Strategy

HUGO BOSS Full Year Results 2018

Driving Brand Desirability

We believe in the desirability of our brands. They will be the most important factor in the Group’s long-term success. To further increase the appeal of our brands, we are focusing on two strategic priorities in our 2022 business plan: personalization and speed. 

  • 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.
     
  • Speed: HUGO BOSS will make its business processes considerably more agile. This will enable the Company to react to customer needs and to new market trends even more quickly and flexibly in the future. The existing skills of HUGO BOSS in product design and development, its modern logistics and IT infrastructure and the use of digital showrooms will be the key levers.

These strategic priorities guide the Group’s specific actions within the following four strategic fields of action.

Four strategic fields of action

KEY DRIVERS

By 2022, the Company expects to increase Group sales by an average of between 5% and 7% per year on a currency-adjusted basis. Sales are therefore expected to outgrow the projected growth of the relevant market segment for HUGO BOSS in the coming years. Four key drivers are particularly crucial for further growth:

Quadrupling of sales in the Group’s own online business targeted
The Company sees great growth opportunities in expanding its online business. With overproportionate growth rates, this sales channel is expected to contribute to the Company objectives in the coming years, in particular by expanding the concession model and fully utilizing the potential in the Group’s own online store, hugoboss.com. The Group plans to quadruple its sales in its own online business by 2022.

Significant improvement in retail sales productivity
HUGO BOSS aims to increase retail sales productivity by an average of 4% annually until 2022. Along with an optimization of the store network, accelerated modernization of existing BOSS stores, expansion of omnichannel services and improvements in product ranges and services are expected to contribute to this.

Above-average growth in Asia
The Managing Board sees considerable growth potential particularly in Asia.. Sales in the region are expected to increase at a double-digit percentage rate on average per year by 2022, with China playing a key role. The share of sales from Asia will thus increase from its current 15% to around 20% by 2022. In addition to the optimization and expansion of the local retail network, the online business, also in cooperation with various multibrand platforms, should contribute to overproportionate sales growth in particular.

Significant sales increase for HUGO
The Company sees great potential for the HUGO brand. In the coming years, the focus on the dynamic contemporary fashion segment should contribute to overproportionate growth and therefore also to achieving Company targets. This entails taking full advantage of the potential of the HUGO brand in the casualwear segment. Furthermore, additional HUGO stores with a unique store concept will be opened, and the HUGO brand will increase its social media activity.

EBIT margin

Increase in EBIT margin to 15% expected by 2022
The Company has set itself the target to grow operating profit (EBIT) significantly faster than sales by 2022. In doing so, EBIT margin shall increase to 15% until then  (2018: 12.4%). An improved gross profit margin and a Group-wide efficiency program with a strong focus on a more efficient use of operational expenses will contribute to this.

To improve the gross profit margin, particular emphasis in the coming years will be placed on further increasing the sales share from the Group’s own retail business, reducing the complexity of the BOSS and HUGO collections, improving markdown management, and decreasing the sales share of the outlet business. The efficiency program aims at improving profitability of the Group’s own retail business, using marketing expenditures more effectively, and optimizing the organizational structure. Additional investments in digitizing the business model will partly offset the savings achieved.

 

Further information

Innovation

HUGO BOSS uses digitization along the entire value chain to ensure greater efficiency and sustainability. Innovation is a top priority throughout the company.

Brands

With two brands on the path to success. The core brand BOSS offers modern and elegant collections that combine quality and fit. With its progressive and cool looks, the HUGO brand inspires true style individualists.

History

Sartorial heritage meets lifestyle. Numerous milestones mark the way to becoming an international fashion and lifestyle company.