Hugo Boss initiates measures to return to profitability in 2018

Ahead of its Investor’s Day in London today, Hugo Boss has announced a strategy to drive the company towards profitable growth. The company said, key elements of the new strategy include focusing the portfolio on only two brands - Boss and Hugo, harmonization of sales prices and structural improvements in distribution. Since the majority of strategic changes will become effective in 2018, Hugo Boss expects to return to growth in 2018.

The company has decided to operate with only two brands in future – Boss and Hugo, where in Boss will be positioned in the upper premium businesswear as well as sophisticated casualwear segments. Hugo on the other hand will be positioned to appeal to a broader base of younger customers with fashionable collections offered at attractive prices.

The company also said that it will continue the harmonization of its global price architecture. 2018 in particular will see a number of further adjustments in price-points. Hugo Boss will also link its three-part distribution structure involving retail, wholesale and online. While online channel will play a major role in case of Boss in future, the expansion of the network of stores, on the other hand, will be slowed down considerably. Both brands will be sold via the wholesale channel.

Forecasts flat or 3 percent decline in sales

The company has already introduced measures in response to the difficult market environment over the course of the year. These include cost savings of around 65 million euros (69 million dollars)in the current year, closing loss-making stores and adapting the sales structure in the US market, as well as significant price reductions in China.

The outlook suggests that sales will grow steadily or decline by up to 3 percent on a currency-adjusted basis. The company still expects the operating result (EBITDA before special items) to decline by between 17 and 23 percent.

Picture:Hugo Boss