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Hugo Boss shrugs off weaker U.S. sentiment

by Staff GBAF Publications Ltd
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Hugo Boss shrugs off weaker U.S. sentiment

By Linda Pasquini

(Reuters) -German fashion house Hugo Boss on Thursday raised its 2025 sales target, betting on strong demand across its markets as it proved immune to weaker U.S. consumer sentiment.

The company now aims for annual sales of 5 billion euros ($5.4 billion) by 2025, compared to the previous target of 4 billion euros, which it expects to meet this year.

Hugo Boss has undergone a brand revamp under the leadership of former Tommy Hilfiger head Daniel Grieder, investing in marketing to boost sales and expand market share.

It also targets operating profit (EBIT) of 600 million euros by 2025, up from a previous goal of around 480 million, and an EBIT margin of at least 12% versus a previous forecast of around 12%.

The company, whose brands have been gaining traction among younger consumers thanks to targeted social media campaigns, said it would keep marketing spend at 7% to 8% of group sales until 2025.

Grieder said he still sees “very promising” growth rates in the U.S., in contrast with luxury and retail peers flagging weakening consumer spending there.

“While cracks are clearly visible in the US consumer environment and to a lesser extent in Europe, Hugo Boss has been immune so far,” Citi analysts said.

The world’s top consumer and luxury goods companies started 2023 strongly as demand in China recovered, but worries remain regarding U.S. growth and a possible slowdown in China’s post-COVID rebound after factory activity dropped in May.

In the Asia-Pacific region, Hugo Boss expects revenue to grow at a low double-digit percentage rate annually between 2022 and 2025, and aims to grow the region’s share of sales from the current 13% to around 20%, or 1 billion euros, by 2025.

“Unleashing the brands’ full potential in China will continue to be of particular importance,” the group said.

Hugo Boss shares, which have gained around 46% over the past year, fell slightly, down 1.5% .

($1 = 0.9247 euros)

(Reporting by Linda Pasquini and Elizaveta Gladun in Gdansk; Additional reporting by Helen Reid in London; editing by Milla Nissi, Jason Neely and Christian Schmollinger)