- Hugo Boss is separating from Russia business
Hugo Boss severs ties with its Russia business. The fashion conglomerate confirmed media reports that its Russian subsidiary had been sold to long-standing wholesale partner Stockmann JSC. "Stockmann is a company that belongs to one of the long-standing wholesale partners of Hugo Boss in Russia. Consequently, Hugo Boss will no longer be represented in Russia with its own subsidiary," a spokesperson said. Russian authorities have already approved this.
Soon after the start of the Russian attack on Ukraine in March 2022, Hugo Boss closed its stores in Russia and suspended online business. Together with Ukraine, the Russia business accounted for around three percent of the group's turnover in 2021, according to the label.
Cost-cutting program
Things are not going smoothly for Hugo Boss at the moment. After a decline in profits in the second quarter, the fashion conglomerate announced that it would be implementing a cost-cutting program. The company said it was taking the current market environment into account and would be tightening its cost discipline, as announced by CEO Daniel Grieder when presenting final figures. In addition to potential savings in procurement, the company also wants to reduce costs in areas such as distribution, marketing, and administration. Furthermore, the cost structure in retail will be adjusted to "current visitor trends."
These measures are intended to support the company's results in the second half of the year. A weaker consumer climate and higher costs for marketing and in stationary retail led to falling profits and a decline in profits in the second quarter. At the end of the day, Hugo Boss earned 37 million euros, around half of the previous year's value. The company had already presented preliminary figures in mid-July and adjusted its forecast for the full year. Last year, Hugo Boss achieved a record turnover.
New growth strategy
Three years ago, the Metzingen-based company presented a new growth strategy called "Claim 5," with the goal of doubling its turnover 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 turnover to 4 billion euros by the year 2025 and become one of the top 100 global brands." Now, the company is only expecting an increase in turnover in 2024 of one to four percent, to 4.20 to 4.35 billion euros. Previously, Hugo Boss had been expecting a turnover increase of three to six percent.
The sale of Hugo Boss's Russian subsidiary to Stockmann JSC marked the end of the company's presence in Russia as a fashion group with its own subsidiary. With the implementation of a cost-cutting program to improve profits, Hugo Boss is focusing on reducing costs in various areas, including distribution, marketing, and administration, as part of its new growth strategy "Claim 5."
