Hugo Boss Has Record 2022, Promises to ‘Keep Up the Hype’
BERLIN — Hugo Boss broke the 3 billion euro sales barrier for the first time in 2022, the company said Thursday, as it released financial results.
Last year revenues at Hugo Boss grew 27 percent in currency adjusted terms to 3.65 billion euros. In the fourth quarter, Hugo Boss’ revenues rose 15 percent to 1.07 billion euros.
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At a press conference about the results, company executives celebrated what they described as a “milestone” on the road toward their stated goal of doing 4 billion euros in sales by 2025.
Chief executive officer Daniel Grieder and chief financial officer Yves Muller both credited Hugo Boss’ expensive brand refresh for the positive results, despite ongoing macroeconomic uncertainty.
“We have introduced the right strategy at the right time,” Grieder told journalists. “We have achieved significant progress within only a short period of time….The bold brand refresh we initiated in January 2022 has impressively fueled our brand power.”
The company is committed to “keeping up the hype this year,” Grieder said, name-checking Hugo Boss’ upcoming see now, buy now fashion event in Miami on March 15.
There is no doubt that “keeping up the hype” has been expensive. Over the course of the year, Hugo Boss’ marketing costs rose 41 percent and, in total, operating expenses went up 29 percent. By the end of the year, more than 200 points of sale had been refreshed, the company added.
But, as the company pointed out, EBIT bounded 47 percent in 2022 to 335 million euros as the brand refresh and new marketing moves led to more full-price sales and less discounting. This was despite some product price increases during 2022, due to inflation, with more increases potentially coming from May. The price increases have not discouraged customers in this premium segment, Hugo Boss executives noted, again crediting the brand’s new image for its increased desirability.
Despite successes in 2022, Hugo Boss acknowledged that ongoing uncertain global economic conditions would be an issue this year. In its guidance for 2023, it expects sales to slow, only increasing by between 4 and 6 percent to between 3.8 billion and 3.9 billion euros. EBIT is expected to grow between 5 and 12 percent, reaching 375 million euros at most.
Will Hugo Boss be able to retain the kind of momentum and marketing spend it led with in 2022, given the more cautious outlook for this coming year?
“We walk the talk and we are doing everything we said,” Grieder told WWD. Part of the CEO’s strategy for Hugo Boss, called Claim 5, stated that marketing investments would total between 7 and 8 percent of group sales. “Last year we were at 7.9 percent,” Grieder explained, “and this is the moment to continue boosting the brand.”
“But we are not on autopilot,” he continued. “We go from quarter to quarter and we will make sure it [marketing spend] is what we can afford. If there is anything happening that is unexpected, we always have ways to put the brakes on and adapt.”
Hugo Boss’ home market of Europe, the Middle East and Africa continues to be its largest, making up around two-thirds of the business. Fourth-quarter sales in Europe grew 18 percent in currency adjusted terms to 647 million euros. Over the whole year, revenues from its biggest territory rose 32 percent to 2.3 billion euros. Growth there was fueled by double-digit improvements in the U.K., France and Germany, Muller said, as well as by an “exceptionally strong performance” in the Middle East.
Revenues in Asia Pacific region, impacted by pandemic-related lockdowns in mainland China, fell 3 percent in the fourth quarter. For the full year, revenues in the region rose 6 percent thanks to double-digit increases in parts of the territory other than China.
But, as Muller said, “we are quite encouraged by the most recent recovery in China, following the opening of borders and relaxation of COVID-19 restrictions.” The past few months in China have been good for the brand and Hugo Boss saw very successful sales during the Chinese New Year period, Muller noted.
In the Americas, revenues rose 29 percent over the full year. Grieder attributed Hugo Boss’ success there to differentiated positioning alongside the increased marketing. “In the past, we were more positioned as a formalwear brand,” he said. “What we’ve done is clearly state we are a 24/7 lifestyle brand. There’s been more casualization — but without losing the formal part of the business.”
Capsule collections and collaborations with brands like Russell Athletic and the NFL have seen the German company become more popular with younger American consumers too. Department stores like Macy’s, Nordstrom and Saks have also reacted well to Hugo Boss’ brand refresh.
“We have a good full-price business [in the U.S.] and actually all the partners there are also profiting from our investments into the brand,” Muller pointed out.
The Boss formal line still makes up the bulk of the company’s sales and grew 27 percent, currency adjusted, to hit 2.87 billion euros in sales in 2022. Boss womenswear was up 21 percent to 239 million euros. Meanwhile, the more casual Hugo collections grew 27 percent year-on-year to 545 million euros in revenues.
Analysts from the likes of JP Morgan, Baader Bank and Warburg wrote that the company’s 2022 numbers were largely in line with market expectations and that Hugo Boss’ more cautious guidance for 2023 was appropriate, given economic and geopolitical uncertainties.
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