects related to the renovation of existing stores. This year, renovation projects will focus on the second half of the year in time with the implementation of the new BOSS store concept. As a result, also overall investment spend will be weighted towards the second half of the year. In addition, we also shifted a number of renovation projects to 2018 in order to best incorporate the learnings from the first rollouts. IT was the 2nd most important area of investments. In the first half year, we spent around €10,000,000 in this area, in particular in relation to the rollout of omnichannel services, e commerce and customer relationship management. By doing so, expenditures in this area were in line with the prior year. As a consequence of better earnings, lower CapEx and the reduction of trade net working capital, free cash flow more than doubled and also net debt declined significantly compared to the prior year period. Ladies and gentlemen, we've guided for 2017 to become a year of stabilization for HUGO BOSS. Our results in the second quarter and the first half year period demonstrate that we are on track to deliver on this promise. That is why we are reconfirming our financial outlook today. We expect group sales to remain largely stable in 2017 with growth in non retail compensating for a lowtomidsingledigitsalesdecline in the wholesale business. On a comparable store basis, we continue to forecast retail sales will perform within a range of minus 3% to plus 3%. Obviously, though, the lower end of this forecast has become a less likely outcome now compared to 3 months ago. By region, overall sales in Europe are expected to remain more or less flat on the prior year. The Americas should perform somewhat weaker than the overall group Asia Pacific somewhat better. In fact, our sales outlook, our profit forecast remain unchanged too. Group's gross margin should increase slightly year over year. A positive channel mix effect and the non recurrence of prior year inventory write downs will compensate for negative currency effects, mainly associated with the devaluation of the British pounds. Largely depending on the sales performance in on retail, EBITDA before special items is also expected to perform within a range of minus 3% to plus 3%. And net income is projected to increase at the double digit percentage range, supported by the non recurrence of costs related to the aforementioned store closures. Finally, we are adjusting our forecast for investments and free cash flow. As we are shifting a double digit number of renovation projects to the coming year, investments will be around €20,000,000 lower than originally planned. We now project them to be in a range between €130,000,000 €150,000,000 in the full year. And consequently, we raised the free cash flow outlook to around €250,000,000 So to summarize my comments today, the results of the 2nd quarter make us even more confident in the achievement of full year targets. We are encouraged by the improvement of retail sales, who trended better than in the Q1 in all three regions. And while we invest in building brand momentum, we maintain strict control of costs to keep margins stable. Continuously difficult market environment means that we are not immune to setbacks, of course. Nonetheless, we look ahead to the rest of the year and beyond with the confidence that we're heading in the right direction. So before discussing the progress and strategy implementation in more detail, I'll be pleased to answer your questions. Keep in mind that there will be a second Q and A session with the entire Managing Board later on. So please limit your questions in this session on today's set of results and our outlook for the remainder of 2017. Thanks. Antoine? And just one addition, it would be nice if you could state your name and your institution for those of us following the event over the webcast. It's Antoine Benge at HSBC. Three questions, please. So first of all, on the gross margin, you only had a very limited increase even though there was a big differential between retail up 6% and wholesale 6%. And if I'm not mistaken, I think the gross margin gap must be in the 20 basis points 20 full points. So I'm a bit surprised that you didn't get more gross margin improvement or does it mean that the FX impact was really huge? And second question regarding the marketing spend, I think it's been a bit of there's been volatility in between the two quarters. So can you guide us a little bit about the overall evolution for full year in terms of year on year growth but also as a percentage of sales. And so qualitatively, is there a shift towards more digital versus traditional media? And finally, with regards to CapEx, so there is a sort of €20,000,000 postponement, if you will. And I know it's a bit early to talk about 2018, but does it mean that the CapEx for next year could be closer to, let's say, €180,000,000 to €200,000,000? Yes. Thank you. Starting with your first question on gross margin, you're right that there was one more significant negative effect and that was currency, so especially related to the devaluation of the British pound. And you saw that the U. K. Business had very strong performance in the Q2, so it was up at a low double digit rate. That means that the effect on gross margin was also relatively large. Other than that, you're right, one would have expected a better gross margin performance just due to the channel mix effect, I. E, a better sales performance in on retail over wholesale. But as I said in my comments, all other factors which had also impacted gross margin performance positively or negatively over the last few quarters just had a neutral impact in the 2nd quarter, so in particular rebate management. So we held the overall rebate level stable with some differences in between the regions. And also inventory valuation was a nonevent, so to say, in the second quarter. In terms of the marketing spend, yes, there is a different phasing of marketing expenditures this year compared to last year as we want to support the repositioning of the 2 brands. And later on, you'll see a list of events that we have ahead of us for both brands, so events that will fall into the second half of the year. That includes fashion shows. We had one in June for HUGO, one for the BOSS menswear in July, another one for the BOSS womenswear, although that was a small event that we held in Berlin also in July. So all these events come with more extensive campaigns, in particular, in digital channels, and that is reflected then also in the marketing spend. So overall, we expect marketing expenditures to rise at least slightly relative to sales in the full year. In terms of digital, where we commented in the past that by now we spend around 70% of our media spend in digital channels, that is also what you should expect in 2017. In terms of CapEx, we're also here. I agree with your general observations of the fact that there will be a shift of renovation projects into the next year will mean that one should expect higher investments in 2018 compared to 2017, although we will still fall short of the peak levels in terms of investment activity that we had seen in 2015. Remember that we had an investment spend of 2.20 €1,000,000 in 2015. I think there was another question from Susanna. Hello. Susanna Posh from Berenberg. I have three questions, if I may, please. First of all, on the like for like performance, have there been any noticeable trends throughout the quarter? Has there been an acceleration towards the end of it maybe? And also, can you give us an idea of the negative price mix effect? So was it low single digit or kind of any color would be helpful? Secondly, on the U. S. Performance in a bit more detail. So your comments about the improving performance are a little bit different to what we hear from other players. So I was wondering, do you see this as sustainable? Is it purely brand specific given the improved assortment? Or could it be that there's simply some stabilization in the market? And then finally on the online business, you've seen a nice improvement this quarter and I was just wondering if you could give us a bit more color on that. Have you made any improvements to the website functionality? Or is this different merchandising assortment? That will be helpful. All right. So first of all, starting with like for like trends over the course of the quarter, there was no significant pattern that we would call out. I mean, we had said at the time of the Q1 earnings publication that trends towards the end of Q1 had been better already compared to the beginning of the Q1. And this trend basically sustained also into the Q2. The price mix effect was negative indeed, in line with what we had also outlined at our last Investor Day in 2016 in London. And indeed, this was a low single digit negative for like for like sales. And so the negative impact from a decline of average selling prices was more than offset by better traffic, although we still continue to be challenged on that metric and most noticeably a far better conversion rate. Your second question was on the U. S. And whether the upswing we saw in the second quarter is sustainable. I would defer my answer between wholesale and on retail. So on retail, we have indeed seen a stabilization of trends and that not only started in the Q2, remember that we had mentioned improving trends in our outlet business already towards the end of 2016 and at the beginning of 2017. Now full price distribution has followed. So the gap in terms sales growth in between these two retail channels in the U. S. Has narrowed quite significantly. So that overall like for like trends were positive. It's always very difficult to give an outlook for like for like sales performance. Of course, we are working on turning this into longer term trends. In the wholesale channel, unfortunately, it would not be realistic to expect the same kind of performance also in the quarters 34. So in the second quarter, we benefited from a far easier comparative compared to the rest of the year. Basically, in the second quarter of 2016, we took a lot of action to discontinue business relationships with off price retailers. We also accepted returns in this process, and this is something which helped the year over year comparison. But still, I would argue that we have started implementing changes to our distribution in the U. S. Wholesale market maybe earlier than others. I mean this has hit us very hard in 2016 with sales decline in our U. S. Wholesale business of almost 30%. So maybe we are now a longer way through this process than others in the industry. In terms of the online business, well, we're seeing also in online stabilization of visitor trends as well as an improvement in conversion rates. So actually very similar to what we saw also in our physical stores. And this had to do with some technical improvements. I mentioned page loading times, but also with an improved ability to reach out to consumers in a personalized way. And so we are in the process of insourcing our customer relationship management that helps our online business as well. In terms of merchandising, we have improved, but we would expect another benefit from that in the second half of twenty seventeen because we have adjusted our internal buy, so the merchandising for the online store for the FallWinter 2017 collection, more specifically to the needs of the online customer than this had been the case in the Q1 or in 2016. John? Thanks, Dennis. It's John Guy from MainFirst. Three questions please. Starting with Europe, you mentioned your expectations I think, of some resilient growth in some key markets, including the U. K. In the second half of the year. I memory I think in the European region tourists account for about 15% of your sales. Has there been any discernible change to that number? Why maybe in the U. K. Do you think that you can continue to grow at a healthy pace, especially given the tougher comp base as we move forward into the second half? That's my first question. And second question, maybe just sticking with the U. S, I think off price as a percentage is now roughly you've reduced it from 20% to 5% or so. So you've done a lot of the heavy lifting already in the U. S. Market. Easier comps aside, how do you think about the U. S. Market slightly sort of longer term timeframe, so in the course of the next 2 to 3 years? I think Mark was maybe a little bit more cautious on the U. S. Market as a whole. So how do you see that over a longer term timeframe? And then just on 2018, when we think about CapEx loading, we think about investments related to the dual brands rollouts into 2018, how should we think about CapEx but also marketing costs and other related costs into 'eighteen? I think you mentioned that you're looking for some sales growth and stable earnings for 2018. So maybe you could elaborate on that. Thanks. So probably I'll have to refer a few questions to the later Q and A session. But so let's start with Europe and the importance of tourists. You're right that we've always commented that tourist demand accounts for roughly 15% of on retail sales in the region. That broadly still holds true today. Actually, the share is now slightly higher. So definitely, the business with tourists is doing better at the moment than the business with local clients. But when it comes to the U. K, the growth that we've seen in the second quarter also in the first half year was basically fifty-fifty split between locals and tourists. So also in terms of local demand, we're seeing growth in the U. K. When it comes to U. S. Off price, you're right that we've guided for off price to just account for a single digit percentage of wholesale sales in that market. And we're exactly on track to achieve this guidance. When it comes to the overall market outlook, we wouldn't say that this has improved overall over the course of the second quarter or if so then in a rather gradual term. So it's not that we are supporting from an awful that we're benefiting from an awful lot of tailwind now from the overall market in the U. S. When it comes to the longer term outlook for the U. S, I would refer you to our Chief Sales Officer, Bernd Hagen, later this morning. And actually, very much the same is true for CapEx. So we discussed earlier, we do expect higher investment spend in 2018 compared to 2017. Beyond that, this point in time, there are no large scale investment projects, which we believe could change the overall investment intensity of the group to any significant degree. So we don't expect retail space expansion to reach the levels that we've seen, let's say, between 20102013. And as this area had always been our most important area of investment spend, this is not going to come back. So there will be rather a shift from retail expansion into retail renovation. Stacey, over there, please. Stacy Woodlitz from SW Retail Advisors. Just one question. Some of the brands have commented in Europe that they feel that it's the promotional environment or what the department stores are doing is a little more reflective of the U. S. Are you seeing any of that? Is that is the European wholesale channel going down the same promotional road as the states? And I guess what do you do in response to it? Well, I'll give you the short term answer and then again, Ben Haak is going to give you the more longer term answer. So when it comes to trading in the Q2, indeed, we've seen an earlier start of promotions market wide and to some degree, and we have followed that in our European on retail operations. This is simply a consequence of the fact that the European apparel market, especially in the wholesale channel, has been quite depressed for quite some time now. So just follow the market data in Germany. So the German market has seen declines, I think, in 4 out of the last 5 years now, at least when it comes to physical retailing. Whether the market entrants of some off price concepts from the U. S. Into Germany will change the overall structure of that market. That's something that we may discuss later on. I think we also have some questions that came in over the webcast. Frank has collected them. So maybe we take 1 or 2 of them. Yes, Sean. We received a question on our outlet channel. What was the impact of outlets outperforming on your gross margin in Q2 or H1? And then a follow-up on that, how does the EBIT margin of your outlet channel compare with the full price stores? All right. So yes, overall, the outlet channel still grew at a stronger pace compared to the rest of retail operations, although the outperformance was smaller in the second quarter as this was the case at the beginning of the year, largely due to the U. S. Market where I explained earlier, the trends converged to a stronger degree. So overall, as outlets obviously do have a lower gross margin compared to full price retailing, this is first of all a negative effect. But we would count that into channel mix. So you may argue and coming back to the discussion with Antoine earlier that the overall positive channel mix effect was diminished to some degree by an adverse channel mix within own retail operations, so to say, due to the fact that our debt had a better performance compared to full price retailing. On an EBITDA level, there's no significant difference. I mean, the overall economics of now that are totally different compared to full price store, but net net, there's not a large difference. One more question maybe? We also received one on provisions. Do you expect further releases of provisions related to store closures similar to what we have seen in Q2? The short answer is no, we don't. So that should have been rather an exception. Of course, we negotiate as good as we can when it comes to exiting the remaining 15 locations that we have flagged will close until the end of 2017. But at this stage, we don't expect any other positive effects in the remaining two quarters of the year. Any final questions from the room to complete the session? Charmaine Yeah from Redburn. Just a quick question on womenswear sales. The decline, is it a reflection of space? Or is it a reflection of other costs like marketing and personnel? It's actually both. So first of all, we've shifted our marketing activities to Minaswain quite a significant degree. We commented on that earlier by saying that around 70% of our media spend in 20 will be dedicated to menswear. That was rather the other way around only at least 2 years ago. And while it's in many cases difficult to measure, or it is difficult to quantify the exact correlation between marketing spend and sales performance, we believe that this had a positive impact. In terms of the retail space allocation, we've rather implemented gradual changes. I mean, don't walk away with menswear throughout our retail network. So this is simply not the case. For example, in London, there are some stores like Sloane Square or also Regent Street, where women's wear is doing very well and in some cases even better looking at sales productivity levels compared to minceware. So it's always a case by case decision how we allocate retail floor space in the different locations. But overall, yes, womenswear has lost a bit of space, especially when it comes to shoes and accessories, which we had pushed quite hard in 2015 2016 and where retail performance had been disappointing in the past. One very last question from Mark over there. Thank you, Marchez and Aquinet. A follow-up question with respect to the own retail performance in Q2, obviously nice recovery there. If we look back to last year, it was a very depressed base across all the regions. With e commerce as well, it was low last year and particularly depressed, I think, in Q1 of this year. How much of an influence was e commerce on that business? I accept that we've got omni channel and it's difficult to tie it down to the last penny, but how much of the influence was Equals on that performance? So when it comes to the performance of our online business, that was dilutive to like for like sales performance in the Q1. That was almost around a percentage point in the Q1. Now given that online at least slightly outperformed the overall retail business in the second quarter, that was very small positive, but it did not move the needle. So in other words, the majority of the improvement between Q1 and Q2 rather, But online, of course, contributed to that improvement, but there was also a large share of the improvement coming from physical stores. All right. Thank you very much. We'll have a short coffee break, short and early coffee break. If you could please be back in the room at 10:35. We'll then continue with the presentation from Marc Lange. Thank you. So good morning, everybody. Welcome to our Investor Day 2017 here at Metzing. It's always a very special moment for us, for my board colleagues and me to welcome here at our corporate headquarter. As part of my presentation today, I would like to give you an update on the status of implementation of the strategic plans that we presented to you last November in London and also the results we have achieved so far. Already this morning, I think Dennis Weber gave you an update what we already achieved in the 1st 6 months of this year. As you know, HUGO BOSS as a company has gone in the last 18 months through quite some turbulent times or to say it more in nautical terms, we have come across some difficult and challenging selling conditions. And very similar to our skipper, Alex Thompson, pictured behind me, we were convinced that we were in command of a business model that would weather any market condition. Well, as you know, we were proven wrong at the beginning of 2016. We were over relying on physical store expansion, but we also had to correct in an increasingly non sustainable global price architecture. And consumer feedback confirmed that our especially our BOSS collection lineup with BOSS BLACK, BOSS GREEN, BOSS ORANGE has become increasingly confusing. And as Alex had to face the consequences at the London Globe race earlier this year of a broken off foil and he had to rethink his racing strategy for the remaining threefour of the race, we have to go through a similar exercise as a company. So what we did 2016, we had to rethink and redesign our business model and we had to identify new sustainable growth drivers, which we presented to you in London in November. And again, very similar to the remarkable achievement of Alex Thompson, he finished 2nd in the race, quite remarkable achievement despite the severe damage to his boat. We as a company made good progress over the last couple of quarters. So we are clearly not at our target stage, but we are beginning to reap the first benefits of the implementation. Our new corporate strategy is deeply rooted in our vision to be the most desirable fashion and lifestyle brand. And we will achieve this vision by starting from the consumer. What do we offer as HUGO BOSS to the consumer beyond just a new suit, nice BOSSWEIGHT jacket or just a cool polo shirt? We inspire our customers in their confidence. And we do that with impeccable style, superior quality in our products and a captivating brand experience. This is Superbaud spirit that will give us loyal customers going forward. What I would like to share with you is a short video that we produced for our global staff to capture this vision in a short film, which we have distributed and used globally over the last couple of weeks. HUGO BOSS, a leader of the global apparel market. It is our vision to be the most desirable premium fashion and lifestyle brand. We dress customers impeccably for every occasion. We celebrate fashion and creativity. We share our passion for We enrich our customers lifestyle with refined products and a compelling experience. We continuously enhance our expertise in order to push boundaries. We act responsibly and strive for long term value creation. It is our mission to inspire our customers' inner confidence with impeccable style, superior quality and a captivating brand experience. So after this, from my perspective, quite impressive visualization of our Corp division. Let me now share with you or give you an overview on our assessment of our relevant market segments. After a year of decline in 2016, where our market declined by around 2%, In 2017, we are back to growth. We expect market growth around 2% to 3% in 2017. In the following years, this growth rate will probably accelerate to something around 3% to 4%, but this is still significantly below the growth rates that we experienced at the beginning of the decade. In addition, our industry is exposed to some fundamental changes and also new trends. Let me just highlight a few to them. 1, and we discussed this already with many of you over the last months quarters is that the separation between formalwear and casualwear is increasingly being replaced by a merger of these two worlds. So this is also with the infusion of athleisure, a key global trend that we see to sustain and to continue in our industry going forward. But also from a consumer experience, consumer perspective, our consumers are now expecting from us to experience brands in a much closer way. In other words, they want to be part of the brand world beyond wearing our products. One related aspect to that is that shown our binder concept have clearly increased the demands for newness of new infusions to our collection and our offering. And last but not least, online has become in the apparel industry not only the prime source of information and inspiration, but increasingly online is the embedded part of any transaction in our industry. So within this context, where do we stand in terms of implementation of what we presented to you last year in London. Let me start with the first field of action, refocusing our brands. And focus our brand portfolio on the 2 brands, BOSS and HUGO, both with a distinct target group and distinct brand identities. For both brands, we have developed a cohesive and complete lifestyle world that's a base for our collection development. And also we have gone via market research into the attitudes of our customers towards brands in their respective segments. Already with the delivery of the springsummer 'eighteen collection, which we'll start to deliver in our own stores and our partners on the wholesale side at the end of this year. We will discontinue to offer BOSS Orange and BOSS Green a separate collection to the end consumer. Both offers will be integrated into the BOSS core offer with a consistent brand messaging and brand design. But beyond the integration of these 2 sub brands, we will also further upgrade our casualwear offering. As you can see from the chart, casualwear has been the driver of over proportional growth for Bosmancave over the last 7 years, delivering 8% growth rates on average, clearly beating the underlying market trend. With our new focus on menswear, with our step up in brand communication but also design competencies, we are convinced that we will continue to benefit from a strong growth momentum in the casualwear segment. But also in our historical segment, was former wear, we have delivered strong and solid growth rates of around 3% over the last 3 years. So in contrast with some popular beliefs, this has been a growing segment also for BOS. And what I mentioned earlier as the market trends, we see with the increased fusion of casualwear elements into our formalwear offering. And you see on the right hand side on the chart some key visuals and looks from our springsummer 'eighteen lookbook. We think that formalwear in a newly defined way will also benefit and continue to grow for us in the outer years. The key steps that we are also currently deploying is strengthening the important anti price product segment. Again, as of the delivery of the springsummer 'eighteen production for BOSS, We will increase in all product categories or offer at the entry price points. And we do this to regain access to a younger customer group or more price conscious consumers we're just starting to discover the product offering of our brand. To give you one example, in the suit category, the price point of €595 will account or does account for roughly 10% of our offer. And that's a surprise point that we did not offer many key European markets outside of Germany so far. But beside the enterprise point, we remain very committed also to our accessible luxury offer, Made to Measure, Full Canvas, BOSS Tailored have been very successful initiatives for us, and we continue to uphold also our marketing our market position in this price range. For our own retail operation, any merchandising decision that we take is, therefore, just and only and strictly based on the demands and the needs from our customers. Besides changes to the balance of our offer, we have also completed an extensive design to value exercise in the first half of twenty seventeen. So based on numerous customer interviews, we have identified and we have also started already to eliminate those features on our products where we received a feedback from our customers that they were not relevant for them as part of their purchase decision. And you see some examples in the suit category on this chart. But at the same time, we also made these changes to the product, added features, qualities where we received strong feedback that these elements were important for the decision making process for our customers. As a result, we were able to increase the customer value at an unchanged cost situation for this product. So as an overall principle for any product category that we offer or any brand, we remain strongly committed to an uncompromising focus on superior quality. And I already mentioned that we have taken very concrete measures to improve the quality levels on fabrics, but also trimmings in these product categories where we received feedback that these investments are needed to strengthen our market position. But also in terms of collection, we introduced last year made in Germany collection in our suit part of our offering, which was very well received in particular in Europe and Asia. And as of the new collection that I already referred to, the springsummer 'eighteen collection will further enhance and grow the suit offering. And also since the beginning of this year, we have established a managing board led continuous improvement table where we meet on a biweekly basis. So it's Ingo Wirth and myself that we have an early morning 30 minutes stand up meeting with the respective team members from Creative and Technical Development. Typically, we review 3 to 4 pieces. We discuss with the team what are feasible options. And in the meeting, we take a decision on the best solution. And on the one hand, this has proven itself to be quite efficient. But it also sends a very strong signal into the organization on how serious the management is taking our commitment to superior quality. So let us now move on to HUGO, where we also accomplished important milestones in the 1st 6 months of 2017 to make further inroads into this growing and important contemporary market segment. Already over the last years, HUO has become a very strong pillar, in particular in Europe of our business. And it has a strong growth rate on the one hand, but also healthy balance across wholesale, retail and e commerce. So for the next years, we will take this as a base first to grow in other European markets, for example, in France, UK among others, where HUGO is significantly smaller relative to BOSS. And we will then move on also to the U. S, in particular in other key Asian markets. What you see here behind me is there was a final scene from the HUGO fashion show that we hosted at Pittioma in Florence this summer. It was the first time since 7 years that we had a major runway event for the brand. And by many who were there and participated there, we're seeing probably as the highlight of the PTOMO this year. In a former industrial setting, there was a tobacco factory, very impressive from the inside and the outside. This was the stage to present to the world of fashion our statement for HUGO. And as you can see from some of the calls we collected from trade partners, buyers, editors, but also influencers that we also invited to this event, the feedback was overwhelmingly positive. Just one quote from the Huffington Post, sheer perfection when it comes to the show. What these comments especially highlighted was the contemporary modern statement of the collection And it's a very impressive casualwear offering that we now have also included in our HUGO offering. So besides the fashion show in Florence, we also started the collaboration with our global brands ambassador, SEG AFRON, on the fragrance side of our business with our partners at Coty to further build global awareness for the brand. But until the new collection will be available to the end consumers, we have a full set of initiatives on the product side but also events until end of this year, beginning of 2018 to further fuel and create interest and awareness of our HUGO offering. Let us now move on to the 2nd field of action, refining the way we sell. In this field, we have set ourselves key priorities. 1st, to drive sales densities in our own retail operations by roughly 20% from a point of departure of roughly €11,000 per square meter to €13,000 per square meter until 2021. What are the key initiatives to achieve this objective? We already started with fallwinter 'seventeen, so the collection that's in store as we speak to strengthen our enterprise offering. And we also have started to have a broader offering in the category and as leisure categories. We are rolling out omni channel services to our end consumers as we speak and we continue to invest into staff training and complete the optimization of our retail network. So I mentioned already online, so this is the 2nd priority for us. After we have successfully in sourced and integrated crucial functions and capabilities from our former partners in 2016. We're now enhancing our platform not only via the hugoblast.com, but also to get into the closer collaboration of third parties. We have to be with our e commerce offer wherever consumers prefer to shop HUGO BOSS products. And now with this in house expertise and competencies, we do have a portable IT infrastructure that we can work on very close collaboration on a global scale with these sites where this traffic that's important to us, our HUGO BOSS customers occur. Our decision to offer the BOSS or the HUGO brand on these sites will be determined by exactly the same two factors that we also use when it comes to physical distribution, brand mix and the quality of distribution. The 3rd element is the rollout of online channel services. So in less than a year, we will be able to offer all relevant omnichannel services, order from store, click and collect and convenient returns in the majority the vast majority of our European stores by the end of the Q1 2018. Let us now move on to the 3rd field of action driving the digital transformation. The complete value chain in our industry is being radically transformed by new technology as we speak. So let's start at the development stage. Design and prototyping, processes were typically all physical and quite time exhaustive in the past are becoming digital. And this is replacing physical prototyping and as a result is accelerating tremendously speed in the development process. As we move on to our own production, but also including our partners, we see Industry 4.0 capabilities to allow us not only to operate efficiently with smaller lot sizes, but also to cater for an increasing aspect of customization to the end product. The improved transparency on inventory levels and availability and the seamless integration of the warehouse management system on a global scale will allow us to speed up delivery to the end consumer whether it's in the physical world or via our e commerce sales channels. And beyond omnichannel services, I already mentioned, customers will discover in our stores, but also on our mobile devices and channels increasingly digitally enhanced and enabled services and functionalities. Let's start at the development stage, and I would like to give you some more tangible examples of what I've just highlighted to you. In particular for the HUGO brand, we have seen strong results from our move from physical prototyping into a more digital process setup. How is this done? Well, it starts with taking advantage of a far improved information flow and exchange with our suppliers. So in particular in these categories that you see on the chart, where we have only limited in house production capacity, we will only gain the speed advantage if we start with the seamless and fast integration with our suppliers already in the development stage. But we also have reduced the number of prototypes that we use as part of the development process. Our design teams, our buying teams are increasingly using digital mock ups to take design decision on our products. And as a result, already by the end of this year, 100% of all products in 3 categories will be digitally developed and enabled for the HUGO brand. Well, we heard this is following some of the standards that we have seen in the sporting goods industry. And we have looked in much detail into systems, especially IT systems already available in the sporting goods industry. In particular, on the apparel side, many of these systems did not work to the requirements of the premium apparel company. So part of our solution is now also to have some quite proprietary solution at hand that will exactly allow us to now have a full functionality also in the replaced digital development process as we speak. I mentioned already the production facility in Izmir, which is, as you know, our biggest plant. And over the last couple of quarters, we have developed Izmir into the prototype of our most advanced production facility, be it in our overall portfolio. So starting in 2016, we started to collect and analyze real time production data, in particular to use preemptive maintenance measures, which has led to a quite sizable reduction in downtime in our production. In the current year, we have started to introduce 3 space planning and tested voice command, which especially the first will allow us to gain further space but also labor productivity during this year. What we're currently testing, we expect to roll out in the following years as we use augmented reality as a very powerful tool in the onboarding and training process of new operators. I've seen these first tests myself. I did not qualify as an operator on my first try, but I was quite impressed how intuitive these tools will be on a especially in a production environment. And we will take big data also for the bit more difficult to predict future to become or to fulfill our vision to turn ISMEA into the 1st smart factory in our portfolio with full functionality. In order to gain speed in terms of online fulfillment, We have not only invested in state of the art facility like many of you have seen with our flat pack distribution center in Feldherstadt and also the in source e commerce operations. This year, we are also ensuring that we have a globally consistent SAP EWM standards with the completion of this deployment also at our Savannah warehouse operation for the U. S. Market. This will help us not only to operate this warehouse far more efficiently, but also to deal in a much more flexible way with the quite volatile demand patterns in this key market for us. We at HUGO BOSS believe that physical stores have an important role to play in the future for our customers. The roles that our stores will play, however, fundamentally changed. So as I already mentioned to you, increasingly our customers have used our website, other websites as a prime source to inform themselves to form an opinion to get inspired on which product they would like to buy from us. So keeping this in mind, when we started about the same time last time we met you in London to think about what are the objectives of our new BOSS store concept, we define 2 key objectives that we have to meet. First, we have to create an atmosphere in our stores that offers that's inviting enough, that this has a warm, welcoming atmosphere, that it makes our customer healthy from and they're willing to spend time with us on-site. And beyond that, as a second important function, we have to step change digitally enhanced services that we offer in stores. Starting with smart mirrors, we have introduced what you see on the picture, experience table that beyond other functions will allow us to use in a far more convenient way omni channel services in store. I'm not sure whether any of you have tried or already tested our omni channel services that we have in Regent Street and others, but this will be a step change in ease of use and convenience, in particular, for our customers. The concept is ready. We will present to you. So this is not a mock up. That's the real thing. And we will share with you, you've seen it from the agenda, exactly this prototype this afternoon. And if you want to see the real thing, you're invited to celebrate with us our 1st BOSS store according to the new concept, which we open next month in Geneva. We've also developed a new store concept for HUGO. But as this brand also in the next couple of years will be predominantly distributed in shop in shop environment, We've placed a special focus on a very cost efficient design of this concept. And it is even more advanced when it comes to the integration or the use of social media, access to Instagram postings from our sideband and also from our customers in store. Also this concept is ready for deployment. Peter Daryovsky will share this HUGO store concept with you. And we are ready and we are already right now in discussion with wholesale partners in particular, but there will be also selective number of HUGO prestaining stores that we open. And we expect the first deployment of this new HUGO concept already also at the end of this year. On the wholesale side of our business, we also made tremendous progress that we are moving from our more traditional sample based SHORM concept to concept where we work with a digital enhanced or based SHORM at HUGO BOSS. Within less than 6 months, the team of dedicated resources has developed a fully functional digital forum for HUGO with a completely integrated order functionality. With the next order intake session that we have for HUGO in October for pre fall 'eighteen, we'll present this store concept to a selected number of buyers. And based on this feedback, I'm very confident that the move to digital showrooms will transform our wholesale distribution commercial room aspect very rapidly in the following years. So let me move on to the 4th field of action where we I would like to share with you of the initiatives and results of innovating the way we operate. And coming back to the Schrum examples I just gave you, It's just one example beside others. It's a very good example from my perspective to demonstrate the benefits of this new way of working that we have defined at HUGO BOSS. So let me start with highlighting some of the concept the principles that we have established that. Something that we probably should have done in most cases or also did in the past, but which is now, as you see, the core principle on anything that we do in this context is that anything that we do starts with evaluating and tracking the benefit from a customer perspective. And this leads to sometimes hard decisions that we have to take. So if part of a Sprint exercise, we do see that the service is not delivering as we expect. We will actually kill this project and not wait for a steer code decision by the managing board, but we will redeploy these resources. Just to give you one example that we are starting right now, you might know that our 2nd biggest store in the U. K. Is in Manchester, Cathedral Street. It's a quite sizable store that we took over from our partner. This is the first store because Manchester is also good location to find some smart kits when it comes to IT services. We have deployed on-site an IT development team that is now developing with our store management and regional operation functionalities that we need to have in store. And this is a very good example also from my perspective to what needs to be the second principle that we delegate decision making powers within the organization to the level where this decision is taken best. Clearly, there are certain decisions that we have to take as a Board and also our managing directors take important distribution decisions. But when it comes to technical design questions, we have multiple projects now empowered junior team members, so team leaders, head of departments to be empowered within the budget frame and the scope defined to take decisions without going through a complex alignment process in the organization. We have helped our teams to achieve that. So from training is not the solution for everything, we know that. And just to say this project is agile, doesn't make a project successful. So we have to be careful with an extensive use of buzzwords also in this context. But I myself have participated in 1 scrum training myself. And I can tell you it's also helpful to run the company. So there are new ways to manage projects different than it was 25 years ago when I went to university, And we need to be open to incorporate these aspects. And last but not least, and maybe that's the most important point when we talk about culture, we also have to change our attitudes towards setbacks or even failures. So too often in the past, this was seen as a personal or an organizational failure. And we have to move this perspective or this perception rather to say, okay, what do we learn from this setback? So what was good and what we started and how do we avoid or modify our approach to get a better result? From the very few examples where we already have gone through this exercise in the last 8 months, I take a lot of confidence that will help us to build a far more entrepreneurial, also risk taking culture at HUGO BOSS. So many of the initiatives that are highlighted today to you were initiated. They are led by Hugo Boss. Team members have a long history with the company. And if you talk to these people, and you will meet some of them also today in the afternoon, are very proud on their contribution to build a stronger business model with us. But also, we have selectively added external talents, especially in these areas or in these instances where we thought a different personality but also a different expertise is needed to be more successful. And what I'd like to do today, and again, you will meet some of these colleagues today to give you examples in 3 areas. Let me start on the design side of our business, where Filippo Belafconi has joined us from Bali and Niel Merga Vluti. They are now leading our shoes and accessories business and our sportswear business, respectively, for us. Moving on to the distribution side, some of you already have met, Tony Lucia, he is in charge for the important U. S. Market for us. Just a couple of months ago, Markus Mayer has joined us to lead the actual largest region for us, the Central European Markets for HUGO BOSS. But also in more the central function at Hugo Boss with the appointment of Linda Daures, who is especially leading now enhancing and developing all aspects of customer experience at HUGO BOSS and Richard Lloyd Williams, who has been instrumental in terms of the way we work, in particular in relation to the IT interaction with the main function has helped us to achieve the results that I just highlighted to you. One important point at the beginning of 2018 is that I will pass on my role as CFO at Huwos after almost 8 years to Yves Muller. And I can tell you even so I enjoyed this task in my role very much, I'm very happy with his appointment and decision by the Supervisory Board because Yves will not only bring a very strong financial track record to his role, But he is also, based on his tenure at Chivo, has a very thorough and detailed understanding of physical and retail in today's world. Beyond that, he will also be responsible for IT at HUBBOSS. I already stressed a couple of times a core function for us. And also in this area, he has made very important contribution at Hibo where he was instrumental to build strong IT infrastructure and processes. So we're looking we all as a team are looking forward for him to join latest by the end of this year. We are very happy to welcome him here in Metzingen. So based on the results we have achieved so far, I'm very confident that we achieved what we stated as an objective that both brands, BOSS and HUGO will outgrow their respective market. And we will do this not only from a sales size, from volume perspective, but we think that we also will make and have started to make good progress to improve, enhance the brand's desirability and added and enhanced the customer experience. The change to our corporate culture to become more risk taking, to think more entrepreneurial will be a key enabling factor to it. Sometimes more difficult for me to give you tangible, measurable KPI as I mentioned, But I was asked a couple of times from you last night, okay, what do you think after 7 months on this journey, which are the elements which are key? There are many things that we can measure and where we have tangible benefits. But we have to look back that this is a company with a different corporate culture going forward to be sustainable successful. That brings me to the outlook for this year and beyond. We confirmed our financial outlook for this year where we expect a stable development in sales and operating profits. As of next year, 2018, we expect to return to growth in terms of sales and operating profit. In West 2019 and beyond, we expect not only to grow sales and operating profit, but also to start increasing operating margins again. So in a nutshell, after year 2017 of implementation of many measures and thus stabilizing our business, we do expect an acceleration for our business and the return to sustainable and profitable growth in 2019 and beyond. So far from my side, I would now like to hand over to Ingo Wirth, who will share in more detail our new brand strategy. Thank you very much. Yes, let me take the opportunity today to talk about the brand strategy. What I would like to do show you is what we achieved over the past 10 months here in Wartsengen to make Jugobors even more successful for the future. Therefore, I have a agenda. We I would like to talk first about the brand positioning, then about our brand experience and then I would like to give you a few key messages. Start with the brand positioning. As we said, as Marc also said in his presentation, from now on we go with a 2 brand strategy. On one side we have BOSS. On the other side we have HUGO. So we have here 2 brands with 2 target customer, but also 2 brand identities. To show you a little bit how do we see BOSS and YUGO different from each other, I would like to start with a short video, which really explains the YUGO and the BOS going on for the future. So how we identified this target customer groups. So on one side, we looked at our customer base. So worldwide, we have a wide range of customer all over the world. Then secondly, we looked on our offer. So we offer formalwear, business, business casual. We offer casual but also at leisure. On the other side, we looked in our fashion level in the product we offer. So we have classic, fashionable, edgy up to extravagant product. So then we match these against 2 different our 2 different brands. So on one side, we have the demanding quality Sika, which is POS. On the other side, we have the Open Mind Life enthusiast, which is HUGO. So we identified here 2 strategically relevant customer groups. But they also have a face. So to give you a visual idea of the face of the BOSS customer and also the HUGO customer, you can see here they are completely different. So we also did this on purpose. We have 2 different brands with 2 different customer. But they also have an age, they have also a phase. So for BOSS, we identified our target customer, he and him. They are 38, they are consultants, but they can be also a lawyer. We have some we want them not born, but they're married and they live in London. I mean, kind of you probably so. On the other side, we have YUGO. Here, our target group is 29. Could be a founder of a startup company. They both are single and they live in Berlin. So what we have here is we have 2 different customers but also 2 different lifestyle. On one side, we have the BOSS lifestyle. The BOSS lifestyle, our customers here is cultivated, successful, sophisticated, but also he has also an active life. On the other side, we have Fugro. It's a totally different lifestyle. Our customer our target customer is here more progressive. He's creative. He's spontaneous, but also individual, which means we have 2 different lifestyle. But they are also surrounded by different brands. So our BOSS customer, he feels very comfortable. When they go on a business trip or they go on the weekend, they stay in a Hyatt hotel. They feel comfortable with Remova, Nespresso, but they use also product from Aesop. The YUGO customer, I mean, he comes from a sharing society. So he's much younger. Sharing is for him, it's for him also key. They're more interested in Netflix, Airbnb, car2go and Uber. So you see here also the lifestyle from both are totally different. But both of them have also a different attitude towards fashion. So the BOSS customer, he's more status oriented, traditional and he's rational. I mean the status symbol, the biggest watch, the biggest car, that's very important for him as well. So BOSS, the HUGO customer is totally different. I mean they these things are not so important for them. But they are open minded, individual, but also spontaneous. Their style is also different. The BOSS customer is more classic, modern, sophisticated, while the YUGO customer, he's a little bit more fashion forward, he's contemporary, progressive up to a little bit edgy. What the BOSS customer expects from us in our store is first personal assistant because this needs this also because of our product range. And when we talk about tailored, we talk about made to measure, we talk about made in Germany, you need to explain the customer a little bit more what the advantage of this quality of this product is. But he expect always from us the highest quality. Your customer when he comes into when he goes into store, he's more into the latest fashion trend. But he want this in also an urban atmosphere. And in the chart before from in the presentation from Marc Lange, you saw already the new HUGO concept, which we will show you later as well. When it comes to shopping, the BOSS customer, he shops more in retail stores, department stores, but online as well. But the YUGO customer, I mean, he lives on his mobile right now. I mean, for him everything which is portable, mobile iPad is much more important. So he lives on these devices as well. And he is more an online shopper, but he also finds the way and we make him also come to our stores through different devices, which we explain you later in the new shop concept. BOSS and HUGO, they are 2 distinctive brands, but they're both under the umbrella of HUGO BOSS, which means they have also shared values. If I talk about the shared values, we have innovation for both brands. We always look for the most innovative products. Premium quality, perfect fit, this is a given for both brands. Sustainability is something which is very, very important for us. So we work here with animal welfare. We have also product equality and a material strategy, but we developed also new products, sustainable product. At the moment, we're working on a shoe made out of pineapples. Trustworthiness and authentic product development, this is very important. So whatever we do and this is what I explain the design team all the time, whatever you do, put everything through the BOSS filter and through the HUGO filter. So I don't want also for the future no overlaps. And they both have a lifestyle experience. When we talk about exclusive characteristics, of course, for sure, it should be always a modern design. The look should be always effortless. You will see this also later when we when I show you what we did in New York this year in July for the fashion show. Sharp tailoring in urban casual wear, this is a given and this is in our product portfolio. But we always have to be the best in class. So product excellent is something what is super important for us. And all this we do to be dress our customer impeccably in every wearing occasion. When we talk about HUGO, HUGO is always a contemporary design. The look that what we show and you saw this in the video is a little bit more progressive. It's a little bit more fashion forward as well. And what we always want to be, we want to offer our customer designer clothes for an affordable price. All this we do to be dress our customer from YUGO individual. So you see also the shared and the different values of both brands. When it comes to BOSS, and this is what we explained before, we integrate orange and green into the core brand, BOSS. We offer here we offer still business wear. And what we did with the team, and you will see this later in the showroom, us gets more modern right now. I think this is very important because we offer more than just a gray and a blue suit with a white shirt and a tie. For the casual, we upgraded the quality in the past season. So we upgraded the quality of Orange to really bring this on the same level as BOSS and what is really important for the BOSS brand. And in at leisure, we still work on technology. So if I see all these three wearing occasions, 1, we make much more modern the other one, the second one, we increase the quality and on the third one, we worked very, very much into technology. We position BOSS in the upper premium level. While HUGO, we offer business wear, We also increase our portfolio in casualwear to make YUGO also successful and fit for retail. And our positioning here is more on the premium. Then we talk about 360 brand experience. When I came, the first thing I said, every consumer touchpoint has to be the same. This is very, very important. So through everything what we do and where we show our product, where we do visual pictures, it has to be always the same touch point. It has to be the same look. If you see our global campaign, if you see our look book, but also our windows, which we implemented 2 weeks or 1 week ago in most of our stores. So everything what we do has to be the same touch point and has to be the same look and feel. Next to this, we also implemented a 3 tiered communication approach. So on one side, we have our global campaign. Our global campaign and the product here you find most likely in our flagship stores. And here we really said, okay, I feel inspired. This is why I go and visit the HUGO BOSS store. The second part is our commercial campaign. Our commercial campaign is based on product on the retail buy. So it's very, very customer centric here as well. And this is you find this in most of our freestanding retail stores. It's very important and this we play also through CRM, social media and also on and offline. And the third one is product statements. So we look very carefully with retail or with our CRM and online team, what product is needed or what product was bought in which month of the year. So for example, if we said February needs a push for suits, we do product statements just purely we penetrate our customer with suits that we get also traffic here online and also in store. This is all fall. This is what we worked on. Now I give you a view to the future. I would like to start with the fashion show in New York to give you an idea to show you also how do we see what's going on in the future. Mark put in his presentation that there's ongoing trend about your casualization of the suit or the casualization in general. And I think this was a perfect example to show also there is more ways of wearing a suit. I mean you can wear this with shirt and tie, but the way how I wear today with a shirt and sneaker, it's also something which we see also an ongoing trend. And we get also very good feedback from press all over the world here on the fashion show. But we don't show always only the suit. We also were very well known for our casual wear. And also here we get in general with the collection a very, very good feedback. For spring, we also implement the 3 tier communication approach. We're starting with the global campaign. When you see the fashion show and the collection theme was summer of ease. So everything was easy. It was unconstructed. It was very, very light. So with the summer of ease, we decided that we shoot the campaign, which we did with Glenn Lushport 1 week ago in Greece and has this kind of feel also. The second one is our global campaign, and it's our commercial campaign. Also here based on our retail buy, we will give the collection, the shooting the same look and feel. So while we develop the collection into 3 different stories, we do this with our commercial campaign as well. We look here also into at the moment into an actor or an influencer, which we can use and also for the activation. This gives you also traffic and also follow-up. The commercial campaign is so in the same look and feel like the global campaign. And the last one are the product statements. Also here they will also have the same look and feel so that we give every customer consumer touch point has to be the same for the future. Then we talk about different wearing occasions. So we changed from Orange, from BOSS Orange and at leisure and green, we changed into 3 different wearing occasions. And here we show also our customer a new way of wearing a suit, the new casual product, but also at leisure. You see the team works here very, very close together, follows the same direction, follows the same color card more or less. And this they will happy to present you later in our showroom. The same we do for women. We also have here the business part, but also a casual part. Even if I talked a lot about the men right now, the women part is equally important for us. We're still investing also into women's. We present a few weeks ago before we went to New York, we did during New York during Berlin Fashion Week, we presented a new capsule collection called Gallery Collection, which is basically available also in our stores. And we get here also a huge press success. BOSS as a German brand went back to Berlin after a few years. It's very important. So our investment of women is still very, very important. On the other side, we have FUGO. I would like to show you also our point of departure with the show first which we did in Florence. So you can see here also look and feel is totally different. We present this show during the Pittioma in Florence, which is one of or not even the important show for menswear. We invited customer, we invited press, which was very important. So it was a big event also. In the past, we did this in Berlin. But this year, we really focused on HUGO to show also our way of HUGO for the future. We received also a lot of attention there. We had 200,000 livestream views because it wasn't livestream. We had 7,000,000 influencer reach. So we had a large variety of different influencers from all over the world flying in. And they also put their hashtags on Instagram. So we had a big reach also through our influencer. 80% of the customer are potential of the people who looked at the show are also new customer. And we saw this on our Instagram account that we after Florence it increased dramatically. €795,000,000 PR reach, which is big for YUGO, but also 270 published articles worldwide. And this was more or less in 1 or 2 weeks. But here we also had €7,000,000 editorial value, which is for a brand like HUGO, it's really a lot. But also here in HUGO, we offer business wear and we also continue with casual, we even increase the casualwear. Our key value or our key messages here also with the way how we see our customer, we also want to have him globally engaged. He's always curious, but he's also authentically expressive. We have here the same, equally important, the womenswear in business but also in casual. As I said, for communication, we use influencer as well. On one side we have here Adam Gallagher. I mean he has a reach of 2,100,000 follower And we do different products with him. Sometimes he take over a show in New York, but we use him also for our license partner for watches and also for eyewear. So instead of having one big influencer, we use several ones because we think that it's very risky also just put the potential to put all on one influencer. So we work here with Adam Gallagher. We work with Master Floros, but also our new brand ambassador for Coty for our fragrance with Coty Krusseuf traffic. The HUGO influencer for sure, they are a little bit younger. They are also less Instagrammer. They are more YouTuber. So for example, Junker Reynold, I mean, she has less followers. She has a 600, 700 followers on Instagram, but she has more than 1,000,000 on YouTube. So also here it's a different customer also in terms of influencer. Where we continue is also sponsorship. So as Euroboss, very, very important is our ad sponsorship. So in collaboration with Guggenheim, we always have very, very nice events. We have the Guggenheim event and we have our ad sponsorship with them together. For HUGO, we focus more on music and on film to also keep this separate from BOSS and Hugo. Here, we're looking at the moment for music band, for a DJ or even for an actor to really collaborate with him together and try also to create a lot of buzz here. We are looking at the moment more into the music direction because we think that it feels very good to HUGO. On the other side, we have the sports sponsorship. Sports ownership is something where we are very successful. We have on one side, we have Alex Thompson. We have also Lewis Hamilton World Championship Formula 1. But we also have different soccer teams. So we do Bayern Munich, we do the German soccer team, but we have also Liverpool and Madrid. Here, it also gives us a lot of traffic because each soccer player has already a high reach of followers. So even the new hire for Bayern Munich, James Rodriguez, he has also 35,000,000 followers. So also this is very important. And wherever the German soccer team or the Bayern Munich where they're going, they wear Hugo Boss. And this product is also available in our retail stores from September on. At the end, I would like to give you also 3 key messages. I would make clear that BOSS and YUGO that they are 2 distinctive brands, but they share the same core value. So what we heard in the past is, yes, YUGO is the cheaper BOSS or YUGO is the younger BOSS. No. These are 2 different brands and we really want to separate this also in all our activities. Both customers have also different lifestyle. I think that's very important. And I think in this presentation, I make this quite clear. And what is very important for us and we will continue with this with the approach to create a customer experience over all customer touch points. And I think all this, what we did over the past 10 years, 10 months is very successful. And you will see that what I explained to you in the presentation, you will see this in real life in the showroom during the walkthroughs later on. So welcome then to the stage. Before opening up the floor to the questions of our guests, let me ask you some questions around distribution. Ingo just presented the implementation of the 2 brands, Verdi Jean. You've just presented these 2 collections to wholesale partners over the last few weeks. How did they react to these collections? You have been with us when we announced our strategic direction to move from 3 brands, BOSS BLACK, BOSS ORANGE and BOSS GREEN into 1 brand, BOSS. And after our Investor Day in London, we had many calls from our wholesale partners who actually were quite nervous about what does it mean for the investment we've taken in regards to shop fits of BOSS BLACK and BOSS ORIGINS in particular, but also what how does the new brand strategy relate to the distribution of each individual customer and each individual point of sale? My wholesale team and I thereafter spend a lot of time with our key partners. We had roundtable interviews, we had discussions. We also invited them to our fashion shows in Florence for YUGO and in New York for BOSS. We had intense discussions on how we are going to proceed. And now with the introduction of the collections bring summer 'eighteen into our showrooms, we received honest feedback from our customers. There was actually lots of excitement. There was a often the statement, it's now much, much clearer how the brand BOSS is positioned. And this reflects much better the brand and the customer BOSS wants to go with. And I can give you 2 insights of customer feedbacks, which I enjoyed a lot. 1 was our customer, Pieck and Klappenburg, who actually utilized our brand, Boss Orange, more on the commercial side, on the entrance, or on the ground floor of the department stores, where we are sitting beside brands of Tommy Hilfiger and Marco Polo. He actually I think Klompenboeuf was quite concerned about movement upwards in the upstream in regards to pricing. But now where they see the collections for BOSS casual and where they see how prices for T shirts, for polos, for jeans, for auto wear translate, They believe there's a quality we have introduced into Boss Orange that we are still an extremely important player also for them on the commercial ground floor. On the other hand, the discussions with Nordstrom, our biggest customer in the U. S, And I'm very happy to say that they now announced to us that we're going to be a strategic partner for them again. We have very, very limited brands are actually in their portfolio. Clearly, you said that the collection development on BOSS Orange and the increased focus on quality and on fashionability will help them to reintroduce BOSS Orange into their stores and will give us another growth momentum for this very important collection. So what did this feedback mean in terms of the actual order intake then for spring summer 2018? First of all, you have to get this under the perspective that our customers in general have a difficult time with premium and luxury apparel. So when we look into the sell throughs of us but also of competitors, we have to admit spring summer 'seventeen hasn't been very successful as the apparel business in total. You've seen the numbers of Mark. We believe business has grown by 2% 3%. And then you can see how own commerce, own retail, how online has taken away from pixel motor market share. You can imagine that the decrease in pixel motor has been shown. So under this circumstance, we are very happy that we have seen a stable business performance from spring summer 'eighteen against spring summer 'seventeen. And this in line with the brand development. So we've spoken about casualization. Our casual parts will grow in a good way. We see that close and casual parts, which you will see later on is also is actually part of it is sold out, which is very good news. And we've seen also in YUGO a very strong commitment from our wholesale community, especially on the sports side. So Mark Langan mentioned 3 priorities for distribution in his presentation. I think we've quite spent quite a lot of time on the first one. So we go to improve sales productivity by 20% over the next 5 years and talking about product, about merchandising, also about the importance of the sales staff and the training that goes into our retail organization as well as technology. So maybe let's jump right into the second point, which was online. So online business improved in the Q2 compared to the Q1. From your perspective, what were the main drivers behind that? And where would you say that there's still further work that needs to be done? There's definitely further work to be done. I think in general, what we see is that the customer is moving at the moment extremely fast into mobile and is also expecting much more personalization. So these are topics we have on our agenda and we will further address. However, the main disappointment in Q1 was the fact that we were within our merchandise offer, not strong enough relating to our online customer. So you all heard the move towards luxury. And with this in mind, we bought too many expensive high luxury items into our online store. And we saw that the online customer is much more driven by price, does much more relate to offers. And this we didn't have in our portfolio for January, February, March. Furthermore, and this became obvious when it really got difficult due to the fact that we brought our online organization to Metzingen and we already put it in place like an omnichannel organization where we put some merchandising team into the merchandise department, the IT team into the IT department and the marketing team into the marketing department. We saw that once you need to react agile and very quick, that it takes much, much longer to integrate these groups back into 1 group and to work together on improving the performance. We did so since from February, January, end of February onwards and we saw immediate results. So therefore, Q2 has been better. Now we are focusing on 1st of all, on the buy and see buying curve, the sizing curve in online is different from the sizing curve offline because we see that there is a huge demand on sportswear, for example, of the size of M and L and the size curves, which are outside the core sizes, are not as important. Secondly, we focus on starting price points. Our focus absolutely clear is to compete against the or to show and offer a merchandise mix, which is competitive. And then it's about moving or converting our mobile customers more. We've seen today a strong increase in mobile. Mobile is actually the number one traffic driver, but we still see that conversion is lower than it is on other devices. And therefore, we are strengthening this tool. So online is not just our own ecom business and not just the sugarbos.com business, but we also have an online business on the wholesale side, which is actually at retail value more than twice as large as our own business. So the business with online pure plays as well as the online offerings of department stores, how do you view them? Are these competitors who take share from our own online business? Or do you view them as partners? In general, I have to say that our wholesale partners are seen as partners. So we work closely together with them. And once we've chosen wholesale partners, we are strongly committed to grow together with them. This is bricks and mortar, but this is also online. In the online world specifically, we see that the customer is younger and the customer is with our online partners, they have a customer base, which is not in line with our customer base. It's younger. It's wider. And therefore, we clearly state that all our online partners we work together with partners. However, what we now started is discussions in regards to how can we proceed in getting further control of their business. So also here, what we did the last 3, 4, 5 years in our department store business in taking someone as a concession, we will now utilize also these key online players. And this is now the game for the next 12 months. And then the 3rd priority, Marc Lange mentioned, was the intention to further integrate distribution channels. And he mentioned omni channel as one element that combines own online and offline retailing. But beyond that, what do you mean by this? It's actually a very interesting discussion yesterday on the tables. There were the question was asked, what are the growth markets? And I answered that there's definitely a focus on China. I still believe that there are opportunities in the U. S. But for me, the growth markets actually are in general the metropolitan cities. As I believe that when we compare here London with Berlin, with New York, with Shanghai, that we see that there is inconsistency in regards to how we develop this business over the last years and how we develop each individual metropolis. So therefore, we are now running a much more integrated distribution strategy. This means that we look into cities like London, like Paris, like New York and that we see how is an optimal setup in regards to own retail, but also in regards to department stores and in regards to online. Let's for example take the city in New York where we do good business. However, when we compare it to cities like London, for example, we see that we have a lower base of own retail stores. We have stores in Soho. We have stores in the south of Manhattan and the north of Manhattan. However, the market penetration via our own stores is not in line with a city like London, for example. We also see that the distribution in department stores, especially on the shop in shop base offers opportunities. And now connecting this with online and making sure that we focus our online distribution with click and collect order from store services, but also to return to store offers us the opportunity to grow there over the next years. And finally, we talked a lot about HUGO. So what role is the HUGO brand going to play in our distribution going forward? JUGO is actually an exciting brand due to the fact that we have very different distribution opportunities over the past taken into consideration. When you look at Central Europe and you look at Germany, Benelux, Austria, we have already established a very strong brand also in regards to wholesale. And now we are in discussions with key partners from the French market, from the Spanish market in regards to running together with us a wholesale distribution. On the other hand, as I'm a strong believer that we need to control our brand better, there are also opportunities for us in the retail field. Mark and Ingo mentioned it, we are going to start to expand into YUGO stores. We will remain cautious in our first approach as we have a new shop fit as we have now a much wider offer in sportswear. And therefore, we target 5 to 10 stores in Europe. If you see an alternative to open a few stores outside Europe, this might be, but it's not our highest priority. Furthermore, we are in discussions with the major department stores in the metropolitan cities to really to drive shop in shop concessions. And here we also see first signs, which are very positive. All right. So as you mentioned, we sit together here again in 5 years' time at the Investor Day 2022, how would the customer journey look like then? And how would we cater to the changes? For me, the overriding theme is that stores will remain important when they are in the right locations. So therefore, when we look into the customer experience in 5 years, I believe that personalization and that service is becoming name of the game. And let me describe it with one of our key customers, a international businessman who lives in London, example of Ingo and who now goes to New York and cuts via social media, he sees that Bayern Munich has their new kits and he likes He will He will then be informed that in our Soho store or in our Columbus Circle store, this piece is available. He will go there. The sales associate already knows that the person is coming because this customer is going to be interested in our suit, but he will also display them a shirt, a tie, a shoe, which goes with the outfit. He then goes into the stores, gets welcomed by his name, see sales associate will see his customer history. We'll also know who is in front of him. We'll also know the date of birth. So we can also see are there birthday packages which could be available. So they will be measured. They will be in luxury service in the store and measurements. So if the customer says my shorts my trousers are too long, I would like to readjust them to be measured. Then he can decide if he takes his products to his house or if he says, I would like to have it delivered back to my house in London. And my vision is then that the order has been taken over from our store in Slonesquare, where we have the same suit, where we have some measurements of the customer, where we will make the alterations and present us to his house. And when we perform best in class and the product will arrive before the customer will be back. It's all about personalization and it's all about using mobile. But as I said in my personal opinion, the customer service level in store and around the customer will remain very important and become even more important. So now you've heard a lot of presentations. It's up to you to ask your questions. I think Antoine was first. It's Antoine, Benjamin from HSBC. Three questions. First of all, regarding the spring and summer orders, when you said that orders are broadly flat year on year, are you just including the external buyers and not taking into any sort of internal orders as well. And I think the press release mentioned a more difficult trend in the brands business where so when you say more difficult, is it more difficult than for athleisure or is it more difficult compared to the sort of previous collections? And maybe can you explain when you take those orders, these are initial orders and how much are they accounting for the total season versus replenishment? My second question is, you've mentioned a lot of management changes. Is it possible to have some kind of timing around when those people already arrived or will arrive? And finally, on the YUGO brand, is it fair to say that compared to November the brand is still in the sort of testing phase, so you haven't taken any new decision in terms of rolling out more stores or spend allocating more spend behind the brand or has it been any change since then? Okay. I'm on let me give it a first try and then Valente Ingo will stop in on the wholesale and the Hugo question. So first, yes, it's only 3rd party preorders when we talk about preorder development. So we're talking about roughly €1,000,000,000 wholesale business that we do. And for winter, it carries a higher weight. So it's not fifty-fifty. And we do have now data for the springsummer main collection for 'eighteen, which is probably a bit more than 30% of the wholesale revenues on the year. So and with all these changes that also Bernd highlighted and also some nervousness or initial resistance, I think it was quite an accomplishment to achieve preorder figures on a similar level. Keep in mind, this is value not volume. With springsummer, we also have decreased many markets outside of Germany also our average selling prices in HUGO because so it's not a major attack, but in this aspect I'm very happy especially with HUGO and the casualwear development. And yes, you have seen the developments in formalwear versus casualwear over the last 7 years. This trend rather to wear sneakers like Ingo is doing and not buying the more expensive Budapest that I'm wearing is there, it's here to stay. And it's a fact. So get over it, deal with it. And I think I'm very pleased with the reaction from Nordstrom. Has to be rebuilt. We have to be better than our competition at least POS, but we are very confident that our collection will deliver in this context. On the management, I was just going through all of the 6 phases. You will see Filippo today. I think Neil is also no, he's not with Christian there. But they're all on our payroll. They all have started. Some of them already a bit more than half a year or almost a year. The only gentleman missing, I would love to have him on stage and to pass all of the financial question on to him. Well, we give him a start up. It's Yves Muller. As I said, Yves Muller will join us at the end of this year, beginning of 'eighteen. On HUGO, well, there was kind of like a, I would say, negative connotation to your question. But honestly, to where we were in November in London with night year with some market research data that indicated that there's a huge market segment that is sizable and distinct enough and cannot be served from our BOSS offering. This was basically coming back to some questions that we heard very loudly back in London, value added consolidated all down to 1 rent. Well, I think today we gave you quite convincing answer, right? There's enormous business opportunity for HUGO with a different customer who has a far higher likelihood now to use this current brand mix to have a higher share of HUGO and to convert them into a BOSS customer. So in terms of collection, in terms of pricing decision, in terms of marketing efforts that we have the brand ambassadors, but most importantly also with the point of sale that will allow us to bring the HUGO brand to life, these boxes are ticked. We had a good initial reaction from our wholesale partners. We are looking right now very actively and we are in discussion with wholesale partners where we have to relocate some of our existing HUGO shop in shops into the right brand mix environment. We take it from there. So there will be interesting content, I'm very confident to tell you, 12 months from now. But it's just an important step of implementation, but not resolved so far. Thank you very much. Luca Solca from Exane BNP Paribas. Could you help us bring some depths of context to the vision that you presented this morning when it comes to bringing Ugo and BOSS in the broader market context. You were talking about a relatively flat or slightly growing market. When I look at the market, I actually see that there's a lot of turmoil. Former business models like the ones from the Designer Brands Ralph Lauren and Armani suffering a lot and falling off a cliff, premium denim also falling off a cliff, streetwear booming, mid price retail integrated brands like Saint Laurent Masch Couillard du Piedalore that we discussed last night booming. So how do you fit in those changes and why do you qualify to be among the successful players? And you were talking about distribution and distribution strategy, there's even doubts that wholesale customers could be there in the future. How do you see the evolution of your distribution in that context as well? Well, I think that's you touched on the many topics. So since it was relatively broad question, I think the 2, I think, are relevant from our perspective. So of course, we looked in terms of technology, market trends, what is happening out there. And as Ingo explained, we are not in denial, but we see the casual wear trend as an enormous opportunity for us because we have the design, sourcing, production, distribution capabilities to take full advantage of this market trend. And that is due to 2 things where we have to deliver and we say so already starting with the second quarter, where we for the first time have seen a return to positive like for like in all three regions, everything that we do also inspiring the consumer has to bring this company back to sustainable like for like growth. We have more than 1100 POS that we operate. And as Bernd said, we believe that many after we've gone through the clearance are here to stay also in the 5 years from now. So the filter we have to go through not only from a collection perspective, but what we do as a corporate has to be how does this drive and help us to drive sales densities in our stores, particularly on the perspective. You know the size of HUGO. We already mentioned that HUGO has been over proportional to our order intake. But we will not allow us to be cornered as we say, Hugh will be X percent of our revenue on absolute revenue target. We know these business models in the contemporary segment and we you can be sure we studied them very carefully what we can learn from them and what we should incorporate in our blueprint for HUGO. And coming back to the earlier question from Anton, I think we are now ready to roll out, deploy many of these. But the size of the opportunity for HUGO is quite relevant. We have probably from all business opportunities a very good qualification to be successful. So let's see how high is the ICU work. We're off to a good start. But on the short term, also in our outlook on 2018, I expect this question will come eventually, if not Dennis already answered this question this morning. But it's too early to tell. And this part of that is the second half on the wholesale side, which will be very much determined by the performance as we speak. So wholesale performance in the second half of 'seventeen will be the decisive factor for order intake for the second half of 'eighteen. And also the first results, the first discussion we have on the wholesale side on the HUGO concept will determine which momentum we are able to build already in the second half of 'eighteen. So we ask for your understanding. There's a minimum we expect to achieve, but we're also not today able to tell you, okay, this will be and we clearly that's not the point in time to say 'eighteen will be the year of margin growth. 'nineteen is what we committed to, but for 'eighteen it's too early. Thank you. Thank you for taking the question from the other half of the room. Falko, please. So Volker, Bosterve Baudelink. So a question from my side. Then starting with your outlook on 20 18, is it out of your indications, is it fair to assume sales growth above 3% to 4% with stable margins from 2019 on margin improvements? And second question is regarding your online strategy. How do you see your need to team up with marketplaces or resource players who have decent frequencies? So far, as I understand, it's a newer brand web shop you're operating and how do you see that going forward to develop? And you mentioned some returns, 3rd question is regarding the mobile strategy. How is your mobile channel traffic? And how is your mobile strategy going forward? Also perhaps an update, which apps are available in which region and where do you stand here? Okay. I think on the online question, I will pass on to Bernd. Just on the outlook, yes, but it's unfortunately more concrete than what you saw on the chart. It will be growth in sales and profits in the following year. And I also shared with you that based on our research, we expect a market growth of 3% to 4%, but this is not an indication that we see the same numbers for us. We will update you on our more quantitative forecast for fiscal year 2018, probably again around our presentation of our full year results 'seventeen in the end of the Q1. Talking about mobile, we see since approximately 9 months that the share of visitors coming via our mobile sites are bigger than the share of customers who are coming via the iPad or via the devices. Today, it's probably 65%, 35% and it's definitely increasing. You were also asking how I see our HUGO BOSS websites. It has for us two reasons to exist. 1 is clearly the commercial reason. We really want to further penetrate the markets and we'll also see this as a very important link to drive our omni channel services. On the other hand, it is also a tool which helps us to develop further the brand desirability and to showcase our visitors what the brand stands for. And here, I have to admit, we I see huge opportunities in regards to the sponsorship opportunities we do to create, say, more content. Igor was saying how many followers he saw for Bayern Munich, how many followers he saw for PSG in Paris or Real Madrid. And then we see that this is not even known by many of our customers what we do on the sports activities. And I think this offers us opportunities. On the other hand, we are also very good in regards to addressing the international business men and women. I think here competitors from the online world today build better content than we do. I think one of our next steps should be how to address when you go to business, how to address when you go to a party and really build selling around the content, which is important Jurgen, Kepler Cheuvreux. Three questions also. Mark, you mentioned ISMIA as a relevant factory. We expect additional ismias do you think you need more in order to fulfill all your targets when you talk about becoming more speedy, more focused, more personalized or ORAND is that factory now at a full capacity swing that you would like to even increase. Secondly, also in that relation, would that be a kind of a think tank for you to develop more IT services to be again more digital also on the production side something you mentioned that we've seen maybe also at the sporting goods guys? And lastly on the personalization, what level of business could that really develop? I mean I understand it with a sneaker, you change your colors, fair enough. But how can you personalize really or can that really be a really impactful business overall? Well, since the personalization question is a tricky one, I will pass this on to Andrew later. Because in some aspect, we don't know, but it's a trend. But let me start with ISMIA. In a way, just to put everybody on the same page, this is by far one of the biggest production facility when it comes to suits formalwear in the industry. So it accounts for quite a significant part of that. And this allows us also to have an R and D department there, which is led by actually by a gentleman who was working on product development technical product development for many years here in Metzingen. He transferred to Isthmia, I think, 2 or 2 or 3 years ago. And now this is he has done a very good job now to focus this development R and D capabilities that he can apply to 2 things. 1 is, of course, by productivity because that's what we're asking to deliver quarter after quarter to ensure that we deliver higher productivities in the categories. But also to be leading in our portfolio, of course, this is most relevant for other suit partners that we work with, shared partners to see how this technology can help us to have a closer collaboration when it comes to the product development, but also on-site productivity. So we are making good progress there. Actually, we have been approached. This is a plant that is also producing for a third party. We don't disclose these names. But we have started to offer spare capacity also to others, not necessarily because we need them to drive full utilization. But for me, it's also the good yardstick to see, okay, are we really world class in terms of productivity that we can offer to a selective number of non core competing brands. But now to also take this know how to other partners. So I believe you mentioned speed and agility that we will see in our industry a trend to more nearside production to shorten lead times in our industry, a topic we didn't discuss today in too much detail, but it's clear from what you described to you also what we think is in the success factor for HUGO. It's not only quality of design and value for money for the product, it's also our ability to react quicker than competition on new fashion trends when it comes to the contemporary market segments. And here we will see 2 trends, even so we have we are happy with our in house share so far. That will be definitely a closer collaboration with suppliers, which is already happening. There will be a wider role to play for our own factories. Keep in mind that we also have a quite sizable shoe factory in Italy. With the ultimate gain to beat the competition also in terms of our ability that we have to build on the more fashion part of our collection. So I'm not talking about our NOS articles, but on the fashion part to be much quicker to change to rate on changes in market demand. And also a tricky one from your side. Personalization, no. We have to see this I think first of all, personalization is something which is very important. But we have to see this from 2 different angles. 1 is the one Bernd explained is personalization and service. The other one is personalization on product. I mean, we do this already. So in our made to measure line, everything is really personalized. So you can have your name in your product. We personalize also scarf. The only thing is and then it comes to agility and to fastness, we need to be faster with this because you don't want to wait 3 months on your scarf because then the winter is over. So what we discussed actually last week is also to talk to IT how we take this out of our regular process to be faster with this. But in general, we're working also on this because it we see this also as a key factor for the future. And there's nothing more exciting than to receive content which relates to you, which is personalized. So when you are a business customer and you always get sportswear, active sportswear, this probably will somehow not excite you for the brand. So the more we understand you and the more we understand what you really need and want and what you desire, the more we strongly believe that this will inspire customers to look into our brands even more and to purchase more than before. This is Anakos from Brandenburg. I have two questions, last actually. So first of all, on the you've mentioned the new retail concepts, I mean, the shopper shops and also the fact that some of your partners have previously invested in the concepts you had for the Orange and Green brands. So I was wondering how did that grow? I mean, have all of them agreed to actually invest in the new stores, shop in shop concepts? Or did you have to maybe take some share of that investment? So that's the first question. Secondly, on the new products, I mean, for a while, I think one of the concerns has been that maybe a core consumer could be aging. So I was wondering whether the more focus on casual wear, I appreciate that the new collection will come only later in the year, but you've already made some changes. Have you noticed any change in the type of consumer you're attracting? Have you seen a big issue of younger consumers coming to the stores? Want to take a question on the So we are in discussions with each individual wholesale partner in regards to where did we in the past position our brands and our lines and how would we like to be positioned in the future. We usually have contracts or shop in shop contracts of 3, mainly 5 years. And as I said, many of these stores we have done so far reflect to the new strategy. However, wherever we believe that a commercial repositioning would make sense due to traffic and due to the customer, we are discussing with the department store on how we can develop this move together and what kind of investments do we need to take from the department store and what kind of investments do we take from our side as a marketing expense. On your second question, it's very relevant, but we have to look at 2 different time periods. So as of now, and have heard that many of you liked already what you saw in our VIP store on-site, but you probably also noticed that this is still a BOSS menswear collection with 3 color codes. So it still has the orange and the green and the black logo. And it's also not reflecting what we have done on the Hubert side of our business. So it's not that we did not offer casual wear in the past. But the people who we excite and you've seen this enormous number of reach, in particular via our influencers that Ingo had in his presentation, is the first step in the marketing funnel and it all starts with awareness. So I get your point, you say, okay, give me the improvement in average age of the customer by how many weeks or months have you improved. Well, honestly, I don't know. And I expect also from our Centimeters data that we, of course, probably we have stabilized, maybe we have improved. But the real important form and you've seen the target age on our ideal profile, 39 for the POS customer, slightly younger on the HUGO, is still the way to go for us. So in a way, this very typical customer is what we aspire to do, which by the way means no age discrimination. We're happy to serve anybody. All that is a great, so if you already start to worry, this is still the blame for me. So maybe we should have learned that. But clearly, and this is not a very serious topic for us, it was an issue in the past and we were not hiding from the fact that we were not happy with the average age of our customers. We see encouraging signs, but we don't see it yet in a significant shift that we added numerous new customers to that because the collection is not in the market yet to achieve this objective. There was actually one question coming in over the webcast, so maybe we take this one. It's on management compensation with regard to the new senior management and new senior management members, but also more broadly. The question is, what are the major targets and KPIs, both quantitatively as well as qualitatively, that will determine their compensation and various share incentives over the next 3 years or so. Okay. That's probably I'll take this question. So we do have classical base, short term and long term incentive scheme. I would now refer to the long term incentive scheme, which by the way is in all details flagged out also in our annual report, but you can check whether I'm able to repeat it correctly. So there are 2 clearly quantitative one. One is aligning clearly our interest also with our investors that the actual performance of the HUGO BOSS share price relative to the MSCI textile industry and our performance is a major part of our compensation over a 3 year performance period and a 1 year vesting. We have a so 3 year performance plus 1 year of vesting for all 4 components. So that's one relative performance to the MSCI tax side. And of course, it's our financial performance in terms of EBITDA development over a midterm base. And then there are 2 from our perspective as relevant more qualitative factors. One is how good are we in inspiring our employees not only in track but retaining talents in terms of being an employer of choice. We work with the great place to work initiatives to do a global assessment on progress that we make here to be seen by our employees as attractive place to work. And last but not least, I think you mentioned sustainability as part of your presentation. We believe that there's something that sometimes the kind of like the back seat in some discussion that it's an important factor for many stakeholders, in particular also for employees that we made progress in improving in our also externally recognized efforts to become more sustainable in all aspects of operation, which for us will be measured in our improvement to be part of the Dow Jones Sustainability Index, where we right now are not a member. The exact score is not disclosed. We're close, but we're not yet on the level of Adidas and Kering. These are clearly the 2 companies we take as a reference. So these 2 quantitative and 2 qualitative factors determine our long term incentive payout. Questions from the room. John Guy, please, in the first row. Thanks for taking the questions. It's John Goll from Enfist. Three questions, maybe starting with Ingo. You talked about the differentiation between HUGO and BOSCORP, but at the moment from a pricing perspective, both HUGO and BOSCORP pricing is relatively similar and there is going to be up to a 30% maybe difference in pricing going forward. So when you talk about that different consumer, are you worried that there's going to be And My second question for Mark, just around 2018, you're talking about targets and you're talking about sales growth and profit growth, margins relatively flat. Within that in terms of cost phasing and thinking about selling distribution, we're not really planting so many flags anymore in terms of stores. So what sort of increase could we see on the marketing side or any other sort of cost relative in order to effectively neutralize out that margin? And Bert, just the comments around the online concessions that you talked about, could you give us an indication as to what the size of that business could be in the U. S. Opportunities to grow that? And I guess the opportunities to protect the margin because clearly taking an online concession model should give you a little bit more firepower when it comes to limiting the markdown volatility that you may see in the U. S? Okay. First of all, we don't think that there's any cannibalization in terms of product even if we talk about suits. There is a it's a price difference. YUGO is more based, as I said, in the premium and BOSS in the upper premium. But I think it's even if we offer the suit for different prices, I mean, in the YUGO suit, you have already a very, very good product. And we make sure that in terms of quality and fit, we ensure that this is all the HUGO BOSS standard. But in BOSS, we have even a higher quality and it's also a different design. But also on the other side, if somebody wants to buy a JUGO suit because it's at the end it's BOSS. So even if he wants to buy a YUGO suit, this is not a problem for us because even for YUGO, even our target customer is 29, we also said it's about it's not about age, it's about attitude. So we offer our customer a wide range of product. And if you see this in total as you go boss, we make sure and we ensure that there is no cannibalization in terms of the product. Talking about the online concession, we will not move to the U. S. Before we have started in Europe. So the first point is that we are sitting together at the moment with the core online players in Europe. We are discussing on alternatives on how we can take over the wholesale business and run it as a concession. This is in mind, we definitely play the 2 brand strategy. And in many of our online stores and online wholesale partners, we see that the brand environment today more reflects towards a YUGO customer. So the YUGO, when you see Ingo's competitive set, most of our online players have at the moment the competitive set for our YUGO. They are quite well performing in sportswear parts with Tommy, who is a direct competitor of BOSS. However, what's the end game of the big online players is to become also popular in premium and luxury. And here we can definitely support them and get better terms when we sit together with them and going to be one of the first movers. So up until we wait, this is what we had to negotiate. We will only go into online concessions. This is why it took a while to really decide we go there. When we have the financial terms which suit us, this is one of the keys. So we are not paying growth for profitability. We have a clear profitability target in our mind. And for this, we can utilize the rental deal concession fee. Yes, coming back, my second try to give you as much detail as we can at this point in time on our 2018 assessment, which is not a guidance. So what we already told you in London is that we for this year, but also for 'eighteen, we do not expect significant changes in our gross margin. And I think today, you have seen some reasons why we come to the conclusion channel mix, while other things equal still has a slight positive impact to that, but it's much smaller than what we had in the past where we have benefited clearly in gross margin level from a strong over proportional growth in retail. And there's a lot of things happening in our collection, changes in retail prices, but also a smart investment into product quality. But I also tell you is the trade off is, okay, well, we optimize this product from a cost perspective based on the quantitative preferred. And with a strong case, be it coming from one of our review tables or market feedback, and we come to a conclusion to beat competition requires an investment into product, we're willing to do that. So that's what we flagged already very consistently 8 months ago. We will not stop until we assure both on HUGO and BOSS on all wearing occasions that we have a superior product. If it comes at that implies some pressure on our gross margin development, we are willing to do that. We continue to run a tight ship when it comes to fixed cost, as we've demonstrated over the last quarter. But also some of these screws you can squeeze only once. So one of the optimizations that we did last year cannot be repeated in the hugo, bos menswear, bos Hugo was menswear. It was womenswear. It was the right decision. We have seen tremendous results. And I'm very happy, and I will do it again. And we know that we have to fund some of these investments from the inside. But there's no low hanging fruits that we say, well, we just carve out another €10,000,000 in other parts of our business to fund these investments. So as you've seen, and I think you mentioned this as part of your call in the Q2, we have seen a ramp up in marketing expenditures. This will probably be an important factor also for 'eighteen. We continue to invest into digital enhanced business models, so our site is such, but also with the enhanced features in store, which requires investment continuous investment into IT capabilities, be it people, be it systems and we are ready to take these investments. We will grow profitability if we grow sales, that's our from a more supportive market environment what we do expect, but it's too early, as I said. Of course, you can try 3 other ways to ask this question, but we will not commit to a margin improvement today for next year. So unfortunately, we've come to the end of the Q and A session. Is there anything you want to conclude with? Yes. Thank you. And we'll have a chance to talk to some of you on-site also during the afternoon. What was important to me what I said at the beginning, it was for important to demonstrate that we have passed many important milestones. So the strategy that we presented to you in London is the right strategy for HUGO BOSS. It covers all relevant elements. We have seen tangible positive results on that. We have received a very positive feedback from our wholesale customers. And maybe most importantly, we have built a strong momentum on the inside. Today, you have met only a very small group that represents HUGO BOSS. We will meet some more people in the afternoon. But what I'm deeply convinced what you feel is the excitement, the commitment from the whole team that we are taking the company into the right direction. So we would like to demonstrate this in more detail in this afternoon. But for the time being, I would like to thank you for your time, your participation, also for those who want who are listening in, taking your time to follow our Investor Day so far. So thank you very much.

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