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Hugo Boss Idea Proposal (BOSS)

Hugo Boss Idea Proposal (BOSS)
 

Will Hugo Boss’ rebranding efforts and focus on growing its casualwear line lead to improved sales in Europe?

 

Report Available: December 14, 2017

 

Blueshift’s initial research shows Hugo Boss simplifying its brand away from its traditional color labels and into two distinct bands, HUGO and BOSS. Amid this shift, there is also an increased emphasis on growing its casualwear line within both these brands. The challenge for Hugo Boss is that the shift to casualwear means more competition and lower margins, while its businesswear segment stagnates.

 

Observations

  1. Hugo Boss reported Q3 earnings of €1.16and revenue that grew 1% year to year. Currency-adjusted sales climbed 3% in the quarter, while retail same-store sales increased 5%, up from 3% growth in Q2. The company also raised its sales guidance for the year. These positive results are happening faster than anticipated considering the CEO noted, when laying out his new strategy, that growth would hit in 2018. Parts of that turnaround strategy included closing stores, cutting non-essential brands, and re-focusing on its core customer.
  2. As part of that focus on its core customer, Hugo Boss is revamping its core brands, shifting from what was four different labels to segment the brand (black, red, green, orange) to simplify into just a HUGO line and a BOSS line. Both will have a mix of casual and formal apparel, though the more traditional BOSS line will have a higher mix of casualwear. HUGO is still expected to be more fashion forward with a trendier line of clothing and more affordable pricing aimed at a younger consumer. The bulk of this transition will occur in 2018, though some items are beginning to ship to wholesalers now.
  3. As fashion and apparel preferences shift to more casual and athletic wear, Hugo Boss is looking to capitalize on this trend with an increased emphasis on these offerings within both its HUGO and BOSS lines. In Q3, sales of the BOSS line grew 1%, benefiting from double-digit growth in the athleisure offering, still categorized under the Green label in 2017 but switching in 2018. HUGO grew 3%, with double-digit growth in casualwear and a smaller decrease in businesswear.
  4. The other side is that Hugo Boss’ sales performance in 2017 is up against weak comp numbers from a year ago. And the company is shifting to a more competitive lower-margin category with its emphasis on casualwear. It also still relies heavily on formalwear and business attire at a time when there is a significant shift to a more casual workplace.

 

How are the new styles resonating with customers? How are stores managing the shift from color labels to HUGO and BOSS lines? How is the shift to emphasize casualwear working out? What is the competitive landscape at this price point? How is inventory? What are expectations for 2018? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Wholesales department store buyers, Supply chain, Store personnel, Competitors, Marketing/advertising executives, and Industry specialists.

 

Companies: Hugo Boss AG (FRA:BOSS), PVH Corp. (PVH), Ralph Lauren Corp (RL)

 

Research Begins: November 20, 2017