Dive Brief:
- Hugo Boss reported a second quarter sales decline of 1%, to 1 billion euros, or about $1.1 billion year over year, according to a Thursday release. H1 sales were up 2% to 2 billion euros.
- The report also confirmed the company’s previously announced 42% EBIT decline for the second quarter. Its full year outlook is now expected to grow between 1% and 4%, down from its previously forecast 3% to 6% growth.
- Brick-and-mortar retail revenue dropped 3% in Q2 and down 1% for the half, representing a significant change from the same period in 2023, when Q2 revenue in the channel was up 17% year over year.
Dive Insight:
Hugo Boss began to see a slowdown in the first quarter of 2024, when it posted single-digit increases in its digital, wholesale and retail channels following a year of double-digit growth.
CEO Daniel Grieder said the company’s Claim 5 growth strategy boosted brand relevance for both its Boss and Hugo lines over the past three years, but the global market has “deteriorated substantially in the first half of 2024” following a previous period of momentum.
“The weakening consumer sentiment in most markets led to a rapid slowdown in growth across the entire industry, which we could not completely escape from,” Grieder said in the release.
He added that “while the macro environment is likely to remain difficult for the time being” the company was committed to “driving above-trend growth, capturing further market share, and focusing even more on operational and organizational productivity.”
Brick-and-mortar wholesale revenue increased 6% in the quarter and 7% for the half, while digital revenue was down 4% in the quarter and up 3% in the half, per the release.
The company also stated that it planned to implement “various brand, product, and sales initiatives” in support of both its Boss and Hugo brands, and that wholesale order intakes for upcoming winter 2024 and spring 2025 seasons were “robust.”
In addition, a new ad campaign for its Boss brand is launching at the end of the month featuring model Naomi Campbell and athlete David Beckham.
Grieder said the company was confident in Boss and Hugo, and expected its new membership program, Hugo Boss XP, to “further elevate customer engagement and strengthen customer loyalty.”
However, he also said the company would accelerate its “cost discipline” in order to adapt to the current market. Streamlining efforts include “removing spend in non-strategic areas of the business,” particularly in terms of sales, marketing and administration.
“Together, these efforts will enable us to noticeably limit cost growth going forward and provide strong tailwind to our bottom-line performance, starting in the second half of this year already,” Grieder said. “In doing so, we will ensure that we emerge even stronger once the global market environment returns to normal.”
