Income Statement

At 65.0%, the gross profit margin was 20 basis points below the prior year level (2018: 65.2%). Besides higher markdowns, first and foremost in North America, currency effects had a negative impact on the gross profit margin. This was only partially compensated by positive effects from the growing share of sales in the Group’s own retail business.

Operating expenses in 2019 were above the prior year level, both in absolute terms and as a percentage of sales. Currency effects had a negative impact on selling and distribution expenses in particular.

Selling and distribution expenses were 5% higher than in the prior year. Excluding the effects of the mandatory first-time application of the new accounting standard IFRS 16 in fiscal year 2019, the increase was 6%. As a percentage of sales, expenses rose to 42.8% or to 43.2% when excluding the effects of IFRS 16 (2018: 42.1%). The increase over the prior year is largely attributable to investments in the Group’s own retail business. In addition to the modernization and selective expansion of the store network in 2018 and 2019, the extension of the concession model in the online business also contributed to an increase in selling expenses. These were 5% higher than in the prior year. As a percentage of sales, they increased to 33.4%. Excluding the effects of IFRS 16, this corresponds to an increase of 6% or 33.8% as a percentage of sales (2018: 32.7%). Marketing expenses were 3% above the prior year level. Alongside the intensification of digital marketing activities, this increase was also due to collaborations with external partners and brand ambassadors. As a percentage of sales, however, marketing expenses remained at the prior year level of 6.2% (2018: 6.2%). The significant sales increase in the online business led to an increase in logistics expenses of 5%. As a percentage of sales, logistics expenses were 3.2%, and thus only slightly above the prior year level (2018: 3.1%). Notes to the Consolidated Financial Statements, Note 2

In fiscal year 2019, administration expenses were 1% below the prior year level. As a percentage of sales, administration expenses were 10.3%, hence also below the prior year level (2018: 10.8%). General administrative expenses recorded a decrease of 3%. Excluding the effects of IFRS 16, this corresponds to a decrease of 2%. High cost discipline more than compensated for higher expenses resulting from changes in the Group’s management and additional investments in the ongoing digitization of the business model. As a percentage of sales, general administrative expenses were 8.0%. Excluding the effects of IFRS 16, they were 8.1% (2018: 8.5%). Research and development expenses incurred during the collection development increased 2% as compared to the prior year. As a percentage of sales, they amounted to 2.3% and were hence on the prior year level (2018: 2.3%). Notes to the Consolidated Financial Statements, Note 3 Research & Development

The operating profit (EBIT) in fiscal year 2019 decreased 1% to EUR 344 million. Excluding the effects of IFRS 16, this represents a decrease of 4% to EUR 333 million (2018: EUR 347 million). This is attributable to the lower gross profit margin as well as the increase in operating expenses. Accordingly, the EBIT margin decreased 50 basis points to 11.9%. Excluding the effects of IFRS 16, the EBIT margin was 11.5%, 90 basis points below the prior year level (2018: 12.4%). As a result of the first-time application of IFRS 16, depreciation and amortization was significantly higher than in the prior year, amounting to EUR 362 million. Excluding the effects of the new accounting standard, depreciation and amortization increased 3% to EUR 134 million (2018: EUR 129 million). The increase is attributable to higher capital expenditure as compared to the prior year. Financial Position, Capital Expenditure

Higher interest expenses resulting from the first-time application of IFRS 16 in fiscal year 2019 led to a significant increase in the financial result (net financial expenses). Even without taking into account the effects of IFRS 16, net financial expenses were above the prior year level. This was due to higher interest expenses associated with the tax field audit at HUGO BOSS AG. The latter also led to an increase in the Group tax rate to 33% in fiscal year 2019 (2018: 30%). As a result, the Group’s net income decreased 13% in fiscal year 2019. Excluding the effects of IFRS 16, this corresponds to a 10% decrease. Notes to the Consolidated Financial Statements, Note 4 and 5