Hugo Boss is raising its 2025 top and bottom-line ambition due to the success of its Claim 5 growth strategy. It aims to achieve its previous mid-term sales target of EUR4bn this year and believes it will generate revenues of around EUR5bn by 2025. This, Hugo Boss says, represents a strong compound average growth rate (CAGR) of +11% compared to the fiscal year 2022 (2022: EUR3.7bn), thus well above the anticipated industry growth.
The superior top-line ambition is coupled with significant improvements in EBIT, which is forecasted to grow to a level of at least EUR600m by 2025 (prior target: around EUR480m). The increased EBIT margin target reflects the company’s updated gross margin projections, exceeding initial expectations.
To deliver on these 2025 financial targets, Hugo Boss will continue to invest in its business and execution of its Claim 5 strategy.
Further to this, as part of its sustainability strategy, Hugo Boss will, among other things, strongly increase its circularity initiatives, leverage nature-positive materials, fight microplastics, and keep pushing towards zero emissions.
Initially introduced in August 2021, the Claim 5 growth strategy aims to accelerate growth across all Hugo Boss brands, touchpoints, and regions.
It targets the company’s vision and aspiration to be the world’s leading technology-driven fashion platform, and one of the world’s 100 leading brands, and is based on five pillars: Boost Brands, Product is Key, Lead in Digital, Rebalance Omnichannel and Organise for Growth. There is also a clear commitment to sustainability, Hugo Boss notes.
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Driven by this strategy execution and bold branding refresh, which started in early 2022, the company pointed out, momentum for both Boss and Hugo accelerated. This resulted in expanded market shares worldwide and significant progress in increasing brand relevance.
The company is updating its growth strategy based on the progress made across all five strategic priorities in the last two years and to deliver on its increased 2025 financial ambition.
Progress so far
Claim 1 – Boost Brands
To further increase brand relevance, particularly among its younger audience, Hugo Boss will continue to pursue and develop its two-brand strategy. This will be supported by two distinguishable marketing strategies for Boss and Hugo aimed at activating consumers across all touchpoints and maximising consumer impact. In this context, the company says it will continue its digital-first marketing strategy, supported by star-studded campaigns, strong collaborations, and unique brand events.
The German brand will therefore continue to keep its marketing investments at a level between 7% and 8% of group sales until 2025 (2022: 7.9%). Consequently, by 2025 the company is now targeting sales of around EUR3.5bn for Boss Menswear (prior: EUR2.6bn), around EUR500m for Boss Womenswear (prior: EUR400m), and around EUR1bn for Hugo (prior: EUR800m).
Claim 2 – Product is Key
There will be continued emphasis on further enhancing both brands’ 24/7 lifestyle images. To live up to this target, the company will continue to fully exploit the potential of its Boss Black, Boss Orange, and Boss Green brand lines for the Menswear collection, and leverage the exclusive Boss Camel line introduced in late 2022.
Further building on these successes, Boss is reintroducing its Orange line to Womenswear while also introducing the Camel line. Products ranging from high-end tailoring to smart casual and active lifestyles will therefore from now on be part of both Boss Menswear and Boss Womenswear. In addition, with the upcoming launch of the Hugo Blue brand line in early 2024, Hugo Boss said it will explicitly seize opportunities in denimwear to further win over Gen Z and young-minded consumers.
Both brands, Boss and Hugo, will continue to maintain their superior price-value proposition, thus fostering their unique positioning in the premium / affordable luxury segment.
Claim 3 – Lead in Digital
Leveraging the full potential of digitalisation will remain a key driver to deliver on the company’s vision. Over the past two years, Hugo Boss achieved strong progress in further digitalising important business activities – from digital trend detection and product creation to AI-enabled pricing and innovative experiences in the metaverse – thereby laying the foundation for further initiatives.
The Hugo Boss Digital Campus, physically inaugurated in Porto, Portugal, this year, is described as being at the heart of the company’s digital journey as it significantly expands its data analytics capabilities. By capitalising on data-driven insights, the Digital Campus will further drive meaningful insights and efficiencies along the value chain, while also supporting the goal of creating a seamless customer experience across all consumer touchpoints.
Claim 4 – Drive Omnichannel
Going forward, the company will continue to fully leverage its high-quality channel mix on a global scale. Against this backdrop, Hugo Boss aims to increase revenues in brick-and-mortar retail to more than EUR2.5bn by 2025 (prior: around EUR2bn). In this context, the company is targeting store productivity improvements of at least 3% per year, supported by investments of now up to EUR600m (prior: EUR500m) between 2021 and 2025 to modernise, further optimise, and selectively expand its global retail footprint.
At the same time, Hugo Boss will continue to build on its regained strength in brick-and-mortar wholesale. To take its business in emerging markets to the next level, the company will further strengthen its global franchise business by increasing the total number of full-price franchise stores from 300 to around 500 over the coming years.
From a regional perspective, Hugo Boss will continue to drive its broad-based momentum across all geographies, thereby further increasing market shares by 2025.
Claim 5 – Organise for Growth
Over the past two years, Hugo Boss has transformed its operating model into a platform approach and implemented a streamlined, brand-led organisational setup that enables profitable growth and ensures rigorous strategy execution at a global level. To foster growth and further drive efficiencies going forward, the company will step up investments in its supply chain.
Hugo Boss has also recently launched its Digital Twin initiative, aimed at enabling smart decision-making through a tech-driven business operations platform and being a key enabler to meeting consumer demand even better in the future. While further increasing the stability and transparency of its global supply chain, the Digital Twin will contribute to the company’s future growth, profitability, and sustainability ambitions.
At the same time, Hugo Boss is expanding its global logistic capacities by around 40% as well as continuing its nearshoring initiatives by bringing production even closer to EMEA and the Americas.