Hugo Boss’ data for the third quarter of 2016 are quite negative. Revenues: -3%, for a value of 703 million euro. -5% Europe, United States -14%. A bit better was the response from China, a market that at constant rates, has lost 4% but that considering like-for-like sales “has stopped the negative trend”. A little of solace, although flanked by +2% of the flagship, as the online business, excluding any currency effect, fell by -15%. Worrying it’s also a -14% EBITDA before certain non-ordinary items, that reached a figure of 144.5 million euros, higher than what analysts’ forecasts which had predicted 138.5 million euros. Hugo Boss in the luxury segment does not work anymore: so the german brand is changing strategy, going back to its roots. “The effort we have made to open up a road for ourselves in the luxury market has not been useful for our business”. With these few, lapidary words that Mark Langer, CEO of Hugo Boss since last May (in the photo), alludes to the future of the German brand: so long to the top range and back to the premium segment. According to his first interview with a German newspaper, released by Reuters, the new CEO intends to close the less profitable stores and reduce costs by 50 million euro per year. In this outlook then it is easy to see why the designer brand decided not to take up the opportunity of opening a new boutique in the Galleria Vittorio Emanuele II in Milan at the beginning of October (read the news here). The move is not only an attempt to distance the brand from the management policies of the previous CEO, Claus-Dietrich Lahrs who, by opening more than 400 boutiques all over the world and increasing costs in the womenswear sector, had attempted to make Hugo Boss a household name in the luxury segment. It is also a warning light that shows how the designer brands are reacting to the new trends in the luxury segment, which, following a sparkling double-digit rise, has subsequently slowed down and seems destined to reach normal levels of +2/3% in the growth trend stakes. Over the last year, analysts have explained that while the so-called hard luxury maintained its profile, and the premium and affordable markets continued to grow, the aspirational product was the element that suffered most as a result of the unfavourable market trend. According to the experts, this context was the element that drove the designer brands to elevate their market position towards the high-end luxury segment. With Hugo Boss we have the first example of a brand that sets itself the opposite goal. Salvation, it would appear, can also be found in the lower ranks.
Hugo Boss: -3% in the third quarter. Mark Langer (CEO): “So long, luxury: we’re going back to the premium segment”
