Hugo Boss focuses on cost efficiency amid challenging market conditions

Key Developments and Initiatives

Strategic Partnerships and New Lines: Hugo Boss has signed a multi-year design collaboration with David Beckham, bolstering its brand appeal. The launch of the denim-focused line, HUGO BLUE, has successfully contributed to increased brand revenues.

Sales Channels and Growth: The company saw growth in brick-and-mortar wholesale operations, with a 7% increase in H1 and a 5% increase in Q2. Online sales at hugoboss.com also grew by 3% in both periods. Brick-and-mortar retail revenues remained stable compared to last year.

Customer Loyalty and Engagement: The HUGO BOSS XP loyalty program has seen a 30% increase in membership, reaching approximately 9.5 million members, highlighting the brand's efforts to enhance customer engagement.

Financial Performance: Hugo Boss achieved robust gross margin improvements due to efficiency gains in global sourcing activities, with an increase of 30 basis points in H1 and 50 basis points in Q2. Free cash flow showed strong improvement, driven by optimized inventories, amounting to €156 million in H1 and €143 million in Q2. However, overall market uncertainty and increased operating expenses affected EBIT, which stood at €139 million for H1 and €70 million for Q2.

Outlook for H2 and Full Year 2024

Hugo Boss anticipates continued relative outperformance, with full-year sales expected to grow between 1% and 4% in Group currency. The company plans to launch various brand, product, and sales initiatives to support the growth trajectory of BOSS and HUGO.

Upcoming Campaigns: A new BOSS campaign featuring global fashion icons David Beckham and Naomi Campbell is set to launch at the end of August, aiming to strengthen brand visibility and engagement.

Profitability Focus: Hugo Boss is implementing several cost measures to support profitability. The company expects bottom-line performance to accelerate in H2 2024, with a full-year EBIT forecast of between €350 million and €430 million.

With these strategic efforts, Hugo Boss is poised to navigate market challenges effectively and achieve sustained growth and profitability.

Daniel Grieder, Chief Executive Officer of HUGO BOSS: “Over the past three years, our ‘CLAIM 5’ growth strategy has enabled HUGO BOSS to drive superior, high-quality top-line growth. By stepping up investments into our brands, products, and touchpoints, we boosted brand relevance for BOSS and HUGO, winning over consumers from all over the world. However, following this period of strong top-line momentum, the global market environment deteriorated substantially in the first half of 2024. The weakening consumer sentiment in most markets led to a rapid slowdown in growth across the entire industry, which we could not completely escape from. And while the macro environment is likely to remain difficult for the time being, we are steadfast in our commitment to continue driving above-trend growth, capturing further market share, and focusing even more on operational and organizational productivity.

Our confidence in the immense potential of our two brands, BOSS and HUGO, remains strong, as do the long-term growth opportunities for our business. We will keep driving consumer engagement while also fostering loyalty. Our 360-degree brand campaigns deeply connect our brands and products with consumers worldwide, while our various partnerships enhance our global appeal even further. And with our new membership program, HUGO BOSS XP, we will further elevate customer engagement and strengthen customer loyalty. With initiatives like these, we drive forward strategically relevant and consumer-facing areas of our business to ensure the long-term success of BOSS and HUGO. 

At the same time, we adapt to the current market environment and accelerate our cost discipline from here on. This includes leveraging our global sourcing activities, which has already translated into solid gross margin improvements in the first half of 2024. We have also taken additional measures to enhance efficiency and effectiveness across our business, capitalizing on our robust organizational platform built in recent years. This includes removing spend in non-strategic areas of the business, with particular emphasis on sales, marketing, and administration. Together, these efforts will enable us to noticeably limit cost growth going forward and provide strong tailwind to our bottom-line performance, starting in the second half of this year already. In doing so, we will ensure that we emerge even stronger once the global market environment returns to normal. At HUGO BOSS, we remain committed to driving sustainable, profitable growth and creating significant value for our shareholders.”