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January 19, 2022

Hugo Boss weighs Turkey production boost as FY sales surge

German luxury fashion brand Hugo Boss has hailed 2021 a “highly successful” year as it booked a 43% jump in sales compared to 2020 to EUR2.8bn (US$3.17bn).

By Hannah Abdulla

Hugo Boss said it exceeded its full-year 2021 sales and earnings targets, which had been revised upwards back in October. On a preliminary, non-audited basis, the company recorded sales of EUR2.8bn for the period, representing an increase of 43% compared to the prior year, both on a reported and currency-adjusted basis.

It added currency-adjusted sales remained only 1% below pre-pandemic levels, with an average of around 90% of the company’s stores open during the year.

Sales rose in all regions during the 12 -month period, with the biggest jump coming from the Americas at 78% year-on-year to EUR423m on a currency-adjusted basis.

Europe, the Middle East and Africa delivered a 41% increase in currency-adjusted sales to EUR1.7bn, while Asia Pacific saw a 22% increase to EUR423m.

Earnings Before Income Tax (EBIT) for 2021, meanwhile, amounted to EUR228m on a preliminary basis versus a loss of EUR236m a year prior.

Hugo Boss said it recorded the strongest quarterly sales in its history in the fourth quarter, with currency-adjusted group sales up 51% on the prior-year period to EUR906m. Sales were up 12% compared to 2019, prior to the pandemic.

EBIT, meanwhile, increased to EUR100m on a preliminary basis.

“2021 was a highly successful year for Hugo Boss,” CEO Daniel Grieder said. “We strongly accelerated our sales and earnings development throughout the year and also made first great strides in executing our new ‘Claim 5’ growth strategy. The upcoming weeks will see further important milestones, with the introduction of our new branding and the launch of the biggest Boss and Hugo marketing campaigns in our company’s history. Based on these exciting initiatives, we will further drive brand relevancy in 2022.”

Commenting on the results Louise Deglise-Favre, analyst at GlobalData, says the rise in sales has been helped by the group’s “successful pivot towards a more casual product offering, alongside social events pre-Christmas boosting spend on its more traditional formalwear lines.”

Its digital proposition focus has also paid off with its total digital sales in Q4 FY2021 growing 50% on the previous year and 85% on Q4 FY2019, representing 20% of the group’s total sales.

Deglise-Favre adds: “Though this is still low compared to the online penetration of the apparel market in key countries such as the UK (47.4%) and Germany (35.1%) in 2021, Hugo Boss is well-positioned to reach its goal of digital accounting for 25-30% of total sales by 2025. Continuing to focus on impactful digital marketing content featuring celebrities relevant to younger generations, and user-friendly features on its website such as personalized product recommendations will ensure it reaches and potentially surpasses, this target.”

Last month, reports surfaced that Hugo Boss would expand the scale of production in the Izmir region of Turkey in a bid to shorten its supply chains.

Hurriyet Daily News, citing an interview with CEO Daniel Grieder published by the Financial Times, said the brand would be expanding production capacity closer to its base in Europe to reduce its dependence on south-east Asia at a time when global supply chains are under severe pressure.

Grieder also told the publication supply chain disruptions were creating “unbelievable challenges” for Hugo Boss and its rivals, with supply shortages, delays and higher shipping costs.

Hugo Boss did not return a request for comment when approached by Just Style.

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