Strategy
Video message of HUGO BOSS CEO Mark Langer
In his video message CEO Mark Langer provides an overview of the financial development in fiscal year 2019 and the progress made in implementing the strategic initiatives. You can find the annual report 2019 here.
Driving Brand Desirability
HUGO BOSS has the vision of being the most desirable fashion and lifestyle brand in the premium segment of the global apparel market. The Group is convinced that the desirability of its two brands, BOSS and HUGO, is the most important factor for its long-term success. In order to take account of customer expectations, HUGO BOSS is focusing primarily on personalization and speed. With a variety of strategic initiatives from a brand, sales and operational perspective, the Group intends to sustainably increase the desirability of its brands, BOSS and HUGO. More information about the Two-Brand-Strategy.
- Personalization: The Company will expand its focus on personalized offerings in coming years. The intent is to increase customer satisfaction sustainably by employing a more individualized customer approach, a personalized product range, and a unique shopping experience. In doing so, HUGO BOSS is building on its strengths: its global retail network, its systematic customer relationship management, and its extensive experience in made-to-measure apparel. In addition, the Company expanded its personalized product range for example with the introduction of “BOSS Made for Me”. BOSS suits, casualwear products, such as jackets and sneakers can be individually adapted to the customer’s wishes within the scope of the offer. The HUGO brand also offers various opportunities for personalizing products. For example, customers are able to personalize T-shirts and sweaters using custom, back-to-front letters.
- Speed: HUGO BOSS is seeking to further accelerate central business processes and to make them significantly more agile. This is intended to enable the Group to respond even faster and more flexible to customer needs and new market trends in the coming years. The further digitization of the business model is of particular importance here. The associated potentials are to be exploited along the entire value chain. For example, the progressive digitization of product development will enable further reductions in lead times. In sales and distribution, already today, the Group is making use of a digital showroom when distributing the HUGO collections to wholesale partners. This offers trading partners a flexible, convenient and fast alternative to conventional ordering.
Focus on four strategic growth drivers
HUGO BOSS has identified four strategic growth drivers, the consistent implementation of which is intended to contribute significantly to the future growth of the company.
Exploiting the full potential of online
HUGO BOSS sees great growth opportunities above all in expanding its online business. With aboveaverage growth, the online business is expected to contribute significantly to achieving the Group’s targets in the coming years. To this end, the Group is focusing on further expanding the concession model to the online business and tapping the full potential of its own online store hugoboss.com. The Group plans to roughly quadruple sales in its own online business by 2022 (base year 2018: EUR 110 million).
Improving retail productivity
HUGO BOSS aims to increase its sales per square meter by an average of 4% per year by 2022 (base year 2018: EUR 10,700 per sqm). The continuous optimization of the global retail network and the further enhancement of the shopping experience are expected to contribute significantly to this. The consistent renovation of existing BOSS stores to the most recent store concept is crucial in order to optimize the store network. In addition, the Group is striving to expand its global distribution with selective new store openings.
Realizing growth potential in Asia
HUGO BOSS is convinced that its brands have significant growth potential in Asia in particular. The share of sales in the Asia/Pacific region is expected to grow to around 20% by 2022 (base year 2018: 15%). Chinese consumers are playing a key role in this context. In particular, the Group sees potential to open up additional retail stores in mainland China in the coming years. In addition, the online business in China is expected to contribute to the above-average growth of the region.
Strengthening the HUGO brand in the contemporary fashion segment
The Group also sees great potential for its HUGO brand. The focus on the dynamic contemporary fashion segment, which has already achieved higher growth rates in recent years than classic tailoring, for example, should also contribute to above-average growth of HUGO in the coming years. This entails taking full advantage of the potential of the brand in the casualwear segment. The Group will also continue to examine potential for the selective opening of other HUGO stores. In order to increase HUGO’s recognition, partnerships with brand ambassadors and influencers and keeping up a strong focus on the social media activities of the brand will also continue contributing to this.
Medium-Term increase in profitability
The Group’s operating result (EBIT) is expected to increase faster than sales in the coming years. As a result, the Group has set itself the target of improving the EBIT margin significantly in the medium term. An improved gross profit margin and a Group-wide efficiency program with a strong focus on a more efficient use of operational expenses should contribute to this development.
In order to improve the gross profit margin, the aim is to reduce the complexity of the BOSS and HUGO collections, to improve the markdown management, and to reduce the sales share of the outlet business. In addition, further increasing the sales share of the Group’s own retail business is expected to contribute to a higher gross profit margin. In this distribution channel, the Group achieves a higher gross profit margin than in the wholesale business. The efficiency program aims at improving the profitability of the Group’s own retail business, using marketing budgets more effectively, and further optimizing the organizational structure of the Group. Additional investments in digitizing the business model will partly offset the savings achieved.
