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An increase in the high single-digit range in Great Britain and growth in smaller markets was partially offset by sales declines in Germany and France.
In the Americas, sales fell by 12% when adjusted for currency effects. The main driver behind this result was a double-digit decline in sales in the U.S.
The Company significantly restricted the distribution of its brands in the wholesale business, and in doing so consciously accepted a loss in sales. In Asia/Pacific, sales fell by 2% when adjusted for currency effects.
Sales in China decreased 6% in currency-adjusted terms, however momentum improved markedly over the course of the year. In the fourth quarter, sales on the Chinese mainland grew by almost 20% on a like-for-like basis, meaning that sales were up also in Asia/Pacific as a whole.
The gross profit margin in 2016 was unchanged on the previous year at 66.0%. Positive effects due to the increasing share of sales coming from the Group's own retail business were canceled out by the reduction in selling prices in Asia as well as negative inventory valuation effects.
Savings of EUR 65 million compared to the original budgeting limited the increase in costs. The renegotiation of rental agreements in the Group's own retail business and strict management of operating overhead costs contributed to the savings.
Nevertheless, EBITDA before special items declined by 17% during the year as a whole to EUR 493 million (2015: EUR 594 million). The adjusted EBITDA margin was 18.3%, down 290 basis points on the prior year (2015: 21.2%). Other operating expenses of EUR 67 million were mostly related to the planned store closures (2015: EUR 4 million).
As a result, the Group's net income fell more strongly than EBITDA before special items. At EUR 194 million it was 39% lower than the year before (2015: EUR 319 million).
At the end of 2016, inventories were 2% above the prior year's level, and 1% in local currencies. In both the Americas and Asia/Pacific, inventories declined by a double-digit percentage rate. Trade net working capital fell by 1% to EUR 524 million (2015: EUR 528 million). Free cash flow increased by 6% on the prior year to EUR 220 million (2015: EUR 208 million).
This was due to a decrease in investments to EUR 157 million (2015: EUR 220 million). The reduced rate of expansion in the Group's own retail business and the non-recurrence of prior year one-time investments had a significant influence on this. Net financial liabilities increased to EUR 113 million (2015: EUR 82 million).
The Managing Board and the Supervisory Board of HUGO BOSS AG intend to propose a dividend of EUR 2.60 per share for fiscal year 2016 to the Annual Shareholders' Meeting (2015: EUR 3.62).
This corresponds to a payout ratio of 93% of the consolidated net income attributable to the shareholders of the parent company in 2016 (2015: 78%). ■
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