Focus on implementing the strategic growth drivers

HUGO BOSS has identified four strategic growth drivers, the consistent implementation of which is intended to contribute significantly to the future growth of the company: the online business, retail productivity, the Asian market and the strengthening of HUGO in the contemporary fashion segment.

Strategic growth drivers (graphic)

Exploiting the full potential of online

HUGO BOSS sees great growth opportunities above all in expanding its online business. With above-average growth, the online business is expected to contribute significantly to achieving the Group’s targets in the coming years. To this end, the Group is focusing on further expanding the concession model to the online business and tapping the full potential of its own online store The Group plans to roughly quadruple sales in its own online business by 2022 (base year 2018: EUR 110 million).

HUGO BOSS is selectively seeking close collaborations with multibrand platforms whose presentation best matches the brand values of BOSS and HUGO. A significant measure in this is the expansion of the concession model to the online business. The Group already introduced the concession model into its business years ago with brick-and-mortar retailers in which HUGO BOSS sells to end customers on its own behalf and on its own account. This enables HUGO BOSS to directly manage the presentation and distribution of its brands in a third party environment, while at the same time ensuring a consistent and stringent pricing. In this context, the Group has already been able to intensify a large number of strategic partnerships in the past year. In 2020 and beyond, the Asia/Pacific region and Europe will be the focal points for the expansion of the online concession model. This will enable HUGO BOSS to serve customer demands even better in the future.

Moreover, HUGO BOSS intends to fully utilize the potential of its online store in the future and develop it into a digital flagship store. To do so, the Group is continuously optimizing the user-friendliness of its website, which as of today is already present in 15 important international markets. In 2019, in addition to expanding to the markets of Denmark, Sweden, Finland and Ireland, further improvements were made in the page layout and in the navigation of the website and mobile app. For 2020, the Group is planning to extend to further online markets. The Group also sees potential for intensifying the commercial use of digital channels, such as Instagram or WeChat.

Improving retail productivity

Improving sales productivity in its own brick-and-mortar retail business represents another strategic growth driver for HUGO BOSS. The Group aims to increase its sales per square meter by an average of 4% per year by 2022 (base year 2018: EUR 10,700 per sqm). The continuous optimization of the global retail network and the further enhancement of the shopping experience are expected to contribute significantly to this.

The consistent renovation of existing BOSS stores to the most recent store concept is crucial in order to optimize the store network. The integration of modern architectural elements and various digital services are intended to significantly enhance the shopping experience. Also in 2019, numerous strategically significant retail stores, such as the world’s largest BOSS store on the Champs-Élysées in Paris, were upgraded to the latest store concept. Customers can now experience the BOSS brand in a new environment already at around 100 locations worldwide. In 2020, the Group will continue to invest in the modernization of BOSS stores with the latest concept. In addition, the Group is striving to expand its global distribution with selective new store openings. Particularly in mainland China, the Group sees potential to open up more BOSS stores in the coming years. Conversely, the Group will use expiring lease agreements to reduce the size of, relocate or ultimately close those stores that are not meeting productivity and profitability requirements. Consequently, HUGO BOSS anticipates total selling space of its own retail store network to remain broadly stable in the coming years. Earnings Development, Sales Performance

In addition to the continuous optimization of the product range in the stores, the further improvement of service also plays a crucial role in the enhancement of the shopping experience. In order to further increase the quality of customer service, the Group will continue to invest in structured training offerings for its sales staff. In addition, the further expansion of omnichannel services is expected to enhance the shopping experience in the long term. Already today, for example, customers can check whether a product offered in the online store is also available in the nearest brick-and-mortar BOSS store. In Europe and the United States, services like “Click & Collect” – in-store pick-up of items purchased online – or “Order from Store” – online ordering of missing sizes or items in the store – are also available.

Realizing growth potential in Asia

HUGO BOSS is convinced that its brands have significant growth potential in Asia in particular. Therefore, exploiting the potential in this region represents another strategic growth driver. The share of sales in the Asia/Pacific region is expected to grow to around 20% by 2022 (base year 2018: 15%). Chinese consumers are playing a key role in this context. In particular, the Group sees potential to open up additional retail stores in mainland China in the coming years. In addition, the online business in China is expected to contribute to the above-average growth of the region.

The Group intends to raise brand awareness and brand desirability for both BOSS and HUGO in the region, with marketing measures specifically targeted at Chinese customers. This includes, for example, the partnership established in early 2020 between BOSS and the Chinese actor and singer Li Yifeng, who is expected to accompany important campaigns as a brand ambassador. Last year, BOSS was also represented at a fashion show in Shanghai for the first time since 2013, underlining the importance of the Chinese market for the Group.

Strengthening the HUGO brand in the contemporary fashion segment

The Group also sees great potential for its HUGO brand. The focus on the dynamic contemporary fashion segment, which has already achieved higher growth rates in recent years than classic tailoring, for example, should also contribute to above-average growth of HUGO in the coming years. This entails taking full advantage of the potential of the brand in the casualwear segment. For example, it is expected that products inspired by graphic reinterpretations of the HUGO logo in particular, such as sweaters, hoodies and T-shirts, will continue to grow at an above-average rate.

Following the opening of the first HUGO stores with their own store concept in the last two years, the Group will continue to examine potential for the selective opening of other HUGO stores, especially in Europe and the Americas. By intensifying selected wholesale business partnerships, further growth opportunities in the contemporary fashion segment should also be tapped both in brick-and-mortar retail and online. In order to increase HUGO’s international recognition and desirability, partnerships with brand ambassadors and influencers, such as those with British musician and artist Liam Payne, and keeping up a strong focus on the social media activities of the brand are also intended to continue contributing to this.