Most Recent Articles In Financial
Latest Financial Articles
- E-commerce, Activewear Lift Belk Q1 Profits, Sales
- Chico’s Q1 Net Falls as Sales, Margins Rise
- Fossil Among Midday Decliners
More Articles By
METZINGEN, Germany — Boss Woman has a new formula. The company’s parent, Hugo Boss, wants the troubled women’s wear division to move from 3.7 to 30 in 10.
That is, in 2002 Boss Woman generated about 3.7 percent of total Hugo Boss sales of $1.3 billion. In 10 years, “the goal is for Boss to do at least 30 percent of its business with women’s [fashion],” stated Boss chief executive officer Bruno Sälzer in an exclusive interview.
At 2002 levels, that would mean growing women’s wear sales to at least $386 million from $43.7 million. Dollar figures have been converted from the euro at current exchange.
A tall order? Yes, when one considers Boss Woman’s botched start for the spring-summer 2001 season and the fact that the division has yet to see the black. But under the Boss Hugo Boss label, Boss Woman — as it’s called internally — is now expected to break even in the second half of 2003.
Two years ago, Boss moved the women’s division from Milan to company headquarters in Metzingen. After two seasons back at Boss central, during which just about every aspect of the collection — from design to patternmaking, production, sales, logistics and marketing — was changed, Boss Woman is making progress, the company said. Preorders were up 8 percent for fall-winter 2003-2004, and sell-throughs this spring were “well above those of our competitors,” according to Sälzer.
Analysts say Boss could pull off the 30 percent equation. “It’s pretty achievable,” commented Gavin Finlayson, an analyst for Commerzbank in Frankfurt, “when you consider how much bigger the women’s wear market is compared to men’s. And they already have a pretty widely recognizable brand.
“If they don’t mess up, they could even achieve more sales in women’s than in men’s down the road,” Finlayson continued.
Michael Winkler of West LB in Düsseldorf agreed. “The women’s collection is definitely working better now. The fit is better, the sizing and design are better, they’re better-positioned price-wise and the feedback from retailers has been quite good.
“Still, to relaunch and reposition a brand in such a sluggish environment needs retail help and retailers are quite defensive at the moment,” he commented. “The timing is a pity.”
Nevertheless, Winkler said it’s possible for Boss Woman to reach 30 percent of the company’s sales, “if everything goes well. And Hugo Boss needs to have Boss Woman. In the long term, they can’t depend on the men’s business alone. They need women’s. Or to acquire something,” he stated. Like Jil Sander, which, in Winkler’s view, would have been “quite nice, but now that Jil Sander is back, I think that option is gone. But the [Boss] brand is there. Armani has men’s and women’s, so why not Hugo Boss?”
Sälzer’s vision for Hugo Boss as a lifestyle brand gives women a central position. “I feel fashion in 10 years’ time will have much more to do with women than even now. The women’s market is 60 to 70 percent larger [than men’s], and every woman spends at least two times more on clothing than a man,” he said.
Moreover, he said that 10 years down the road, a globally positioned fashion brand that produces men’s wear only won’t be able to exist. “At least not on our level and at our size. One needs the women’s market to insure one’s image,” he stated.
As for acquisitions, Sälzer told journalists and analysts at Boss’s annual meeting in Metzingen this spring that the company would have its hands full getting the women’s business on track for the next 18 months. In moving the women’s operation from Milan to Metzingen last year, Boss had to more or less start from scratch. “The first season [back in Metzingen] was like open-heart surgery. In the second, the patient is getting better,” he quipped.
Nor does he mince words about the company’s earlier missteps, noting, “We made just about every mistake it’s possible to make. People expected Boss to be light, trendy and fashion forward but not excessive. Our fit in men’s wear is a big asset, and they expected Boss would be better than the rest. But we couldn’t fulfill those expectations, nor in the quality of fabric. And one also expects Boss to deliver on time. Others can deliver at the end of the month, but not Boss.”
Those problems have been addressed, he emphasized. “We’re fully on plan, and we’ll continue to improve.”
By the end of 2003, Boss Woman will be sold in 580 doors in 49 countries worldwide, up from 530 in 2002. Right now, 57 percent of Boss Woman sales are achieved in Boss shops, including shop-in-shops, and Sälzer sets the goal at around 60 percent. In men’s wear, Boss shops generate only 26 percent of sales, “but that’s the difference between the markets,” he said. “Women’s is more involved with brand presentation.”
In line with the Boss men’s business, Germany is Boss Woman’s largest market. Italy is also a key market, “which is very gratifying, as it’s a particularly fashion-conscious market,” Sälzer commented. The U.S. is still having “a hard time,” he acknowledged, partially because America has earlier delivery windows than anywhere else, he said. The collection is currently sold in 29 U.S. doors, including Aaron’s, Belk, Joe Brand, Daniel’s, Garb, Saks Fifth Avenue and Weekend. That number will go to 30 when the new 17,000-square-foot Hugo Boss store opens on Columbus Circle in New York in September, but overall, Sälzer is eyeing strong growth first in Europe, including Eastern Europe, and Asia.
Establishing Boss Woman’s 30 percent share of the business is going to take time. “It’s not bang and you’re suddenly a big player,” he said. “It’s more a matter of the smaller things, which, taken alone, are not spectacular, but together, are.”
Those include Boss’ worldwide slate of special events, arts and sports sponsorship, communications and ad campaigns, all organized out of Boss central in Metzingen. Boss devotes 8 percent of its sales (in 2002, approximately $103 million) to marketing and, Sälzer said, “we must not scale down our activities,” regardless of economic pressures. It’s about creating a buzz for the brand, “which can’t be achieved through an ad campaign only,” he noted.
That means special events like the “The Hugo Boss Affair,” a fashion take-off of “The Thomas Crown Affair,” which was elaborately staged in the Hotel Moscow for some 800 Russian guests in late January. This month, Boss goes to Berlin for a major men’s and women’s fashion show and party in the cavernous Post Bahnhof, the former train station of Berlin’s postal service. And in September, Boss will build a runway over the water for a Boss Woman’s event in a Budapest restaurant on an island, with the public watching the show from deck chairs on the other side.
Then there’s Boss’ art sponsorship, a way “to promote our name in areas where interesting people are. It creates a link to the brand that’s positively loaded,” said Boss communications director Philipp Wolff. Boss underwrites the Hugo Boss Prize, which is awarded every two years and sponsors numerous museum shows, such as the recent Matthew Barney exhibit at the Guggenheim Museum in New York, as well as shows from artists like Jeff Koons in its stores. Boss underwrote the German pavilion at the recent Venice Biennale, works on art and fashion projects with artists like James Rosenquist and Sylvie Fleurie and collaborates on theatre and opera productions. At the Salzburg Festival this month, for example, Boss will costume the cast of Mozart’s “Abduction from the Seraglio,” as well as host the premiere party July 27.
Add to this sport, with Boss sponsoring the West McLaren Mercedes Formula One racing team since 1981, an activity which involves creating a 35 item, 14,000-piece special collection every season for the entire team, from drivers to mechanics to those manning the hospital tents. Vitali Klitschko wore a custom-made Boss robe and shorts at his heavyweight fight in Los Angeles in June. In August, Boss will style a boat, including the sails and spinnaker, for the British Fastnet Race. While Boss’ athletic support is “male driven at present, we are looking into an involvement with women athletes,” Wolff noted.
Boss Woman’s daywear emphasis makes celebrity dressing less of an effective marketing option at present, though Boss counts Cate Blanchett, Penelope Cruz, Nastassja Kinski, Franka Potente, Rosanna Arquette, Catherine Zeta-Jones and socialite Celia von Bismarck among its Boss Woman fans.
The launch of a new Boss Woman fragrance this fall also will further awareness of Boss women’s wear. “We’re very successful in fragrance,” stated Lothar Reiff, Boss management board member responsible for creation and licensing. Under license to Procter & Gamble’s Prestige Beauté division, Boss fragrances do a particularly strong business in Germany, placing eighth and ninth in Douglas’ women’s bestseller list for May 2003, and taking positions four, five and six for men.
The theme of the new fragrance is slanted towards seduction, Reiff revealed, “and we hope for a synergistic effect from the Boss Woman scent to the fashion and back to the fragrance again,” he said.
The fashion collection, of course, is critical. “I believe we carried out a sure relaunch for spring-summer 2003, and for fall-winter 2003-04 we’re on the right road,” he declared. “It’s a mix of fashion and sportswear, and we’ve become more faceted and offer more possibilities. [The collection] is more feminine and not so minimalistic, with a touch of sex appeal, which is very important.
“We don’t want to dress the fashion victim, but the woman interested in fashion. With fashion,” Reiff continued, “that’s in no way garish, but nonetheless surprising. And we are working very hard to make a woman’s suit that has a certain something.”
Reiff added, “We definitely never wanted Boss Woman to be a bridge range. And while the line had orientation difficulties in the beginning, the collection is definitely moving in the direction of a designer line. That’ll be more visible than ever for spring-summer 2004 with a collection that’s interesting, always modern and which captures the spirit of the time.”