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Hugo Boss to Reduce Brands, Limit Store Expansion in Revamp

The company will only produce clothes under the Hugo and Boss brands, narrowing its focus to casualwear and business clothes with womenswear becoming a lower priority.
Hugo Boss store | Source: Shutterstock
By
  • Bloomberg

METZINGEN, Germany — Hugo Boss AG announced plans to eliminate two brands and slow down expansion of its store network as chief executive officer Mark Langer resets the ailing German fashion house's strategy six months into the job.

The company will only produce clothes under the Hugo and Boss brands, narrowing its focus to casualwear and business clothes, the Metzingen-based suitmaker said in a statement Wednesday. Womenswear will become a lower priority, and Hugo Boss will expand its online business, the company also said.

Langer needs to jumpstart the company, which ousted its longtime chief executive officer in May and whose shares have lost almost a third of their value in the past year. Since taking over, the company’s former chief financial officer has been closing underperforming stores and has signalled Hugo Boss will turn away from the luxury market in favour of making more affordable premium clothing.

“The majority of strategic changes will become effective in 2018,” the company said. “Hugo Boss therefore expects to return to growth in 2018.”

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The Boss Orange and Boss Green brands will be folded into the Boss brand, the company said. Hugo’s entry-level prices will be about 30 percent lower than Boss clothing.

Shares of Hugo Boss have risen 17 percent since the company’s Aug. 5 second-quarter report that showed first signs of a potential turnaround. They rallied again this month after third-quarter earnings beat analysts’ estimates.

The clothing maker reiterated its full-year forecasts. The company said Aug. 5 that it expects earnings will decline by 17 percent to 23 percent and currency-adjusted sales will fall as much as 3 percent. Analysts expect Boss’s sales to decline 4 percent this year.

Hugo Boss’s management is scheduled to meet with investors in London at 9:30 a.m. local time Wednesday.

By Aaron Ricadela; editors: Matthew Boyle, Thomas Mulier and Phil Serafino.

Related Articles:

Hugo Boss CEO Wants to Abandon Luxury Segment
Hugo Boss US Chief to Be Replaced as Clothier Seeks Revival

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