The Metzingen fashion group Hugo Boss AG is continuing to push forward with its reform efforts. On Tuesday evening, the company announced a new, medium-term program called “Claim 5 Touchdown.”
It continues the “Claim 5” strategy that CEO Daniel Grieder launched after taking office in summer 2021. “Claim 5 was a growth strategy. It was about refreshing the brand and bringing it back to the stage, and we achieved all of these goals,” emphasized Grieder during a conference call on Wednesday. “We now want to move into a second phase in which we concentrate on profitability and the result.”
The new concept, which was approved by the Executive Board and Supervisory Board on Tuesday, applies until 2028. “Implementation will focus on three central areas: brand, sales and operations,” the company explains in a statement. These priorities would “increase efficiency and create the conditions for long-term, profitable growth.”
With the measures, the group also wants to “significantly accelerate free cash flow generation”. The aim is “to achieve average annual free cash flows of around 300 million euros from 2026”.
Hugo Boss creates an “independent powerhouse” for women’s fashion
The company sees great potential for profitable growth, particularly in the women’s fashion sector. In order to take advantage of this, a structural reform is planned. “Two independent powerhouses for menswear and womenswear” are being created, which are intended to develop synergies between the two corporate brands Boss and Hugo.
As part of the reform, all women’s fashion activities will be brought together under one roof. The aim is to develop a “clear DNA” for the womenswear range and to formulate an overarching brand statement. In addition to the clothing collections, this should also include categories such as shoes, accessories and handbags.
The company announced that it had already hired an executive from a well-known international women’s fashion brand to lead this area, who will take up her new position in January.
In the Boss Menswear division, management is committed to further expanding its “strong positioning as a 24/7 lifestyle brand”. The Hugo label will “further develop its identity with a sharper positioning and a more accessible product range and focus even more on contemporary tailoring”.
Management is committed to increasing efficiency, but is not planning any layoffs
The group also announced that it would further optimize its own store portfolio in order to “continuously improve the customer experience and at the same time increase space productivity and efficiency in its own retail”. In the wholesale business, the clothing supplier will “expand strategic partnerships, pursue a more selective product range approach and expand its franchise business”. In addition, the digital sales channels are to be further strengthened.
Otherwise, the company relies on optimization “along the entire value chain” to achieve its goals. “The most important priorities include further increases in efficiency in the area of procurement through the continuous optimization of the supplier network, a preference for sea freight and shorter delivery times,” it said in a statement. In addition, the increased use of new technologies and artificial intelligence (AI) in planning processes should enable “faster and more intelligent decisions”. However, there are currently no plans for layoffs.
“Year of adjustment”: Losses in sales and a lower operating result are forecast for 2026
The measures presented are intended to bear fruit in the medium term, but for now the clothing supplier is accepting losses. “2026 will be a year of adaptation, strengthening the business by streamlining processes, overhauling the range and optimizing the distribution network,” the company said. “Against the backdrop of a deliberate refocus of brands and distribution channels, a mid- to high-single-digit currency-adjusted sales decline is expected in 2026, before a return to growth in 2027, which is expected to accelerate in 2028.”
For the coming fiscal year, management is already expecting an improvement in gross margin, “supported by improvements in procurement efficiencies, selective price adjustments and higher sell-through at full price.”
Specifically, the company predicts that earnings before interest and taxes (EBIT) will fall to between 300 and 350 million euros in 2026. For the current year, the group expects an EBIT at the “lower end” of the target corridor of 380 to 440 million euros. However, profitability is expected to improve in 2027.
After disagreements: CEO Grieder sees “good partnership” with Frasers Group
With a view to the recent disagreements with the largest individual shareholder, the British Frasers Group, the board members kept a low profile in the conference call. The British retail group, which currently holds 25 percent of the shares in Hugo Boss and even has access to more than 30 percent of the shares via financial instruments, announced in a letter last week that it would withdraw its support from the chairman of the supervisory board, Stephan Sturm.
Grieder now explained that Hugo Boss continues to maintain a “good partnership” with its major shareholder. He declined to comment on speculation about a possible takeover of the company by Frasers Group.