Pointing to the pandemic, Hugo Boss said sales slipped 59 percent in the second quarter to 275 million euros. Even though 90 percent of Hugo Boss stores are now open, half had been closed during most of the second quarter.
This added up to a significant decline for the German company’s half-year accounting. By June, it had brought in 830 million euros, a decrease of 38 percent compared to the previous half year. At the same time last year, Hugo Boss had already made 1.34 billion euros in sales.
Market analysts from the likes of Goldman Sachs, JP Morgan and RBC Europe said the results were slightly worse than expected, but that the company’s moves to reduce costs and ensure financial stability and credit were praiseworthy.
During a press conference, company spokesperson and board member Yves Müller accentuated those more positive developments.
As with many other European brands, Hugo Boss saw signs of an upturn in China, with a gradual return to growth that started at the end of March and reached double digits in June. That added up to growth of 4 percent in the second quarter out of mainland China.
July had also been positive there, Müller added, and “it was encouraging to see how quickly our business in mainland China has come back to normality.”
Because of double-digit drops in other areas, like Hong Kong and Macau, sales in the Asia Pacific territory were still down 36 percent for the quarter, totaling 69 million euros.
Slumps in Europe — the brand’s biggest market — and North America were even bigger during the second quarter, with sales in those territories falling 59 percent and 82 percent, respectively.
In the Americas, sales in H1 fell 52 percent in currency-adjusted terms to 124 million euros.
Online sales vaulted 74 percent to total 55 million and make up a fifth of all sales in the second quarter, Müller reported.
Sales via Hugo Boss’ own web site as well as through various concessions — including Zalando in Europe, Next in the U.K. and Amazon from the second quarter onward — totaled 93 million euros in the half. Online sales have risen from just 4 percent of total sales to 11 percent, the company said.
Hugo Boss wants to quadruple online sales to 400 million euros by 2022 and is rolling out digital services to 24 new territories this year, including Australia, Japan, Poland and Portugal. This month, Canada and Mexico should come online.
While sales of both of the company’s brands — Boss for formalwear and suiting and Hugo for more casual looks — declined, Hugo fared better than Boss. The more casual line only fell 30 percent while Boss dropped 38 percent.
A lack of suit sales for special occasions, many of which were postponed or canceled, had certainly had a negative impact on the second quarter, Müller conceded. But he didn’t think current trends would permanently dampen this segment.
In fact, he said, the company believed there would be pent-up demand. “I don’t know what it was like in your private lives but, for example, my daughter’s confirmation was postponed,” Müller explained. “People will still get married. There will still be confirmations and christenings and people will meet up again. And these are all occasions where consumers will say, ‘Oh, I need to get myself something new for that.’”
In terms of more enduring and systemic trends — for example, working from home — Müller said the company was well prepared because it had already seen several years of casual clothing increasingly mixed with more formalwear.
“And we’re on trend with that,” the executive said. “Suits are our heritage, our DNA, but we must keep modernity close to our hearts.”
Given ongoing uncertainties about the pandemic, Hugo Boss couldn’t offer any reliable guidance for the rest of the year. Retail sales had continued to improve from May onward, Müller reported, and preliminary results showed that July was also looking positive.
The company now believes there could be a second wave of lockdowns, but is betting that these will be more localized. For example, stores in California, New York and most recently, in Melbourne, Australia, had to be closed. Sales at airport locations also remained weak. But in the rest of the world, Hugo Boss sites were open.
Questioned further about recent, unsettling developments inside the company over this quarter, Müller was sanguine. “We are proud of how we have coped [with this crisis],” he said.
By the end of June, controversial British retail entrepreneur Mike Ashley, whose Frasers Group is known for buying into distressed companies, had taken a stake of 10.1 percent in Hugo Boss.
In mid-July, longtime chief executive officer Mark Langer left the top job officially. New ceo Daniel Grieder and new sales manager Oliver Timm, both formerly of PVH Europe, won’t take up those positions until 2021. Until then, board members — including Müller — are running daily operations.