Press release on the full year 2021 results
Metzingen, March 10, 2022
HUGO BOSS ACHIEVES STRONG COMEBACK IN 2021
SUCCESSFUL BRANDING REFRESH PAVES WAY FOR RECORD SALES IN 2022
Full year 2021
- Group sales grow 43% to EUR 2,786 million, thus returning to pre-pandemic levels
- EBIT significantly improves to EUR 228 million
- Free cash flow and net financial position hit record levels
- Successful branding refresh spurs execution of “CLAIM 5,” creating strong digital buzz
- Strong feedback on Spring/Summer 2022 collections, fully embodying the branding refresh
- Share of total digital sales reaches 20% for the first time
- Execution of “CLAIM 5” growth strategy primary focus in 2022
- Sales to grow to a record level of between EUR 3.1 billion and EUR 3.2 billion (+10% to +15%)
- EBIT to increase by +10% to +25% to a level of EUR 250 million to EUR 285 million
“At HUGO BOSS, we are deeply concerned by the terrible situation in Ukraine. Our deepest empathy and thoughts are with the millions of people affected by the war and suffering from this humanitarian crisis,” says Daniel Grieder, Chief Executive Officer of HUGO BOSS. “To help the people in need, we support the German Red Cross and other institutions, standing in solidarity with each and every one calling for peace. We will continue to monitor the situation very closely and adapt our measures and financial support accordingly.”
As pre-announced in January 2022, HUGO BOSS recorded significant top- and bottom-line improvements in fiscal year 2021, consequently exceeding its full year sales and earnings targets. Group sales amounted to EUR 2,786 million (2020: EUR 1,946 million), representing a strong currency-adjusted increase of 43% compared to the prior year, above the Company’s guidance of a currency-adjusted sales increase of around 40%. Consequently, currency-adjusted sales effectively returned to pre-pandemic levels. Importantly, growth in fiscal year 2021 was broad-based in nature, with sales increasing for both brands, BOSS and HUGO, as well as across all regions and distribution channels. This development was driven by a noticeable pick-up in global consumer sentiment starting in the second quarter. In addition, the successful execution of several key brand, product, and sales initiatives as part of the Company’s “CLAIM 5” strategy also fueled brand momentum and accelerated the business performance of HUGO BOSS in the second half of 2021.
EBIT significantly improves to EUR 228 million
In light of the strong top-line performance, the operating result (EBIT) also recorded a significant increase. Overall, EBIT amounted to EUR 228 million in fiscal year 2021 (2020: minus EUR 236 million) – above the Company’s increased guidance of between EUR 175 million and EUR 200 million – representing an EBIT margin of 8.2% (2020: minus 12.1%). This development was also supported by improvements in gross margin as well as operating leverage. This means that efficiency gains, particularly in the Group’s own retail business, as well as strict cost management enforced, in particular, during the first half of the year, largely compensated for a noticeable step-up in brand and digital investments as part of “CLAIM 5.”
Free cash flow and net financial position hit record levels
As a result of the significant top- and bottom-line growth as well as noticeable improvements in trade net working capital, HUGO BOSS generated the strongest free cash flow in its history. At EUR 559 million, free cash flow in 2021 more than tripled compared to the prior year (2020: EUR 164 million). As a consequence, the net financial position of HUGO BOSS at the end of fiscal year 2021 totaled plus EUR 167 million (excl. the impact of IFRS 16), representing the strongest net financial position of HUGO BOSS to date (2020: minus EUR 141 million).
“With our strong comeback in 2021, we successfully kicked off our ‘CLAIM 5’ strategy,” says Daniel Grieder. “Right from its start, our growth strategy fueled brand momentum around the globe. The highly successful branding refresh and ongoing investments will further drive relevance for BOSS and HUGO in the current year. We have everything it takes to reach record sales in 2022. As a team, we will take a big step closer towards our goal of becoming one of the top 100 global brands.”
Successful branding refresh accompanied by record-breaking campaign launch
Starting in late January 2022, HUGO BOSS successfully initiated its bold branding refresh by means of the record-breaking launch of two star-studded global campaigns. Since then, the #BeYourOwnBOSS and #HowDoYouHUGO campaigns created tremendous digital buzz around the world, with a total of 6 billion impressions and more than 300 million engagements in the first six days. A unique cast of high-profile celebrities led to a wide-reaching digital activation, making the campaigns the most successful ones in HUGO BOSS history.
Fueled by this excitement, both BOSS and HUGO have undertaken a new, modern brand identity focused on a younger and more global demographic. Feedback on the brands’ new Spring/Summer 2022 collections – the first ones to fully embody the branding refresh – so far has been overwhelmingly positive, both from consumers and wholesale partners. Sell-through rates in brick-and-mortar retail as well as online clearly exceed those of previous collections. The signature BOSS hoodie – emblazoned with the brand's new logo – quickly became the best-selling single style in the history of HUGO BOSS.
Execution of “CLAIM 5” growth strategy primary focus for 2022
Based on the acceleration in top-line momentum in fiscal year 2021, as well as the highly successful branding refresh, HUGO BOSS is confident that 2022 will mark another successful year for the Company and an important milestone towards becoming a top 100 global brand. The consequent execution of “CLAIM 5” will therefore take center stage among all the Company’s initiatives in 2022, with a particular emphasis on further driving brand relevance. The ongoing step up in marketing investments – with a strong focus on social media, exciting events, and exceptional collaborations – will ensure both BOSS and HUGO continue to create buzz also going forward. At the same time, product investments to further drive casualness and comfort across all wearing occasions will strongly contribute to establishing BOSS as a true 24/7 lifestyle brand and HUGO as the first point of contact for younger customers.
In addition, in 2022, HUGO BOSS will continue to invest in the further digitalization of its business model and in the optimization and modernization of its global store network. Regarding the latter, HUGO BOSS is aiming to roll out its brand-new store concept to more than 100 points of sale in the current year. The opening of the Company’s first global anchor store on London’s iconic Oxford Street in the second quarter will mark a particular important milestone in this regard. At the same time, HUGO BOSS will continue to push ahead with its global digital business. The freshly relaunched online flagship hugoboss.com is of particular importance and is building a cornerstone of the Company’s omnichannel strategy. For the first time, total digital sales added up to 20% of Group sales in 2021, marking a significant milestone for HUGO BOSS on its way to growing the digital penetration to a level of between 25% and 30% of Group sales by 2025.
Strong top- and bottom-line improvements anticipated for fiscal year 2022
Also in 2022, HUGO BOSS is confident of achieving strong top- and bottom-line improvements. At the same time, the Company faces ongoing uncertainties with regard to the further development of the COVID-19 pandemic. In addition, it is difficult to assess the implications of a potential further escalation of the war in Ukraine on overall economic and sector growth. As of March 9, HUGO BOSS has temporarily closed its stores and suspended all own retail and e-commerce business activities in Russia. Together with Ukraine, the market accounted for around 3% of Group sales in fiscal year 2021. The Company will provide all impacted employees with financial and operational support and remain in close contact with its business partners.
Against this backdrop, Group sales are expected to increase between +10% and +15% to a new record level of between EUR 3.1 billion and EUR 3.2 billion, with all regions and both brands expected to contribute to this development. In addition, HUGO BOSS forecasts that it will increase EBIT in 2022 within a range of +10% to +25% to an amount of between EUR 250 million and EUR 285 million. This development will be driven by the anticipated strong top-line improvements. In addition to that, efficiency gains are expected to largely offset the investments planned for 2022 as part of "CLAIM 5" to strengthen products, brands, and digital expertise.
HUGO BOSS to resume dividend payments
In view of the strong operational and financial performance in 2021, the very solid financial position, and management’s confidence in the successful execution of its “CLAIM 5” growth strategy, HUGO BOSS is planning to resume dividend payments. Consequently, the Managing Board and the Supervisory Board intend to propose to the Annual Shareholders’ Meeting on May 24, 2022, a dividend of EUR 0.70 per share for fiscal year 2021 (2020: EUR 0.04). The proposal is equivalent to a payout ratio of 35% of the Group’s net income attributable to shareholders in fiscal year 2021, thus fully in line with the Company’s targeted payout range of between 30% to 50%.
Further information can be found in the Online Version of the HUGO BOSS Annual Report 2021.