Hugo Boss AG (ETR:BOSS)

Investor Day 2018

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Nov 15, 2018

Welcome again in London to our Investor Day 2018. It's good to be back. Last time we were here in 2016 and very warm welcome from my side also on behalf of my board colleagues today for Investor Day. Before we go into the presentation, let me give you a quick overview on the agenda. So, I will kick off our presentation to give you a comprehensive overview of our strategy until 2022. This will be followed by a presentation from Ingo Vils, who will give you thorough and detailed presentation on our brand strategy both by Google. After a coffee break, then Hake will take over and he will discuss with you in detail and present to you our strategic plans both in terms of distribution channels in our retail, in our e commerce activity, but also in wholesale and how this will come to life in our 3 important markets Americas, Europe and Asia. What's important to us to give you today is sufficient time for Q and A. So, we plan for I think almost 45 minutes for Q and A session before lunch. Then I think we all have a well deserved lunch break to it. And after lunch, I will be on stage again on a topic where I will share with you more details how the digitalization of processes, the advancement of advanced analytics has already helped us and will do so even more in the future to become far more responsive in our business system. After that, I'm more than happy to welcome a new colleague on the stage. It's almost now a year ago that Yves Muller joined us as our group CFO. Some of you clearly have met him already during the last 12 months. So, he will present to you our financial strategy. He will sum up all the initiatives that we will describe in much detail today when translate into top and bottom line growth, but not only from the income side, but also what does it mean for important balance sheet and cash flow implication. Again, lots of questions that probably will be derived from that for the Q and A session in the afternoon. And hopefully, I'm confident we will wrap up the event around 4 o'clock. So, let's start the presentation today to give you an overview on our strategy until 2022. What can you expect from today's presentation? First, of course, I would like to give you an overview on what we have achieved over the last 12 months in terms of tangible improvements in our business system and how this has already started to translate into the momentum we have created, especially on the top line of our business. Then we will introduce 2 core priorities, personalization and speed, which will shape our strategic agenda going forward and we will complete our presentation to show you how these initiatives will translate into sustainable growth until 2022 and we want you to gain today confidence in our ability to achieve these targets. Before we go into these details, let's take a quick step back what has happened over the last 2 years. As I said, last time we met here in London in November 2016, we presented to you our new corporate strategy. And this new corporate strategy was based on 4 strategic fields of action. First, we recognize the need to review our brand portfolio to focus our brand activities on our 2 core brands, BOSS and HUGO. 2nd, we decided to review our sales and distribution strategy. Until 2016, many of you are aware of that. We predominantly relied on expanding our retail footprint, adding new stores to our network, buying back franchise operations. In 2016, we announced our plan to have a stronger focus on sales productivity improvements, streamlining our existing operations and to focus even stronger on the evolving e commerce opportunity for Chugoboss. Ecom and Ecom capabilities was an important element to build digital capabilities within HUGO BOSS. But it's not only from the sales side, it's also important processes in our product and development which gave a strong push into aggressively pursue opportunities that new technology will offer to us. Last but not least, we recognized already in 2016 our need to become more reactive, more responsive in our business model to speed up our processes both on our development, sourcing and distribution side. In 2016 2017, 1 year ago, we invited you to a Capital Markets Day in a small city south of Stuttgart, our corporate headquarter. And I think it was good to have you on-site. Many of you followed our invitation to meet with us and our management team in Medtings because it gave us the opportunity to show you on-site at our headquarter progress that we achieved over the 1st 12 months. For those of you who were there and will probably recall, it was the first opportunity for Ingovils to show the combined BOSS offering in a short fashion show that already demonstrates the strength that we now see as we combine the different brand lines of BOSS into one unique and strong offer. But also on the sales side, we were very excited to show you back in November 2017 the new 2 store concepts that we have developed for BOSS and for HUGO. We started to roll out the BOSS new store concept. Some of you might have already seen these new stores and we've seen strong results and so today give you more details to that. In terms of technology, this was the first release of the digital showroom that we developed also in the 1st 12 months of our strategic journey. And today I will as part of my presentation give you more detail of this digital showroom for HUGO and now increasingly also for BOSS has played an important part from gaining efficiencies, but more importantly to have a better business model in terms of customer responsiveness. Today, of course, we will review in more detail what we have accomplished over the last 12 months. But more importantly, we will explain to you how these accomplishments, these achievements will form the base for our plans until 2022. And today, we also release our ambition in terms of top line growth and profitability until 2022. So, what we have achieved over the last 2 years is an important foundation for our plans going forward. Let me quickly recap these achievements with you on the following chart. Today, we have completed the simplification of our brand portfolio. Both BOSS, our core brand and HUGO have been now clearly positioned as it was a distinct brand DNA with a unique lifestyle and brand language. During the last 3 years, we have simplified our brand portfolio. 2nd, we have harmonized our global price architecture. Arbitrage consideration has been taken out of the consideration for any customer globally and we have strengthened and established a strong value for money proposition for both brands on a global scale. We have combined that with selective investments into product quality, certain product categories and price points because value for money, product quality remains the number one reason for our customers to build a strong lasting relationship with our brands. Last, 4th point was the establishment, the build up of digital capabilities. And the improvement we have seen over the last 12 months in our e com performance is just one very telling example how Hugo Boss has stepped up its capability in game when it comes to digital competencies. Last but not least, our laser focus on retail productivity clearly has started to pay off. The last four quarters were one of the strongest improvements in like for like improvement in our retail network that we have seen in the recent history, which is important clearly not only to return to top line growth, but to drive structural profitability for the group. So what you have seen that after a year of stagnation in 2016, we returned to growth already in 2017 with a 3% growth rate. And for the current fiscal year, we expect an acceleration to 4% in our business. This performance over the last 2 years of course has to be seen in the context of the relevant market for sugar BOSS. This market has returned to model growth like our growth rate in 2017. And we believe that the current growth rate that we see in the market of around 3% to 4% is probably the right proxy also for the expected underlying growth in the relevant market for us going forward. For us, what is even more important than the growth assumption over the next 4 years that we recognize and take into consideration major trends in our market. And I would like to highlight 3 major trends that we consider extremely relevant as we shape our strategic agenda. 1 is, we do continue to see a strong shift from formalwear to casualwear. And even so formalwear clearly is the heritage to our brand, We are very excited that especially the streamlining of our brand portfolio has given us now venues to grow strongly in the casualwear segment of the market and we have seen this as a major driver in our store productivity improvement over the last 2 years. 2nd, customer behavior has changed fundamentally and for good. Online penetration not only in terms of buying products online, increasing via mobile devices, but the importance of social media and online platforms to build connections to our customers are here to stay and are of increasing importance in our market segment. And the third element is that customers worldwide have shifted to a measurable and important degree from owning things to doing things. The importance of experience has clearly increased, it has slight dampening effect clearly on any industry that provides physical goods rather than services, but it also is an important factor because we have to up our game to offer our customers services, experiences that will add to the traditional way of serving them with superior products. So, what we have done over the last 2 years to evaluate our services through the eye of our customers has served us extremely well. We believe it's not technology that will disrupt our industry, it's the intelligent application of this technology to create value, superior benefits to the customer which is important to drive a competitive advantage. So, let's go in a bit more detail how these customer expectations have evolved and changed in our industry. The customer we see today has changed in many important ways. The customer is empowered in an unforeseen level. The internet, the access to data wherever, whenever you want is giving our customer insight and knowledge of our brands of our offering which is second to none in previous generation. And this is happening in an extremely time constrained way. Many of our customers and our core customers are juggling professional with private obligation and ambition, so time is an important factor for these customers. And even though there is still an enormous importance of the brand and the product as such, they expect more from us. We need to offer a meaningful offering which creates a sense of authenticity to the product and to the brand. So, how do we build this connection between us and our customers? Well, we need to become more personalized in our offerings and services. So, it's not just product, we see strong opportunities to build this relationship to strengthen this relationship via personalized services. And almost from a financial perspective, we need to have a superior return for time spent with us, the time spent on our social media offering or even more importantly time spent in our stores. This has to go almost to the level of instant gratification to the expectations and needs of our customers. This allows us with the right service, the right events to build a strong promotional connection to our customers. When we met last time here in London, we not only had this strategic framework for the first time introduced to you, but we also shared with you our core division. The vision is to become the most desirable premium fashion lifestyle brand. And this has served us as a management team but also everybody at HUGO BOSS very well. Driving the desirability of our brands through the eye of our customers is a very good guiding light to evaluate setting priorities, selecting the right product and doing the right things that will drive desirability as we believe that brand desirability will ultimately be the prerequisite for top and bottom line success of the company. So what are the priorities from our perspective which will shape or influence brand desirability going forward. These are two factors, personalization and speed. So, how and why does personalization drive customer engagement? Let's go back again to the expectation that customers have to our brand and also to Hubert specifically. I already mentioned the personalization goes far beyond what has been a traditional way of personalizing products with maybe a monogram or with a made to measure suit. It's especially moved in the area of service on ways how to communicate with a customer, which is normally from the traditional print media, mass communication, which is something that is increasingly tailored to your specific interests and needs. Store events, the fashion show you have seen the examples from New York are important events that drive an emotional connection between us and our brand. Big Ben still in use. Well, we think we are well positioned to take advantage and basically benefit from this increasing expectation from our customers. One asset that we clearly continue to build on and rely on is the global reach that we have with more than 1,000 POS worldwide. It's an extremely valuable asset also in this increasingly digital world because it's not only the store, it's the competencies, it's the commitment, it's the expertise of more than 7,000 sales associates that work for us worldwide. Their knowledge on style, their knowledge on advising customers is one of the most valuable assets that we have to cater to this need. Something that we discussed also in previous occasion is that we now up our games and more details will come today on our Centimeters and data analytics capability. It's not only the data from our e com side, but it's also clearly from data customers are willing to share with us in store that we are able to analyze this data not only to be more targeted on our product offering, but to go back to our customers with far more personalized offering on what is interesting to them. And we have seen very strong, very strong indication on the very positive impact this will happen on physical, but also e commerce business development. And we are growing the range of personalized products. Sometimes a short movie is selling more than many words from the CEO, so that we have prepared a short movie that gives you an indication where we stand today and what is being developed and tested right now in terms of personalization. Please. So these were just 6 examples on the product side, but increasing also on the service side where we see enormous potential to drive this connection, the emotional bond between our customers. Just to quickly recap, it's a don't underestimate that even in traditional product categories like suits, the scarf, the monogramming, the ability to create a product like the new offering on made to measure shoes still resonates especially with the highly sophisticated customer. I'd like this gentleman on his way to the store for his personal appointment to discover more of our collection, met his friends with the Hugo reverse theme. We see the wish to personalize clearly also in the more contemporary segment. The HUGO reverse story, which was an important driver in our HUGO category growth has grown from nothing to a significant part around 10% on our sportswear offering already in the 1st year. So we believe the capability to build to offer personalized services does not only apply to the more traditional tailoring part of our business, but also to be it on sneakers, be it on contemporary casualwear segment. More importantly, and this afternoon I will give you even more details to that, we believe that these services, the cross recommendation based on past purchases, it's important drivers that it's an ease of convenience, but also an important revenue driver to our customers. So, actually, personalization will be the one of the core drivers of driving customer engagement. So why? Let's move on to this aspect of speed. Why is responsiveness so important? Again, before we go into our first results, let's make sure that we are all aware of the expectation of our customers why speed and responsiveness is so important. Well, it goes back to something that I already mentioned. We need to be quick and fast in our responsiveness to serve your needs. People will see the engagement with us almost as an investment and there need to be tangible benefits in terms of clearly a product suiting their needs, the advice they are receiving to engage even stronger with a brand like us. These experiences will build a strong relationship with our brands. And again, other skills, but skills that we have developed over years will form a strong base and assets to achieve or to meet these expectations. Let me just quickly go through them with you. One is, we are one of the leading companies in our industry when it comes to product design and production capabilities. And as we move now from a more typical related development process into digital, we were even wider from our perspective the gap in our capabilities to many of our competition. This is supported by a very robust global fully integrated IT and logistical infrastructure and we believe that our own production facility in connection with the intensified collaboration with leading partners and other categories is a strong fundament to become even more responsive in our businesses. Again, so far to the background to it, what I would like to share with you now is also in the dimension of speed, and very tangible results that we achieved over the last 12 to 18 months. So, please go to the second movie. So again, just a short overview on 4 important initiatives that we successfully implemented over the last 12 months. One important part is that we have now proven and we are on the 4th generation of the completely digital developed collection as part of HUGO. We have seen part of the collection. We have seen an important prerequisite that from our perspective is needed to establish this function at the digital material library. And it's not only development process, it's also the digital showroom. That's for HUGO now, it's a global standard and we will start and implement over the next 2 years the rollout of the digital showroom also for our core brand BOSS. Yes, there is also a quite sizable cost saving related to that because you will reduce your physical sales samples by sometimes even more than 50%. But more importantly and you've seen just a glimpse on the ease of use, it has been extremely well received from our own retail buying teams, but also from wholesale partners who recognize it's much easier to use. It helps you to visualize your buy and a nice side effect we have seen also in terms of sales and preorder numbers a strong reaction to it. So it's not only the collection, it's also the ease of use of technology that is helping us to gain market share. So, you see we're quite excited about what these two priorities will offer to us And these two priorities will also shape our strategic agenda going forward. So personalization clearly will more influence anything that's related to our brands and how we sell to the customer. It's product and services which are predominantly influenced or where we see the benefit of introducing this concept. On the right hand side, you see that we believe that speed will especially important or will be driven by further digitization of certain processes and it will allow us in terms of our overall value chain to speed up critical process to become more reactive. Let's go in a bit more detail and we will use today's presentation from Ingo Wilsd, Dan, Park and myself to give you far more detailed view to it. But let's start with our brand portfolio first. With the establishment of BOSS and HUGO in their own specific market segment with a distinct brand DNA and messaging, we are now building on both of them to gain top line momentum. For BOS, yes, we see strong opportunities still in our tailored heritage. So, examples that we have seen in the last 12 months, for example, the introduction of stretch tailoring suits like the beautiful one I am wearing today. It's already today according to almost a third on our suit business. It's innovation in our suitings which is clearly driving also our core categories. But also in women's wear, we have seen strong results over the last 12 months as we focus our women's wear offering to be the number one brand as a wear to work for professional women. We have reestablished a strong leadership with major department stores worldwide and we see this important segment also as a room for growth for our women's wear offering going forward. Q1 on the other hand will especially benefit from the fashion forward statement to it, the strong resonance signed with the younger customer by our digital sales channels and we are committed to further like you've seen with the 2 fashion shows, Boss and Hugo to support this growth with events, with collaboration, with capsules to drive the brand's desirability for both brands. Ingo, right after my presentation, will give you far more details and color how we will do that. On the sales and distribution side, our core focus will remain to drive sales productivity improvements Within our existing physical retail network, it's the most important parameters to steer our action to achieve an annual improvement of sales densities of 4% in our existing network. We do recognize on the other hand that ecom will be in the years to come the most important growth driver in our in terms of top line growth. This will not only come from keeping and maintaining the momentum that we have clearly gained over the last 12 months in our existing dotcom presence in core markets, but it will be substituted for something that we one example that we announced last week that we increasingly use our technology, our platform to go into 3rd party online distribution channels. Our partnership with Zalando has been seen as a one first and important step that we establish a control on the sales channel also via retail via digital concession. And last but not least, we will clearly also grow our e com business in regions, for example, Australia, Canada, Scandinavia, where we don't have a dotcom presence yet. So, over the next years, ecom will clearly be a very important growth driver for us. The 3rd element and we will go also here in more detail in Bernd's presentation is the importance of Asia. And if you follow us very closely, you have seen a very strong sustained momentum we have seen in this region and we continue to see double digit growth opportunities in this market. I think the movie already demonstrated to you how these can be a game changer in terms of competitive advantages. So, we'll continue to invest to digitize these key processes where we see either cost saving, but even more importantly, the ability to shorten our reaction time. We have implemented multiple digital functions and we will especially now that we have stepped the base in particular for HUGO to bring these capabilities to the even larger business for both. The third element to that which we see applicable across multiple opportunities in our value chain is the use of big data analytics. It includes elements like trend detection, It has an important use case also in our production facility and we have just recently seen a very positive impact from big data analytics when it comes to more intelligent markdown management in our industry. When we move to the aspects on our supply chain, the most important one is speed and shortening lead times. The shortening of development times that we have now successfully implemented, we are now as I said in 4th generation on the digital collection for HUGO has demonstrated that we see that we have the capability to do so. As a next step, we now have to increasingly take this advantage to become even better and pinpoint the trends that are outperforming our traditional way, but also the competition. It has implication also on our own and third party production. We do not stop just by shorting lead times in development. We also see opportunities in becoming more reactive when it comes to our production and distribution capabilities. To some degree, this might even lead to a rethinking of the whole production set up in our industry. We already see today indication that near shoring or shifting production closer to market is helping our industry as technology advances. All four elements together will increase brand desirability for BOSS and Fusible. We believe very strongly that as we build brand desirability, this will enable us to achieve our financial ambition. This will enable us to achieve our financial ambition. So, let's go into our financial ambition at the last part of my presentation. What we will present today is our ambition in terms of top line growth and structural profitability improvement until 2022. Let's start with the sales side. Our ambition is to outgrow the market with an annual growth rate of 5% to 7%, which is almost double to the underlying growth rate in our industry and it will be based on 4 growth drivers. The most important one will be online. For online, we expect until 2022 an almost quadrupling of our business to around €400,000,000 It's the single most important growth driver to our business. And we will spend today to give you more details how we want to achieve this objective. Retail productivity within our network of more than 1,000 stores offers still from our perspective many opportunities to drive productivity, which is helpful not only on the left hand side of the chart in terms of sales momentum, but even more importantly to drive the profitability of our retail business. Asia in terms of structure profitability already today accretive to our overall group's profitability remains in terms of region opportunities the single biggest one for us. And we're based today of around 15% with the strong double digit growth that we have now experienced over the last 4 quarters, we think in terms of distribution network, in terms of technology, in terms of brand desirability, and last but not least, in terms of value for money, we think there's enormous opportunity, especially in Greater China to take market share. We expect the relative share of Asia Pacific to grow from today's 15% to around 20% by 2022. And last but not least, it's HUGO. We have seen a very strong reaction to the collection. We are very pleased with the first results on the HUGO stores that we have the dedicated HUGO stores that we've opened in London, White City for those of you being London based is probably your reference case we would invite you to visit. Don't screw up our conversion rate. Please buy a sweater, but it's an opportunity to discover it yourself. And even I know there are some French colleagues here today in the center of Marais, we are now have opened the first HUGO store relatively close to the number one Sandoz store in the world. So, we are willing and we are confident that we have with HUGO a brand now in our portfolio that is extremely well positioned in the contemporary segment and we target for HUGO an over proportional growth to the group average until 2022. How does this translate into the improvement of structural profitability? We target to increase our or improve our structure profitability which will be measured on an EBIT base by almost 300 basis points. The improvement from today's level will be about equally driven by improvement in our gross margin and by improvement in our OpEx levels. Just to give you a bit more color and details on the gross margin improvement, one factor is clearly known to you with its growth momentum in retail, physical and online, we will benefit in the years to come clearly from the relative higher share on our retail operations. But we also see about equally sized impact from further optimization of our markdown management. The use of now machine learning, far more advanced analytics to drive our markdown management is already proven. It has to be an important factor. It's not the only one, but to improve our gross margin with an improved markdown management in our own retail operations. And last but not least, we become more streamlined in our product offering. We see opportunities with bigger lot sizes to further improve our cost ratio when it comes to our product. So, all three elements taken together will about generate half of the margin improvement we target to achieve by 2022. Efficiency program that Yves will detail today in more detail will account for the second half of the margin improvement. We clearly have established over the last 2 years a cost discipline at HUGO BOSTED was not necessarily part of our genes before And we will continue to pursue aggressively cost optimization venues on the retail side of our business to further drive pay to sales ratios by efficiencies in our build out expenses, but also in our back of house functions that we target to grow at an under proportion rate. More details on these to follow. In a nutshell, our ambition for the next 4 years is to outperform the industry in terms of growth rate and to establish an industry leading profitability for our group. Now, I would like to hand over to Ingo, who will go in more detail on our brand strategy. Thank you for your time. Yes. Thank you, Marc, and good morning. Warm welcome also from my side. I would like to start my presentation today about refocus the brand. So, what did we achieved over the last year? So, in 2016, we announced our 2 brand strategy. In 2017, we integrated the BOSS Orange and BOSS Green into our core brand BOSS. The reason was to give our customer a much more clear and consistent brand message. In 2018 now, we go alive overall and across all channels and touch points. Clearly, we're addressing now 2 distinct customers. So for the future going on, we have 2 brands, we have 2 customers and 2 lifestyles. On one side, we have the BOSS customer. He's a little bit more classic. He's sophisticated. He's modern, but he has very high demand also on quality. On the other side, we have our YUGO customer. He's a little bit slightly younger. He's a little bit more fashion conscious, but he's also much more individual. To also further resharpening our brand positioning, we focus on clear two priorities. 1 is our brand values and the second one is also our product and marketing. To give you a little bit a better understanding how do we see BOS going on in the future and the new BOS, I would like to start with a short video. So we created after all this, we created 5 brand values. On one side, we talk about masculinity, femininity. We talk about sexiness, success, precision and style. And all these 5 brand values guide also constantly our design of the product and also our brand experience. What we did as well, we talk about a new brand statement. The brand statement for BOSS is for men on their way to greatness, for women making bold moves, for stress to drive. All our brand values are also reflected in our product and marketing. So let me start with the product. We focus here really on three priorities. On one side, we want to strengthen our tailored heritage. We want to grow our casual and athleisure wear, and we would like to drive innovation. How we do pursuing these three priorities? On one side, we talk about tailor and heritage. I mean, we all know that BOSS main factor is a suit. So whatever we do, we always stand for a suit. And you can ask a 25 years old person or a 65, when it comes to BOSS, they always would say, oh yes, BOSS is a suit. But there are also new ways of dressing. So in the meantime or over the past years, it's really allowed to work also wear a suit with a turtleneck or wear a suit with sneakers. All this drives also a new innovation in the suit. But what we would like to do is, we would like to inspire our customer constantly with new ways of wearing a suit. And in this case, we also want to strengthen our strength. The second part, which is very important, is our increasing business in casual and athleisurewear. There is a trend over the past 10 years that casualization becomes more and more important. So what we would like to do, we would like build on our positive performance and make the big bigger. The last priority is innovation. We know that innovation really drives desirability and we need to invest constantly in innovation. Follow our vision to become the most desirable upper premium lifestyle and fashion brand, we constantly have to challenge our status quo. Let me talk about the tailoring heritage. I mean, we know that BOSS has an iconic status on their tailoring. So we are trusted. We are trusted by generation within our product here. But the number one reason to buy the Hugo Boss suit is always the quality. What we would like to do is, we would like to reinvent the suit also in new ways. But how are we doing this? First of all, we offer mix and match. So over the last years, also this segment increased in the growth business by 15%. Mix and match for us means our customer can come to our store and can choose between different pants, different jackets, but all in the same fabric, but also different sizes. So some guys need maybe a bigger jacket than the pants. So all here, you can play around, but it's always in the same fabric. The second part is also the integration of stretch tailoring. Marc mentioned this before. Meanwhile, every 3rd suit is sold with a stretch fabric. So this gives our customer also more comfort and really get into his needs for a more comfortable suit. The last one is also made to measure. Made to measure is our highest level of personalization, meanwhile. We offer here and we offer here a made to measure suit where our customer really can choose between the style, the fabric, the inner lining and also can have his name stitched into the suit. So this is really a very, very high level of personalization. We also would like to leverage our tailored heritage in the womenswear. As Marc mentioned, we want to become the number one wear to work destination for females. How we do this? We strengthen our business where even now here we have very good examples. We have our partner, our wholesale partner Nordstrom in the U. S. In the U. S, in Nordstrom, we are the number one where to destination on our level. But we also have to focus on our key categories. Our key categories to make also the big bigger are coats, skirts, dresses, but also the suiting. The last one is in the women's section, we want to identify also collaborations or capsule collections. So, in the past, we showed already one collection, which was our black on black collection, which we designed or worked together with our licensed partner Coty. But also another one, which is in stores right now is our Made to Measure, Made in Germany capsule. Made in Germany is not new for us because we have a lot of Made in Germany also in the suit business in men. But for the women and for the men, we designed 1 capsule collection out of very small 12 small pieces. We used all Italian fabrics, combined this with German workmanship I put a lot of attention to detail. As brand ambassadors, we use here Tony Gan and Daniel Bruhl. They both have a globally and international lifestyle, but they have also German roots. Within our casual wear offer, we really have 3 wearing occasions for the future because what we would like to do, we want to give our customer the chance to wear our product 20 fourseven and being always impactly addressed. So, we start here with smart casual, with casual, but also with athleisurewear. Another factor what we would like to do by putting all three brands together, we want to foresee a complexity reduction. We will do this with a 4 step approach. On one side, we analyze our product groups and look really what are the customer needs. The second is really reorganize our collection structure to minimize overlap. At the moment, we have a basic polo shirt in every wearing occasion, smart casual, casual and leisure. This has to be minimized. We have this in polo shirts, but also in denim. We would like to reallocate our resources for product innovation and free up the resources for capsule collection. So now you may ask your question, but how they want to do it and what is the complexity reduction. So until 2020, we would like to reduce our complexity by 30%. Innovation excites also our customer. So, we constantly have to invest into product innovation to further increase also our brand desirability. Innovation, we interpret it in 4 major fields. One is functionality. 2nd one is fabrics, personalization, but also sustainability. Let's start with the functionality. We developed the latest technology. Here. We developed a heat jacket. We have here a clear customer benefit because it keeps you warm on your body and on your hands. So this pays totally into the functionality. The second one is our fabrics. So we developed a fabric and we create out of this a washable suit. We used here our testimonial Joseph Schuling from Singapore. And here we have a clear customer benefit. The lifestyle the lifestyle of our customer changed totally and he is much more demanding. So this washable suit really pays into this direction. The third one is personalization. Personalization is not really new to us because we do this already in made to measure. But what we really would like to do is we focus much more in 2019 also on this. The last one is sustainability. We have a clear commitment to sustainability. Sustainability for us drives also innovation. So in this case, we developed 100% vegan shoe, which is made out of pineapple leaf fibers. And all this investment rewarded us also by the inclusion of the Dow Jones Sustainability Index already for the 2nd time. Our brand values are also reflected in our marketing approach. Our new campaign, the new boss is much more bolder, much more sophisticated, much more younger, but also much more relevant than that what we did before. All our key elements like ambition, precision and style also reflected in this campaign. We get here also a total reach on Facebook and Instagram within 2 months of 14,000,000 likes. For me, it is very important that all our customer touch points are going in the same direction. And this is also very important that we guide our customer through all our touch points. So when we talk about web, social, CRM, out of home, but also about our stores, we always have to give the same message to our customer. This is what we call a 360 marketing approach. Another nice marketing tool was also one collaboration with the Michael Jackson Estate in L. A. So here, I have to tell you a little story because I was in L. A. On a shooting and then we learned that the white suit which he was wearing on the album Thriller is Hugo Boss suit. So I get invited by the Grammy Museum in LA and somebody presented me the suit in a black garment bag. They opened, they put it on the table. I was not even allowed to touch it. Somebody came with rubber gloves and opened this suit. And for sure, I mean, Michael Jackson was this high. So, I looked at the proportion, I was a little bit irritated. But what I did then, I make pictures from everything, from the fabric, from the lining, from the color. For sure, they make the sleeves shorter, so this looks totally weird on the buttons and everything. But then I flew back to Germany and we replicated the suit in our headquarter in Metzingen. So a few months later, because in 2018, it was his 60s birthday, we put this suit in our stores, but also on the Internet and within 12 hours, it was sold out. We created next to this also a T shirt collection, which was a nightmare because working with the Michael Jackson estate, nothing is allowed. So, we couldn't do our logo in front of him, blah, blah, blah. So, but we created this 4 t shirts and put them on the Internet and also in store. The effect was that we get into our stores a totally different customer, which we had before. The customer was much younger and we excite also our customer, the new customer, not only with the Michael Jackson product, but also with our regular product. So also here on Instagram, we had in 3 days, we had 4,000,000 reach just on Instagram. We always I mean, we know that the Asian market is very important for us. So what we always do is we combine our holiday campaign animal. So in 2018, it was easy because it was a dog. So but then when we worked on the new holiday campaign, we saw there was a pick. So how does it fit together, the pick, Hugo Boss and Chinese New Year? So I was also confused at the beginning, But then we created a capsule collection and we found an artist and we said he would be the only one who can make a pick also in a Hugo Boss way and in a funny way. So this you can see here on our new holiday campaign where we collaborate with Jeremy Will. But we do the same we have the same approach here because everything has to be 360. So the same message of design and elements you see in our stores, you will see it in product, but also on social media. Last one in terms of marketing, which is probably the most exciting and this makes also our brand much more shine is our Fashion Week in New York. So in the past three seasons, we just showed a men's show. It was singular men's. So for the first time this year in September, we showed men and women together. It was the first time in the history of Hugo Boss during a fashion show calendar. The inspiration, as you can see here, is California Breeze and maybe also outside you saw the video already. What we would like here is also to show our customer new ways of wearing JUGOBOS. And we also want to give a new take on how does JUGO BOSS look like in the future. All this marketing investments over the last year result also in a double digit growth on social media. So in 2016, when I started, we had I mean, I was surprised where we had 2,000,000 followers. In 2017, we are around 3,000,000. But now, we're almost on 5,000,000 followers. So this shows also the interest for the brand. Coming to the YUGO strategy. Also here a short video will give you a better understanding the look and feel of YUGO and that this is totally different from BOSS. For YUGO, we have also brand values, but these brand values are totally different. Here we talk about that we live in an age of individuality. We embrace the possible. And we see YUGO as the platform of self expression. But what does it mean? First of all, our YUGO customer is globally engaged and he is a citizen of everywhere. They are always curious. They always look for the next thing. So when I travel around and I'm in New York, I go into the same hotel, I go to the same restaurant, I'm not really interested anymore what's new. But the YUGO customer is totally different. I mean, he's really interested. So what is the newest club in Tokyo? What's the new restaurant in LA? And where does the newest shop in New York? So he is much more curious of what's new. And this he reflects also in his styling. But also he's authentically expressive. He's more the power of real. All our brand values here also reflected in product and marketing. Let me start with the product. We focus here also on 3 different directions 3 directions. 1st of all, we would like to create an unconventional authenticity. We grow casual wear and we drive product innovation. Our number one priority is really the unconventional authenticity. We see that the customer behavior from YUGO is totally different. He's more an individual style. He also mix and match product group. So that's why we also would like to position HUGO as a platform of self expression. And therefore, strengthen the strength from YUGO to really design in every aspect of the collection development into this direction. The other one, it's also the major wearing occasion for BOSS is the casual wear. Customer here want different styles. It should be much more personalized. And also here, we see that the U Go Reversed, as Marc mentioned before, it's a big part of the collection. Casualwear is one of the main driver for YUGO and also here, we would like to make the big bigger. The third one is innovation. Innovation sharpens also here the brand desirability, but it's in a different way. Innovation is totally different interpreted in YUGO than in BOSS. It's more the way how we design product. And therefore, we also have to here constantly challenge our status. The YUGO customer for us is the Mixmaster. So he's wearing business wear and casual wear, mix this together to get always an authentic and unconventional and innovative look. So this is one of the USPs for YUGO. We call this group of people the Mixmaster. The second is also the YUGO Reversed. YUGO Reversed is one of the big main driver also in the sportswear. Here, our customer and this goes into brand desirability and customization, our customer can come to the store and create his name in the Hugo Reversed on a print t shirt or on the sweater. So also this totally pays into the brand desirability. And the last one is our digital is that a part of our collection is digital developed. This has two effects. 1 is, we personally we totally reduced the lead times here. And the second one is we have no sample cost anymore. It's a totally new way also for the design team because they design the product and the next time they will see it is in store. So there are no samples anymore. No samples and reduce the lead times. When we talk about marketing, also here, we have to implement or we implemented the U Go marketing in a totally different way than in BOSS. The customer is much more different. So they speak a different tone of voice and they have also different channels. So also we have to focus on this to reach our customer there. Therefore, we try to give YUGO also a home. I think that's very important that YUGO as a home, as a brand. So what we did is we connected YUGO totally to Berlin. All our activities, which we have now, which we do and which we've done are connected around Berlin. The YUGO customer and our marketing approach here is much more connected, much more online and it's always on. So the U Go customer lives also different like they don't make phone calls anymore. They do everything. They watch up, they buy, they do everything on their phone. They even connected with us as a brand, but also with their friends always on their smartphone. So that's why we also here, we integrate our marketing approach totally different. On one side, we do everything on social. We try and we get our customer and excite our customer also through pop up stores. So we opened recently a pop up store in Berlin, where we developed 25 pieces, all with the YUGO reversed in a pop up store. We make their events, we have their parties and we connect much closer with our customer. And for sure, the last field is also our fashion show, which we did in Berlin as well. Even connect more, unless our customer wrote, what he wants from us is we do also co creation. So in 4 major product groups like jackets, belts, sweater and shirts, we put them always 2 pieces on the Internet and let our customer vote what he wants to see, what he wants to have. So we call this co creation with social media followers to just connect much more to our customer there. We also do collaborations, but collaborations are different than in Euro BOSS. So here, we collaborate with actors during the fashion show, but also with magazines. So while we're pushing product to influencer, we get our press back into the internet. For example, here you see Bella Hadid wearing the Hugo sneaker. So this was not only in print, but also in social and gives us also a lot of added value, editorial value within our brand. The last one is the fashion show in Berlin. I mean, you saw already the video maybe outside also here. This gives us a really buzz and shows also how differently YUGO is from BOSS. We did this in a techno club in Berlin and the look and feel was totally different. It was not only that the location was different, the audience was different and also the whole setup was different. And this excites also our customer and it gives us back a lot of coverage also in press and social media. So you see the most important thing for us is also drive desirability to our customer to outgrow our industry. YUGO is the key driver for that, but also brand desirability in general lead us to a very strong bottom line improvement. Thank you so much. Christian, I think we have another Okay, ladies and gentlemen. So we now have a little coffee break and we will continue at 10:45, so basically 30 minutes coffee break. After the coffee break, Ben Harker will come on stage and talk about how we execute all of that in our channel. Thanks very much. That's That's So, welcome back. Good morning, ladies and gentlemen. It's great to have you all here. It's very nice to see so many familiar faces. So, Marc, in his presentation, has shown how we are set up on our overall strategy within HUGO BOSS. Then Ingo has so far shown and new how our brand is developing and what our brand consolidation, which progress it has made and is now up to me to show you how we are actually developing the brand strategy into a distribution and sales strategy to utilize growth. We call it how we refine the way we sell online and offline, wholesale and retail to develop a seamless customer journey. You've seen the slide already with Mark. Our company is today aiming for customer centricity. This means that besides the fact that we are now listening much, much closer to our end consumers in regards to what are their needs, what are their requirements, what are their desires that from a product point of view that we also develop services, which interlink closely to our customer. And this is in mind, our overall organization is much, much more dedicated to both thinking what does our customers stand for and what does they need to be excited about the brand. I usually start with a slide to also give you a bit of an insight in our customer journey. I spoke with Lara earlier today. I'm now in the company 21 years and I've seen big movements. But our company is today almost 100 years old, so we have a very strong heritage. And this heritage was for a long time mainly driven by working together with the most dominant players in the wholesale environment. So the channels we were attracting were, 1st of all, department stores. You know Selfridges Hurals here in London, but also Nordstrom in the U. S, Galeries Lafayette in the French market, Pardeebee in Germany, then the high end luxury independent retailers, we were also working together with specialty stores like Kurt Geiger here to elevate our shoes and accessories. And one of the key strategic moves towards mono brand was to build a franchise business, a solid franchise business with franchise partners like Mossbos, which we then took over in the second stage of our company building. 2,008 was a time where we said, we need to change how we do business. We need to better understand what consumers think, how they behave and what they require from us as a menswear brand, but also getting to know much better the women's wear side. And this is why since 2008, we developed our retail footprint in opening stores in key locations like for example here in Regent Street. We acquired our franchise businesses like for example the Mosbros business here in the UK, But this was done globally. We also took over the Chinese operations. We went to America. And we went to our department stores and we said we got to get closer to the end consumer. And therefore, as we believe we can drive better productivity as you can, please allow us to assign towards the concession model. And this is how we trade today. So we are definitely a retail led company. Our mindset is how do we make productivity, how do we make our spaces more exciting. In the last 3 years, however, we've seen that our customer has moved on and this is mainly due to the fact that it's much, much easier for them to interact and to connect to brands. And this is due to the fact that mobile has become so important on the customer journey. So, we see much more that our customer interacts with us via social media and that they inform themselves via the mobile. So therefore, it is very, very important that on each individual touch points we target that we send out a consistent brand message and this is why our journey is now moving on from retail to customer centricity. And this is in mind, we much more talk about omni channel experiences. So, we are not connecting anymore retail, wholesale and online, but we see it as one because in the end for us what is important is that the customer gets a similar consistent experience across each touch point, which means we move from a multichannel approach from point of sale Uber's point of experience, where we try to be as close to every customer connection within the brand, BOSS and YUGO. So our distribution strategy reflects the changing customer expectations. And I think this journey can be very much highlighted in regards to how we develop our turnover share. In 2,008, 75 percent approximately of our turnover was wholesale driven, 25% or 24% was retail driven, and we had a very small share of online. 2018, we are at approximately 5% online, 65% retail and 30% wholesale. And we aim to move this on to get further control about our brand and the next big growth engine will be to really integrate the online world, the offline world and to connect it and bring net sales up, net sales share up in the online world. What we want to do is we want to ensure the seamless customer journey across all touch points. And when we look today how our customer journey has evolved, I think it's very, very interesting that all these touch points are consistent. Let me give you an example. So for example, we had a dress which was worn by Megan here in the U. K. It was leather dress and many, many customers resonated to the dress. So immediately when she put it on her social media account, we saw that the interest on our online page went up dramatically and that people were reading about the stress, what does it stand for, what are the price points, how is it going. The day after the weekend, we saw many of these women going into our stores and trying it on, connecting to the product, connecting to our sales associates and really experiencing the product and how it fits to their lifestyle. We then were seeing either they took it immediately at home, they went at home or they bought it online or they bought it in store and shipped it home. And what we then realized is that also, say, we're talking about it, about the experience on social media. On each of these touch points, we need to bring consistency alive and we need to make sure that the experience for our customer is superb. The main driver is still the physical store. This is where we still make over 90% of our total business wholesale retail. And you can see here, this is our Rapongi store in Tokyo. You can see what kind of excitement can be created by a physical store. It is the windows which are beautiful. It is the light and it's very inviting in regards to how customers get into the store. And then today, we work much more on the in store experience and the customer journey we offer our customers in regards to the casualization, so casual first, then separation between at leisure and clothes and fashion furnishing and then also to present our women's wear. And we are very happy that we have such a strong global network where we today have 4 31 stores, which we operate direct. We have 502 shop in shops with concession partners. So for example, here in the U. K, we run Selfridges by our own, in France is operated by us. Or in Germany is directly managed by us. This means we buy the product. We have the operations behind it to replenish, but we also train the people, which are our people and our payroll to make sure we got a consistent experience. And also important for us is our outlet network because in the end, it's about end to end merchandise management. It is about selling the product within the channels. We aim to increase our full price also. However, the outlet is in the final channel where it gets to. And when you go, for example, to Vista and you experience how luxury brands and also Hugo Boss is developing their footprint there, I think these are also connections which are very valuable towards our customers. It's our clear commitment to improve retail sales productivity by 4% on average per year. And we have identified 5 key levers, which help us to improve the retail sales productivity. 1 and 2 is about how do we build our distribution roadmap and how do we develop the in store experience. And you've seen when you were last time in Mexican, you've seen how we developed our store concept in regards to desirability. I will come to this in a moment. But how to optimize the store network in regards to size and in regards to where we actually present our stores is going to be even more important in the future. We know we come from a mindset that we move upwards towards luxury. Some of our stores have been dedicated to areas which are low traffic and which are high luxury areas, where we see today that we cannot provide the productivity which is necessary for our brand and the footfall which is necessary to our brand to convert it into units for transaction and average transaction price. So, what we do is we are optimizing our store network 1 by 1 whenever contracts are available, we have a look into the distribution roadmap of this country and of the city to utilize on it. And I've got a very good example, for example, in Boston, where we have been in a mall, where we were located in a luxury area, and we had a store which was 230 square meter net selling size. We moved it in February towards a more commercial size. We reduced the space to 160 square meter and we see since then an uplift in our sales productivity by 68%. So this is a scalable example. So this is what we aim for to really think customer centric in our distribution strategy, where's our customer, what kind of product does our customers need and how can we make sure that we elevate the brand experience to maximize its productivity. We also talked to our customers in regards to omni channel services. So what do they require to see us best in class? And we know that we have a very strong end to end operations, which means that we are directly connected with our omni channel services towards our IT systems and fully integrated in our logistical systems. So it is very important for us that we offer click and collect. This is what our customers appreciate because they say we would like to choose from home, but then we would like to have the in store experience. We would like to get the service from your sales associates. So this is one part of our omni channel services. The second part is return to stores as we have a very, very transparent network, very easy for our customers to bring that merchandise and to give it away into the stores. And then one of the key drivers is order from store, which helps our sales associates to connect to a much wider merchandise offer that we can offer it in the stores. Very important in the end is product and Ingo talked about this is about how we can elevate the product experience and how we can elevate the value for money relationship. And what we do today is we have customer insights in regards to which customer actually shops in a store like 1 Street and how is he similar or dissimilar to a customer who shops in Regent Street. And this is how we build our product range. So what we do is we sit together with our market specialist, with our buying and merchandising specialist and with our retail operations team. And store by store, season by season, we analyze the data, which is given by our sell throughs to understand what kind of opportunities do we have in each individual store. And this then leads to either an upsides of the clothing and fashion part in a business area or the uplift of space in casual, smart casual and at leisure whenever we see that a customer group is more sporty and more casual. Last but not least, it's about driving retail excellence. And we have today approximately 7,000 employees who work direct in our retail stores. And these are the people we need to build, we need to train so that they not only understand the product quality and see the new collection, but they also understand how to engage with the customer and how to sell customers product they really love. And what we do is, and this we do since years now, that we have monthly mystery shopping results, which we analyze. And this is when customers come through our doors, how are they getting welcomed, how do our sales staff get in contact with the customer, how do they upsell, how do they integrate more products into the selling process and how do we say goodbye to our customers. This is all monitored, measured and then we can see what are the top performers, what do they do right and how can we train other sales associates to become better than today. Let's have a look into our newer shop system. And for us, it was very important that it elevates the shopping experience. So what we did was we actually we focused already on the store. So what do we show the customer when he or she bypasses? We have immediately a lifestyle area, which combines the lifestyle aspect of our brand and which highlights what is the monthly theme and what are the monthly colors, which we see for this month to come. Then when we go into the store, we create an inviting atmosphere and when we ask our customer what is important for you or what do you miss today, they said to us, your light is a bit too dark and your products don't shine so much. And I think there's a new store system, but you can see is that we really focused on white walls so that the product jumps out. We have much more better light and a very nice flooring. And we connect the merchandise of fashion with the accessories and the shoes. What we see is that this drives UPT. Our customers also said to us, we love your jeans, we love your polos, we love your shirts, we love your sneakers. However, how you highlight them today is not really giving us the clear understanding of how big your range is and what kind of categories you actually offer. So what we did was especially for these ranges, we developed strong category walls and they deliver not only on conversion, high uplift, but they also are good for UPT because the customer can choose from a wide range. And as you probably know by yourself, when you fell in love with 1 shirt, you are much more easily when you see different colors that you as a salesperson can much easier offer this as well and that you go for it. So, category convenience has become a game changer for us. And then it's about offering digital services. But what is clear to us is digital services are complement. So for me and my team, it is much, much clearer that the human connectivity between the customer and our sales associates must be top. And the digital services are only enhancements in regards to how we communicate with our customers. And therefore, we have the Shop A Cookie Kiosk, which is a mirror where the customer can see him or herself wearing a suit or a dress. And then what we can add is we can say, okay, this is dress, we can add the following shoes. And then it can be either shoe which is actually in the store or it can be combined with a shoe which is in our shoppable kiosk and which is supporting the product idea and the outfit idea. And last but not least, it's about delivering an integrated omni channel experience. And this means for us when we talk about order from store that we give our sales associates the opportunity to integrate the product which are actually on the shop floor with products which are in our warehouses. And where does it help us to drive conversion? It is 1 when a customer loves a suit from the fit, but he would like to have another fabric. We can directly say this is the article, this is the fit you have and these are the offers which we have actually in our warehouse, so connect between the in store and the external experience. The second is that he likes a Polo and this Polo he would like to have in size 48 or sorry in XL, but we only have it in L, we can immediately see where is this product available and shall we ship it to you at home or shall we ship it into the stores or set we have a pickup. And the third one is that we can integrate products which are complementary. So if you have a nice suit and you would like to see more shoes than we have actually on the shop floor, then we can integrate it into our selling process to try a few units for transaction and conversion bring it up. And we are very happy about the results we've seen so far in our newer store concept. We see that sales are on average up by 14%, the EBITDA renovation. Even more important is that due to the optimization of the space, so and some stores, as I said, in Boston, for example, have been downsized that we see an increase in sales productivity by 28% and due to the fact that we are focusing much more on the customer journey, so what kind of product needs to be displayed when in the customer journey that units projected transaction are up by 12%. And this gives us confidence to now really start to accelerate our rollout and to focus on metropolitan cities where we are now for next year going to renovate. We plan to renovate approximately 100 stores, but these are key locations. So for example, Tokyo, Chicago, one of our flagship stores, New York, where we have a store in Zoho, which has no brand desirability at all to be very honest. And to uplift this one and to bring it to tools or to have it into a location where millions of people bypass will definitely help us to elevate the brand, but also to drive productivity. Berlin important, Toronto, many important stores in many important metropolitan cities and this will be the key aim for BOSS. YUGO on the other side, you've seen from Ingo's presentation is targeting a younger customer, a more fashionable customer and we said 18 months ago that we're going to open 10 new stores. We had a bit of excitement, so we drove it up to 13 in 2018 and the first results are promising. We have some there's a clear focus on Europe. However, you see one store is in Dubai who is driving exceptional numbers. We are also starting to develop our footprint in the Americas with the main focus on U. S. A. And Mexico. And we start to also understand the Asian customer, especially the Chinese customer on how YUGO can resonate as a brand towards this customer group. And as you can see, we target a much younger customer, a much more of Fashion Forward customer with our store concept. And whereas with the BOSS customer, we aim for the local customer and for a globally traveling customer. The YUGO concept at the moment is much more looking into the community as a local community to really connect, to reconnect every time the customer gets into the city and to build some kind of excitement. This is in mind, YUGO BOSS or YUGO store in Amsterdam is a very important store, which is Leidenstraat, which is definitely in a very good location. Also here at the stores of YUGO, in average between 80 and 120 square meter, 80, 90 square meter if it's a men's only store, 120 square meter if it's a men and women combined store. It's even more important to have access to the full range. This is why the shop in the kiosk also here is very important to highlight the overall collection and to help our sales associate to drive conversion and to drive units per transaction in combining the in store product with this product we actually have in the warehouses. And here, as Ingo highlighted, social commerce and social media is even more important because it's a younger customer and what we want to drive with our community wall is we want to excite the customer in regards to telling him or her what YUGO stands for as it is our new brand and what it aims for, so what are the activities. So for example, we are just in Berlin, the pop up store to create some excitement and this product store this pop up store is much more about creating a connection and about selling products. We have a special range of products which is connected to this pop up store. However, it's about creating excitement via music. It's about really building the community so that they get excited and that they come to our stores more often. We also have a community table and it's much more about communicating not only about the fashion part and about the product, but also about what is actually happening in the city. So we offer our customers regularly coffee, lemonade, etcetera, to really to invite them to come to our stores and to be part of this community. And what we see is that due to the fact that our customers see that selling is only a part of it, but that the overall experience is to create excitement. We see that traffic is coming back and there is excitement. Whereas customers at BOSS come regularly every 4, so core customers come between 4 to 6 months, they come to our stores as of 3 2 to 3 times a year. Here in the YUGO stores, we want to come there more regularly. This is why we focus on the local customer. And hence interaction with customer, so it's about communication, it's about creating a community and it's about creating excitement for the brand, for the product, but also for the city the store is in. Social media, as I said before, is a key driver so that our customers talk about the experience on their social websites, social media websites, so that they actually also are seen as multipliers when they talk to their followers. And then excitement is going to be created by pop up stores. We had a very successful pop up store in Brodinger and Stuttgart, which was a shop in shop where we drove brand desirability towards a younger customer in the contemporary area. And now at the moment and this is up until 2 weeks, we are driving desirability in Berlin with a fully pop up store freestanding. And the journey has just started. So what we are doing now for 2019, we have already commitments from our sales teams in regards to developing this brand further, Mexico, Moscow, Hong Kong, Singapore, LA, so really to start to build this global brand and start to create excitement in the key metropolitan cities. What is our strategy in regards to retail selling space? Marc already highlighted, it's not anymore about developing one store after the other and over sizing the stores, but it's about developing a distribution roadmap, a global distribution roadmap, which fits for our brand. And with this in mind, we are clearly committed to further extend our footprint with BOSS in Asia Pacific. And you've seen the development over the last 18 months. There's a clear focus from our teams in regards to supporting the Asian market. So we are on a very good track. I've just come back from a meeting with a landlord, Mix City in Chang Zheng and they said that we belong to the top 3 performing brands. Their premium is not so well known. It's about luxury. So in the luxury area, we are at the moment within their portfolio, one of the top 3 brands, and they would like to develop further our footprint together. Opening UBO stores in key metropolitan cities as the clear focus because this is today what drives brand visibility in the premium and upper premium market is to have nice spaces in metropolitan cities. And there you go, as I said, the stores which are between 80 and 120 square meters will be further rolled out as the more we understand and learn from what do our customers desire. And then it's really to focus on the new role of the store and to train our sales associates accordingly. That selling is a very important tool, but it's also about entertaining and about having fun in our stores. For us, more important is especially for BOSS is to build a distribution roadmap and to say what kind of sizes do we need. And we are very clear that our stores in America are most of the time too big. So what we want to do is we want to scale up the model which we have developed in Boston and really to see how we can downsize and bring it to more commercial locations. And the same is for us to relocate within the same city or in the same mall to really make sure that our customers get the right sizes, that they get the right products into the stores and that we then, with this in mind, drive productivity. And we also have a look into whenever contracts come up for renegotiations, if the store delivers the productivity, which is required for us, which we set as a benchmark. And if we don't see that we can uplift it or that we can relocate it, then there will be very selective closures still happening. And then it's about renovation. Yes, I said it before, we are very happy with the signs of what our new store concept going to deliver. And therefore, 2019 is going to be about acceleration, about the global rollout of our BOSS store concept is a clear focus on metropolitan cities and we not only want to renovate our stores, we also believe it's now time to have a look into our shopping shops to our outlets so that we have one consistent unified message when it comes to our store concept. Wholesale, very important, still very important. However, for us, the clear message is make the big bigger. It's not about building more wholesale partners bringing them in, but really to sit together with key department stores and key e online players and see how we can develop our brand together. As we believe, we have already a very strong global wholesale network. Today, we are and this might be categories that might be the full collection, the N6,700 point of sale. We have still franchise partners in Central and South America, in Africa and in Eastern Europe, where we don't have subsidiaries today. It will be very important for us to further develop our relationship with this partners as they in the end have our brand across their door and it's very important that we drive together a consistent brand experience. The second is that we also have 500 shop in shops, which are run by our partners, by our wholesale partners like for example, Diekenkloppenburg, where we together need to develop the brand desirability on the shop floor and this comes via the product, comes via the shop in shops, but it also comes via the state associates on the shop floor. And then we have 6,000 multi brand stores, where we, for example, offer either categories like body wear and socks, shoes and accessories or where we have a lifestyle presentation without our shop fit and they are also important in regards to building our brands. Also here, we sit together with these partners to see how we can further elevate our brand. Strategic wholesale partnerships, what are the key elements? 1 is enhanced brand presentation. So for us, what we require from our wholesale partners is that they have a clear understanding where we are positioned upper premium. This means that we would like to be presented on the shop floor with the major competitors around us. The second is that we want to be presented mainly in shop in shops. This will be the key aim to really show and highlight our brands in a shop in shop environment to really enhance the brand presentation together with the product and together with the merchandising. Mark said it before, simplifying the selling process is very important. And we've seen a very good reaction from our wholesale partners from YUGO in regards to the digital process of selling in to our wholesale accounts. So today, we feel very confident that we can reduce the amount of samples in our showroom and that our hotel partners have the trust to buy into our products in a digital offer. 3rd is to increase marketing support with the one aim to build brand desirability and only with our wholesale partners who are clearly committed to further develop the business together with us and to strengthen our brand. Expand online cooperations, online has become a key driver of brand desirability also from the wholesale part And if online so visible globally, it is very important that our wholesale partners, our e tailers or department stores who work together with us online, that they have our pictures, our images, that they have the processes behind it to really satisfy the customers and that their payment methodologies, but also their return policies are absolutely aligned with customers' expectation. And then it's about utilizing each square meter and driving also on the wholesale side productivity. And this we believe we can do much better when we grow our demand driven supply side. This means when we see a best seller is actually happening in fashion that we shorten the lead time and that we can replenish quicker than we do it today. And with this in mind, when we talk about wholesale partners, we focus on the top 10 partners as they generate today 1 third of our overall wholesale business. And we have seen also over the last 12 months that they have been generating mid single digit growth across their portfolio. The single biggest opportunity within our omni channel strategy, however, is online. And this is where we now feel very confident that we are able to also connect online with our customers. You see the results, we've seen strong growth momentum, 43%, which make us proud and which give us confidence to really develop this footprint further. And when we talk about it, we today, we really feel confident that we can quadruple our online business, our controls, so our self managed online business by 2022. What gives us the confidence? I think we have 4 levers which help us to utilize on this online opportunity. 1 is to accelerate online concession business. I'll come to this a bit later, but I think the Zalando model is a very interesting model, which we are now learning and which we can roll out to further retailers. Exploit full potential of hugoblast.com. When the customer was moving to mobile, we had to catch up, but we are now there. And I think our mobile side is not only good in regards to content, but also in regards to how we connect and sell. The Process is very clear and very easy. We need to enlarge omni channel services wherever our customer says to us, we would like to see you also providing this service and a small share, but a share which we believe is going to rise over the next years, how do we expand our social commerce. And we're seeing growth momentum in our concession business on 2 parts. One part is where we have department stores, which are now moving into online. And a very good example here is the Beincoff in Sibenelux, where we turned the business from wholesale to retail and have been able to increase their retail productivity by a factor of 2.5, which I think was a very good momentum. And we also see that this offer we get that customers really resonate to our brand within a department store environment. Which makes me personally very proud is that we brought the Palando partnership to a next level and that we today really talk with them eye to eye in regards to our BOSS business. YOO is still a wholesale, but the BOSS business is fully controlled and managed by my team. And what we do is we sit regularly together as we are now exploiting further markets over the next 9 months. So, we are today, it's only FOSS, smart casual and clothes and fashion furnishing. But within the next 9 months, we will integrate every market, today we are in Germany, every market where Zalando trades and every product category under BOSS, which will be coming into our control. And I think this partnership will help us to not only elevate the brand, but also to drive sales. And then the more we learn together with Zalando, so more we then will feel confident to also turn other online concession models into a online partners into a concession model. And we've seen great interest from some of the e tailers because as you know for them it's more about building a technology platform and not so much in regards to holding merchandise. Now these are IT experts, but often they are not experts in regards to which product resonates best to the customers online. And hence, the performance of HUGO BOSS needs to remain key. And one part will be that we need it's a very strong platform already, but we need to make hugoboss.com, the digital flagship store. This means in regards to how we tell stories and how we bring content to the site, how we highlight our marketing experiences, is it sports bundling activities with teams like Bayer mentioned who we support, Paris or Jean Mayer. Is it sailing and Alex Thompson is sailing across the Atlantic. So all the stories we need to talk about and we need to make sure that our customers understands that within each of the stories, we also have a commercial aspect behind it. So, ugopost.com should be mobile, but also on computers, our digital flagship stores. Then we see great results in regards to conversion and UPT if we personalize the offer. So the more we understand our customer who regularly shops and the more we get via our CRM, but also when they are on the site information and products, which actually resonate to the single customer, the better we see that we convert our customer. And this is why it's so important that we accelerate our personal customer experience. CRM plays a very important role and we are also learning here. So what kind of information do we send out to our customers in regards to weather related information, we need to much better understand what kind of forecast comes next week and what kind of products do we offer, what does our customer actually desires, you see the sportsmen, you see more into arts, you see more into fashion and then to build content around it to really highlight a personalized CRM message. And then it's about driving conversion because conversion on our mobile side is still behind conversion on the desktop is really to make this journey even more easy so that we can drive conversion on our mobile side to the next level. And last but not least, we are with our hugoboss.com site only in 11 countries so far. We see huge potential in markets where we know there is a digitally savvy customer, like for example, Scandinavia, like for example, Japan, but also Mexico, Canada, Brazil, Australia, Poland, many countries where we haven't set a footprint so far, but where we believe our brand is so desirable that we need to offer the Hugo Boss digital experience there as well. And it's our midterm aim up until 2022 to cover 90% of our global online apparel and footwear market with our hugoboss.com site. And we want to listen further to our consumers. Mark, Ingo, Eve, myself are now every year we go into 1 or 2 stores where we meet our customers, our high profile customers and maybe discuss with them what do they like and what do they aim for when it comes to the Hugo Boss experience and what do they expect from us. And here we get very valuable information, especially on the omni channel side about what kind of services are appreciated. And the interesting part is sometimes speed we know is very important, but some of our customers tell us that demand driven deliveries can be even more important than speedy deliveries. So for many customers, not so much about getting the suit within the next 6 hours, but it's about getting the suit at 1 o'clock the next day because this is when they are actually at home. And these learnings we integrate into our supply chain and we integrate into our logistics to really make sure that we are up to the level which our customers expect. And with this in mind, omni channel services, we believe, can be growing to 5% of our retail net sales. And this is why we are expanding our omni channel services into more markets and why we are expanding it into more stores. In Europe, we are more or less fully set. Now it's about thinking it to the U. S. Where we started half a year ago and where we've seen already high demand on omni channel experiences. So for us, when we talk online, it's about 4 highlight topics. Concession.com as a key driver for growth because we believe not only optimizing our brand presentation and understanding to get us to know in a younger customer group, but also to drive our hugoboss.com site as it enables loyalty and as the hugoboss.com site is providing us the opportunity to really make omni channel services and bring them alive. Wholesale needs to be further controlled in regards to the pictures, in regards to the pricing, but also in regards to all operations behind it. And then an aspect which we have a look at, which is at the moment a very small chair, social.com, so sell via social commerce. But this is something we will attract the younger customer and we will see how it is developing. And if it's developed fast, then we're going to be up for it. Now we've spoken about the omni channel distribution. Let's have a quick look into how the regions stand in our opinion. In Europe, as you know, we are the leading brand. We are premium, we are in menswear, the number one brand and this results I also get when I speak to many department stores, we are almost everywhere between number 1 and number 3 when it comes to turnover, but also when it comes to sales productivity. What we need to improve further is our distribution in the Americas. As I said before, we have the feeling that many of our stores are too big and we will see once contracts get renegotiated that we can downsize and that we can optimize spaces and Asia will be the clear focus of extension. This is in mind, the Americas will remain from a share at 20% and will grow at mid single digit growth, What we believe we have a clear strategic point is to further leverage on the trend towards casual and leisure wear because we are still in America seen too much as a formal brand and our offer within at leisure and casual wear has not as much materialized as this year in Europe is the case. We need to review and optimize our existing store network. This does not mean that we are going to now close stores, but what we will do is when the contracts get to an end that we will review together with the landlords on opportunities to optimize the space. The U. S. Share of outlet business is further ongoing. You know 2015, 2016, 2017, we already terminated all kind of partnerships with 3rd party outlet players, and we will further reduce the share. And then it's about grow quality business through strategic wholesale partners. This is in mind, I think Ingo said it before, we have a very strong relationship with Nordstrom, where we are in close and touch furnishing one of their top partners, where we are still very small in sportswear. We are today the number one, and I think this is very good news in women's businesswear. So we are the top brands here. And we also see that our shoes and accessories is starting to accelerate, where we are at the moment one of the fastest growing brands and within premium, we are the fastest growing brand in regards to extending our shoe and accessory offer. Maintain leading position in Europe, 62% as this year is quite high as we believe that Asia is going to grow faster down to 57% as a share. Main aim is to further increase store productivity to roll out YUGO as the YUGO brand is already well known in many markets in Central Europe. Is it Benelux? Is it Germany? Is it Austria, Switzerland, where we have a very strong positioning. Also here in the U. K, we know this brand resonates very good to the customer. Mark highlighted if you want to understand the brand a bit further and get in touch with the product, please go to our store in White City. And we want to expand the concession business. We believe we have a model together with Zalando developed, which is strong. And we know that quite a few other retailers are getting excited about what we can deliver here. We want to strengthen our existing partnerships with key wholesale partners and here with a clear focus on the most dynamic ones, on the ones who love our brand as much as we do so that we develop this relationship towards the customer together. And that is about Asia, and this is very exciting because I think that 15% share is actually too low and we know that our fits, our products and the quality is resonating to an Asian customer because we know when Asians come to Europe, how often they go into our stores. So the spend is already on a good level. And what we want to do is we want to now really focus on the marketplace Asia Pacific and especially on the Chinese customer because we believe that the middle class is going to grow further. We have due to our price adjustments, we are now in the luxury field, but there's a positioning where price value is really excellent. I personally believe there is not a lot of other brands having this kind of price value relationship to be offered and resonates to the Chinese customer, as I said before. Expand our retail footprint. So this is where we are really in contact with our landlords, with the mall, and where we want to see how can we optimize our range and how can we further extend our footprint. Travel Retail, I haven't spoken about it too much. Travel Retail for Hugo Boss today is €100,000,000 business. And as we see that the Asian customer and the growth of the middle class is driving also travel experiences. We believe that the travel retail business is and that the BOSS business are connecting very well. And then it's about further leveraging digital opportunities together with Tmall, together with JD, but also together with other providers in not only in China, but in the Asia region. This brings me to the end of my presentation. Key driver of sales growth are online, retail productivity and Asia. That's going to be my focus areas. You've seen YUGO, we want to extend faster than the market. However, that's going to be the focus areas. And then it's about driving gross margin expansion and integrating ourselves into the efficiency program. And these two parts which are very important, one part is how do we drive pay to sales ratios and the second part is how do we connect with our landlords to decrease rent to sale as well. You very much. Thanks, Bernd. So we would now start with our Q and A session. I would like to welcome the board on stage. So Mark, Yves I think you please join us and we quickly set up the stage. So I would kindly ask you, those of you who want to ask questions, course, raise your hands. But please let's try to limit the questions to a total number of 2 first, and then we can make a second round if there's more questions coming up. Feike, please go ahead. Feike Bose from Baader Bank. Thank you very much. Feike Bose, Baader Bank. Thanks for all the provided information so far, very interesting. Two questions from my side. First, starting with Brent Hugo. You spoke about store expansion. What amount of stores you can imagine to have life at 2022, so to say? The second question would be also related to your expansion targets. You speak about closures, renovations, relocation, openings. So to sum it up, what kind of square meter growth do you imply into your 5% to 7% growth until 2022? So from the Uro side, it's too early for us to indicate any kind of expansion number. So what is for us important now is to really is to learn how our customer is developing, what kind of products do we need to further develop to optimize the space. And we see, for example, that in trousers, we believe that we are under potentialized today compared with the BOSS. So we are now together with brand management elevating what kind of categories do we need to add towards our store concept and towards our digital offer. And then with this in mind, we are going to see how we can enhance and accelerate our store rollout. So here we don't get any numbers. From a net selling space, our model says probably 0% plus 2% up until 2022. So it's a very limited and not the focus to really to build further sales flows and further net selling space, but we need to drive productivity. I have two questions, please. So first of all, on the drivers of the top line growth, so 5% to 7%, we've just heard some details on the space growth. But can you give us a bit more, I mean, in terms of the assumptions embedded in it, in terms of the like for like growth? And specifically how much of that could be potentially driven by the conversions of some of the online wholesale accounts into e concession. And space, I assume that 0% to 2% would be per annum, right? Total. In total, okay. And the second question on the lead times, so you have mentioned plans to reduce lead times further. Can you remind us what are the lead times right now for HUGO and the POSE brand? And for HUGO, do you think you'll be able to compete with the likes of, for example, the FMCT brands, I think their lead time is around 100 to 120 days? Yes. Let me come back to your first question. We have been quite explicit in quantifying the growth drivers until 2022 with one exception and you probably try to get more detail on that. But just to be clear on the one where we gave you this detail. So for physical retail, we're targeting a 4% annual like for like improvement, so excluding the impact on ecom. For our ecom business, particularly driven as Bernd just highlighted from the digital concession expansion, we expect absolute increase from about $100,000,000 today to 400,000,000 until 2022. And on the Asian impact, which is from a regional perspective, it's the most important one. We gave you relative targets depending a bit on exchange rate calculation. So we decided against an absolute revenue target, but a relative one for Asia Pacific to grow at a double digit rate to account for 20% of group revenues. Where we haven't been only giving you a relative indication on the growth contribution from HUGO, it goes back a bit to the first question asked from Polka, How many stores will we have with HUGO in 2022? How strongly will HUGO resonate also in this evolving online concession business where we see very encouraging signs. So what we believe today is that HUGO will be clearly over proportionate growth rate to the total group, which means larger than 5% to 7%. But we are not specifically targeting revenue target for 2022. We believe anything that will not lead to an over proportionate share of fuel by 2022, just remind you, it's 15% on group revenues today. We would consider it as a disappointment because we have not fully tapped into the potential of this market segment. And you mentioned one of the key competitors that we see in this market segment in terms of also great collections, but also in terms of responsiveness, the brands within the SMCP Group. The store in Marais is right next to one of their stores and we have demonstrated in our issue that we're getting relatively close to the level of responsiveness already when it comes to digital development. We believe that 6 to 8 weeks is really super fast when it comes to turning in the design idea into something that's already then ready to go into serial production. I believe personally, I will give you a bit more details later in my presentation this afternoon. There's still room in terms of speeding up in the true production and distribution systems and we have already deployed some in season demand solution where we also pass on the production processes. But first, we want to make sure that we are as good as the best in our premium, upper premium segment when it comes to reactivity. And I think we are at least on par in terms of capabilities in our deployment in our system. Admittedly, it's just a small part of the HUGO collection today because we would like to remind you speed is not the prime aim while we do it. Speed is just a need to be more productive and more efficient. So we want to see now the proof of concept that the investments also change in attitude and procedures are paying off with the superior success in these collections. We see some early indications, but this will be of the importance for us to turn it really this capability into a competitive advantage. So, next question goes to Antoine, but let me kindly remind you that we have a second Q and A session this afternoon. And just to make sure that the financial topics, because we have Eve on stage, of course, but there's a second Q and A session. So questions that cover Eve topics will probably be more forward this afternoon. Antoine? With regards to the volume versus price mix component of that growth, I think 2018 was a bit special in the sense, I think that Yves mentioned in the last conference call that volume growth was double digit, but because you had to sort of re platform due to more casual work, etcetera. So is that rebasing done now? And so what would be the I mean, do you expect still some negative pricemix in the next 4 years? And the second question is about China Mainland specifically. So how many stores do you have today? How many do you intend to open? And also in terms of the cities, is it still in the, I would say, existing Tier 1, Tier 2 cities? Or is there any ambitions to be going outside of that? Or will that be covered by other means, notably online? Do you want to take the first question? Okay. I'll take the first question. Thank you, Marc. So from the pricing perspective, everything has been incorporated now coming from the global price harmonization. So this is done in 2018. It's over. So the effects that really remaining are coming from the assortment mix more casual wear than formal wear, but this is in some cases compensated by more units per transaction. So this you have to consider both aspects. At the end, it's about net sales per transaction. But this has been incorporated in our business plan, Fagetix. We have around 120 stores in Greater China, and we're focusing on Tier 1 and Tier 2 cities. And now it's about further exploiting this city potential, but also to start to move into a top 3 Tier 3 and Tier 4 cities together with landlords, which are valuable to drive traffic. So, Marc and let me take Lucas, so let's do the first row. Mark Josephson, Equinet. I'd like to push you on the answer to both questions with respect to Store Products. So relatively little new space, but of the existing BOSS portfolio, how many stores do you think are either wrongly located or maybe not quite the right size? Well, I think what is important to understand, we have cleared our portfolio of significant loss making stores in 2016. Well, you all remember it was a significant restructuring charge that we took in the Q2 2016. And over the next the following 12 months, we have clearly eliminated the loss making operations from our store. We are focusing right now is something I would call it a gray area. I mean the store that we have relocated in Boston was okay to good or the ones that Dan also mentioned in Soho. It has deteriorated, but it's not a dramatic loss to it. And what we see now with the new store concept with omni channel services that we turn something from good to great. And one of the implications to that is that we with Super run separately with the omni channel service that we've integrated with consumer preferences to go for e comm to generate even higher sales and you have seen some of the examples to it. A 10%, 15%, 25% decrease in space can still result not only in higher sales productivity, but even higher sales. So this is how you should look at our stock portfolio right now. It's rightsizing, sometimes it's right location. So, also the former luxury location that we have went after in some malls, in some street location will be replaced by more commercial location. But this is rather not fixing something that's broken, but taking something that's already on a very well performing level to something that deliver ICP 4% like for like annual improvement in our physical retail. Luca, the mic? Luca Solca from Exane BNP Paribas. One question on wholesale. You were talking about 6,000 doors and a third of the sales on the top ten accounts. I wonder if that potentially represents a risk knowing the predicament of some of the apparel wholesale players in the industry and whether you are sort of integrating some contingency in planning that and the business to 2022. A second question more on the overall approach and the strategy. I see a lot of rational elements in your narrative and in your plan today that I really appreciate. I wonder though if from a marketing and brand positioning viewpoint, there's a potential for more irrational elements. If we take some of the brands that are leading in the subluxury space today, if we take Montclair or if we take Gucci or even Vuitton with Supreme or what Berger is trying to do reconciling punk and the Queen. I wonder if those elements are more concentrated in the Ugo project and there's a bit too few of that in the BOSS brand. I just wonder if the focus on precision makes it look a bit too too German maybe. When we wait for Ingo to cool down, maybe we start first with a question on what is happening on the wholesale multi burn environment. Do you want to take this one? Yes. Due to our network of subsidiaries, we are usually very close to our wholesale partners. So when it comes to America, Canada, Mexico, but also in Europe, are actually we are visiting our point of sale very regularly. And we know exactly what our wholesale partners aim for and deliver with our brands. And if we talk about 6,000 point of sale, you need to also take in mind that these are also specialty retailers, which only sell our body wear or which sell our shoes and accessories. So it's not that they have the full portfolio. But we definitely do is see our wholesale partners 4 times a year in our showrooms and we are also visiting them regularly. And when we see that brands deteriorate or that we are in an environment where our brand doesn't fit anymore, we are definitely in tough discussions with the wholesale partner in regards to either elevating the brand and the competition, but also then to consider what kind of products do we actually sell to this wholesale partner in the future. Ready to answer? To answer my question, Luca. It should be really that you haven't been to our stores nor that you're Instagram follower because you might be saying that we are a little bit safe, yes. And we are very safe in general. But with our new collaboration with Jeremy Will, I really want you to go into our stores and maybe you have to open your Instagram account and see that you are that we are much, much bolder than in the past. I mean, for example, I get a lot of feedback on the new campaign where everybody said, Oh, what's that? That's, I mean, new for Jogoboss. It's very bold, but it's even stronger than what they saw in the past. So, we constantly want to go in that direction. And yes, you're right, we have to be a little bit more louder than in the past. And we always had the discussion on the board that also with our fall campaign, we went one step further. I think the Jeremy Will collaboration is another step and we go further with this. So, I really would like you to go to our store and see our windows and also see our Instagram account. Maybe this answers your question. Let's move on the right side. And Francesca first and then Andreas first row. Francesca Di Pasquantonio, Deutsche Bank. Two questions also for me. The first, if we could have a bit of a more detailed timetable for your renovations. How many should we expect according to what time frame? I'm sure we'll cover the CapEx related to that this afternoon, but whatever you can say on that. And the second is on your outlet strategy and markdown. So whether you can maybe share if you have any targets in terms of how you are going to change your markdowns policy, if you're targeting to reduce the markdowns generated sales by how much, by what time frame and how that relates to your outlet strategy and how you are going to have your wholesaler also cooperate in terms of your more stricter pricing policy? Thank you. So let me start with our hotel strategy because here we have sent out a clear message towards our managing directors. It is less, but bigger. So what you will see, for example, when we talk about the U. K. Is we are just upgrading our store in Bicester where we have a very productive and very profitable business so far. And we are now moving it to the next level. So we go bigger because we know that this store and also the location resonates very well to our consumers and that we can drive their productivity also on an outlet full price business model. So which means that we usually discount by 30%. So the starting this point and here we have very high social figures. Yes. We aim to renovate our store network every 5 years for freestanding stores and every 5 to 7 years for shop in shops and this is what we target also for 2019. And there's a slight backlog in renovation. You know that because we developed a new store concept. You have seen it and now the examples to live from 2016 because this was when we developed the new concept, it went live in 2017 and we already guided to expect an acceleration of CapEx. But this is something Yves will cover in more detail this afternoon and maybe this disclaimer at this point in time will not not I have two questions. The first one, you mentioned digital omni channel services are to increase to 5% by 2022. I'm just wondering how your incentive scheme is for the 7,000 in store shop assistants. How do you incentivize them to actually leverage your digital footprint? That's the first one. The second one, like for likes, 4% in store like for like, that's quite strong in my view. What's the current hurdle rate to actually keep the EBIT margin stable in terms of like for like? So how much like for like do you need to keep the margin stable? Thank you. The incentive program is always something which is interesting because it's a drive sale as you know. We have we give a high percentage in regards to the fixed salary and then it doesn't matter if our sales associates sells online or offline, you get the same percentages. More important for us is how we train our sales associates not only to have in their mind the products they actually know from the shop floor, but also to integrate the digital world into their selling process. So therefore, we are regularly training them, but the incentive scheme is the order from store or if they sell product in store are similar. Yes. Regarding your second question, like for like performance, I think after my presentation, it's good to pick up this question again and then answer it. It. So, we refer this to the second Q and A please. So, first question goes to Jurgen and then the last second one goes to John, who is sitting at the very end. Thank you. Jurgen from Kepler Cheuvreux. You mentioned the speed is obviously a big topic for you. Do you think you have to adjust your production strategy in terms of how much you do in Turkey, maybe additional productivity or production increases that you need there? And secondly, Andreas already had a question on incentivization. Let's step one level higher up for you guys and also on the regional basis, how are you incentivized with respect to the 2022 target? Let me start with the state aspect first. We do not put more pressure on ourselves at the headquarter level or production partners, but the most important facility we have in our portfolio is our plant in ISMEA. And I will detail it right after lunch where we've seen that this very large scale operation has seen tremendous improvement in terms of ability to rack faster, in terms to change the production schedule and operate at a smaller lot sizes. Add to that technology advances where basically now in our very labor intensive industry certain production steps are now being substituted by automatic production, particularly insurance, but also in other categories. We see that the factor of labor cost will in the years to come play a less important factor to decide on where to produce, which offers multiple exciting opportunities that already is near as very close in terms of shipment times to core European markets. But we expect that also our processing partners are starting to consider and review their production network to create a closer proximity to their important sales market. Yes, Asia will increase importance as well, but it could be the renaissance of also textile production in regions like the European or the North Americans. Clearly these industry has shifted tremendously into Asia. So, we do not exclude this to happen. The question on incentive system, of course, until today, our annual I mean, it's very visible also in our annual report, but just to put everybody on the same side on our annual performance metrics, which drives our variable short term incentives. It's until so current fiscal year based on EBITDA, I assume since this plan we presented today has been also closely discussed and aligned with our supervisory board who's ultimately deciding on our incentive scheme that this will be replaced by an EBIT margin target. And Yves will give you today also more details what are the reasons why we think this is the best proxy to guide financial performance of the group, but also for us and our leadership team to be one of the most important variables to drive our performance. We continue to be highly committed to improvement in net working capital. We will discuss this later. And clearly, top line growth as a 3 parameters. For me, it's a better and more precise earnings proxy to move from EBITDA to EBITDA, but there is more detail to come later from Ethan's presentation. Moving back. John Guy from MainFirst. Two questions. So just on online, moving to €400,000,000 by 2022, CAGR of just over 40%. Can you talk about how you see the contribution coming from or what percentage of contribution is going to come from hugoboss.com and how you see the contributions coming from the digital concessions in Zalando. So actually sort of breaking out where the incremental $300,000,000 is actually going to come from? And my second question is, I guess around Asia growth in the double digit targets that you've aspired to. I mean if we go back and say 2012 to 2018 at a constant FX growth rate your Asia business has grown just over 3% and Mainland China has been a little bit softer than that. So that double digit forecast, can you maybe just expand on where it gives you the confidence to take a full year double digit plan? Thanks. So online, we in our growth plan, we say it's going to be fifty-fifty by 2022. So this will be €400,000,000 and 50 will come from our hugoboss.com via expanding, via driving conversion and really also delivering results on the sites and 50% via online concessions, which means to connect and build our business with Zalando and then to go to other e tailers and also department stores, which have online concessions and to develop this business together. The second question isn't really here. I think it was when you gave me a heads up because you're talking, so I have a bit more time to prepare for the Asia. Of course, what is my words, okay, why are you confident to increase your growth rate in Asia compared to a year of performance over the last, I don't know, 4, 5, 6 years? Yes, there was a phase in our China market where when we adapted our price level in China where we have not seen an over proportional reaction in terms of unit sales. So if you follow-up closely, you remember that we adjusted prices in China in 2 steps, bringing closer to the European pricing. And only after the 2nd price step, we have seen a quite over proportional uplift in unit sales that are actually more than compensated the value impact on the price adjustment. So, clearly, we're doing this phase that you're referring to and there were setbacks in our sales momentum in the Chinese market. Add to that, that we had to readjust our distribution strategy. So clearly, China was one of the examples where we just opened stores at the wrong place, period. So, this was we never disclosed the specific location, but we gave you this indication back in 2016 that the cleanup work that we had to do was globally, but it was especially in the Chinese market. That's done now. We are now at the right places, highly commercial, high stress, but we need to be successful with our new positioning in the Chinese market. And what we take more confidence in to answer your question, it's in the buildup of momentum we have seen over the last couple of quarters. So, it's true. It's not the average CAGR over the last 6 to 8 years due to some factors that I already highlighted. But we have seen in Mainland China, in addition to that, now a very well established business model also in some smaller markets like the Korean one where we have struggled for many years. It was clearly not one of our most successful franchise takeovers. Singapore was flat for many years. It's now on fire delivering double digit growth. So both the core markets, Greater China as of important other Asian markets, which are at the same degree under penetrated from our side, will deliver over the next 4 years a double digit growth rate. It's an ambitious target like the rest of the plan, but what we have seen from our team and the confidence we place on it, it will come. One important factor just to complete your question, completely untapped today is the very important multi brand distribution platform when it comes to e commerce in China. I mean we're just scratching the surface with tapping into the potential that the more premium luxury platform from Tmall and JD will offer. It will clearly not come in a linear way, but this is something that requires us to step up our games. We have some resources on the ground and I'm very confident that China not only from physical sales aspect will deliver over proportion to growth, but especially from the e com, which is not really part of our current base today. Brett Spierris, and then we go on the left side, Elena. Thanks. Brett Pierce from UBS. Two questions. The first would be on retail sales productivity in the physical stores. Could you give us a sense of how much you're expecting to come from Asia and China specifically? And perhaps also give us an idea of where sales densities in Asia and China are right now compared to Europe and where you think they can get to relative? And second question would be around online, talked about moving to about fifty-fifty split between boss.com and online concessions. And it's very early days, but can you give us a sense, given take rates that we can see today, how you think the profitability between those two elements of online and those going to developments now? Thank you. The first question was related to the different productivity levels. So, you can compare actually the sales productivity between the different areas. There are only minor differences between the different areas. This is point 1. And secondly, if it comes to online, it's clearly margin accretive for the retail margin, the online net cap. Between the two, they are pretty similar and it depends on the different contracts that we are having. But overall, if you take online hugoboss.com and online concession, those are retail margin accretive. Ilan Mariani from Morgan Stanley. First question is on your competitive environment. You've highlighted that you expect or consultants expect the market to grow around 3% to 4% in the next few years, and your plan implies market share gains somewhere. So could you elaborate on the players that in your view will be losers in the current environment and you're going to get market share from because I personally see more and more competition coming from other players, might be supporting good companies or Inditex and so on? And the second question is about the phasing of your business plan. I appreciate that you're not going to provide a 2019 target. But am I correct in assuming that the 1st year or 2 are going to be again years of investment, especially with regards to your online capabilities. And then you would expect maybe a reacceleration later on in the plan. So in essence, do you expect 2019 to be a profitable year when you're going to see profitability improving or not? Thank you. I knew it's coming. What we indicated and we stick to this commitment is embedded in the plan that we see in 2019 not only absolute but relative profit growth. I think there was an important commitment we gave already back when we unveiled this plan. So 2019 will be a year where we increase not only top, but also bottom line. By what degree and how will be something we will discuss in much detail with you when we give you our 2019 guidance. We are committed to grow our business stronger than the market. Whether we take it from A or B, I don't care. It's something it's ultimately down to customers' preferences and choices that they will find our offering driven by these two priorities, personalization speed, more appealing and better, ultimately superior to any competitive offer. The set of our competition, I believe, has not dramatically changed. So, when we go to beverages, if we go to Takashimaya, if we go to Isitan, if we go to premium luxury malls in China, our neighbors tend to be at least some core names tend to be the same on a global scale. What we clearly have established, so what's also important for us internally, HUGO is not a competition to BOSS and vice versa. So, both are targeting different customer and I think therefore also targeting a different set of competition. So, as we aim to grow with both brands, especially with the HUGO brand over proportionate, You can be sure that we take references that we monitor very closely activities from brands that we see as our neighbors more for HUGO than for BOSS. But you will not hear a comment from us who is the predicted loser in terms of as we hopefully successfully implement and achieve our target. Let's move further left, Julian, from your side to mine, Alberto. Thank you so much. Jose from Citi. Two questions. Firstly, a follow-up on wholesale. So it's a channel going through some structural changes, challenges in Europe and the U. S. Are you not in that 6,700 number of doors planning to close any of them? I noticed there's no formal guidance on wholesale sales growth this time versus previous Investor Day. Can you comment on how profitability of Wholesale has evolved over the last couple of years? And secondly, on Womenswear, many of your competitors, I'm thinking Ralph Lauren, but more importantly Burberry, have a much more balanced gender mix of revenues. In light of the end of Jason Wu's collaboration, the shift towards casualization at leisure, I was a little bit surprised that you don't seem so more ambitious on women's wear. And perhaps if you could give us an idea on the size of the business. I know in the past you've given targets and they were not necessarily met. But why not more optimistic and ambitious on this important segment of the apparel market? Thank you. We believe that the current quarter trend that we have seen on women's wear is a bit masking the gaining strength that also we see with the BOSS Women's Wear. That's our most important Women's Wear brand because what we have done is that we have brought women's wear at the right share of retail space and budget with our own retail network. So, any product category, any brand has to be accretive to our aim to drive sales densities. And clearly, it wasn't you're referring to previous ambitions. We overexposed us in terms of space allocation to women's wear. So you can't have both. Either you're determined to drive sales densities and profitability in your retail network or you're trying to push just top line on certain brand lines. We clearly opted for the first. However, especially since Ingo joined us, we had a smooth transition in creative leadership from Jason who has clearly done many things to create buzz around our collection. But it was almost an extremely important milestone for me to see what we did in New York in September. It was the first time we were able to demonstrate the strength that we have both in menswear and womenswear. And if you look through the previous comments from buyers, editors, there was a wow effect. It has demonstrated not only our commitment, but more importantly our capability to be also in the future to come a strong contestant in the women's segment. We elaborated quite extensively on the very strong feedback we have received for women's wear already in key departments or partners. But during my tenure, I'm not going to be here for 30 years. For the next years, I'm leading this company. We want to win market share with womenswear and apparel. Apparel is the number one priority today. We are already today a leading contestant in this game. We know that we have to work harder also on Women's Wear side. You can be sure that we have more than a few 100 colleagues who are working exclusively on the Women's Wear side of our business. They work night and day to have a superior collection out there. They have the same access to technology distribution platform like any other brand to us and they will be like our menswear offering, our casualwear offering, our formalwear offering have the access to drive that. Today, we expect women's wear to be in line with our overall business development. We do have the flexibility to shift budget and space allocation to women's wear even more. We are even considering to test some women's wear only like we have done in the apartment stores where we anyway operate successfully on women's wear floors also in freestanding stores. But what we present to you today is that we have stronger evidence and confidence to grow the HUGO in its specific sub segment than we see in terms of outperformance on the women's side. I'm very emotional about the women's side topic that I forgot about your first question. Wholesale in America. Wholesale, do you want to take this one? As we do with our retail portfolio, season by season, we have a look into our wholesale accounts and we see how do they work together with our brands, what is their productivity and how are we actually set up in the city in regards to penetration of BOSS and YUGO. We have today 2 brands. So what we have discussed over the last 2 years is what kind of customers get both brands due to the fact that they have 2 customer segments in their department stores, what kind of department stores have a more contemporary feel and they will get in the future only you go and which one are more classic, modern, sophisticated and they will get both. But there's a constant evaluation of our wholesale accounts as well as we do with our landlords, what I described in retail, in regards to how committed are we to this partnership, how committed are the partners in regards to developing and strengthening our brand presentation. And then we are going to change in a process of 12 to 18 months, whoever is not aligned with our partnership agreement, which I highlighted in the strategic field. Well, we never disclosed profitability by channel also not today. But is on a very constant level. It's an important roughly $1,000,000,000 part of our business. We are committed that many of the products and marketing initiatives that we take will also benefit our franchise partners, which are still important. It's more than 200 POS operated by our partners. So, one out of 6 mono branded POS is still operated from a partner. But also at the partner stores we want and I think it was the chart in Beth's presentation, where we how we want to increase presence, desirability at this point of Structural profitability of wholesale has not changed. We do not expect a significant change. The relative share will decrease. We only guided I mean you have seen an indication from our chart the strong growth in online, continued growth in retail, but we expect that the absolute business of our wholesale business will be very similar or slightly larger than what we have today. So, Bharatou's next and then we do Thierry and Melanie and then we have to go into lunch break. And I apologize for those that were not able to ask questions, Philip. I know you will be the first one in the second Q and A session, okay? So sorry for that. Don't leave early. Alberto and then Yuri and Milan. Alberto Dagnano from Goldman Sachs. A couple of questions on online. So first, I see a great opportunity for you to shift more revenues online. I was wondering whether your 4% like for like assumption for retail, for physical retail includes any assumption on kind of validation that is outsized online growth might have. And if not, what gives you confidence that these revenues will be entirely incremental? And then still on online, I'm trying to add up the opportunity in casual wear with the formal wear and personalization. So what role does formal wear play in this online growth assumption? Then just a clarification, when you say fifty-fifty econcessionsmonobrand.com, Are you planning to convert all wholesale online accounts into concessions? Thanks. The last one is a big one. Of course not. It has to be beneficial from both sides. So like we agreed with Zalando that we both parties agreed in an arm flex agreement. We both come to the conclusion that the new setup is accretive for both partners. And we see enormous interest and willingness of these ecom partners with pure place or somebody who operates also in the physical world, because they see 2 things. They were seen that we have done this extremely well in the physical world with our physical concessions and they are quite impressed with the capabilities that we have built for ourselves in our e com operation in terms of processes, picture material, where they see, okay, this is much better than what they do with their own resources. We expect certain product categories to perform stronger in ecom also to come. So, they are more likely to be successful there. However, you will see that suiting tailored business is also an important category on e com business, but to a lesser degree than in our physical store. And when we talk about the 4% like for like, I think, Paul or somebody already mentioned that, yes, 4% like for like improvement of physical store is an important driver. But this of course includes the impact of what we just gave you already some descriptions, particularly in Vance's presentation. But we think that there will be integration also when it comes, for example, to omni channel services. Clearly, we see this as an important driver in terms of driving traffic and revenues in our stores as our stores now increasingly tap into also the opportunity to use our virtual inventory that goes beyond our stores. So, the synergies that we have already started, Clint, I think you mentioned the 5% share of omni channel sales in our physical retail is also one important building block to get to a sustainable 4% like for like improvement for our physical stores. I think we wanted to have one more question. Thierry and Melanie and Ben, we have lunch break, ready served. And Philip, you're next. Yes. Good morning. Thierry from Societe Generale. Furthering what you just said on the 4% target, I was wondering, are there some low hanging fruits? You just said that the regions had similar right, similar productivity across regions. Are the HUGO stores markedly less profitable or productive than the rest? Of course, there are very few. Are there some easy gains? Or more or less everywhere is the same kind of activity that you want to raise? Secondly, I was wondering how many stores beyond in BOSS, beyond the 100 that you're going to revamp? Will you go to the whole network revamp under the new concept? And I was wondering on the payback period when you renovate a store. And maybe one last thing on the what you said. I know it's not a question, it's tariff free plan. We knew what you were saying. Maybe I didn't. You said the EBIT margin is higher for online business. You meant EBIT, right? We did. The commitment of the EBIT level. Yes. Okay. But you're confident of how you can allocate costs between channels? Well, I think we should allocate costs, yes. Yes, we do this. And I think you have to be aware in this online segment that we talk about variable costs instead of having fixed costs in the store business. It's a complete difference. So, the big beauty there really is we have a higher retail margin, plus we have variable costs. And this has very specific drivers because the basket is very high and relatively the returns are pretty low because we talk about menswear business of 80%. So these are actually big drivers that drives the profitability of the online segment. And regarding your first question like for like, I hope I will be convincing this afternoon that will answer your question regarding the 4% and the low hanging fruit. Great. On the payback period, that's not one. Of course, one important hurdle road is the NPV and the payback on it. What we have seen with the new top store concept is not only what we like very much, of course, is strong uplift and performance in our stores. It's a better performance than we had before, but we're also working on further streamlining investments, processes to shorten the payback times. But it can be less than 12 months on a renovation on a shop in shop, but it can be also something between 2 3 years if it's a major renovation on a freestanding store. So, you have to decide on case by case and there are class specific payback periods that we aim to achieve. So anything that's beyond 5 years in terms of payback, even if the positive NPV receives a question mark because then we already move into the next renovation. It's really something that's quite a sizable hurdle to pass to be Will you be doing more after? I mean would you expand to the rest of the network? Well, on the timing on the investment, as Yves said, I would refer this question whether we clarified with our presentation this afternoon. So maybe Hi, my name is Luca at JPMorgan. I have two questions. So the first one is going back to wholesale. So did I understand this right? The absolute value of wholesale over the period is going to be roughly the same as it is today? And what share of e commerce within this? How is that going to evolve within it? Because I imagine the concession part conversion actually is a negative, but I don't know whether you're signing new agreements, whether it's the underlying growth of existing partners that's going to make the difference. And my second question is on outlets. Could you share with us, sorry, compared to the 32% of sales that you currently have in period? Thank you. Well, let me start with the this period? Thank you. Well, let me start with the expected share. You were right when you rephrased our price expectation on the wholesale business in total until 2022. There will be less franchise takeovers because we believe that these market experts in some smaller markets are the best partner we can have. There might be a selected few, but we expect the franchise network to stay more or less stable. Many of our wholesale partners are also quite successfully pursuing to take their business from physicals on the e comm side. And there are 2 routes to it. One is they might decide at one point in time and we are in very close discussion with them that we go also in a digital concession with them. So, this is clearly something that on the one hand will reduce the relative and absolute part of our wholesale business, whereas we have some other players where we due to the fact that we have not a superior infrastructure to run it better for them, that we continue to benefit with them in our partnership as they grow their e com activities. And this will probably will net itself. It's very difficult for us to predict by 2022 what is the share of our partners between e com and physical retail. Honestly, sometimes it's even today difficult for us to judge on that one because they buy one collection from us and then they have some flexibility, I would do the same, to sell it either via the e com offering or within store. What we do see that there are some that's an important part of tech boost in Scandinavia, for example, already some very strong and growing partner for us in the wholesale part of the business that there's a sub segment of e com peer players who have grown strongly on the wholesale side. So, it's a plus and minuses. Overall, it will be roughly stable and we expect an increasing share whether it's as much as in our business, but the share of e com will also be more important. On the outlet, just to complete your last question, we want to have a stronger growth in our full price sales channel, which is physical stores in the U. S. And shop in shops in our ecom business. However, we recognize that's an important and also very profitable business that we operate in outlet. We mentioned the upcoming renovations and strong focus that we have on Vista. For the U. S. Market, which we coined as maintain the relative group share and improve it, it's also an improvement in terms of quality. And the question you raised is especially something that we consider to be important in this part that our retail relative share depending on outlet operation has to decrease until 2022. We have not given a specific target to it, but our determination together with our U. S. Leadership team is to reduce relative share of orders in the U. S. And with the discontinuation of third party off price distribution, remember it was an important step for us in 2016 and the trend we have seen in recent months quarters, we see we are on a good track, but it will be gradual reduction of the relative share of outlet also in the important U. S. Market. Great. So, it's time for lunch? [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] It is, absolutely. So, we'll be back in 55 minutes. We'll continue at 1:30. All right. Welcome back after the lunch break. So it's a bit not an easy task for me to bring you up to speed again after you hopefully enjoyed your lunch. We already have seen this morning in my overview presentation why we are a strong believer in the importance and the significance of bringing our business model on a much higher level of responsiveness. And as part of this presentation, I would like to give you more details where in terms of data analytics, but also digitizing and ultimately speeding up our operational processes will have multiple benefits to our business. So, to gain market share, to build stronger bonds and relations with our customers, we believe the responsiveness of our business system is very important. But beyond this emotional connection that we're trying to build via this capability, there are very important intangible benefits also from a financial perspective to our business. Let me highlight the 5 most important where speed will be a decisive factor. What we have started to do and what we clearly further built on is the ability to act significantly faster to in season session trends. That's something we already tested over the last 2 years that we have on selected products and selected styles, selected fabrics have gone through fast reaction programs that already were able to keep within in season to something that we called missed opportunities. So, it could be a polo shirt in a specific color, it could be a chino with a specific dyeing technology, which was an existing style in a specific color where we only test it with our own supply chain and also our partners how quickly can we react to that. And these inventories tend to have a significantly higher inventory turns because they're basically built on the demand that we see in season. But if we see it on a more fundamental change to our design processes, we see also that over the for the overall collection, we are able to avoid excessive inventory in our supply chain. And you see not only for us, but also for the industry as such, Inventory management in a even faster pacing time has been become a very important metrics not only to control your inventory and cash flows, but also your margin. So as we exceed in a better, more efficient inventory management, you see on the right hand side of the chart, we see the 2 flip sides of the same improvement that we have reduced markdowns and a higher share of full price cash flow in operation. So you see improvement in speed is not only important from a customer perspective, but it will have multiple positive repercussions also when it comes to our financial performance. Before I go into more detail and I will give you 7 very concrete examples where we have already started to supply speed to improve our business system. I would introduce the 2 core projects that we have run across full value chain at HUGO BOSS, some more related to BOSS, some more on the HUGO side, which we have used now for the last 18 months to generate learnings to test certain concepts or even implement them already to our daily practice. 1 is on the left hand side advanced analytics. In advanced analytics, there's basically 3 fields of application. 1 is very early in the development process, call it trend detection to be even to capture more data points to make us more precise, more successful in identifying winning fashion trends. Advanced analytics also plays an important role throughout later stages in our value chain predominantly also in our production system. I will give you some examples from our own factory in Izmir. We have seen based on data analytics significant productivity improvements versus our previous data. And last, it's about more intelligent markdown management. You have seen earlier today the importance of markdowns improvement as one of the elements to drive gross margin. And here again, data analytics have started to play an increasing productive role to improve our performance. On the right hand side, the HUGO transformation has been used for the last a bit more than 12 months to test our ability to move from traditional physical processes into digital one and what are the prerequisites to deliver more successful collection to our market. In a way, we have taken advantage of the relative smaller size of HUGO, the smaller size of the organization to turn HUGO into our digital speedboat and within the HUGO transformation, we have tested, developed, tested and deployed many of new digital processes that we now scale not only for HUGO, but also for BOS. So let's have a more detailed look into 7 examples along the value chain where we are seeing already the positive implications of improving speed and responsiveness. Trend detection has been an important additional factor for our creative and brand management functions to have additional important import sources to drive design decision and creative briefing. Not only on the product, but as you will see in a minute also on marketing concepts to resonate even stronger with our target customer. A very significant initiative initiative and I included it also deliberately in the short movie you have seen this morning on speed is the digital developed collection. We are now in the 4th generation of digital developed collection for HUGO. The bits and bytes collection you saw also in Ingo's presentation was the first one which was more a proof of concept. Now basically on a sequence of between 2 3 months, an increasing higher share of our HUGO collection already today is fully digitally developed. No prototypes, no samples, the first product to hit the stores is already the the first product to hit is the first typical product in our business system. An important prerequisite to that is the digital raw material library. It's fabric, but it's also trimming, which allows our development and technical development functions to work with materials that are ready to be deployed fast within these collections. In our own production, but also working with our 3rd party production partners, we need to up our game to connect with this partner when it comes to the data exchange and already the early integration into the design and development process with these partners. Within our own production, we have seen additionally the impact of data analytics. I mentioned this point already is becoming more agile to work with smaller lot sizes and to quicker ramp up our production on polysilicon production. As we move more on the marketing and distribution side, we first tested and deployed a new way of customer recommendation. So, it's an extremely valuable source of information what has been historically of your interest as you visit our website and how we can base, based on your purchase behavior, on your preferences, references to new products. And I will show you as part of this presentation examples where we've seen very strong uplift in our test performance by applying these technologies. The digital process in the development is not is one part of it, which is now further enhanced by the Digital TORM capability. Much faster than I initially expected, the Digital Showroom has found a strong acceptance not only from our own retail buying teams, but also from many of our relevant wholesale partners. It's not only as good substitute, it's an improvement to our historical more physical sample based selling process with multiple features that gives us the confidence to roll out our digital showroom quite aggressively over the next 2 years on a global scale. Last point is markdown management. As I said already in the introduction, it is a very powerful tool to be far more intelligent to manage this high complexity within our collection in relatively short time to minimize markdowns, while at the same time of course managing inventory in a smart way, thus driving gross margin improvement. Let's start with trend detection. And I would like to do this with the example again of the HUGO brand because we have already today collected first results to shape the collection messaging, but also the marketing message for HUGO. We work with own and third party, so with proprietary, but also with publicly available databases where we use algorithms that are being fed from keywords you've seen the brand attributes that we use by HUGO to see whether these how they connect to the target groups that we work with HUGO and what are related terms that the algorithm will identify. It could be music trends, it could be color trends, it could be general topics of interest that are being generated as something that has a higher relevance to our customers. So what we discovered for example as part of first testing it on HUGO was the extreme high resonance and importance that our HUGO customers have with the connection to music. So where the brand or many of our brands historically were based on the association with active sports. We have discovered that music, for example, is an extremely important element of association for the HUGO customer. And we have to use this in multiple ways. We included this in the finalization on the brand statement. You saw the fashion show from Berlin, which was techno inspired from a music direction, but it was also used in our marketing and social media strategy that we built on these trends as being stronger in the ability to resonate with our end consumers. The interesting thing about this machine learning algorithm will improve as we will feed further data. So, we will continue to use that. It's not the only, but it's an increasingly important factor that helps us to shape at an early stage the important inputs that will define our new collections. The digital developed collection will allow us to become significantly faster. So, before we go into more detail, I would like to share with you some of the core elements that are decisive for our digital collection. 1 is, it's always non physical. So throughout this short period of development, there are no prototypes, there's no samples. We have found a good balance between new and existing patterns. And this is quite healthy that we have round 3 quarter out of that from existing patterns and we introduced as part of the digital collection round 1 quarter new patterns. To be fast, we have to break with some of the traditional thinking that any collection has been made from new trimmings and materials. If you want to be fast, this collection has to work always with proven tested materials. So it has to come completely from known materials and trimmings. And last but not least, it's not only the development process, it's also the capability of our production partners that need to be fully digital and enabled to work on the interfaces work with our digital data to transfer immediately into the serial production orders. The digital raw material library, it is, it's a major step forward for a company that comes from an SAP background. So if you work at Hugo Boss, you better love SAP. And if you love SAP, you're probably very unlikely to work in Ingo's design department. So historically, this was almost like a clash of 2 worlds. What this and you see a screenshot of that on the left hand side that the team that has been working as part of the human transformation developed an extremely user friendly user interface that allows our technical development, also our design people to select already proof of materials. You see we have already 40 fabrics, more than 100 trimmings in this database to be easily included into any design ideas they want to pursue. This tool has proven itself to be so powerful that we already decided today to apply the digital material library to expand its use not only for HUGO, but for BOS. So, for me, it's a very strong indication that whenever we see some of these more digitized processes to be well accepted and beneficial to our business systems to be rapidly deployed not only for HUGO in the pilot phase but also to BOS on a broader application. Well, you asked this question today already multiple times. So, what is the time saving that we see on our industry? And it is important that we are now different to what we sometimes did in the past where we did selective in season production. We are now talking about a full collection that has dramatically reduced the traditional lead times in our industry. 8 months was a typical timeframe in our industry starting typically with French researchers, fabric fairs to be visited when already key elements of the new collection were determined until at the end of the development process the final sample which is going to multiple physical prototypes run was sent over to CRO Production. Since the first release of the 1st generation of the digital developed collection with HUGO, We are now on the 4th one where we have reduced this process to 6 weeks. And this is a dramatic almost 5 to 6 months reduction in the time where we take final decision on the design on these collections. The economical success which is the ultimate goal of this collection still has to be further enhanced. We are not here to tell you today that the digital developed collection will outperform in terms of sales through our more traditional one. This was not our objective for the 1st year. But what we do see now increasingly with the successive generation now that we have moved beyond the proof of concept that these capabilities will allow us to achieve the objective of speed that I described on my first page. As you see on the right hand side, in particular on the production logistics, we still see significant room to improve. And we have from our own production facility in Izmir already seen first indication where we not only become passed on the development side, but also on the production and distribution side of our business. Just to give you three examples how we have improved our operational capabilities also in our own production side for Istnium. 1 is to become even faster in terms of ultimately or actually reducing the garment, we have to reduce our setup times. And we have seen already today around 40% reduction in setup times which allows us to operate a smaller lot sizes until with a much higher ability to react faster to new fashion trends than we were able to see in the past. Please keep in mind that we have almost 4,000 colleagues in Isthmium. So one of the tasks also for the plant itself was to increase skill sets to onboard new operators in a more efficient way. Also here, virtual training capabilities have been not only cost saving factor, but has made the plant far more productive in terms of skills throughout our set of employees. Last but not least, this is where not only digitized processes, but we use data analytics also on the operational side of our business. We are able to use via preemptive maintenance the downtimes in our operational performance for ISNIA. Let's move on to the marketing side of our business. And before I will again go into some examples, Let's remind us that the shift from traditional marketing into online marketing has been a strong change in our industry. Today, we are more than 2 thirds of our marketing spendings are being online driven and we expect as part of our 2022 plan that online marketing, performance marketing will be an important factor going forward. But it's not only how we speak to customers. Luca, you were recommended to connect closer with us via Instagram. I can only subscribe to this view because this will be more important than traditional print magazine. But we also invested significantly also to up our game on our own e com site. Because the hubos.com is important from Inspirational, but also from transactional side. From 1 third party assessment that we have received for the last 3 years is the L2 Gardner Stature which is covering the 77 top premium luxury brands in our industry. We scored number 7 which was the highest score for within the apparel segment. What's here was highlighted by L2 was already today extremely high industry leading capability when it comes to site navigation and digital services on the hugoboss.com site. Well, especially in this industry, standing still certainly will give you a lower score in the years to come. So, I would like to give you three examples where we further enhance our digital capabilities predominantly in our biggest growth area, which is ecom in the years to come. 1 is, BitFinder. As you know and I know we have a lot of e com expertise here in the room, return rates is one of the decisive factors whether your e com business is profitable or not profitable at all. So, we have invested already in the past to give our customers the confidence to have the right selection on the right size. So, the PIF recommendation on our website today was already considered from Gartner as one of the superior functionality of our website. However, we see further room to grow. And again, since a lot of these sizes correlate, so the shirt you bought is probably correlating with the size requirements you have on your suit, on your coat, on your pants. We're using this now also to that we're developing algorithms that becomes even more precise in recommending the right sizes to you which goes far beyond the traditional placement of your chest or your hips. It's already based on data you share with us that the algorithm is able to suggest to you the right sizing suggestion for our size. The second element which I personally find extremely exciting is the ability that if you buy products from us online, you're not down to your own thinking and assessment. Already today, many of our customers have used the chat functionality to get advice on material fit and styling advice. So, what you see on the left hand side, whenever I'm not sure whether that's the right blue to wear, today, Silberos associate will offer advice on the product, which was extremely well received. Now what we introduced over the summer was the next step to it. It's truly omni channel from my perspective because as you on the left hand side of the chart decide okay well it's now the time to discover the new suit collection from HUGO BOSS. You book an online appointment and whether you're in Cardiff or in any other remote place, you get an appointment with our experts or maybe from our recent street or Liverpool store. First gentlemen, we'll advise you via split screen video function on whatever questions you might have and we were overwhelmed by the positive reaction to it. So compared to what we have seen with our previous functionality, we have seen a strong uplift in the conversion rate and the basket size from the transaction. I see this as a very good example of how we will bring competencies and assets that we have in the physical world to our customers who increasingly prefer due to time constraints and other reasons to interact predominantly via social and digital channels with us. The 3rd element I would like to highlight is something that has already proven itself quite effectful in our 20 18 ecom performance. What data analytics has told us is there is a strong correlation between your prime or your anchor product that you buy first with Hugo Boss, which is the most likely product we offer you next to maximize the penetration on your purchase behavior. So whether it's an anchor product, it's a suit or it's a shirt or it's a leather product, it's very important to consider this initial purchase to offer you the right product for the add on searches. And if the suit is your anchor product, you see some of the results that we know exactly what is a significantly more likely product to buy from us which should be the focus of our CIM communication with you, cross selling suggestions on the website. To the degree that whenever you're buying omnichannel also for the information available for our sales associates. You see the significant impact that this functionality that we introduced in 2018 has had on our e commerce performance. With that, move a bit more detail on where digital services have also affected our performance in our more traditional businesses. So, when we first introduced the digital showroom for HUGO, our intention was to find also cost savings opportunities because samples tend to be expensive. They are on the critical path on the design processes and we wanted to take now the digital material that we have created also to the sales process. As we developed the digital showroom and there was also part of it in the video we have shown you, we discovered there is even more to it. The capability of this large screen presentation on the collection, the source of inspiration or you can combine the collection for your specific needs, be it for the buying function of our regional buying teams or for your operation of the multi brand stores has proven itself to be extremely powerful and convincing for our wholesale customers. So it's a combination of best of both worlds. It's a very attractive cost savings because we are able to reduce sample cost by in some categories by significantly more than 50%, which makes this investment into the technology pay off rapidly. But it's also something that will drive an even better and stronger relationship with our wholesale partners. It's a technology that very few companies are able to offer. We are now you see it as the second bullet based on this very strong feedback we'll bring it to our both casual wear and other product categories over the next 2 years. And a very nice side effect to that is and Caesars also is a part of our commitment to maintain our strong position on the wholesale side of our business, about 20% to 25% on our wholesale business we do with in season replenishment. So, it's evergreen articles. This is something where we offer our wholesale partners to reorder products throughout the season. It's an online order tool, which is now based on the same technology significantly improved to what we had before. So, we also see the technology, the capability to be deployable across multiple use cases. So, it's not only the online term, but also with some but minimal incremental program work is something that will also enhance an important factor for our wholesale partner for the replenishment business. Let me complete after we have seen many examples where speed is of importance. Let's go to the last example in terms of big data analytics. Markdown in our industry was very much driven in the past. Well, it's again a certain date or oops, what has competition A, B and C done. Now it's time to markdown certain product categories. And it was basically, as we say sometimes in German with the lawnmower, we probably don't say the same in English. But basically it was the same discount across all categories across all sides. And we knew that some of these rebates were excessive and sometimes the way they are not good enough. And what we also didn't know which rebates was really important to drive conversion rates. Now with the first test we have now conducted with far more intelligent markdown management, again, we use machine learning now to see, okay, how what are bundling effects between different product categories, which product categories need to be combined, which do not correlate with each other. Taking into consideration inventory levels, we've become much smarter and the e commerce business offers multiple opportunities to that in terms of timing, amount and combination of markdowns in our business. It will help us to optimize the end of season markets in our business. We see them and we mentioned that this morning as one of the three elements which will drive gross margin improvement going forward. So speed will be an important factor to gain competitive advantages and it will be in particular on the margin side important driver for our 2022 business plan. So most of the impact I described as part of this presentation, on the right hand side, the last one is clearly one where you have an immediate connection to it. But we also believe that in particular the digital connection which are being increasingly directed by train detection other means will be something that will help us to become more efficient in our operations, but also to gain higher sales densities in our retail operations. This concludes my part of the presentation. I would now like to hand over to Yves who will again will go into our financial ambition going forward, but also covering not only the income statement, which clearly today in terms of top line and bottom line ambition, but also in terms of cash flow, dividend policy and balance sheet items. Thank you very much. Over to you, Yves. Good afternoon, ladies and gentlemen. Also from my side, welcome to our 2018 Investor Day at HUGO BOSS. This is my first Investor Day at HUGO BOSS. And today, I'm very excited to share with you our prospects, our financial medium term outlook. What I will be doing today is I will summarize those initiatives my Board colleague just outlined today and I will explain to you how these strategic priorities, how they translate into our medium term financial targets. So let's start with our top line expectations. I think we have seen in the last 2 to 3 years that we are really performing that we have delivered what we have promised. We have seen an acceleration of our top line performance in the last years. So in 2017, we have delivered and in 2018, we will deliver our top line expectations. And going further, for the next year, we expect to accelerate our top line performance by a CAGR of 5% to 7%. This is a clear outperformance versus our industry where the industry expects a growth between 3% to 4%. Where is this outperformance coming from? And we see 4 major drivers who are pointing out our outperformance. First of all, we want to exploit the online potential. Secondly, we want to improve the retail sales productivity. Thirdly, we want to exploit the full potential in Asia. And fourthly, we want to grow with the HUGO brand over proportionally in comparison to our group net sales. So, let's have a look at our online performance. Actually, in online, we see tremendous potential. We start from a low base, but we have tremendous potential in the online sector. In the last 2 to 3 years, we built a solid foundation because we were investing into our digital capabilities. And you can see it in the figures, it pays off. We are showing strong momentum, strong double digit growth in the online segment. And this is what we'll maintain in the future. We will take this momentum for the future and we are very convinced that we will quadruple our net sales in the upcoming 4 years until 2022 from $100,000,000 in 20.18 to $400,000,000 in 2022. So what are the major drivers that drives our online performance? And there are really 4 big pillars. First of all, it's all about accelerating our online concession business. And I really want to point out why is this so crucial to focus on online concession in the online world, because in the wholesale model, the partner owns the inventories. It's for us an uncontrolled distribution. Once they have an overstock situation, they might add up in discounting our products. And whereas in the physical world, in the wholesale business model, it's limited to a certain POS, in the digital world, it scales all over the customer base in the online world. So this is what we will be doing. So whatever we can, we will convert a wholesale partner to a concession partner and this will drive our net sales growth going further. Because at the end in the concession model, we want to control the brand, we want to control the product offering, we want to control the pictures, the content on the page, and most importantly, we want to control the prices. And this is what matters in the online concession world. And actually, I'm very pleased to say that we delivered on Zalando because we promised this during the course of the year and we just signed the contract and we have the 1st net sales with Zalando in our book. Secondly, what is the big driver of the online growth? It's clearly that we want to exploit the full potential of the hugoboss.com, which is our digital flagship. We are today present in 12 countries, but in the physical world, we are present in 35 countries. So there is more to come to roll it out to different countries. We are not present in the Nordics. We are not in Canada. We are not in Mexico. We are not in Australia. We are not in Japan. So further countries to add, to grow and to exploit the full potential the e commerce is really offering. So this is what we will be doing. And thirdly, we will enlarge our omni channel services. I think we talked about it already, but I think we can build on a lot of good strengths. I'm responsible for the IT and after reviewing the IT, we have a lot of strong capabilities because we have real time access to our inventory level in the stores. So this gives us the potential to further add functionalities to the omni channel services. For example, shipping from store and there we can really deliver speed because for the customer it can be much faster delivered to the customer at the end. And finally, we want to expand social commerce. It's all about we have shopping environment already in Instagram. But for us, as a fashion brand, it means that we have social commerce that we try to convert content into commerce in the digital world. This is what it's all about. Let's talk about retail sales productivity. And I really want to point out that retail sales productivity is the most relevant KPI. Why is this the case? Because this is the perspective of the landlord or the managing director of the department stores. When they decide where to put the fashion brands at which location, they will be deciding on sales productivity. And this is the reason why we are focusing on sales productivity because we want to be in the best location. So what we are saying here is that we want to increase for the compound rate of 4% in the next years. This is a like for like performance that is even better than before, but we are very convinced that we can achieve this. And be aware that this 4% does not include online sales. So, we changed our definition here contrary to our previous announcement. So, what are the major drivers? Why are we so convinced that we can achieve a like for like improvement of 4%? And there are 5 major drivers. First of all, we will accelerate the rollout of the new store concept. Bernd outlined what kind of uplift we are seeing. We are already talking about the Q and A about what is the payback of this. I really have to say, we in fashion retail, we are often saying it's the bird that is singing and not the cage. This means it's all about the product. But here with our store concept, I really have to say it's different. It's different because we are putting our products in a certain theme, we put the wonderful collection from Ingo, we create a kind of stage for the product. And this really works and I can see it in my figures. And in addition to this, I was in Boston as well during our roadshow in August. I was standing in front of the store in Boston. I was looking at this. And coming from retail, you can see it and you can feel it. Wow, this is how rides should look like, because it was the right location from the commercial area going into luxury, so the right location. We renegotiated the rent in a smaller space, so we reduced the rent. And when I was looking at the shop layout, there was a nice rectangle, the count is in the middle and just the operations on one floor. This drives pay to sales. So, this is how Wright should look like. And this is it's a tremendous store, highly profitable from day 1. And I called Bern and said, congratulations. This is how Wright should look like and we have to replicate this now 2 50 times. This is how it works. And actually 4 weeks later, I saw Philadelphia, we were exactly doing this. So, what I'm saying is, we are moving on. Week by week, we are getting better and we will do it 2 50 times. This drives our like for like growth. Secondly, we will optimize our store network. If you look at the Americas and Europe and Ben was outlining this, we still have today oversized stores. In the wonderful city of Lille in Northern France, we have a store that has 800 square meters. It's too big for Lille. 200 square meters is enough. So what are we doing? We will right size this to 200 square meters and we take the safe 600 square meters and invest into 4 stores in China. This is what we will be doing. And this really drives net sales per square meters. You get much more out of it, out of the existing square meters. This is what we mean by improving the sales productivity. Enlarging omni channel services, be aware that the sales associates on the floor and they get the incentive for order from store, we touched this in the Q and A, But be aware that they have the possibility for the entire collection in the online world. So it's not limited to what we offer in the store, it's the entire collection on his iPad. We touched the issue of the enhanced product range. Clearly, we focus our merchandising on driving sales productivity. And last but not least, it's all about driving retail excellence. Be aware, we have 7,000 people on the floor. They are really our brand ambassadors to the customers and we will be investing in training and personal development in order to make sure that the customer has the best shopping experience he might get. So, let's talk about the next growth area that we're having. Let's talk about regions, and this is Asia Pacific. As of today, we have 15% of our net sales are generated in Asia Pacific. We are clearly under penetrated in this region, particularly if it comes to China. We only have 8% of our net sales that are generated come from China. If you consider that they are traveling around, I would assume we have around 15% is somehow Chinese induced net sales in our group. And if I compare this to our peers, they have 33%. They have 33%. So there is much a lot of potential between 15% and 33% and we will be focusing on this. Plus, we have a price premium of 30% to 40%, which makes the business highly profitable and this is what I like as CFO. And plus, it's all about a controlled distribution for the brand because there is almost no wholesale in China. So, there is no argument against China. We have experienced a double digit growth in the recent quarters and clearly, we will shift our resources to this big market. So what are the drivers? What are the major four pillars that we are aiming for to grow double digits to achieve at the end 20% of our group sales in Asia. So, we will leverage the Chinese demand across the region. So, we will take our money and we will be focusing on the Chinese consumer. And I know you want to ask this question. We don't see any slowdown today in the Chinese market. We don't see it today. We had a wonderful gold week and really it's working. We will expand our retail footprint like in Maya Retail Maya Lily example. We will have more stores in 2022 and we will grow with travel retail and we will be present in the most important airports in Asia because the people are traveling a lot. And last but not least, it's about leveraging the digital opportunities. What do I mean by this? In China, you have 2 big players, it's Tmall and JD. And we have a cooperation with them, but the cooperation is just at the beginning. And as I just take the huge potential we have with Tmall and JD, it's really huge to get more net sales out of this. And the great thing about Tmall and JD is they both operate in the concession model. So, talking about the brands. Clearly, we at HUGO BOSS, we have a 2 brand strategy. We have BOSS and we have HUGO. And with HUGO, we want to grow over proportionally in the next 4 years to come. Clearly, the year 2018 has been a kind of transition year. And yes, it was the right measurements that we did. Why? Because HUGO is not the cheaper boss. HUGO has their own DNA, has their own brand identity and is targeting to a different customer. And that was and that's the reason why it was necessary to have distribution changes in order to sharpen our positioning with the brand HUGO. And clearly, we have in our business plan that we want to have higher growth rates in comparison to our group sales. What are the major four drivers that we are seeing? First of all, we are strengthening the positioning in this fast growing contemporary segment. Clearly, this segment is growing much faster than the other segments. Plus, there are a lot of regional small players, so the competition is very fragmented all over the world. And thirdly, Qubo can benefit from the marketing and distribution power from BOSS, from our HUGO BOSS organization. Once it comes to negotiation with landlords, when it comes to cooperation with different department stores, we can we have HUGO as a separate brand to offer. Now we will be focusing on casualwear. This is the brand heritage of HUGO. We've seen double digit growth and we will focus on casualwear like Ingo pointed out this morning. And we will expand our store network into key metropolitan areas. And last but not least, it's all about social commerce. The HUGO customer is very digital, it's always on, it's much younger and we will work and elaborate on this. So these were the 4 major growth drivers. So let me perhaps change the perspective and talk about the operating margin. We have always said that we aim at sustainable, profitable growth starting in 2019. This is what we say. And this is what we are committed to. So what we are saying here, we expect in 2022 an EBIT margin of 15% and we expect this to grow year by year from 2019 to 2022. And this margin improvement comes from 2 levers. 1, it's clearly the gross margin expansion and secondly, it's all about operating leverage. And both the improvement operating leverage and gross margin, they are more or less have a similar contribution. But we will achieve operating leverage, although we are investing into the digitization of our business model. We will achieve operating leverage because we will improve the efficiency in our organization. And we have started an efficiency program and please stay tuned in a moment, I will talk about this. Because first of all, let's talk about the gross margin. So, we see 3 major levers to improve our gross margin development. First of all, I think it's more technical thing. We will see accelerated growth in the retail versus wholesale. So this means that we will experience a positive channel mix effect and this will drive our gross margin. And this margin will come because we will be outgrow especially when it comes to online and be aware that our gross margin is 15% to 20% higher in the retail world in comparison to wholesale. Secondly, it's about complexity reduction. The simplification of the brand portfolio give us the possibility to reduce the complexity of our products. And as Ingo outlined this morning, with casual wear and athleisure wear, we will reduce until 2020 the complexity by 30% in this segment. What does this mean? We will reduce the overlaps. We have less number of styles. And those styles that remain, will have higher volumes. This drives efficiencies and synergies in our coxswain. And thirdly, let's talk about markdowns in full price business. I always say there is one big figure between gross sales and net sales. It's a 3 digit million number. It's about markdowns and discounts. And we as a premium apparel brand, we must have an attitude that every discount is harmful to the brand. So we have to manage this big P and L number. The good beauty is, it's good for both. It's good for the brand and it's good for our P and L. So, what we will be doing is, we will be reducing the outlet share going forward and we make use of advanced analytics like Mark is pointing out, in order to reduce the markdowns. It's all about increasing full price business and reduce the markdowns. So, let's talk about the efficiency program, how do we achieve, how do we drive operating leverage. With full alignment with my Board colleagues, I have put the efficiency program on top of my CFO in September. We have already started this program. We have clear targets, clear responsibilities and concrete measurements. We identified altogether 3 areas where we see the most potential for efficiency improvements. Let's talk about to improve the retail productivity. The first big thing is to improve the pay to sales ratio. Here we talk about the 7,000 sales people on the floor to improve this pay to sales ratio. As of today, the pay to sales ratio in different areas, in different countries is very different. And in some cases, there are good reasons for this because the wages is different. But we have different systems in different countries and we must come up with one good system. And clearly, we have 1 best in class system and this is here in the U. K. Our retail organization here in the U. K. Is by far the best, best in class at HUGO BOSS when it comes to flexibility, efficiency and service levels. So, what we will be doing is we will be rolling out this U. K. Model to the rest of the world when it comes to managing the personal hours. Secondly, we see tremendous potential in renegotiation rental contracts and rightsizing existing stores in order to reduce the rent to sale. Today, we have €400,000,000 of rental expenses. So what we will be doing is we have 600 freestanding stores altogether. If you take an average time of the rental contracts of 4 years, this means we will tackle 150 each year. This means 3 per week. And what we do is, if they don't meet the necessary financial KPIs, we will either close them or we will relocate them. If they are oversized, we will right size them. And if they are all right, we will renegotiate the rent. And clearly, there is potential, there is clear potential to renegotiate rent. You are all familiar in our industry that rents come down because the frequency overall has decreased over the recent times of the year. So, we see the potential in renegotiating rental contracts. And since 1 September 2018, the Head of Retail Estate Management is reporting directly to me. Thirdly, we see potential in optimizing the CapEx to sales ratio. We are convinced that we can reduce the investments per square meters in the retail environment by 20%. Why? Because we will be focusing on remodeling rather than opening and because we see potential with a modular approach, more standardization and optimizing the supplier network. This gives us the possibility to get the investments down. And since 1 September 2018, the Global Head of optimize our organizational structure and we will review the existing overhead cost structure. Giving you some examples. When we talk about the brand simplification, the reduction of complexity, we have redundancy when it comes to brand management, merchandise management and operations. Secondly, if we talk about the digital capabilities, like Marc was pointing out, we see that these investments into the digitization of our business model that we can do the business much faster, much more efficient and much more simpler. Two examples are no prototypes, more selling via digital showrooms. This gives you relief from the cost side. And last but not least, we will implement shared services. When it comes to back office functions, we see clearly the potential to centralize more functions to make it more efficient and it's clearly my ambition in the finance function to be in the 1st quartile benchmark in our industry. Let's talk about marketing. In marketing, it's not about reducing our marketing to sales ratio, it's not about reducing marketing to sale, it's more about getting more out of €1, how can we achieve, how can we make the marketing more effective. So, we review our marketing mix and we have a broad brand. We have sports sponsoring, art sponsoring, billboards, print, fashion shows, performance marketing, all different things. But at the end, we will end up with a more focused, more integrated marketing approach. This is what Inglis says, the 360 degree, focus our marketing efficiency, you get much more out of €1 spend. And the performance marketing we see in the digital world, it's good for CFOs because you can measure it. You know what you get, the cost per order. It's a viable business model. You just pour money into it and you know what you get in terms of net sales and customer lifetime value. And finally, we will clearly invest into digital marketing activities like we've shown and to grow the social media presence in order to reach a broader base of the customer. All in all, this kind of efficiency program, all these measurements that we have in mind, they will end up with a cost saving of €160,000,000 by 2022. And importantly for you to know, this is not back end loaded. We see more a gradual development starting from 2019 until 20 22. Notwithstanding, we are committed that we won't sacrifice that we will still be investing in our digital capabilities going forward, And we will not sacrifice short term profits for this because we will continue to invest in those areas where we are convinced they are good for us medium and long term. And yes, like Mark pointed out, we will be investing in the digitization of our business model. What do we mean by this? We will exploit the full potential of omni channel services to get full out of it like Bernd was pointing out today. We will roll out our hugoboss.com to more countries. We will strengthen the IT capabilities to ensure that we have that we make it happen, the digital transformation from an IT point of view. And we will expand in our content marketing teams because we want to ensure that we are in the right spot with our digital capabilities and we want to convert content into commerce. And last but not least, we will be investing into our supply chain. It has to be best in class and we have seen by the presentation from Mark today that speed is of the essence, speed is a game changer and that's the reason why we will be investing in speed in our supply chain. I think you have seen this chart today. So to summarize, what are the key drivers from the top line perspective and from the bottom line perspective? We expect our sales to grow 5% to 7% each year, which is a clear outperformance of the market. Online will quadruple. The like for like retail sales will increase by 4%. In Asia, we will grow double digit until we reach 20% of our net sales in 2022 and HUGO clearly will outgrow our group sales because they are present in the fast growing contemporary fashion segment. And from the profitability point of view, we will target at an EBIT margin of 15%. This means that bottom line clearly grows much faster than top line and we have 2 highly 2 high levers of improvement. It comes half of it comes from the gross margin expansion. And furthermore it comes from operating leverage, which is boosted by the efficiency program I just outlined. As you might have noticed, Abbott has become our future key performance indicators and we will change our perspective from 2019 going on from EBITDA to EBIT because there are good reasons for this. First of all, we are sure that the EBIT performance indicator is much more comparable to our industry peers to measure the underlying operational performance because it does not because it does include special items and it includes depreciation. 2nd of all, we have the clear emphasis focused on capital efficiency. What do we mean by this? Since we are further investing into retail, which require investments, we want to lay more focus on capital efficiency in order to maximize return. That's the reason why the depreciation has to be included into our performance indicators. And last but not least, we will have the IFRS change from 2019 going on from 1st January. This means that operating lease expenses are not further accounted under operating expenses. They will capitalize and so they will depreciate it, so EBITDA will be less meaningful. That was really the last argument to change the performance indicator. And clearly, what I have to say 2 more messages. Firstly, I won't disclose any IFRS 16 implications today. We will be doing this in March 2019 when we publish our fiscal year 2018. And clearly, 2 more important messages. One is, for EBIT, we see a low double digit number in terms of changes when it comes to the incorporation of the IFRS 16. And clearly, all the figures that we are showing today do not include the IFRS change. So they are operational performance changes that we include. We excluded the IFRS change completely in today's presentation. So let's have a look at the balance sheet and the free cash flow. Our business model is highly free cash flow generating and we aim to generate free cash flow in the next coming years in a range between $250,000,000 $350,000,000 per annum. Every year, this should be the free cash flow. And there are 3 major drivers. It's our increased profitability. We will see improvements from the trade net working capital and CapEx will be much more efficient. I think we touched the point of the EBIT already, but the trade net working capital, we will see improvements. We are today at 19.4% and we are very much convinced that we can improve our trade net working capital gradually coming down to 17% at the end of 2022 because we are convinced that we can achieve shorter lead times and optimize the merchandise management and that we can improve our trade terms management and our collection efforts. In addition to this, like I pointed out already, when it comes to our investments, we see the opportunity to reduce the retail investments to reduce the investments per square meter by 20%. So this will drive the efficiency from a CapEx point of view as well and this will enhance our free cash flow generation. So, let's talk about shareholder return. When we talk about shareholder return, it's always good to keep in mind that our first priority is that we will be investing into our business. This is our first priority and we do this because our investment case is based on organic growth until 2020 2. Notwithstanding, the dividend is very important, has always been very important for all the investors, and I'm happy to confirm that we will have a reliable dividend policy going forward and that we will paying have a payout ratio between 60% to 80% of our net consolidated income for the upcoming years. What are our financial targets in 2022? Let me summarize this please on just one chart. So we will see growth rates between 5% to 7% CAGR in the upcoming years above market growth. We will quadruple our net sales in online, 4% like for like in retail, double digit growth in Asia, FUGO outgrowing the group sales. From a margin perspective, we will aiming for 15% in 2022, really coming from gross margin expansion and coming from operating leverage boosted by the efficiency program. And we will generate free cash flow of between €250,000,000 €350,000,000 not just only coming from profit increase, but also from optimization and trade net working capital and more efficiency from CapEx side. So, all in all, at the end, it's all about creating shareholder value. I think today, we have shown to you that we have strategic priorities that are clearly focused on the brand desirability and that we get to a higher level of customer centricity, that we have a strong top and bottom line improvements that especially when it comes to costs that we put profitability on the next level at HUO GOBOS. We are highly generating cash generating business model with a clear focus on driving capital efficiency and we will have an objective dividend policy, all are good arguments to invest into HUGO BOSS. And clearly, all in all, at the end, it's our clear focus to create long term value for all the shareholders and we expect that this is what you want. Thank you very much for your attention. We will continue again with the 2nd Q and A session. I would like to welcome Bart back again on stage and we will quickly prepare and set up. So let's see who gets the first question. Well, probably first of all, filling in some of the blanks of the efficiency program. Well, if I get it right, store optimization obviously also means smaller source means most likely in a similar environment also a higher rent per square meter. Do you expect to overcompensate this by the declining trends that we see in overall rent per square meter in the industry? So despite smaller stores, still lower rents per square meter in the stores. And secondly, on the ramp up of the digital showroom, I think you started only this summer with the digital showroom. Not? So how can you remind us about the share of the digital showroom on the HUGO collection and probably also some numbers on the sample cost which you have overall. Am I on? Yes, I am. Well, first, don't look at absolute rental expenses. I wouldn't say it's meaningless, but what is important and I think what Eva explained very explicitly is that we have seen a strong uplift by being at the right location at the right size. This would lead due to the sales density improvement that our rent to sales ratio will be significantly improved. So that's what we aim to achieve. It needs to be the right location, the right contract and then with the right size we see and we confirm that it's typically starting around 100, 150 square meter on freestanding and typically nothing has to be much larger than 300. That's the sweet spot for our operations. And with the improvement in the offering and the better store content that we have, we see a relative decrease of rent to sales, but also pay to sales are the 2 initiatives. Just to give you a bit more details on the debt to insurance, It's a double digit million amount that we spend every year on samples and it will not go into 0. So, there was a bit of a fear from our sales teams and they're well fully digital. No, it's not. There's still plenty of samples there. So, if you take the great suits we are wearing today, there will be a double breasted suit available that Ingo is wearing because it's a great innovation and you need to have one there. You need it and have 10 fabrics, you don't. And this is just one example where you see limited because we didn't create samples in all fabrics available. But also in casualwear, outerwear jacket, we significantly reuse a number of samples that you still have a fit we call it fitting model available to touch and get a feel for the fit for the product. But overall, it's about a 40% to 60% decrease in the number of samples that you need. And then you create different story to tell in your showrooms to explain the connection to the consumers. You saw from my audio reaction, we are far more advanced on HUGO and the rollout already in 2018. So we are well advanced globally that already for HUGO menswear, we have an almost 100% penetration on the digital show. We do some technical advancement and we will start already 2019 book into certain product categories for BOS. So you've seen from my chart, we have basically ticked the box on the sugar side and over the next 2 years 2019 2020, it will be the global rollout on the BOS categories. And as I said, it will not decrease our double digit €1,000,000 investment into samples to 0, but it takes a 40% to 60% decrease already as a proxy that there is a good saving opportunity from lower sample cost. Thank you. I guess we're still with the 2 questions, right? Yes. If I forgot to mention that, then you have to try your own. Just checking. Okay. I think there was I think, Mark, you said that you have some benchmarks when you do your new analysis. In general, when it comes to this digital topic, is there any benchmarking you're looking at? Anybody that you think is really driving this whole operation and business like you would also be as efficient, first of all? And secondly, when it comes to the, for example, the Zalando Corporation, how far are you willing to go? Is that also a fulfillment service topic that you're willing to do with Zalando and also with the others in China specifically? Or on what level are we talking about here right now? Thank you. The degree that we take over this online business in total from our partners might vary from instance to instance, but what we typically do and I think my 2 colleagues went into that, that it's our inventory decision. So, we decide what to buy and we have now the intelligence that it's not a specific budget board for this partner, but we have now access to our full inventory pool, which in terms of width and depth is one of the strongest arguments also for our partners to say, well, this is much bigger than what I would ever be able to do. Add to that, our the picture material, the description of the product, which is important in our category where we have built capabilities and established level of sophistication that many of our wholesale partners find difficult to match. When it comes to the logistical fulfillment, we are quite proud with the remember it was just a bit more than 2 years ago that we in sourced ecom fulfillment at Hugo Boss. And in terms of service level, so buy on Monday, have the product ID on Tuesday or later to Wednesday at your door. In terms of packaging, to get something Hugo Boss, it should be like receiving a gift, not a plastic bag. We have high standards on how you should receive our product. So also with the Zalando case was our clear decision now with BOSS Smart Casual and former we are offered by Zalando. It has to be our logistical standards that deliver. So it's via our warehouse operation. It's not for the full offer yet. Casual and the leisure is still being fulfilled by Zalando, but we have the intention, like Bernd said, to also integrate this into our operation. In terms of benchmark, we are extremely curious and we monitor the market in many dimensions. Sometimes these best practices, for example, in big data analytics might not even come without our industry. So, many of the partners we work with have looked into big data analytics and developing algorithm out of our industry because we're looking at input, like I tried to explain, not only on the product, but maybe even on marketing strategies. So, we are not limited to the fashion work. So, we're working with industry experts, academics, consultants to find best practice in our industry. Clearly, we believe that many players in the contemporary segment where we're competing with HUGO hourly today on comparable reaction times, comes to quarter lead times in development. Whether it's also due to digital process or others, we don't have a full insight to that, but we know I mean, Innitex has always been cited as an important player not only in terms of extremely fast and efficient design processes, but also very efficient production and global delivery. And also here we need to understand it's now the time to include certain capabilities into our system. But it's not one copy paste case here, but it's like best practice and we apply it in an intelligent way in the HUGO BOSS ecosystem. The right side, Fred and Susanna. Thanks very much. So firstly on the efficiency target, have you set internal targets for each of the various margin drivers? How granular are those if you have? And also, will you be sharing the efficiency targets per annum with the market? And second question will be on pay to sales ratio. It sounds like you think there's quite an opportunity here, clearly UK best in class. Just wondered if you could give us a sense here of how much better than group average the UK pay to sales ratio is? Thank you. So the second question related to the paid to sales. Actually, for the time, we have bigger targets for each bucket for pay to sales rent. So, what I said is we have clear targets until 2022 and we laid them down what to expect next year. We will publish our guidance for next year in March 2019. That's clear. And the second question was related to was what again? Well, it really depends on the countries and we won't disclose this, but clearly there is potential in the different hours all over the world. So, we just don't disclose this now how far it can get. But clearly, we have for each single item, just to make it clear, for each P and L line, we have a clear target until 2022 to make it very concrete. Susanna Boesch from Berenberg. I have two questions. One reminder of the question from the previous session and also one clarification, so it doesn't count as 4, right? So my first question is on the e commerce strategy in China. Can you remind us, I mean, do you operate your own e commerce in China or like do you have it run by someone like one of the Tmall partners like Baozun or Buy Quickly? We do it on. And can you just kind of maybe discuss a little more in terms of what sales potential you would see in China, especially as there's been lots of changes in the Chinese e commerce market over the past year. 2nd on the store renovation. So as you've mentioned, the new stores under in the new format, they see significantly higher productivity and that is meant to be one of the drivers of your like for like improvement. Do you have any internal targets in terms of how many stores you plan to renovate by 2020? How many stores are in the new format right now? And I think you suggested before that the normal schedule is to renovate them every 5 years. Is there any chance that some of them you're going to actually renovate earlier? The reminder was of, I think, someone's question on the like for like hurdle to maintain the margin. And the final one is the clarification. I don't think you've mentioned the gross margin target, and if I missed it. I mean you were saying that this is one of the drivers of the EBIT margin improvement, but I think I didn't hear it. Well, we haven't missed anything. Of course, there's always a level of disclosure that we are not giving. And one is that we haven't broken it down to that specific level what is the uplift in gross margin. But it's not too complicated if we say the overall almost 300 basis points uplift will come about equal to equal amounts from gross margin improvement and efficiency. So make your guess. And honestly, I think that the level of disclosure where I say I don't care at the end if both will make their contribution to hit the 50%. So don't shoot me if it's 45, 55 by 20 22. The 4% like for like, I mean, this was an important question throughout many years. And I think that we started to be extremely laser focused on test productivity improvements in 2016 has underscored it's not expansion, it's not buybacks that will drive this company going forward. It's an almost paranoid focus on driving sales density improvements which all sometimes also painful consequences that we have, closing stores, resizing stores because it all only adds up to a strategic target if we have the right stores at the right location with the right brand mix. So, it's 4% like for like already in every case margin enhancing? The answer is no. So, there are clearly locations like in China, maybe some start up HUGO location where changing career path being a store manager at HUGO BOSS, your target is 20%. And we have good reasons to explain to you why we explained 20% from you. But the 4% on average will be margin accretive as we've seen from our list as one of our top priorities to drive structural profitability. By how much, it's difficult because we do not only rely on their density improvements to get to our gross margin and EBIT. But it's one of the major items as you've seen from the top line, but also on the gross margin improvement comes from sales and sales improvement. On the ecom system on China, we can basically do a full Investor Day. That's all. The more question you ask, the more complicated the work will be because JD is different than Tmall. They have dedicated platforms within the ecosystem. And what was true yesterday will be not true tomorrow. So, they're also evolving very quickly learning from each other. Today, we do have an operational platform that delivers already e com controls e com net sales in China, but it's Mickey Mouse in size. So, because we predominantly rely on our own dotcom.cn site, which is relatively small. That's a negative. The positive is we do have the infrastructure in terms of systems, logistic capabilities to scale it We have a dedicated we have built up resources based in Shanghai, now defines the right system now also taking the full ecosystem. It's how we tie into WeChat because a lot of these commerce initiatives are driven by social media. So, it's different kind of like if you were to think Instagram, Facebook and Amazon into 1 integrated platform. That's how we have to look at the Chinese system. We're not going to solve it for Metzing and also North London or New York. We need to have resources on the ground. We are confident that it will be an important building block there. It's not so complicated because you don't have 20 partners are the 2 giants you have to tango with and that's JD and Tmall. But what gives us confidence, what is true in the physical world that we are now enjoying extreme momentum that the brand is hot, it has a strong value for money perception in the Chinese market as true in the digital world. So, it's just leveraging our strength that we clearly demonstrated in China in our store network where we have grown significantly above market average to bring it also to the right digital channel. On Guy and afterwards, Maybe I'll give you a bit of an insight how we proceed with our renovations. So, we have budget process which is usually in August, September where we sit together with our company managers and with our directors and where we discuss store by store, which is upcoming, which is longer than 5 years not renovated. At the moment this list for the first half of twenty nineteen includes approximately 60 stores which we confirmed to be renovated And I would believe that overall we come to 100, 120 stores which we are going to renovate next year. Yes. We have today. In the new format already, how many stores on the new format already? 15% to 20%. Yes. Okay, great. Thanks. John Guy from MainFirst. 2 for me, please. On the 4% productivity that you've outlined, I mean if you think about the new store formats, you mentioned a 14 percent sales uplift, a 28% productivity uplift and a 12% UPT gain. So 4% productivity given the fact that you're scaling the renovations as you go along seems okay albeit within your high targets that you set today seems actually reasonably conservative. That's some buffers. So I wanted just to maybe clarify why you think 4% be a number. And then when it comes to my second question around the opportunity that we have I guess with the online business again the $400,000,000 you said 50% of that was going to be running through the concession side and 50% within hugoboss.com. You mentioned that clearly that's accretive from a gross margin perspective. You talked about the other gross margin drivers whether it's lead times, whether it's markdown etcetera. These are all relatively day to day sort of drivers within the gross margin that you would expect to push through. And yet even in Q3, the initiatives are the same, but we've seen a relatively tough gross margin delivery. So what's different going forward in terms of that gross margin expectation? I mean you're clearly pushing for the same kind of initiatives now that you are tomorrow and probably into 2022? Well, I think it would be misled if you not would try to judge whether this is a sound plan by a single quarter performance because at the same time, we could pick another of the last 4 quarters where you'd say, wow, this a quarter we have seen 80 bps improvement. Why is not this quarter representative for your next 4 years? So, there were and I think you've made a very explicit call with you after we went through but also from our side was a disappointing Q3. What was the reason why we have seen the decrease in the Q3 and why we believe it was something that's clearly not to be seen as a proxy for our performance for the next 4 years. So I would just ask for your understanding that it's clearly not an indication on the Q3 2018 to judge on our ability to deliver over the next 4 years. I think that should be very clear. On your question, maybe the positive extreme in your first part of your question, Of course, we have selected for the 1st deployment of the new shop concept stores where we've seen strong impact to it. It was the relocation of the store in Boston where I would tell you even relocating the store with the old concept would have seen a significant uplift in performance because it was just in the wrong place. We picked it as a luxury location with not enough traffic, was a bit awkward layout when I was the CFO when I signed up to it. So, shoot me on this one. But at least we took our learning from it and now it's in a much better location. Add to that and it's very difficult to separate from that what is the impact from the new collection, how much is the impact from the much better store front end. So, it's a small base, short period of performance, but it's already now the tangible result that is clearly moving into right direction. And I'm saying it's not only the new store concept, it's a combination of what we try to explain to you that gives us on average 4% like for like improvement. There might be some 1 or 2 rainy quarters also in the 16 quarters that will add up until 2022. And hopefully, we have a convincing explanation why it's below 4%. There will be clearly some stores, some markets, some quarters we are ahead of that. But overall, based on the analysis we have done, plans we have built with the markets, we are confident to deliver 4% in the physical Piral? Hi, Piral from Royal Bank of Canada. If I could just come back to the 3rd quarter performance, maybe we could look at it slightly differently and that's to say, well, we've heard a lot about markdown management and improving the gross margin, which I think happens a lot at the end of season. But what are the learnings in relation to dealing with exogenous factors like weather in relation to timing of products going into stores and wholesale partners, which appears to be happening on a more frequent basis for the industry as a whole. So like how we haven't really heard about what changes are being done to the processes around deliveries on the first hand. And then secondly, just on the retail like for like target of 4%, I guess the key kind of thing that retailers are saying in apparel is that the thing that they struggle with most is traffic. So could you just perhaps give us an indication for what the component parts of traffic versus conversion versus UPT are in that 4% target? Are you expecting your traffic to be broadly flat or down on a 5 year forward basis? Thank you. Well, I actually waited for the second part of the question because of course you guys are not satisfied by giving a 4% target, but you would like to see okay, bracket down by traffic conversion rate and then of course, Eylea 2022 share of shoes and dresses. So, nice try will not get the answer. But it's an important part because what we observe in this trend will stay. You better prepare yourself for flattish or negative traffic numbers to come. Everything else is just whistling in the woods. Do you say that? Kind of hoping for the better. And it's a continuous trend that we see that some of our malls are weakening in terms of traffic numbers and we as an important not to decide that tenants have limited means to change that. We have similar discussions with department store partners. And there are sometimes tough calls. We say, well, it's a 20% drop in traffic over the last 2 years. We remain committed, but if we fall under a certain revenue threshold, we either have to resize or we have to turn this relationship. So it is a tough environment out there. What you gain on the e commerce side, it will to some way cannibalize the physical retail. This is here to stay and it will come most visible in your traffic numbers. So the outperformance, if traffic is flat to negative in most cases, it has to be better conversion rates, better sales per transaction, which are driving that. I don't want to turn this into Q3 another explanation session. So, please any further question to Q3, we will respond to follow-up. So let me just give my $0.50 from a CEO perspective to it. Well, part of it, we were running too high inventories and we explained to you why the inventory situation at the Q3 was higher than we initially expected. And this has triggered from our system some write downs on our inventory levels, which was not nice. But looking at the structure in terms of which product categories they are, we are confident this is temporary and not a repeating issue that will hit our gross margin. The second is, yes, there might be a shift in purchase. So, look at your own purchase behavior. It's not that we gave more rebates necessarily, but you guys just didn't buy winter coats under the circumstances. So, do we have now a new supply chain system that will shift to swim gear in September instead of cold? No, we won't have. So this is what I mean. There might be temporary disruption that people start buying autumn or fallwinter collection at a later point in time. This is something which has to be the exception of the rule in our performance. However, what we need to have in our ability to act and there were already some measures implemented from Bernstein when it comes to the e com They say, okay, if there's an extended winter or summer period, we need to be quick in our merchandising to push in terms of visibility, in terms of CRM. That we say, well guys, it's a late summer evening, do you still sure that you have the right summer gear to wear? Because a lot of things that we sell from our NAS program are not driven by markdowns and we have a great offer that we can push there. So, get me right, there might be some disruption because of the hurricane that shuts down Florida completely for 2 weeks. This quarter will be worse than next year. And hopefully, we remember 1 year later that is then again management's super capabilities because just a shitty quarter in the previous year that will drive your sales performance in the following year. On average, it has to balance out. We have to deliver on gross margin improvement. Any quarter we will fall short will increase the pressure on our side to outperform in the other quarters in our performance. The right side again, Andreas Rehmann and then Andreas Ingers, maybe you start. Is that okay, Andreas? Maybe you start here and then you go. Andreas Macquarie. Coming to a longer term question, free cash flow, €250,000,000 €350,000,000 by 2022. This year, if I remember correctly, you guide €150,000,000 to €200,000,000 1,000,000. That's correct. Now, if my assumption is correct, you will add around €200,000,000 EBIT plusminus by 2022. Working capital should come down by over 200 basis points. CapEx as a percentage of sale is also coming down. So what do I miss here? So why only 250,000,000 to €350,000,000 free cash flow? That's my first question. The second question on your facility in Izmir, 7 months production to shelf, it's still quite long given the season tends to be around 2 to 3 months or so. I mean, you elaborated a bit, but maybe you can give us a bit more insight what could we expect to get the lead times really down to have really in season flexibility? Thank you. [SPEAKER JEAN FRANCOIS PRUNEAU:] Perhaps I'll take the first one. I think you're right with your overall assessment when it comes to free cash flow. In our case, we anticipated that in 2021 2022, we need investments into the logistical environment and that's the reason why we have increased CapEx in these areas. So, it's a fully plain calculated business plan that we are having and this is somehow what limits the free cash flow giving you this range. It's a very simple answer to the question. It's the CapEx. It's the structural that we're having and then there might be sometimes it's the structural of 6% that we are aiming. Today, we have 6.5%. But there might be some occasions like in this case that we are investing into the logistical infrastructure that we might need and might not need, but it's a 4 year plan. So, this is what we're talking about. Coming to what I consider the next extremely important field for improvement to the group. So, we have now today shown to you and it's already more of a growing part of our business that working completely digital will be the base case of operation for HUGO BOSS when it comes to product development. And you need to scale, we're in a learning curve. There are a lot of things we need to capture. Now, do we gain anything if I just reduce on suits or on knitwear my handover from production to delivery from 5 to 6 months to 2 months? No, I don't. Because like we discovered on the collection development phase, we don't we are not a short expert and we are not a network company. We are a lifestyle company. So if we want to sell a complete look to you that's a 3 60 degree in terms of marketing now in the also from operational people it means I don't care whether you're a shoe, a shirt, a knitwear or a piece of outerwear, you need to be globally synchronized in our store when it's needed. And this makes this part a bit more difficult because on a standalone base if you buy tomorrow made to measure suit from us in Regent Street you have it latest in 4 to 6 weeks. There is clearly the opportunity to run through our system much more quickly. More complicated part that we indicated that we're working right now to this now in an orchestrated way for at least the relevant part of your collection where this is another potential competitive advantage. So, you can be sure that we are now starting to look into what are the key commercial items, be it we think it's outerwear, pants, jersey items, this is what drives our casualwear segment. So, not only to shorten design lead times, I think there was earlier the question on I think Jurgen asked us about benchmarks, but also how you shorten for these high speed collection also production and global distribution. There will be certainly an element that will come back year after year. But you see, I think you pinpointed an important further room for operational improvement. The only thing I would say it's not an issue and it's not a suit issue. It's something that we would tackle similar like we did for HUGO. You need to do it on a separate collection. Don't call it capsule because capsule always has this kind of like we do it once and we do it then do it to something else. It has to be part of our recurring business. This needs to be proven across the relevant product categories and then we need to scale it. And this might have multiple repercussions. It might even change our supply assets, we're not okay with transportation costs or transportation time. That's an important factor. Do you work with suppliers that are closer to our relevant markets because it could be a couple of weak advantages to produce closer to your relevant distribution market. It's Dias Andreas from Commerzbank now. Two questions. One is in terms of sales, margins, cash flows. It seems that the journey towards 2022 is quite a linear one, yes, so steady progress in each of the 4 years. Is that fair? Or do you want to add any comment to that? It is overall fair. Okay. And question 2, yes, on the investments again in terms of technology, logistics, infrastructure and maybe also in terms of people, Are you happy with current setup? Is that sufficient? Or where do you see the need for further investments in the coming years? I think when we talk about the investments to make it clear like it has been in the past, 2 third of the investments goes into the retail environment and 1 third of the investment goes into IT and what is IT related when it comes to digitization. And actually, we feel very comfortable with this and I think it will be steadily growing as well once the net sales go up. So, we will keep overall, we will keep the IT cost and the IT investments overall stable. They grow in line with the net sales growth overall. So, this means if the size of the business gets bigger, we will invest more from the IT side. And I think we did a tremendous job in the last 3 years when it comes to digital capabilities because be aware that 2 or 3 years ago, there were no digital capabilities at Hugo Boss at all. So we really had to pick up in the last 2 to 3 years to come to the current status. And I'm really proud to say that in the last four quarters, we have seen, especially when it comes to the digital environment, we have seen good double digit growth. You can see it that it pays off. And we will continue with this. And as I outlined actually from the investment point of view, there was one chart that I was presenting to you And when it comes to rolling out the different countries, investing to omnichannel, strengthening the IT, this is all related to this topic. The gentleman on the left, unfortunately, I don't know or remember your name. Apologize for that. And then we continue with Luca at the very front. Hi. Geoff Friedemannes from Bank of America. So I have two questions. The first one would be on your growth target of 5%. You have basically 2 businesses, it's formalwear and casualwear. What's your expectation for formalwear? It's been growing quite low. If it's 0% to 2% in the next few years, you're basically expecting 10% for the rest of the business more or less. Is it something that you would be confident with? Or are you expecting the business side to be actually faster than what we are expecting here? And then the second one is a bit technical. You were talking about the shipping cost and your next day delivery and stuff like that. And if you look at your website, if I want a T shirt of £50 on your website, the next day you are charging the customers £20 while in Zalando they are charging £5 for the same T shirt and SMCP is charging basically £0. So how are you comfortable with that? Would you change it? And if you change it, will you take this cost on your EBIT line? Let's first answer your question on the industry growth. So when we said 3% to 4% is what we see in the current fiscal year and also in the year to come as the growth rates in our global addressable market. And as I highlighted, key trends we see in our market that the stronger growth in casualwear versus formalwear will continue. So what we see in most especially Western European and North American market is the formalwear growing between 0% 2%, I mean very slightly by market and it is probably half the growth rate that we see on casualwear. Casualwear is especially driven by athleisure. So anything that's functional has clearly enjoyed a stronger momentum than what we see with formalwear. With the shipment, that's a particular situation clearly in the UK and it's also what we recognize, which is for if you have 1 to have an overnight follow, maybe hugoboss.com is not your preferred destination. Our typical basket size is around €220, €240 on average. That indicates that the typical product that our customers buy is not in the T shirt category. We do recognize that expedited shipments, I think these are the terms we are referring to, are not always comparable. So, the shipment surcharge that we asked for certain markets vary from our perspective, but please add to that. We have seen that we are competitive most of them. So, I think the examples you have cited is rather we see with UK fulfillment that some of them are more aggressive in terms of same day deliveries, take Net A Porter as one example where we have same day deliveries that's not feasible with our current logistical infrastructure. Thank you very much. Luca Solca from Exane BNP Paribas. Just two clarification questions. On speed and faster speed, how is that going to translate into more frequent deliveries and drops? And what do you see as a target for that? And will that also imply a different way of planning the collection going forward? And then on social media, if you could give us more depth on what elements you're focusing on, how you plan to increase the brand heat and social media dynamic, KOLs, any plans that you have on that front, I would be very keen to get. Thanks. On social media, so far, we are very happy with the results and we will still continue and work on social media also on different levels. So, on one side, we put our regular campaign on social media. But then on top of this, we also put our product statements on social media where we get a lot of engagement also with our customer. So, this will be speed on and we constantly evolve our social media platform to give more and more customers also the chance to see our products. So, I just had one discussion before with 1 gentleman here and showed him really where our engagement goes through. So, on one side, we show really our the board collection and the collection in a much more broader way. But we do also product statements where we really focus on product to engage much more with our customer. In terms of drops, honestly, Luca, this was not what brought into the digital developed collection because already in the past we worked with basically 10 new themes being delivered in our store. And I think that's right. We're not planning, but because it's good enough, because you don't need to drop in the middle of the head to its 3 themes for the main collection, 2 for the pre collection. I think that it's a healthy rate. I mean we are not serving a passion crazy Asian M 12 or 13 year old target group. However, to make these ten themes more relevant, we think the digital development capabilities to be passed on our activity is important. So what is happening today is that we will over time reduce slight increasing the amount of money we spend on our traditional development and buying processes and substitute basically whole budget back from our buying teams that then will be allocated to the digital one. But also increases the demands on our buying teams because we expect them to share with us their learnings sometimes looking into what we've done from this 20 detection to be even better that we say okay, X percent, just give you a number 80% is a regular buy for February delivery, 20% is a digital development and of course what is important is the 20% need to outperform the traditional AT. Because in the moment where this is happening you see a big tanker changing direction because then you will see an automatic self feeding mechanism that the company will increasingly focus on the digital collection because it has a strong outperformance or an increasing outperformance to the regular collection. That's where we are aiming. Speed as such in the cost savings is not what primarily drives us. What drives us is the capability that is able to deliver an outperformance in terms of sales through margin improvement. The next story, Laura, keep going. Elena and Thomas. Thank you. Elena Mariani from Morgan Stanley. There's always a degree of risk when you give a medium term guidance on top line, right? And sometimes there are elements that you cannot control, the environment, the macro and the weather. So I was wondering how much flexibility do you have to deliver this 15% EBIT margin target assuming that perhaps down the road, you could see some good years and maybe some bad years. So is there any additional pockets of efficiency that you could identify should things be a bit worse than you currently expect because I assume that your business plan is based on stable market conditions? And the second question is on marketing as a percentage of sales because you've highlighted marketing as an area of efficiency. But at the same time, you're also pushing a lot that marketing expenses, I would say, to just boost your brands and your brand perception and awareness. So is there any sort of guidance that you could give us in terms of where the marketing expenditure is going to go in the next 5 years on an absolute basis and as a percentage of sales? Thank you. Marketing spending as a percentage of sales will basically be almost unchanged. There will be a shift in composition. And from an analytics perspective, it makes easier to assess the effectiveness of marketing spreadings. But the other elements of our marketing activities like a fashion show where we only have indirect means to assess that or collaboration with Michael Jackson or with Anthony Joshua, which we believe has an impact in terms of brand heat, brand desirability beyond just selling more stretch tailored suits because it's an association with people that many of our customers aspire to admire these icons. So, this is something that we foresee, but not necessarily significant change in the amount of marketing that we spend. In terms of contingency, to be very clear, we gave you two numbers. 1 is what we expect the market to deliver us as kind of like underlying growth 3% to 4%. If this turns out to be 6% or 7%, I'm with you then maybe even a 7% to 7% top line growth might sound quite cautious. But based on the history that we all have seen in our industry over the last 2 years, we believe that what expert would tell us 3% to 4% industry growth is a very reliable number to work with. So based on this assumption and if you want to hear something about macroeconomic risks, don't ask us, but ask you experts in your firms. We are not here to tell you anything about Brexit probabilities and trade war issues with China. That's not our expertise. We have better sources for that. Based on the 3% to 4% industry growth, the 5% to 7% top line growth are achievable. And there are multiple elements on our margin expansion. It's not one. We have seen I think from Eve's presentation very clearly where we need to deliver on. Some of them are clearly quantified. For example, the 4% like for like improvement. And you can hold us now accountable quarter after quarter whether we make progress. It's not a 2021 discussion where we come back. Well, now it's time to live on our 2022 targets. It starts with Q1 2019. Thank you. Thomas from Citi. Two questions, please. Firstly, on your EBIT margin evolution. So you're guiding for 15% EBIT margin by 20 22, on a 4% store based LFL per annum. When I look back at 2012, 2013, 2014, maybe you call that the golden years of Hugo Boss, at least from a share price standpoint for shareholders. You were actually on 18% to 19% adjusted EBIT margin. Reported EBIT margin was also quite similar on very similar LFL growth. What is what do you think prevents you from perhaps surprising positively in 2, 3 years to return to this kind of profitability? What are the 3 key differences, structural or BOSS specific, that prevent you from returning? And you know US CFO at the time, so you know probably the answer very well. And secondly, on depreciation and amortization, taking into account the CapEx efficiencies, more innovation, less openings, smaller stores, so coming down as a percentage of sales and IFRS 16, Could you guide us to a depreciation and amortization to sales ratio from evolution from, don't know, 5.5%, 6% that you have currently as a percentage of sales? Thank you. Yes. I wouldn't call bring a metal connotation to whether this was kind of the lead or the golden years to it, but it was a different time in our industry. Back in 2012, we still have significant global price discrepancies. We had a distribution model which was predominantly based on physical distribution. And also our communication with the end consumers were still relying on very traditional means. So what has happened since 20 12? Well, part of the value creation of our industry is basically passed on to you. Part of the profit pool in the apparel industry has clearly been passed on to the end consumer. You are very lucky to receive in our industry now a much better product than you did 4 or 5 years ago. So this has led to some kind of profit pool erosion because the phenomenon you described and you're aware of that has been true for almost all of the premium, upper premium apparel companies that the structural profitability of our industry has been basically reset between 2015 2017. There has been significant setback where we're still pursuing retail expansion between I would say 2014 to 2015 where we already saw a slowdown on our retail like for like that we have not seen that there is a risk that our retail physical retail business model will not be as profitable than it used to be in the past. And it was a painful effort to reset it and there has been enormous reset in the retail profitability in our business compared to the high times in 2015. Last but not least, a bit going into the marketing question. We have looked at the profit at Google, at Facebook and some other of these new giants out there, where there's also marketing money that we spent. So that in the interface with us in the end consumer, the new players like Instagram, Facebook, Google, which have taken also from our industry a significant part of the profit pool onto their books. So whether you like it or not, it's a new ballgame today that makes the comparison I believe, from structural profitability in our industry difficult to predict going forward. So, the plan that we presented to you today is not okay, we looked in the archives and we now re applicate our business model from 2012. I think would be a terrible mistake. But what we presented to you today is a recipe, is a playbook to grow our business with new practices, new requirements to a level that we think 15% to be an ambitious level in the current environment. Regarding the depreciation, perhaps I'll cover this. So, actually what I said today is 2 thirds of our investments of our CapEx go into the retail environment and this is where we expect a decrease, a reduction in investments per square meters by 20%. This is what we assume. So this means going forward for the 2 thirds that actually this will go down further down the road. And I explained to you as well how many retail contracts come up in terms of renovation. It's more a linear function that we see. And with the other one third, which is much more related from the CapEx point of view to IT and other investments, they are rather stable in terms of development regarding net sales. So, the improvement are coming clearly from the retail side and they develop over the time. Last one is probably Antoine and Alberto. Hi, it's Antoine Belge from HSBC again. So two questions. This morning, when I asked about China, you said you had 130 stores, but didn't how many stores you could be opening over the 4 year period. If we take the ASMCP group, they have 2 medium sized brand and one smaller one and they have 150 stores and intend to open 40 stores for 0. So do you think you could be opening maybe, I don't know, 10 stores a year? Is that a fair assumption? And my second question relates to wholesale. So you have different slide in the presentation. So if we look at the pie, the share of wholesale is actually not declining that much. And you said that for the top 10, it should be going mid single digits. So overall, if I say that the implied assumption in the overall guidance is that Rusal will be going low to mid single digit, is that a fair assumption? Well, let's start with China. China is probably the market where overall we still see some openings also from the BOSS side, but there's certainly an opportunity for the HUGO side. So we have looked at other contemporary brands, assuming this market. If you're aware of the ownership structure of SMTP. Maybe there's an even stronger focus on China than for other brands. So, that's a question you should ask at a different meeting. But what we have seen that the I mean, we did this opening event for HUGO in Singapore. And Singapore is also a clear strong destination for Chinese consumers and we were almost overwhelmed when we said, wow. I mean, we thought brand awareness of HUGO in Asia is probably close to 0 because the fragrance that has helped us on the HUGO side in some other markets not really strong. It's not a fragrance world out there. But the concept resonated very strongly, similar like what we experienced in Dubai. And our management team in Shanghai is highly committed to HUGO. They see this in terms of design language something that they say there is a contemporary Chinese consumer to it. And we will see I think you saw it on brand map on existing and future sugar stores. We put the foot into the Chinese market. But at this point in time, we are not announcing a strong expansion plan for HUGO in China. Let's also answer your question, what does outgrow group growth rate mean for HUGO? Does it mean 7.5% then why do you make such a big fuss of it? Does it mean 15? Clearly not, because we're not starting from 0. Keep in mind that HUGO is almost as large as any of the SMCP brands on a standalone base. So, we are not the peanut competitors. We are almost at the same size with really different composition. So, to grow a $300,000,000 plus business by 10% is also already quite a sizable number. But give us some flexibility to it. I'm not going to commit to myself today, okay, we're going to kill anybody in the French market because we see no strong results on the Marais store or we will now completely focus on the U. K. Market despite the success of HUGO in White City. Basically, it's something where the 6 regional management teams are now very carefully evaluating to what degree is Hubert now helping them to achieve their sales and profit target. First also for Huo, we are not managing this business as a fleet for top line, but for bottom line improvement. So we only pursue and that's why it's not going to lock us in today and probably also not for the next year to hit on a certain HUGO sales number because HUGO is a means to achieve larger business with a higher profitability level. Alberto, what's the next one? Alberto Dagnano from Goldman Sachs again. Two quick questions on the gross margin page. One would think that as the casualwear part of the business is supposed to outgrow the formalwear, there's going to be more newness within your revenue mix, hence probably more discounting at the end of the season. So I was trying to understand whether you've seen this and you can more than offset that and bring overall markdowns down. And the second question is, does your gross margin guidance include some more investment in product quality as you've done this year or is that completely over? Well, the fact that I think this question has been asked already on some of the quarterly calls, the investment that we highlighted to strengthen our position in terms of certain categories or price points is included. This does not stop us to continuously monitor our value for money, but we don't see it as part of our 2022 plan as something that potentially could dilute our gross margin development. So, it's neutral and it might be even as we said, we expect rather from complexity reduction improvement in our cost, COGS, product cost to sales ratios. I think just to make sure that nobody gets this perception, your ongoing hypothesis was wrong on casualwear for the formalwear. It's not that the one is more likely to require bigger markdowns than the other. We have many categories in our casualwear segment, be it jeans, chinos, polos, basic net worth where you never get a discount from Cheaper Boys. It's an evergreen article and we sell these items extremely successful with above average inventory turn numbers already today. So, there might be some high fashion items that where this does not apply, but it's clearly that many of our casualwear items are at least as good or even better than our formalwear items. So, it's not okay, no discounts on suits and high discounts on casualwear, that's not true. The only product category that from our experience has slightly higher relative discount is women's wear. That's not specific to sugar BOSS, but within our men's wear categories, discount levels do not very much. So the growth in cash wear on our bleacher is not a risk to gross margin development in the 4 years to come. Okay. So let's take the last one. Thierry, Sophie and Andreas, you've already asked questions, but you get another one question. And then I think we shouldn't try another coffee, maybe outside. So, Thierry, you've got 2 questions. Exactly. In terms of the you expect to outgrow the industry with 5% to 7% growth. What OpEx inflation is embedded in your estimates? And secondly, do you expect your OpEx to grow slower than is the industry average? Number 1. Secondly, you expect $200,000,000 revenues from concessions online in 2022. Today, the wholesale business corresponding to this retail migrating business, what is the wholesale revenue base today of this future of 200,000,000 dollars and what is the retail revenues derived by the retailers on that wholesale business. Does that make sense? Well, thank you, Terry. That's a complicated, I guess 50% of this group. It's also difficult to get the question there. But I'll try my $0.50 to answer it. Well, first, we never made a comment on what is the specific profit level that we see on industry. What we always said is that we expect all market segments to grow by 3% to 4% and we think that we have growth elements in our business plan that allows us to outgrow that. The second message that we gave that we will not go back to the heyday of 17% or 18% EBIT margin, but we are committed to grow our EBIT margin by close to 300 basis points to 15% by 2022. And we see this. I don't know what our competition will do and I'm not in charge to manage that. Where they're going to be in 4 years, but we believe from today's perspective that the 15% EBIT margin for 2022 based on our current assessment is something that will basically define benchmarks in the upper premium apparel segment. Of course, this is based on and I think we highlighted this in much detail that we drive OpEx leverage beside gross margin improvement. It's about half of the improvement I think we explained that has to come from that. To what degree this is a proxy for other players in our industry, something we really haven't looked into. And the second part of your question was related to retail revenues online coming from the retail migration. Today it's a wholesale business. I got it. Yes. How much is it for you and for them? There are some cases where you can easily calculate that where we say, okay, it's part of XYZ and where we now take back this operation like we did on physical concession that we did with Galleria Lafayette. We said your business was in index 100. We agreed to a concession agreement and we are very proud jointly that we grow to index 120, index 25. So, you know it's the base especially subtracting from your wholesale revenue size and then the retail uplift especially which generates value to it. Take the Zalando agreement as an example. It's a mixed deal. What we have now introduced since October is a product offering that was not available at Zalando before because we introduced our smart casual and formal way offering to it. So it's 100% accretive. Some of you might argue, well, some of these customers have bought somewhere else before, maybe, but maybe they bought other products and we are gaining market share. So, nobody is going to tell you that. So, part of it is truly incremental, but we also intended and this might be true for others where we take over this business completely and shift it from wholesale to retail. So, part of the 200,000,000 digital concession that we built would clearly be from a conversion from wholesale to retail. How much? Honestly, it's difficult to tell because we see this business also to grow stronger than the industry at most of our wholesale partners. We are today not disclosing any further signed agreements with partners. The question that Susana asked about China is a very relevant one because in China I don't care whether I buy take over any significant business right now on Tmall and JD. It's rather now to establish something that is scalable to take a much bigger share on people who prefer to buy via Tmall in our product categories. So, I think I'm getting at what you've heard about that this is kind of like just substituting, so you're basically just shipping wholesale into something that's not digital concession. That's not the case. We think it's in its result, accretive in terms of top line growth and it's also more importantly accretive in terms of structural profitability. We discussed already extensively that our e com business from today's perspective should be accretive to our retail profitability. So, our push into this market segment is an important driver to drive to achieve also the 15% margin. Thanks, Brett. Okay. So the very last two ones, one from Geoffrey and one Andreas, you can close the Q and A. Yes. Just one quick question on your hedging policy going into next year for the Turkish lira. I think you're at 75 percent in 2018. Are you willing to reduce this? And if yes, how much can you get from there? For the time being, we continue the hedging policy and with 75%. And the next 25%, we have to decide in the upcoming quarter. So this is still disposable for us. So we will decide on this whether how the currency will fluctuate. So, this is what we plan to do for Turkey. Final questions? There is some sub questions, but all around the same topic for you. Euros 160,000,000 cost savings, that's quite significant. I mean, you joined just a year ago or less than a year ago. You have probably seen the budget 12 months ago and how it is now for 2022. Just wondering, what's the incremental savings you have now in place versus in the past? And effectively, what is the incremental new on the operating cost line? And maybe you can rank the cost savings organizational efficiency, marketing efficiency, etcetera of all these 3 and what are the one off costs associated with gaining $160,000,000 by $2,000,000 Let's start with the last one, perhaps there will be no significant one off payments of those. And if you rank those, I think the biggest improvement will come from pay to sales and it's rent to sales, CapEx to sales and organization. So this is my clear ranking. And yes, I think I was hired from an external view to give some fresh external view into the company. And I think we vote before we have the full alignment of the efficiency program. And I think we're all up to it and we are committed to deliver the EBIT margin of 15%. This is what we are aiming for. And I think I have covered all the initiatives that we are having. We have the full alignment to do so, and I'm happy to execute. All right. We recognize it was a full day for you, for us as well, but we are the host today. Well, you all have received our new pack talks. There's a lot of information we expect, follow-up questions from your side. As you know, the team from Christian is more than ready to support you through anything you would like to discuss further. And to be very clear, we are now on a joint 4 year journey with you. We are under the expectation to deliver 1st and foremost on our 2018 commitments. After a difficult Q3, we recognize that, but we are as confident today than we were at publishing our Q3 results to deliver on our 2018 targets. But it's also from today on day 1 deliver on our 2022 plan. It's building capabilities to take our team with us to build these capabilities to improve our business. And as I said, as of the Q1 2019, together with our full year guidance for the year 2019, we will be held accountable to deliver on these mid term growth rates and financial targets. I'm excited about the opportunity. I feel very, extremely privileged to be in this position at this company at this point in time. It's extremely exciting what is happening in our industry. I'm extremely excited also about our capabilities and possibilities to strengthen our position here. And I want to thank you for your time, especially those of you who are invested into HUGO BOSS for your trust and you can be sure that we do our utmost to fulfill your expectation or even exceed them. Thank you very much for your time. Hope to see you soon. We wish you a great day. Thank you.

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