“Stockmann is a company belonging to one of Hugo Boss's long-term wholesale partners in Russia. Therefore, Hugo Boss will no longer be represented in Russia by its own subsidiary," said the company's spokesman. This decision has already been approved by the Russian authorities.
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No sign of decline in consumption: Hugo Boss with a sharp increase in sales and profits
The decision to sell the branch in Russia is not a surprise. Already in March 2022, shortly after the Russian attack on Ukraine began, Hugo Boss closed its stores in Russia and suspended its online operations. Russia and Ukraine together accounted for approximately three percent of the group's turnover in 2021.
Cost reduction program
The fashion concern is currently struggling with financial difficulties. After reporting a decline in profits in the second quarter of 2023, Hugo Boss announced the implementation of a cost-cutting program. The company's CEO, Daniel Grieder, noted that the company intends to adapt its activities to current market conditions, tightening cost discipline. Savings in supplies and cost reductions in areas such as distribution, marketing and administration are planned. Additionally, the retail cost structure will be aligned with “current visitor trends.”
These measures are intended to support the company's performance in the second half of the year. The decline in profits was the result of a weaker consumer climate and higher marketing and stationary retail costs. In the second quarter, Hugo Boss' profits amounted to 37 million euros, which was about half of the previous year's figure. The company revised its forecasts for the entire year in mid-July.
New "Claim 5" growth strategy
In 2021, Hugo Boss presented a new growth strategy called "Claim 5", which aims to double turnover to EUR 4 billion by 2025. CEO Daniel Grieder emphasizes that the company's vision is to become the world's leading technology-based fashion platform, significantly changing the way we interact with consumers. However, current forecasts show slower turnover growth in 2024, ranging from one to four percent, implying a turnover of €4.20-4.35 billion. Previous forecasts assumed an increase of three to six percent.
The sale of the Russian subsidiary and the implementation of a cost reduction program are key elements of the implementation of the new growth strategy. Hugo Boss focuses on cost optimization in various areas of its operations to improve its financial results and achieve the ambitious goals set in the "Claim 5" strategy.
