Dive Brief:
- Hugo Boss projected flat growth for 2025 following a subdued 2024 sales increase of 2.6% to 4.3 billion euros, or about $4.7 billion, per an earnings report on Thursday.
- EBIT was down 12% year over year to 361 million euros, but the company projected an EBIT increase of between about 5% and 22% in fiscal 2025. CEO Daniel Grieder said in the report that the “robust bottom-line improvements” would be the result of “a relentless focus on maintaining cost discipline and driving additional efficiencies.”
- While the current year’s sales were in line with the company’s previous adjusted forecast of between 1% and 4% growth, the growth was significantly below 2023 sales growth, which was up 15% year over year.
Dive Insight:
Hugo Boss is entering the final year of its Claim 5 initiative, introduced in August 2021. The strategy was designed to drive brand relevance and growth for its Boss and Hugo brands in order to increase market shares for both labels.
Since the initiative began, Hugo Boss has posted record sales, gained global market shares and was on track to hit a targeted 5 billion euros in sales, per the company. However, that figure may be out of reach for the time being, according to the company’s own forecasts.
“Hugo Boss’s repositioning has left it in a no-man’s land,” Yanmei Tang, an analyst at Third Bridge, said in an email. “The company moved from affordable luxury to contemporary fashion, but this shift contradicts market trends, which are gravitating towards either high-end luxury or fast fashion.”
Tang said the brand’s loyal older customers, who valued its tailoring, were put off by the sudden focus on hoodies and sportswear. “At the same time, the younger audience it tried to attract did not fully embrace the brand,” the analyst said.
“Our experts say the younger generation has not grown within Hugo Boss despite heavy investment,” Tang said. “This left the company struggling to appeal to both old and new customers, creating a brand identity crisis.”
The company attributed its stagnation in 2024 to “persistent macroeconomic and geopolitical challenges, which dampened consumer demand in most markets and led to a slowdown in industry growth in 2024.”
But Tang said the company also was hurt by a problematic retail strategy. “Hugo Boss’s reliance on wholesale partners means it has little choice but to follow market-wide discounting trends,” the analyst said. “The brand kicked off promotions earlier than usual and offered heavy markdowns, ensuring sales kept pace with competitors — but at the cost of long-term brand value.”
Hugo Boss shares were down 34% at the close of 2024.
“While our peer group, which mainly consists of U.S. competitors, ended the year slightly up on average,” the company said the decline in shares was broadly in line with its European premium and luxury peers.
Looking ahead into 2025, the company said geopolitical tensions, including conflicts in the Middle East and Eastern Europe, could disrupt trade routes and commodity supplies in 2025. Hugo Boss also cited “trade policy uncertainty – exacerbated by potentially new tariffs and protectionist measures” and said that could distort global trade flows, hinder investment, and reduce market efficiency.
As a result the company said its sales in the region comprising Europe, the Middle East and Africa would remain flat in 2025, while sales in the Americas would increase in the low single-digit percentage range.
“Hugo Boss faces challenges in the U.S., where brand perception is weak, and competition is fierce,” Tang said. “While the post-election economic outlook has improved slightly, the company struggles to connect with American consumers.”
In the Asia Pacific region, Hugo Boss said sales will moderately decrease in 2025, reflecting ongoing uncertainties regarding consumer sentiment in the Chinese market.
“Hugo Boss has seen its market share in China shrink, as consumers shift towards local brands and the company loses prime retail locations,” Tang said. “Once a luxury favorite, its pivot to contemporary fashion confused customers.”
