Q4 2024 Hugo Boss AG Earnings Call
Ladies and gentlemen welcome to the Q4 full year 2024 results conference call and live webcast
Sandra: I'm Sandra, the course co-operator. I would like to remind you that all participants have been listening only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone.
Speaker Change: For operator assistance please press star in zero. The conference must not be recorded for publication or broadcast.
Speaker Change: At this time, it's my pleasure to hand over to Christian Stern, Senior Vice President in Nester Relations. Please go ahead, sir.
Christian Sturm: Good morning everyone and welcome to our full year 2024 financial sales presentation hosted by Daniel Greeder, CEO of Hugo Boss and each Miller, CFO and COO.
Today's conference call will be divided into three parts.
Christian Sturm: Daniel Wittigoff by highlighting some of our key strategic achievements in 2024.
Christian Sturm: Afterwards, if we present our financial performance in the last fiscal year before Daniel provides details on our full year 2025 outlook. As always, we will conclude with a Q&A session where we will be happy to answer your questions.
Speaker Change: Before I end over to Daniel, allow me to remind you that all revenue related growth rates will be discussed on a currently adjusted basis unless otherwise specified.
Speaker Change: I would also like to remind you that during the Q&A session, we kindly ask you to limit your questions for maximum of two. So let's get started and over to you, Daniel. Thank you, Christians, and also good morning from my side. Thanks for joining our call today.
Speaker Change: Since the beginning of our CLAVE 5 tourney in 2021, we have achieved significant milestones across our strategic priorities.
Speaker Change: And I am pleased to report that our growth trajectory continued in 2024. We increased group sales to a record level of 4.3 billion euros, while EBIT amounted to 361 million euros.
Speaker Change: Despite the difficult marketing environment and the sharp industry slowdown over the course of the year.
Speaker Change: When we presented our initial outlook for fiscal year 2024, we and most likely also you were somewhat more optimistic about the opportunities that 2024 would bring. At Hugo Boss, we were fully committed to making further progress towards our midterm financial ambition.
Speaker Change: However, over the course of the year, we have to learn that both the world and our industry were being impacted by numerous macroeconomic and geopolitical challenges.
First and foremost, this includes ongoing
Speaker Change: Elevate inflation levels and living costs which wait on consumer confidence. Geopolitical tension and key election outcomes added further volatility and put consumer demand on the pressure in many markets around the globe.
Speaker Change: Against this backdrop, I'm satisfied how we ended in 2024. We achieved our financial targets as adjusted in July and continued our successful claim-5 journey.
Speaker Change: For more than three years we have strengthened brand momentum and achieved above market growth.
Speaker Change: Reaching 4.3 billion euros in sales it yet another milestone along this path.
Speaker Change: It on the scores, the strengths of Claim 5 and the great potential of our brands.
Speaker Change: The enhanced relevance of Boston Hugo in most evident in our greater presence on social media
Speaker Change: Since the launch of Claim 5, we have generated more than 130 billion impressions across all channels and over 3 billion engagements.
Speaker Change: Our social first approach enables us to add over 11 million new followers and within our quarterly brand heat index Boss consistently ranks among the top brands.
Speaker Change: And therefore convinced that today we are operating from a position of strength, both from a financial and a strategic perspective, but over the last several years we have constantly invested in our brains, product.
Distribution, digital capabilities and logistics.
Speaker Change: This upfront investment formed the basis of our operational and financial performance as part of Club Vice.
Speaker Change: and they will continue to drive us forward providing an important foundation for long-term
Speaker Change: In response to the intensifying external challenges and industry headwinds, we adjusted our plant and adapted to the evolving market environment.
Speaker Change: We prioritize strategically relevant initiatives and focused more on consumer centricity.
Speaker Change: This enables us to exploit our global gross opportunity despite all external factors.
Speaker Change: With a strong commitment to protecting profitability we also placed emphasis on increasing cost efficiency across all business areas including operations, marketing, sales and administration.
Speaker Change: We will elaborate on these efficiency measures later on, but first let's take a closer look on some of our most important initiatives all designed to inspire customers around the world.
Speaker Change: Welcoming the global item David Beckham to our boss family was certainly a key moment in 2024 fueling brand awareness and driving brand engagement.
Speaker Change: Importantly, this multi-year partnership goes beyond any of our previous collaborations, both in terms of duration and impact.
Speaker Change: After this debut in our Fall Winter 2004 campaign, the recent launch of our Boss 1 on the November campaign has attracted attention, generating 3 billion impressions in only one month.
Speaker Change: Following this success, we look forward to the first capsule collection co-created by David to drop late this year.
Speaker Change: Our global brand campaigns and marketing events such as our Boss Fashion Show in Milan and the Hugo X Formula 1 event in Miami drove additional excitement throughout the year.
Importantly, we also made strong progress in driving marketing effectiveness.
Speaker Change: is our latest boss brand campaign, for example, we were able to
Speaker Change: More than double the level of engagement and social media as compared to last year's campaign.
Speaker Change: And during our fashion show in Milan we reached over 40 million views making it the most successful fashion show in our industry.
Speaker Change: As in the previous years, we remained committed to delivering exceptional products with a superior price value proposition.
Speaker Change: We sharpened our brand's 24-7 lifestyle positioning and further leveraged the potential of our brand lines, including our exclusive absorbent on the Boss Camo.
Speaker Change: The launch of Hugo Blue marked another important milestone in this direction, expanding our denimber offering to a new generation of consumers.
Speaker Change: Our commitment to continuously improving the customer experience and providing a superior brand experience at all points of contact was just evident in 2010-14.
Speaker Change: With the launch of our next level loyalty program, Hugo Boss XP, we are strengthening the connection with our most valuable customers and deepening their loyalty.
Speaker Change: In 2024 alone, we disenabled us to grow our member base by 25%, surpassing 10 million richest at Boss and Hugo Costumas for the first time.
Speaker Change: Moving forward, Hugo Boss XP will play an important role in further expanding customer relationships, both online and offline.
Speaker Change: The rollout to further important markets is planned for late this year.
Speaker Change: Besides investing in key strategic initiatives and capitalizing on our growth opportunities we took decisive action in improved cost efficiency.
Speaker Change: We further enhanced our digital capabilities and capitalized our AI artificial intelligence to drive forces behind our vision of being the leading premium tech-driven session platform
Speaker Change: We also leveraged our organisational and operational platform and thereby limited expense growth over the course of the year.
Speaker Change: In this context in 2024, we further streamlined our global sourcing activities and unlocked productivity gains across key business functions.
Speaker Change: This translated into meaningful gross margin support which helped us to more than offset various external headwinds.
Speaker Change: In addition, we stepped up our financial discipline driving efficiencies across our cost base.
Speaker Change: These actions enabled us to not the bloody limit operating spence growth in the second half of the year. With underlying OPEX broadly stable in H2, we have made importantly progress in unlocking productivity gates.
Speaker Change: If we'll give you more detailed information on our various cost efficiency measures, in just a moment.
Speaker Change: However, let me take this opportunity to emphasize that we will continue to maintain our cost discipline in the future.
Speaker Change: We are fully reminded to further improve our profitability in the years to come to capitalize on our organizational strengths and leverage the great potential of our company.
Speaker Change: Our commitment to generating sustainable, profitable growth has never been stronger, but before we turn the future into the future, I want to hand over to you if for a financial review of 2024.
Yves Muller: Thank you very much Daniel and also for my side and warm welcome to all of you. Over the next 10 minutes I will walk you through our operational and financial performance for 2024.
Yves: Let's begin by taking a closer look at our top and bottom line performance in 2020.
Yves: While the global market environment deteriorated throughout the year, we delivered solid top-line improvements.
Yves: This development is a direct consequence of the continued execution of our Clean 5 strategy and the enhanced brand relevance of Boss and Hugo. Overall, Group Sales grew by 3% reaching a new record of 4.3 billion euros.
Speaker Change: At the same time, and as Daniel already alluded to, he took the size of action to enhance cost efficiency.
Speaker Change: In doing so, we limited the increase in operating expenses in the second half of the year and yielded meaningful bottom line support.
Speaker Change: As a result, Abbott in 2024 amounted to 361 million Euros with the Abbott margin adding up to 8.4 percentage points.
Speaker Change: This is all the more remarkable when considering that our ever development was negatively impacted by a year-and-year swing and non-cash impairment charges of around 50 million euros. These impairments were related to the overall challenging market environment and within mortar retail.
Speaker Change: Consequently, and despite the difficult market environment, we successfully achieved our full year 2020 for sales and earnings targets, which we adjusted back in July to reflect evolving macro conditions.
Now, let's dive deeper into our top line performance.
Speaker Change: We started 2024 on the positive note delivering 6% revenue growth in the first quarter. However, our business performance over the course of the year was impacted by muted consumer demand across most markets, leading to an overall slowdown in industry growth.
Speaker Change: This was particularly evident over the seven months and of the format in Q2 and Q3.
Speaker Change: Supported by the ongoing successful execution of our strategic initiatives, we were able to accelerate our sales growth again, culminating in an increase of 6% in Q4.
Speaker Change: Both did by successful holiday season, the fourth quarter saw broad base growth across both brands, all channels and most regions.
Speaker Change: Notably, our brick-and-mortarisa business returned to growth, closing the quarter with a 2% increase.
Speaker Change: This was further complemented by an acceleration in brick-and-mortar wholesale and digital, both recorded double-digit growth in Q4.
Speaker Change: From a region of perspective both the Americas and in May are delivered robust revenue up 13% and 6% respectively.
Speaker Change: Meanwhile, the nature-specific business performers remain muted, dragged down by the difficult market environment in China.
Speaker Change: When we look at our full year 2024 performance both Boss and Hugo growth revenue improvements reflecting the discipline execution of key brand and product initiatives.
Speaker Change: Sales for both Boss Menzware and Boss Womenzware increased by 3%, fuels our brand campaigns in major brand moments, such as the Boss' session show in Milan. At Hugo, sales even expanded by 5% supported by the successful launch of Hugo Blue.
Speaker Change: Let's move on to our regional performance starting with the Americas where we maintained our growth trajectory in 2024 with all markets contributing.
Speaker Change: Notably in the U.S., our single largest market, revenues were up high single-ditted, driven by broad-based improvements across all touch points.
Speaker Change: And as a result the Americas outperformed our two other regions delivering 8% growth for the year.
Speaker Change: And in May our revenues increased by 3%. This development was led by solid improvements in Germany, while fairs in France and the UK remained modestly below prior year levels.
Speaker Change: On a positive note, momentum and emerging markets, including Eastern Europe and the Middle East, remain strong throughout 2024, posting double-digit growth.
Speaker Change: Lastly, our digital business continued its growth trajectory with sales up 6% fueled by improved <unk> at both Hugo boss Dot Com and digital sales generated with partners as a result digital now accounts for 20% of group sales underscoring its pivotal role in our Omnichannel strategy.
Speaker Change: And cementing its position as a key engine of future growth.
Speaker Change: Let's now shift our focus to profit and loss starting with the gross margin.
Speaker Change: I am pleased to report that our gross margin improved by 30 basis points, reaching 61, 8% in 2020 for.
Speaker Change: This achievement was supported by a successful fourth quarter, where gross margin expanded by 90 basis points to 62, 4%, making Q4, our strongest quarterly performance from a gross margin perspective.
Speaker Change: This positive development is a clear testament to the success of our strategic efforts to drive sourcing efficiency by leveraging our operational platform builds in prior years. We include increasingly realizing economies of scale, resulting in a gross margin tailwind of more than 200 basis points in 2000.
Speaker Change: 24.
Speaker Change: These structural improvements were partially offset by external headwinds.
Speaker Change: Losing net worth channel and regional mix effect, Forex impact and an overall promotional environment.
Speaker Change: Our ability to deliver gross margin expansion. Despite these challenges speaks to the resilience and effectiveness of our operational strategy.
Speaker Change: Moving over to operating expenses I am pleased to report that all our rigorous focus on driving cost efficiencies led to a substantial reduction in opex growth. During the second half of 2024 in particular, we placed a strong focus on maximizing marketing effectiveness optimizing all reached their cost structure.
Speaker Change: And enhancing productivity with our global sales and admin functions byproduct rising spending and strategically relevant areas.
Speaker Change: As a result underlying operating expenses in the second half.
Speaker Change: Excluding the year on year impact of her off 50 million euros in retail related impairment charges were up only 1% compared to the prior year period.
Speaker Change: This compares to the 6% increase during the first six months.
Speaker Change: On a reported basis operating expenses grew 6% in 2024.
Speaker Change: While admin expenses remained broadly stable year over year, we recorded a 7% increase in selling and marketing expenses.
Speaker Change: The latter reflects higher <unk> expenses due to inflationary pressures expansion related cost and the higher retail related impairments.
Speaker Change: At the same time marketing investments came in slightly below the prior year.
Speaker Change: This reflects our focus on marketing effectiveness by prioritizing high impact brand initiatives is.
Speaker Change: As a result marketing investments amounted to seven 2% of group says aligning with our target range of 7% to 8%.
Speaker Change: Thanks to our enhanced focus on cost efficiency. The decrease in EBIT was limited to 12%, bringing it to 361 million euros. Consequently, our EBIT margin stood at eight 4%, reflecting a decline of 140 basis points on.
Speaker Change: On the other hand, if it starts increased by 3% to 775 million euros, resulting in an increase of 10 basis points in EBIT margin to a level of 18.0%.
Speaker Change: Finally, net income after minorities declined 17% to 230 million, resulting in earnings per share of three heroes in mind.
Now, let's turn to the balance sheet, starting with trade net working capital.
Speaker Change: I am pleased to report a 9% improvement in trade net working capital on a currency adjusted basis, driven by the efficient management of trade receivables and trade payables at the same time inventories remained broadly in line with the prior year an increase in goods in transit towards yearend was compensated by lower.
Speaker Change: On hand, compared to the prior year, reflecting our prudent inventory management.
Speaker Change: As a result inventory as a percentage of group sales declined by 50 basis points to 24, 9% reinforcing our ongoing focus on optimizing inventory levels.
Speaker Change: Consequently trade net working capital as a percentage of sales improved to 19, 6%.
Speaker Change: Thanks to the working capital improvements and our focus on Capex efficiency with investments down 4% year over year, we significantly accelerated cash flow generation in 2024 overall free cash flow reached 497 million Europe, marking a substantial.
Speaker Change: The increase compared to the prior year.
Speaker Change: This development was supported by a strong fourth quarter performance and is clear evidence of the highly cash generative nature of our business model.
Speaker Change: Looking ahead, we remain confident in our ability to continue generating significant free cash flows in 2025 and beyond and wild tailwind from trade net working capital I expect it to be somewhat lower than last year due to expected gradual normalization of trade payables with still anticipate robust free cash flow.
Speaker Change: In 2025.
Given our sound financial position and.
Speaker Change: Our confidence in the long term growth prospects of Hugo boss, we are pleased to propose a dividend of one euro and 40 cents per share for fiscal year 2024.
This represents an increase of five versus the prior year and underscores our commitment towards a progressive dividend.
Speaker Change: Consequently at 45% the payout ratio is at the upper end of our target range of 30% to 50%.
Speaker Change: Ladies and gentlemen concludes my financial review financial year 2024, Let me therefore hand, you back to Daniel for his remarks on our 2025.
Speaker Change: Thank you very much if the key elements of our top and bottom line guidance were already disclosed in this morning's press release, let me take this opportunity to put things into context.
Speaker Change: We enter 2025 the final year of our claim five journey, our commitment to driving profitability is stronger than ever the solid foundation. We have built over the past years gives us confidence to the labor, but we are also fully aware of the external challenges ahead.
Speaker Change: As macroeconomic and geopolitical uncertainty are expected to remain elevated we closely monitor future market developments there.
Therefore, just like in the second half of 'twenty 'twenty four we will continue to focus on what we can control leveraging the strength of our brands.
Speaker Change: Our gross opportunities and ensuring that our strategic investments remain backed by real life less focus on cost efficiency.
Speaker Change: So, let's take a closer look at our top and bottom line expectations for fiscal year 2025.
Speaker Change: Altogether and considering the macro headwinds will continue to stay elevated for the time being we expect group sales in 2025 to be broadly in line with the prior year rang the ranging between four two and $4 4 billion euros.
Speaker Change: At the same time, we anticipate robust profitability improvements as we expect EBIT in 2025 to grow between five and 22% to a level of between 380 at 440 million euros.
Speaker Change: In turn will drive an EBIT margin improvement to a level of between nine and 10% supported by our ongoing focus on driving additional sourcing and cost efficiencies.
Speaker Change: Given the highly uncertain global landscape, we approach went to 25 with a cautious yet realistic top line assessment.
Speaker Change: The road ahead come through several challenges that all post tangible risk to consumer sentiment in 2025 from an uncertain recovery in China to macroeconomic pressure in key markets such as the U S alongside persistent.
Speaker Change: Political tensions and global trade uncertainties.
Speaker Change: Therefore, while our strong Q4 performance is encouraging it cannot be seen as an indicator for Q1, the first quarter faces, particularly tough comparison base and its currently characterized by a further weakening of consumer confidence in key markets such as the U S and China.
Speaker Change: As a result, we expect a muted first quarter performance trending somewhat below our full year top line guidance range.
Speaker Change: In terms of our regional performance in 'twenty 'twenty four we expect sales in EMEA to remain broadly of the prior year level.
Particular, we anticipate political and stability to continue to weight on consumer sentiment in key European markets at the same time remain optimistic in further expanding our footprint in emerging markets, which remains a priority in 2025.
Speaker Change: For the Americas, we anticipate low single digit growth in 2025 following strong growth in recent years driven by the successful implementation of our brand spending seven lifestyle images.
Speaker Change: We now expect some degree of normalization, especially in the U S market.
Speaker Change: This is mainly due to currently softer consumer sentiment and put.
Speaker Change: The potential impact of policy shifts under the newly elected government, which calls for caution.
Speaker Change: Finally in the Asia Pacific region, we anticipate a moderate this line in sales.
Speaker Change: Southeast Asia Pacific is set to continue to growth.
Speaker Change: <unk> in 2025, we expect our business in China to continue facing headwinds due to lingering uncertainties around the country's economic recovery.
Speaker Change: Having said this ladies and gentlemen, let me be very clear in saying that we remain confident in the strength of our two brands in our general ambition to keep delivering high quality topline growth with a range of exciting brand and product initiatives, we will continue to inspire our cause.
Customers in 2025 in addition to our upcoming capsule collection with David Beckham. These includes a further push in our core assortment and foot footwear business as well as our exciting activation of our license business. Later this year so stay tuned.
Speaker Change: Irrespective of the macroeconomic uncertainties and political implications on topline growth, we remain confident in our ability to drive bottom line expansion in 2025, our path to profitability improvement is built on two key levers expanding our gross.
Speaker Change: And driving further cost efficiencies.
Speaker Change: In 2025, we anticipate nothing.
Speaker Change: The notice of both support from our gross margin.
Speaker Change: Sort of which we expect further improvements in particular, we will continue to leverage greater economies of scale and sourcing and to reduce our air freight usage, even more these initiatives remain key contributors to our gross margin expansion, while external headwinds including F F.
Speaker Change: Volatility.
Speaker Change: Volatilities.
Speaker Change: May persist overall, we are confident in surpassing the 62% threshold for our gross margin over the course of this year on the cost side, we will maintain our strong focus on driving cost efficiency in particular, it brick and motor retail we will keep up.
Speaker Change: <unk>, our store network closely align closely aligning our rent to sales and pay to sales ratios with evolving traffic trends. We will also continue to tightly control admin costs is a careful assessment of non business critical projects and services last but not least we will.
Speaker Change: <unk> continued to improve our effectiveness in marketing strongly focus on investments that drive engagement and loyalty to our brands.
Altogether. These efforts will drive the target EBIT margin increase expected to reach between nine and 10% in 2025.
Speaker Change: Ladies and gentlemen, before we move to the Q&A, Let me conclude by saying that at Hugo boss, we remain fundamentally convinced about our long term growth potential and we will continue to take advantage of future growth opportunities.
Speaker Change: The macroeconomic environment remains volatile.
Hey.
Speaker Change: This is Kent with REIT with regards to external factors and we will not drive top line growth at the expense of profitability.
Speaker Change: With ongoing financial discipline, and a robust organizational setup, we are confident of structurally improving our EBIT margin in the long run in 2025 and beyond we remain focused on leveraging the potential of our company and driving long term shareholder value.
Speaker Change: <unk>.
Speaker Change: And this we are now very happy to take your questions.
Speaker Change: We will now begin the question and answer session anyone who wishes to ask a question.
Star then one on the touch tone telephone you will hear a tone to confirm that you have to enter the queue. If you would.
Speaker Change: We should remove yourself from the question queue, you May press star two.
Speaker Change: Question is on the phone are requested to disable the loudspeaker.
Speaker Change: And he turned off the volume off the West coast.
Speaker Change: Please limit yourself to two questions.
Speaker Change: Anyone with a question the pristine one at this time.
Speaker Change: Our first question comes from Susy <unk> from UBS. Please go ahead.
Susy: Good morning, Thanks for taking my questions. So the first one you mentioned youre seeing current trends that's a.
Susy: Weaker than the bottom end of your guidance, though let's say minus two can you provide a bit more color by region.
Susy: And also what youre seeing or key markets in Europe, such as Germany, and the U K has there been any kind of softening trends since the start of the yeah. There's definitely some markets like the U S. Slack it feels like things are getting a bit shakier.
Susy: Where else we're slugging.
Susy: Secondly on gross margin you mentioned you expect noticeable support App and then you've had over 62% can you talk us through.
Susy: Through the moving parts in a bit more detail, what's your FX assumption and also on promotion.
Susy: Do you how do you account for the risk that maybe if overall trends are a bit softer we may see again, a little bit of an uptick in promotions. Thank you.
Susy: Good morning, Good morning, Susie. Thank you very much for your question. So I may comment on the current trends are where they are coming from so we said during the presentation that we are below our low end of our guidance that we have given.
Susy: So we see in the first two months of trading that we are trending at a.
Susy: The.
Susy: Decline of mid single digit.
Susy: And this refers programming to do regions, which are actually predominantly U S and in China.
Susy: So we have to take several things here into consideration of first of all I think the overall macroeconomic environment. The overall uncertainty overall in this world leads to actually lower consumer sentiment lower consumer sentiment predominant leads to lower store traffic and this is what we are seeing in another.
Susy: Shopping malls, so to speak that.
We finally have lower traffic, especially in the U S and also and also in China. So NFU once we put our numbers into perspective, we have also taking into consideration that we have one day less in comparison to last year.
Susy: There are some other effects that for example.
Susy: <unk>.
Susy: One is somehow later this year in comparison to prior year. So this will lead to kind of shifted wholesale deliveries from Q1 into Q2. So there are several effects that you have to keep in mind.
Susy: When you are commenting on our numbers.
Susy: And secondly, if you walk through the gross margin.
Perspective.
Susy: You have to you have to keep in mind that we still see a lot of effects coming from sourcing efficiency as we have laid out during our presentation.
Susy: <unk> seen that we have made almost 200 basis points in terms of sourcing efficiency in the 'twenty to 'twenty. Four this is going to be prevailing in the year 2025.
Susy: Five also and and another effect is that we continuously reduce our FHA. So this will go further down to high single digit number in terms of Asher FHA. So these are two major components I would say self helped measurements that we are doing to get our gross.
Susy: <unk> up into the range between 60% to 64% of expense going forward Forex, we perceive this to be rather neutral and the same is true actually for for the promotional activity.
Susy: Still say that if you look at 2024, and if you would say scared between one and 10 I think the promotional activity was already at between seven and eight so was an elevated level and if this stays the same it would have a neutral effect versus 50 74. So we are assumed to be neutral.
Speaker Change: Okay, Great and can I just follow up on the European markets, you can come out with anything you're seeing in Germany, and the U K.
It's the same trends that we have seen all over the places so I would stick to this global trend that I that I was alluding to overall.
Speaker Change: So it's not like that in the U S and in China.
Darren Mondavi: The next question comes from Darren Mondavi from RBC. Please go ahead.
Darren Mondavi: Good morning. Thank you for taking my questions. I also had two if I may firstly I wonder if you could give any update on the wholesale food order books at any sort of response to say you'll hear it from your wholesale partners maybe.
Maybe particularly around the upcoming David Beckham Copps Hill.
Darren Mondavi: And then secondly, just on the loyalty program. That's been launched then you launch the program in the UK and Germany I wondered if he had any kpis you could call out intensive spending behavior on how how about but this is for loyalty customer that's the non loyalty customer. Thank you.
Speaker Change: So good morning, my jewelry and thank you very much for your question. So first one was related to.
Speaker Change: Two the two are all staying forward orders first of all let me remind you because.
Speaker Change: We are we still have to look a little bit at our 2024 numbers. So I'm really happy that we can be part that we finalize the year was plus 8% and wholesale because this is a kind of multi brand environment and business actually from my point of view the proof positive that we are really gaining market.
Speaker Change: Chess and across the year in 2024, I've said that we have on our books of high single digit and we finalize the year was plus 8%. So we finally delivered on this we were gaining market share with our wholesale partners and we are actually very happy with this kind of performance and finally, we really deliver our pre order. So I think this is also.
Speaker Change: Very important message to keep so if we now look into the year. Our order book still looks so we are very happy with our order books and I think they are somehow.
Speaker Change: Stabilizing our business and they're all around mid single digit order books that we have in terms of visibility for the next collections to come.
Speaker Change: On the XP.
Speaker Change: <unk>.
Speaker Change: We have implemented and are successfully adult feedback from where is the compass we implemented it we.
Speaker Change: Actually we're able to increase our customer base, our loyalty customer base by 25% and the significantly the news on that is that also with the customers that went to our loyalty program we could increase.
The turnover with those loyalty customers between 50 and 75%.
Speaker Change: Great.
The campaign in more countries.
Speaker Change: Great. Thank you very much.
Speaker Change: The next question comes from said that he will look at from Jefferies. Please go ahead.
Good morning, Daniel and Christian Thank you for taking my question.
Speaker Change: Hum.
Speaker Change: And more general one sorry.
Speaker Change: When do you think about the scenarios for the low versus the higher end of the guide what sort of speaks to the world.
Speaker Change: You see what are the puts and takes between the low and the high end.
Speaker Change: To understand your thinking.
Speaker Change: And then even more generally.
Speaker Change: My question for.
Speaker Change: Daniel is on the capital allocation framework are you happy with how things Sam I mean are you still thinking about the business.
Speaker Change: A into the mix that false or are you thinking about share buybacks or something.
Speaker Change: The strategic point going forward.
Speaker Change: Yes, good morning, <unk>. Thank you very much for your two questions. So definitely I think that has to be today.
Speaker Change: Tough start into the year and I would say as we stand currently.
Speaker Change: This is all reflected.
Speaker Change: Within our guidance so to speak so we feel for the time being as the situation is as today, we feel comfortable with our guidance from a lower and higher end if things might improve over the course of the year of course, we rather move into the higher end of our guidance, but I would clearly say for the time being it's very early to call.
Speaker Change: If I come to capture the Colocation, let me.
Speaker Change: Make some initial comments and then Daniel will jump in for the M&A question. So firstly really I want to point out that we had a strong free cash flow generation in 2024, we generated almost 500 million euros and free cash flow on a reported basis, excluding all I have for US. This was a cash generation of almost.
Speaker Change: 250 million euros. So we improved our net debt position extremely so we have just a net financial position of 78 million euros at year end. So we are almost debt free at year end. So we really have a strong very strong balance sheet and we are operating out of the <unk>.
Speaker Change: Additional financial strength and I think this is worth mentioning and this led to the fact that we stick to what we have said to the capital markets to show progressive growth from a dividend point of view. So we increased our dividend, although our net income was decreasing by 17.
Speaker Change: Percent.
Speaker Change: On top of this if you look at our share price performance Daniel myself, we are convinced as of today that we if you see what we have invested into with claim five how we transformed the company that we are perceived to be undervalued and we will not rule it out to do a share buyback in the course of the year.
Speaker Change: With our financial strengths.
Speaker Change: That we are having.
Yes, and I would like to add in terms of M&A. Our strict strategy remains unchanged as we said in our claim five we have so much potential in our business ourself and we are committed to deploying our organic growth.
Speaker Change: Community as you know we have implemented also the soft brands and as we can see that robust black box or eggs to both screen and the box camera, we are still gaining market share. So we still expanding.
Speaker Change: Our our presence in most of the department stores.
Speaker Change: If you think about womens wear business the potential that we have there shoes accessories. So we have really still the potential organic growth, which we are our focus we want to focus, especially in this environment.
Speaker Change: That are currently out there however.
Speaker Change: We see M&A also maybe on that.
Speaker Change: The opportunity for mystic.
Speaker Change: And they stick approach so if something Pops up maybe we got to look at it.
Speaker Change: But again, it's not our priority as we have so many potential at the moment with our own brands.
The next question comes from European calling from Kepler. Please go ahead.
Speaker Change: Thanks, very much and good morning to everyone to.
Two ones really first one just a technical one on number of stores I noticed you.
Speaker Change: Reduce the number of stores 'twenty 'twenty four by about 11, the freestanding stores.
Speaker Change: Is that going to be the idea also going forward 2025.
Speaker Change: Just this one here in the second one yeah, Daniel you mentioned collections and here specifically women's wear again in womens wear has no for quite some time remained about 7% of group sales and Easter is in the next future.
Any indication that this sales line here will go up dramatically and the share will increase is there any driver specific driver that you're seeing in your in your collection or is that rather to be expect it to grow as the rest because at Hugo for example, you certainly have.
Speaker Change: <unk>.
Speaker Change: Been successful that the share has increased with Hulu. Obviously, so that's been propelled is there anything in there making at womenswear. Thank you.
Speaker Change: I start with the store portfolio.
Speaker Change: And I think we have increased our store portfolio to roughly about 500.
Speaker Change: Freestanding stores.
Speaker Change: And we want to say there are there are some opportunity to open stores and that's where we go win but there is also a possibility to close doors, all dose, especially where are not performing to our satisfaction. So these we close and at the same times we open.
Speaker Change: Where we see opportunities and that keeps it more or less in the balance of the opening the stores.
Speaker Change: Forward.
Speaker Change: We continue to do that that strategy.
Speaker Change: Maybe we shift also a bit more to our franchisees maybe that is also de risking a bit the business and we have quite strong.
Demand.
Speaker Change: Some customers to do more franchise stores.
Speaker Change: I think with this in and out.
Speaker Change: Sure you know on the.
Speaker Change: A table this opportunities you can.
Speaker Change: I think.
Speaker Change: You know I think our store portfolio freestanding stores will remain a round of the 500 now.
Speaker Change: Now if I come to women's wear.
Speaker Change: Yeah, it's true.
And we said, we see big opportunities in women's wear and we started to completely change collection says three years ago. We have improved results in women's where you can see 2024, we were growing at roughly 3% to 4% and it shows US also okay.
Speaker Change: Limitation with.
Speaker Change: Both orange that we have good success, especially also in the U S where we actually gained.
Speaker Change: Space in Big.
Speaker Change: Department stores.
Speaker Change: And that shows us that we are on the right track. However, I would like to underline that it always said women's wear is not an easy business.
Speaker Change: We don't want to rush into something we want to build it.
Speaker Change: And in a sustainable way and we want to build it.
Speaker Change: No no no.
Speaker Change: Many mistakes, we'd rather go.
Speaker Change: Better before we go bigger and therefore, we are on track with women's wear we learned out we don't want to rush into it but it remains also for the future.
Speaker Change: A big opportunity for our brand.
Speaker Change: Very good understood and thanks, Tanya for helping where the math of course, you increased the number and not decreased thanks very much for that thanks guys.
Speaker Change: Right.
Speaker Change: The next question comes from Michael Kuhn from Deutsche Bank. Please go ahead.
Michael Kuhn: Good afternoon, and thanks for taking the questions two from my side as well firstly on Yugo Blue There you mentioned it had about a high single digit say its share in overall yugo.
Michael Kuhn: Which was up 5%, which implies that you'll go red was down slightly.
Speaker Change: But that more kind of overall market reflection or did you see some elements of cannibalization between blue and red as well and did that have any impact on.
Speaker Change: Profitability and then once again on our own retail you had like for like sales down 8% last year, but with an improving trend in the fourth quarter.
Speaker Change: Have you baked in the guidance in that regard and what let's say would be.
Speaker Change: The impact on our profitability.
Speaker Change: Four different like for like sales growth scenarios, because that's obviously an important factor. Thank you.
Speaker Change: Yeah.
Speaker Change: Who called Blue we are very pleased with the start of Hugo Blue, adding first of all also a younger customer base to our portfolio.
Speaker Change: Already today in that short period, it's roughly presenting between eight and 10% of the total Google.
Speaker Change: Turnover.
Speaker Change: So we are on track actually with Yugo with who go blue.
So there we want to expand it in a careful way.
Rush hour in terms of distribution, we want to build it sustainably and therefore.
Speaker Change: Therefore, with men's and women's we are pleased with the numbers that we showed there.
Speaker Change: And by the way, who got Blue is also where we push it internationally that means on all regions from the U S to Europe also in Asia, We see there are big opportunities.
Speaker Change: Correct.
We had to shift.
Speaker Change: Likely the collection, we see that.
Speaker Change: The demand for young Taylor.
Speaker Change: Tailored where is it.
Speaker Change: Is increasing and actually we see there a big opportunity and make it less teens driven then.
Speaker Change: And then the who called Blue is that it is not.
Speaker Change: Cannibalization.
Speaker Change: Cannibalize.
Speaker Change: And therefore, we adjusted a bit the collection, but also there it's probably more a doctorate in Germany, Austria and Switzerland.
Speaker Change: Results are.
Speaker Change: Positive, especially in men's and we continue with the strategy that we put in place and nothing to change just continue to drive.
Speaker Change: Thank you very much Scania and Michael regarding your question on retail so actually we were quite happy with our Q4 performance because we ended up with like let's say plus 2%.
And in Q4 reached a retail brick and mortar so our assumptions for 2025.
Speaker Change: Stay around stable in comparison to transfer it to taper off.
Speaker Change: These are assumptions.
Speaker Change: Thanks for that and maybe just one as you're now in the final year of claim five SKU plan a capital markets day anytime soon.
Speaker Change: Yes.
Speaker Change: We.
Yeah.
Speaker Change: We are for sure are planning it.
Speaker Change: A day and we aim to do that in the second half of the year.
Speaker Change: Okay.
Speaker Change: Invitation.
Speaker Change: Some points.
Speaker Change: So the next question comes from Louise <unk> from Goldman Sachs. Please go ahead.
Louise: Hi, Good morning, everyone. Thank you for taking my questions.
Louise: Stepping back on a couple of comments, where he made I wondered if you could help us think about that traffic versus conversion.
Louise: Cool.
Louise: 60 days, which have been outperforming the traffic was weak last year, but you had a very good conversion is that true across all regions anything to really pick out and in terms of the 25 outlook.
Louise: Can you just help us think about how youre your assumptions off of the traffic conversion.
Louise: That'd be very helpful. Thank you and then my second question.
You talked about focusing on the controllable.
Louise: Sensible point to remind yourself of the the multitude of pest organic rate can you just talk about the contribution from space and within that.
Louise: And also the opportunity for new space in the wholesale Arena said not just within the retail format that you're going to see I know you talked about the retail space on the school and anything from a S. P mix is there an opportunity to think more about he makes maybe even learn it to drive a bit more volume.
Louise: I'll take the second question first.
Louise: Space, So so to call in and pricing so to assumption. One is we only talk about volumes. So we have not incorporated any price increases within our guidance.
Louise: One and 0.2 is regarding space to really really simplify it I think.
Louise: This around being stable so actually it's.
Louise: It's more on a you would call it on a like for like basis. So at least this is what you can include in your assumptions and when you look back in terms of the recent performance.
Louise: There has been a kind of logic between traffic being down conversion being up and net sales per transaction being up as well. So if you look at these different components. They made it up then.
At the end with our retail performance that we have shown so still slightly maybe.
Louise: Maybe on par so traffic down, whereas conversion metrics per transaction were up and at the same assumptions apply actually.
Louise: For the year 2025, and all of the assumptions also.
Louise: Can I just asked on the wholesale.
Louise: Because presumably there is some wholesale.
Louise:
Louise: Kimberly could help given.
Louise: On the other market as well.
Cool.
Louise: Clarify thank you.
Speaker Change: Yes also on the wholesale piece I would not assume that the space effect is tremendously high.
Speaker Change: On the other side, we have to say we have now I think it's important to mention under the wholesale number you see around 390 franchised mono branded stores. So we added it.
And the year.
Speaker Change: Between 30, and 40 of franchise stores and I think we will add another 20 to 30 stores also and then the attention to five.
Speaker Change: I think that it's really like calling all of this is has a tremendous effect on the on the whole tisbest overall, but we will continue to invest into franchise partners, especially in the emerging markets.
Speaker Change: Thank you.
Speaker Change: The next question comes from Andreas every months there'll be a chance. Please go ahead.
Speaker Change: Yes Hello.
Speaker Change: Also like Yogurts are counted the retail P O S.
Speaker Change: And I actually saw it in America and the number of Richard P. O S is up 120 or 27%. So can you shed more light on that development.
Speaker Change: And then about space again is it then fair to assume that space or at least be a positive contributor to growth in Americas that would be the first topic.
Speaker Change: And second one on growth in general I understand its difficult to grow at present, but at one point I guess you have to push for more growth. So when you look at the current product range, both yugo formula that cater to that.
Speaker Change: Where do you see the biggest opportunity to extend the offer to launch new products. This would be my second topic.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: So in terms of distribution, where we see.
Speaker Change: The opportunities.
Speaker Change: I think thats a.
Speaker Change: Wait.
Speaker Change: A big opportunity a wide opportunities.
Speaker Change: In all the regions.
Speaker Change: I think ways.
Speaker Change: With our.
Speaker Change: Clearly a selective distribution.
Speaker Change: We have in place.
Speaker Change: We you know we also don't want to expand in any distribution that is a discount driven so we have a quite a good and.
Speaker Change: Our strong distribution in place, where we carefully can expand shop in shops are opportunities.
Speaker Change: And that is happening, especially in the states.
Speaker Change: All the folks.
Speaker Change: From Oh.
Speaker Change: The lines no matter if it is who go order boss mens and womens.
Speaker Change: <unk> erase there and again, we don't want to push we have a long term vision on how we build the brand and therefore, we don't want to rush into just for the sake of expanding it has to we expand but we want to.
Speaker Change: Increase in a quality way and therefore, we don't want to compromise.
Speaker Change: On our selective distribution and we also don't want to compromise.
Speaker Change: With our product by the way I want to say that our sales through I just wanted to add that before is on all the lines are quite high and that shows and underlines again that we are successful and show solid and robust forward order book.
Wholesale.
Speaker Change: Okay.
Speaker Change: And maybe on top of that.
I add and we are happy with the body, where launch that we do at the moment in menswear, where you said David Beckham has also started in a very strong way and.
Speaker Change: There is also a lever.
Speaker Change: Push from our side, which is new but also.
Speaker Change: Product opportunities like shoes, where are we going to hear right the products, which is the Gary which we have a different the same style with different qualities to.
Speaker Change: We're very high average price is not only in retail, but also in wholesale gaining market shares and then Ed.
Speaker Change: Performance tailoring.
It is.
Speaker Change: Also since we launched it continues to be a very strong asset. So you can go in all the brands you can go in all the lines, we see always opportunity somewhat going faster some are growing slower, but there is still lots of product gross opportunities underway.
Perfect. Thank you Daniel Thank you each and ladies and gentlemen, this actually completes our conference call for today, we are running out of time I do thank you for your interest in 4000 per dialing in I realize there's still a few.
Speaker Change: People that managed to ask questions I will reach out to all of you of course as we always do as well. Thank you very much for joining us today.
Speaker Change: Can you a great afternoon, and thanks very much bye bye.
Ladies and gentlemen, the conference is now over thank you for choosing chorus call and thank you for participating in the conference you May now disconnect your lines Goodbye.
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