Fashion: Hugo Boss suffers from slump in consumption – sales targets lowered

After being taken over by the British textile holding company Frasers, the German fashion group is reporting weak figures. The outlook for the rest of the financial year is also cloudy.

Dusseldorf. The fashion group Hugo Boss has cut its annual targets due to the ongoing slump in consumption and surprising costs for its IT. Sales in 2026 are now expected to shrink by a high single-digit percentage after adjusting for currency effects and the operating result (EBIT) is only expected to be between 250 and 300 million euros, the Metzingen-based company announced. That is 50 million euros less than previously planned.

Despite the poor outlook, Hugo Boss shares only fell by around one percent on Tuesday. According to analysts, the share price is less driven by the current business figures. “The price development is likely to be dominated by the 'special situation' surrounding the gradual takeover by the Frasers Group,” commented DZ Bank experts.

Hugo Boss boss Daniel Grieder spoke of a persistently weak consumer environment, but stuck to the strategy. “We are confident that CLAIM 5 TOUCHDOWN has the right priorities,” he said.

The lowered annual forecast is a consequence of the already mixed third quarter. Currency-adjusted sales fell by five percent to 946 million euros and the operating result fell to 81 million from 95 million euros in the previous year.

The younger Hugo brand in particular weakened, with sales falling by 17 percent, while the core Boss brand proved more resilient. In Europe, business was particularly impacted by weak demand in Great Britain and France as well as uncertainty in the Middle East.

Group restructuring is starting to have an impact

However, there were bright spots in the operational business, where the restructuring of the group is bearing fruit. Thanks to efficiency improvements in procurement and better pricing, the gross margin climbed significantly by 2.2 percentage points to 63.3 percent. In addition, Hugo Boss reduced its inventories significantly, which more than doubled the free cash flow to 155 million euros. Boss justified the new depreciation on IT assets with the rapid developments in the area of ​​artificial intelligence (AI), which shortened the useful life of software.

“We are in a constructive dialogue with the Frasers Group,” emphasized CEO Grieder, referring to the new majority owner. The British textile holding company Frasers took over the majority of the Swabian fashion company in October. The company, controlled by billionaire Mike Ashley, had announced that it would include Hugo Boss in its own balance sheet in the future. Ashley also took over the position of chairman of the supervisory board at Boss.

Hugo Boss could benefit from the British retail know-how, said Grieder. On the other hand, Boss also brings expertise from which Frasers benefits. “One thing that will not change is that we will create value for all shareholders, for Frasers and everyone else too,” the manager emphasized.