Sales and earnings development of the business segments

Starting in fiscal year 2019, EBIT replaces EBITDA before special items, used by the Group up through 2018, as one of the key performance indicators. As such, from this year onwards, segment profits will also be presented on the basis of EBIT. The corresponding prior year figures therefore deviate from the figures reported in 2018.

As part of a consolidation of additional functions at HUGO BOSS AG in fiscal year 2019, additional intercompany expenses were allocated to the business segments. This led to a higher burden on segment profits in Europe, the Americas and the Asia/Pacific region compared to the prior year. The Group’s operating profit in total remained unaffected by this reallocation.

Europe

Currency-adjusted sales in Europe, including the Middle East and Africa, increased 4% in 2019 due to robust growth in the own retail business. Currency-adjusted retail comp store sales increased at a low single-digit percentage rate. Wholesale sales remained at the prior year level.

Against the background of a challenging market environment in Germany, both the own retail business and the wholesale business declined. In total, sales decreased 4% to EUR 412 million (2018: EUR 429 million). Sales in Great Britain recorded an above-average increase in fiscal year 2019. Double-digit growth in the own retail business more than compensated for a decline in the wholesale business. Total sales in Great Britain amounted to EUR 386 million and were hence 7% above the prior year level (2018: EUR 360 million). This corresponds to a currency-adjusted increase of 6%. In France, sales amounted to EUR 170 million, up 1% on the prior year level (2018: EUR 168 million). Robust growth in the own retail business more than compensated for a decline in the wholesale business there. In the Benelux countries, higher sales in the own retail business offset a decline in the wholesale business. In total, sales in this market amounted to EUR 143 million as in the prior year (2018: EUR 143 million).

At EUR 456 million, the segment profit in Europe was 7% below the prior year level. This corresponds to an EBIT margin of 25.3%. Excluding the effects of IFRS 16, EBIT declined 8% to EUR 451 million (2018: EUR 493 million). This is primarily attributable to additional intercompany charges totaling EUR 21 million. In addition, currency effects and higher depreciation of property, plant and equipment weighed on segment profit growth. The corresponding EBIT margin was 25.0% (2018: 28.4%). Notes to the Consolidated Financial Statements, Note 25

Americas

The Americas recorded a currency-adjusted sales decrease of 7% in fiscal year 2019. This was attributable to the difficult market environment in the United States and Canada. Besides lower local demand, also sales generated with tourists decreased over there. Currency-adjusted retail comp store sales in the region declined by a low single-digit percentage rate.

In the United States, sales decreased 4% to EUR 406 million (2018: EUR 422 million). This represents a currency-adjusted sales decrease of 9%. In both distribution channels, sales were below the prior year level, with a sharper decrease in wholesale than in own retail. In Canada, sales fell 5% in the reporting currency or 7% adjusted for currency effects to EUR 78 million (2018: EUR 82 million). In Latin America, sales increased 8% to EUR 76 million (2018: EUR 70 million), driven by double-digit growth in the own retail business. This corresponds to a currency-adjusted sales increase of 4%.

The segment profit in the Americas was EUR 60 million, 12% below the prior year level (2018: EUR 68 million). The corresponding EBIT margin was 10.8%. Excluding the effects of IFRS 16, EBIT totaled EUR 57 million, 16% lower than in fiscal year 2018. This was largely attributable to the sales decline and continued high markdowns in North America. Additional intercompany charges of EUR 4 million also had a negative impact on segment profit. The corresponding EBIT margin was 10.2% (11.9%). Notes to the Consolidated Financial Statements, Note 25

Asia/Pacific

Currency-adjusted sales in the Asia/Pacific region increased 5% in 2019, with currency-adjusted sales in the own retail business also up 5%. On a comp store basis, currency-adjusted sales even recorded increases in the high single-digit percentage range.

In 2019, sales in China increased 5% to EUR 239 million (2018: EUR 228 million), representing a currency-adjusted sales increase of 3%. Supported by double-digit comp store sales growth, mainland China developed particularly well. In Hong Kong, on the other hand, the political unrest and demonstrations led to a significant double-digit decline in sales. At EUR 59 million, sales in Japan were 14% above the prior year level (2018: EUR 52 million). This corresponds to currency-adjusted sales growth of 6%. In Oceania, sales decreased 4% to EUR 53 million, reflecting a decline in the wholesale business (2018: EUR 56 million). This represents a currency-adjusted sales decrease of 2%. Sales in Southeast Asia saw significant double-digit growth in 2019, totaling EUR 49 million. This corresponds to a 21% increase in the reporting currency and a 16% increase adjusted for currency effects.

The segment profit in the Asia/Pacific region grew 15% in 2019, totaling EUR 94 million. The corresponding EBIT margin increased to 21.4%. Excluding the effects of IFRS 16, EBIT grew 11% to EUR 91 million (2018: EUR 82 million). Higher sales more than compensated for the increase in operating expenses, which also resulted from additional intercompany charges of EUR 3 million. The corresponding EBIT margin rose to 20.8% (2018: 20.0%). Notes to the Consolidated Financial Statements, Note 25

Licenses

Sales in the license business increased by 10% to EUR 84 million in fiscal year 2019 (2018: EUR 76 million). Earnings Development, Sales by Distribution Channel

As a consequence, the license segment profit, at EUR 70 million, was up 10% on the prior year level (2018: EUR 64 million). The first-time adoption of IFRS 16 did not have any effect on segment profit.