Hugo Boss AG is a German designer, manufacturer and distributor of men’s and women’s clothing, operating in

the higher end of the clothing retail industry. During the period 2001–2008, the company consistently earned
returns on equity in excess of 18 percent, grew its book value of equity (before special dividends) by 5.5 percent
per year, on average, and paid out 65–70 percent of its net profit as dividends. In 2008, the company paid out a
special dividend of €345.1 million. Consequently, the company’s book value of equity decreased from €546.8
million in 2007 to €199.0 million in 2008.
On April 1, 2009, one month before the publication of the first-quarter results, when Hugo Boss’s 70.4 million
common shares trade at about €11 per share, an analyst produces the following forecasts for Hugo Boss.

Income statement (€ millions) 2009E 2010E 2011E

Sales 1548.1 1493.9 1561.2

Gross profit 897.9 875.1 923.7
EBIT 179.6 176.9 196.2
Interest expense (45) (40) (35)
EBT 134.6 136.9 161.2
Tax expense (36.3) (37) (43.5)
Net profit 98.3 99.9 117.7

Balance sheet (€ millions) 2008R 2009E 2010E 2011E

Total non-current assets 459.2 480.8 499.1 512.0

Inventories 381.4 325.1 304.3 305.3
Trade receivables 201.0 175.4 160.8 156.1
Cash and cash equivalents 24.6 33.5 32.5 47.2
Other current assets 95.4 136.5 172.5 203.2
Total current assets 702.4 670.5 670.1 711.8
Shareholders’ equity 199.0 200.2 221.6 259.0
Non-current provisions 27.9 25.6 24.7 25.8
Non-current debt 588.5 576.7 565.2 553.9
Other non-current liabilities (noninterest
bearing) 26.7 24.5 23.6 24.8
Deferred tax liabilities 17.9 18.3 18.7 19.0
Total non-current liabilities 661.0 645.1 632.2 623.5
Current provisions 59.3 59.3 59.3 59.3
Current debt 40.2 40.2 40.2 40.2
Other current liabilities 202.1 206.5 215.9 241.8
Total current liabilities 301.6 306.0 315.4 341.3
TOTAL EQUITY AND LIABILITIES 1161.6 1151.3 1169.2 1223.8