Casualwear will be key to an ongoing post-pandemic at Hugo Boss, which has been mostly known as a formalwear brand until relatively recently.
Today, casualwear makes up around half of all of Hugo Boss’ offerings, with formalwear and shoes making up another 25 percent each.
In August this year, the brand, which is based in southern Germany, unveiled a new five-pillar strategy called “Claim 5” that wants to evolve Hugo Boss into a “24/7 lifestyle brand.”
At a press conference revealing positive third-quarter results, the company’s chief financial officer Yves Müller said he thought the results were partially due to the fact that the strategy was already working. Hugo Boss reported that business was back to pre-pandemic levels in the third quarter, as revenues grew 40 percent to 755 million euros.
It was also an improvement on the third quarter of 2019, the last “normal” year before the COVID-19 health crisis began. On a two-year stack basis — that is, comparing this third quarter to those in both 2019 and 2020 together — Hugo Boss grew revenues 7 percent.
The results were better than expected by market analysts, who had predicted around 739 million euros in revenues, and the company confirmed its recovery was proceeding faster than anticipated.
“The end of the lockdown obviously helped us a lot,” Müller told journalists. In the third quarter, around 95 percent of Hugo Boss’ retail network was open whereas in the second quarter, only 80 percent had been, he explained.
“But it’s not enough to simply explain our success with market conditions. There are also self-made reasons for our momentum,” he boasted.
Müller noted that the company spent 40 percent more on marketing in the third quarter. Hugo Boss also plans to spend 500 million euros updating its retail network of 450 stores over the next five years, he added.
Early next year, an Oxford Street flagship will open in London and there are several major marketing campaigns planned for around the same time. Hugo Boss chief executive officer Daniel Grieder has also spoken about future mergers and acquisitions in line with the new five-year strategy. The top management team has recently been rearranged as well.
Müller pointed to the success of the recent launch of a second capsule collection with Russell Athletic that took place in a baseball park during Milan Fashion Week. This received 4 billion views and led to 25 million interactions shortly after the event, he said, as well as sales in the double-digit millions.
As with most other fashion firms, Hugo Boss’ online sales grew massively during the pandemic as shoppers turned to retailers’ websites to make purchases. As brick-and-mortar stores have reopened, this growth in online sales has slowed, with Hugo Boss reporting an increase of 37 percent compared to the same three months last year, and sales of 67 million euros via this channel. The company plans to relaunch its website in 2022.
Müller also credited the Russell Athletic collaboration, as well as Hugo Boss’ recent alliances with the NBA, for a “turnaround in the difficult American market” and for making the brand increasingly attractive to younger consumers.
In the Americas, Hugo Boss sales rocketed 94 percent to 144 million euros in the third quarter, compared to the same period in 2020. The German brand also saw sales in Europe rise 38 percent, currency adjusted, to hit 512 million euros.
Overall sales in Asia Pacific continued to be impacted by ongoing lockdowns and closures. The company said around 10 percent of its retail network had been closed in the territory between July and September.
This meant that, despite growth in mainland China, sales in Asia Pacific slipped 1 percent compared to the same period in 2020, and down 14 percent compared to the third quarter in 2019.
Hugo Boss is best known for its formal men’s wear and had been challenged as the pandemic meant customers were working from home and formal events were canceled.
The brand reported that sales of suits and other occasion wear had picked up in the third quarter as summer events were scheduled, but noted that casual clothing still did better for both of its lines. Hugo, which tends to be more casual, grew sales 51 percent to make 117 million euros. Sales of the more formal Boss collection increased 38 percent to hit 638 million euros.
The company’s earnings before interest and taxes, or EBIT, stood at 85 million euros in the third quarter. This result takes the company back to pre-pandemic levels: In 2019, EBIT for the third quarter was 83 million euros.
“We look back on a very strong quarter with both sales and earnings exceeding pre-pandemic levels,” Grieder said in a statement.
Hugo Boss said it now expected revenues to increase by 40 percent over the whole year versus previous guidance of 35 percent.
Instead of an EBIT of somewhere between 125 million and 175 million euros, Hugo Boss now expects EBIT somewhere between 175 million and 200 million euros.