New strategy: Hugo Boss focuses on efficiency and womenswear

Metzingen-based fashion group Hugo Boss AG is driving its reform efforts forward. On Tuesday evening, the company announced a new medium-term programme called “Claim 5 Touchdown”.

It continues the “Claim 5” strategy launched by CEO Daniel Grieder after taking office in summer 2021. “Claim 5 was a growth strategy. It was about refreshing the brand and bringing it back to the stage; we have achieved all these goals,” emphasised Grieder during a conference call on Wednesday. “We now want to move into a second phase where we focus on profitability and earnings.”

The new concept was approved by the management and supervisory boards on Tuesday. It applies to the years up to 2028. “Implementation will focus on three key areas: brand, sales and operations,” the company explained in a statement. These priorities would “increase efficiency and create the conditions for long-term, profitable growth”.

With these measures, the group also intends to “significantly accelerate free cash flow generation”. The goal is to “achieve average annual free cash flows of around 300 million euros from 2026”.

Hugo Boss creates “independent powerhouse” for womenswear

The company sees great potential for profitable growth in the womenswear sector. A structural reform is planned to exploit this. “Two independent powerhouses for menswear and womenswear” will be created to unlock synergies between the two group brands Boss and Hugo.

As part of the reform, all womenswear activities will be consolidated under one roof. The aim is to develop a “clear DNA” for the womenswear range and formulate an overarching brand statement. In addition to clothing collections, this will also include categories such as shoes, accessories and handbags.

The company announced that it has already recruited an executive from a well-known international womenswear brand to lead this division. She will take up her new post in January.

In the Boss Menswear division, management is focusing on further expanding its “strong positioning as a 24/7 lifestyle brand”. The Hugo label will “further develop its identity with a sharpened positioning and a more accessible product range; it will focus even more strongly on contemporary tailoring”.

Management focuses on efficiency increases but plans no redundancies

The group also announced it would further optimise its store portfolio to “continuously improve the customer experience while increasing space productivity and efficiency in its own retail”. In the wholesale business, the clothing supplier will “expand strategic partnerships; pursue a more selective assortment approach; and expand its franchise business”. Digital sales channels are also to be further strengthened.

Otherwise, the company is focusing on optimisation “along the entire value chain” to achieve its goals. “Key priorities include further efficiency gains in sourcing through continuous optimisation of the supplier network; a preference for sea freight; and shorter delivery times,” the statement said. Furthermore, the increased use of new technologies and artificial intelligence (AI) in planning processes is intended to enable “faster and smarter decisions”. However, redundancies are not planned at this time.

“Year of adjustment”: revenue losses and lower operating result forecast for 2026

The presented measures are intended to bear fruit in the medium term. However, the clothing supplier is accepting losses for now. “2026 will be a year of adjustment in which the business will be strengthened by streamlining processes; revising the assortment; and optimising the distribution network,” the company stated. “Against the backdrop of a deliberate refocusing of brands and distribution channels, a currency-adjusted revenue decline in the mid to high single-digit range is expected for 2026; a return to growth is expected in 2027, which should accelerate in 2028.”

For the coming financial year, management already expects an improvement in gross margin. This will be “supported by efficiency gains in sourcing; selective price adjustments; and higher full-price sell-through”.

Specifically, the company forecasts that earnings before interest and taxes (EBIT) will fall to between 300 and 350 million euros in 2026. For the current year, the group expects EBIT at the “lower end” of the target range of 380 to 440 million euros. Profitability is then expected to improve in 2027.

After disagreements: CEO Grieder sees “good partnership” with Frasers Group

The board members remained reticent during the conference call regarding recent disagreements with the largest single shareholder, the UK-based Frasers Group. The UK retail group currently holds 25 percent of the shares in Hugo Boss and has access to more than 30 percent of the stock via financial instruments. Last week, it announced in a letter that it was withdrawing its support for supervisory board chairman Stephan Sturm.

Grieder has now explained that Hugo Boss continues to maintain a “good partnership” with its major shareholder. He did not wish to comment on speculation regarding a possible takeover of the company by Frasers Group.

This article was translated to English using an AI tool.

OR CONTINUE WITH

Hugo Boss

Hugo Boss AG