Dear Shareholders, Ladies and Gentlemen,

HUGO BOSS stands for success! We finished fiscal year 2007 on a high note. Not only did we meet the goals that we set for ourselves at the beginning of the past year, we even exceeded them in a number of areas. Our sales grew by 9%, to more than EUR 1.6 billion. This actually corresponds to 12% after adjustment for currency differences. Our net annual surplus grew by 20% to EUR 154 million. Thus HUGO BOSS is continuing its dynamic growth trend from previous years and is expanding its share in all important regions.

Our successful business performance was also reflected in the growing ranks of our employees, which increased to 9,123 worldwide by the end of the year. We are proud to have created 682 new positions in all parts of the company, with 243 of these in Germany alone. HUGO BOSS offers its employees an environment enriched by an international atmosphere, innovation, and development, and considers this as one of the strengths of the Company. As part of our efforts to provide ongoing career development for our employees and create a cadre for the future, we plan to create new positions in the future as well, both in Germany and abroad.

As the most successful year in the Company’s history, fiscal year 2007 has proven the effectiveness of the strategy we have consistently followed in recent years, which is to focus on the expansion of our most important growth fields, namely our own retail activities, womenswear, and shoes and leather accessories.

Our directly operated stores enable us to respond flexibly and directly to changes in the market, and also improve cost efficiency in store management. For this reason, we have continued the international expansion of our own retail activities in 2007. By opening 77 new stores as of the end of the year we are now operating a total of 287 stores in 17 countries (2006: 210 stores). This increased the share of DOS sales to 15% of total sales.

BOSS Womenswear turned in a very gratifying performance again over the past year, with sales improving by a total of 29%. The growth in share of this segment as a percentage of total sales to 13% (2006: 11%) corresponds to our goal to develop the womenswear segment to an important driver for sales and earnings.

In a related development, the Company further expanded its product segment of shoes and leather accessories, which is important for the womenswear business. A 16% growth in sales clearly demonstrates how successfully we have positioned ourselves on the market with these product groups, whose share of total sales is 11%.

Moreover, sales in the menswear segment also increased in fiscal year 2007. Sales grew by 7% compared to the previous year.

From a strategic perspective, our business activities are aimed at both strengthening our established market position and consistently developing new areas of potential growth. With the introduction of BOSS Orange Kidswear as well as a jewelry collection, we will further enhance our product range in the current year. Furthermore, the extension of distribution structures in the strong growth markets of North America, Eastern Europe and Asia, particularly China, plays a crucial role.

This requires the broadening and optimization of our business processes, as well as the IT systems that support them. The Columbus project, which is designed to increase efficiency throughout the entire process chain, and which constitutes the largest internal modernization process in the Company’s history, was successfully completed in the past fiscal year. With this system in place, we now have optimal conditions to ensure innovativeness, flexibility, and efficiency, both internally and externally, as the Company continues to grow.

Following the indirect takeover of the majority of shares in the HUGO BOSS Group’s parent company, Valentino Fashion Group, our Company has been indirectly controlled since the middle of last year by funds advised by the British private equity firm Permira. The Permira Funds currently hold indirectly circa 72% of our Company’s total share capital. The existing business strategy of the HUGO BOSS Group is fully supported by its new major shareholder.

The management of HUGO BOSS AG remains committed to building upon the successes we have achieved thus far, maintaining the good reputation that this has produced and our customers’ confidence in our product quality, and upholding the strength of our brands.

We are therefore convinced that 2008 will be another very successful year for HUGO BOSS. Our goal is to continue increasing our share in all key markets and for all product segments, and to set new records in sales and profits.

We wish to thank all our employees for their personal efforts, as well as our shareholders, customers, and business partners for their confidence and support in helping us to reach our goals.

The Managing Board