The luxury label reacted to the Russian war of aggression in Ukraine by closing stores. Now the Swabian company is going one step further.
Hugo Boss is separating from its Russian business. The fashion group confirmed media reports that its Russian subsidiary had been sold to long-term wholesale partner Stockmann JSC. “Stockmann is a company that belongs to one of Hugo Boss’s long-term wholesale partners in Russia. As a result, Hugo Boss will no longer be represented in Russia with its own subsidiary,” said a company spokesperson. The Russian authorities have already given their consent.
Shortly after the start of the Russian war of aggression in Ukraine, Hugo Boss said it had closed its stores in Russia in March 2022 and also suspended its online business. Together with Ukraine, the Russian business accounted for around three percent of group sales in 2021, according to the label.
Cost-saving program
Things are not going well at Hugo Boss at the moment. After a drop in profits in the second quarter, the fashion group announced that it wanted to cut costs. The company is taking the current market environment into account and will increase cost discipline, said CEO Daniel Grieder when presenting the final figures. In addition to potential savings in procurement, the company also wants to reduce costs in areas such as sales, marketing and administration. In addition, the cost structure in retail is to be adjusted “to current visitor trends”.
The measures are intended to support earnings development in the second half of the year. A weaker consumer climate and higher costs for marketing and in stationary retail led to falling revenues and a drop in profits in the second quarter. At 37 million euros, Hugo Boss earned around half of the previous year’s figure. The company had already presented preliminary figures in mid-July and cut its forecast for the year as a whole. Last year, Hugo Boss posted record sales.
New growth strategy
Three years ago, the Metzingen-based company presented a new growth strategy, “Claim 5,” with the goal of doubling sales to 4 billion euros by 2025. “Our vision is to become the world’s leading technology-driven fashion platform. We will significantly change the way we interact with consumers,” Grieder announced. “Our goal is to double our sales to 4 billion euros by 2025 and become one of the world’s 100 leading brands.” The company now only expects sales in 2024 to increase by one to four percent, to 4.20 to 4.35 billion euros. Hugo Boss had previously expected sales to increase by three to six percent.
Source: Stern
