Group Management

Key performance indicators

HUGO BOSS aims to sustainably increase its enterprise value. The Group’s internal management system is intended to support the Managing Board and the management of the respective business units in aligning all business activities with this objective. In order to increase its enterprise value, the Group focuses on maximizing free cash flow over the long term. By consistently generating positive free cash flow, the Group is confident of safeguarding the liquidity of HUGO BOSS at all times, enabling appropriate levels of investment and thereby facilitating the long-term growth of the business.

Increasing sales on a currency-adjusted basis and increasing operating profit (EBIT) is key to improving free cash flow over the long term. In addition, strict management of trade net working capital (TNWC) and a value-oriented capital expenditure approach support the development of free cash flow. HUGO BOSS has therefore identified four key performance indicators for increasing free cash flow. Unchanged to previous years, these comprise currency-adjusted sales, EBIT, trade net working capital, and capital expenditure. The 2026 guidance for these key performance indicators and the underlying assumptions are presented in the “Outlook” section of this Annual Report. Outlook

As part of CLAIM 5 TOUCHDOWN, HUGO BOSS aims to accelerate average free cash flow generation, forming the foundation for future shareholder returns. To deliver on this ambition, execution will center on three key fields of excellence: brand, distribution, and operations. While 2026 will serve as a year of realignment to strengthen the business, these priorities will drive profitability in the long run and set the stage for renewed top- and bottom-line growth from 2027 onward. Free cash flow generation will be supported by lower capital expenditure and strict trade net working capital management. Group Strategy

For HUGO BOSS, trade net working capital (TNWC) is the most important performance indicator for managing the efficient deployment of capital.

Management of inventories, trade receivables, and trade payables is the main responsibility of the respective operating central departments and supported locally by our subsidiaries. These balance sheet items are primarily managed by reference to the days of inventories outstanding, days of sales outstanding, and days of payables outstanding. Besides this, a specific approval process for the purchase of inventories for our global retail business shall ensure continuously optimized inventory levels. This process takes into account sales quotas, expected sales growth, and anticipated markdown levels.

The senior management of HUGO BOSS is jointly responsible for driving profitable growth. Accordingly, the short-term incentive program (STI) for managers across all four management levels below the Managing Board is tied to the achievement of specific sales and EBIT targets, with TNWC as a percentage of sales serving as a third component. Beginning in fiscal year 2026, the STI will also include a non-financial component that can comprise one or more environmental, social, and governance (ESG) objectives. For management at the two levels below the Managing Board, the compensation scheme further includes a long-term incentive program (LTI), aligned with that of the Managing Board. The LTI comprises two financial criteria, return on capital employed (ROCE) and relative total shareholder return (RTSR), as well as ESG elements. Combined Non-financial Statement

In recent years, HUGO BOSS has made substantial investments to support long-term growth. Investment activity has been primarily focused on the optimization and modernization of our global store network, the digitalization of our business model, and the overall infrastructure, including the expansion of our logistics network. With most of these strategic investments now implemented, as part of CLAIM 5 TOUCHDOWN, HUGO BOSS plans to return to more normalized capital expenditure levels, with a strong focus on capital expenditure efficiency and maintenance investments, while still supporting our strategic priorities. A specific approval process exists for material investment projects. Apart from qualitative analyses, e.g. with respect to potential store locations, this also includes an analysis of each project’s net present value. Financial Position, Capital Expenditure, Group Strategy

HUGO BOSS is confident to generate strong free cash flow also in the future. This is to be supported by strict management of TNWC and the efficient use of capital expenditure. Free cash flow will either be reinvested into the Company or distributed to shareholders. In this context, HUGO BOSS plans to buy back shares in an amount of up to EUR 200 million until December 31, 2027. At the same time, HUGO BOSS will continue to further strengthen its balance sheet over the coming years. In this context, we analyze our balance sheet structure at least once a year to determine its efficiency and ability to support future growth and to simultaneously provide sufficient safety if the Company’s business performance falls short of expectations. At the end of fiscal year 2025, HUGO BOSS holds two investment-grade ratings from Standard & Poor’s (BBB-) and Moody’s (Baa2), underscoring the rating agencies’ positive assessment of the Company’s financial strength. At the same time, the Company will also preserve the strategic flexibility needed to pursue selective, value-accretive M&A opportunities. Financial Position, Capital Structure and Financing

HUGO BOSS is structured by region, with our business segments being EMEA, the Americas, Asia/Pacific, and the license business. Within the three regions, individual markets are grouped into hubs, with local management reporting directly to the Chief Sales Officer (CSO), while the global license business is part of the Chief Executive Officer (CEO) resort. This ensures close alignment between markets and central functions as well as efficient decision-making processes. Further details on the financial development of the business segments in fiscal year 2025 can be found in the chapter “Earnings Development.” Earnings Development, Sales and Earnings Development of the Business Segments

Core elements of the Group’s internal management system

The Group’s planning, management, and monitoring activities focus on optimizing the key performance indicators described above. The core elements of our internal management system are Group planning, Group-wide financial reporting, and investment controlling.

Group planning at HUGO BOSS generally refers to a rolling multiyear period and is prepared as part of the annual, Group-wide budget process, taking into account the current business situation and our underlying Group strategy. Based on targets set by the Managing Board, our Group’s subsidiaries prepare sales, EBIT, and investment budgets as well as forecasts for TNWC for their respective markets or divisions. Based on this, our product development and sourcing units derive mid-term capacity planning. Business Planning & Analysis, part of the Business Operations division which reports to the Chief Financial Officer/Chief Operating Officer (CFO/COO), reviews these plans for plausibility and aggregates them to form the overall Group planning. The latter is updated on a regular basis, taking into account the actual business performance as well as any opportunities and risks.

Additionally, HUGO BOSS regularly conducts liquidity assessments, based on the expected cash flow development for any given year. This aims to identify financial risks at an early stage and to take appropriate measures concerning financing and investment requirements. Financial Position

On a monthly basis, the Managing Board and management of the Group subsidiaries are informed about the operational business performance through standardized, IT-enabled reports of varying detail, supplemented by ad hoc analyses. Actual data compiled by our Group-wide, IT-based reporting system is compared against budget data on a monthly basis. Any deviations are analyzed and countermeasures are discussed. Developments with a significant impact on the Group’s net assets, financial position, and results of operations are immediately reported to the Managing Board. In addition, dashboards offer real-time insights into key financial and operational performance indicators.

The Company is particularly focused on monitoring early indicators suitable for obtaining an indication of future business performance. In this context, the sales performance in our own retail business, the wholesale order intake, and the performance of our replenishment business are analyzed on a regular basis. To provide even more immediate insights, a dedicated mobile app enables the Managing Board and senior management to track the Company’s top-line performance on a daily basis. In addition, benchmarking against relevant competitors is performed at quarterly intervals. The continuous monitoring of early indicators is intended to enable us to identify deviations from the budget at an early stage and take appropriate countermeasures.

The Group’s investment controlling appraises planned investment projects with respect to their contribution to our Company’s overall profitability targets. This ensures that projects are only launched in case of an expected positive contribution to the Group’s overall profitability ambition. In addition, subsequent analyses are conducted at regular intervals to verify the profitability of projects that have already been realized. Appropriate countermeasures are taken in the event of any negative deviations from the initial profitability targets.

In light of the elevated market uncertainty weighing on industry development in 2025, the past fiscal year saw a particularly close dialog between the Managing Board, Business Planning & Analysis, and the management of our central divisions and subsidiaries. Corporate planning was regularly reviewed throughout the year, with particular attention paid to the various macroeconomic factors and their implications on our operational performance. Against this backdrop, the Company continued to focus on efficiency and effectiveness across the business, with a particular emphasis on sourcing excellence and strict cost discipline, thereby supporting both gross margin and operating expenses. As a result, the Company successfully achieved its top- and bottom-line targets for fiscal year 2025. Report on Economic Position, Comparison of Actual and Forecast Business Performance