Hugo Boss Q1 Sales Increase 6 Percent but Has Brand Momentum Slowed? (2024)

With a lift from denim and casual styles, Hugo Boss reported sales in the first quarter grew 6 percent, in currency-adjusted terms, to 1.01 billion euros.

“I am pleased that we delivered further sales and earnings improvements,” the company’s chief executive officer Daniel Grieder said in a statement.

Even though the first-quarter results were slightly above market consensus, they also indicate less dynamic growth for Hugo Boss this year, something analysts say the market has come to expect from the German brand.

Grieder took on the top job in mid-2021 and instituted a five-year plan he named “Claim 5.” An all-encompassing brand refresh, high-profile fashion events and star-studded marketing campaigns revved up the previously moribund German company to the extent that last year it saw double-digit growth every quarter and record sales. However, this year Hugo Boss’ results will return to more earthly realms.

Boss, the more formal offering that has been the backbone of Hugo Boss’ business, grew 5 percent to 777 million euros. Boss womenswear grew 7 percent, currency neutral, to hit 70 million euros.

Sales at Hugo, the more casual and youth oriented line, increased by 9 percent to 167 million euros. The company pointed to the successful February launch of its denim collection, Hugo Blue, as contributing to the number.

“We are very happy how Hugo Blue has developed over these first weeks. It has surpassed our expectations,” Hugo Boss’ chief financial officer Yves Mueller told journalists during a press conference Thursday morning on the results. “We feel we are hitting a nerve with younger customers with this very modern denim brand. We expect it to make up a mid- to high-single-digit part of our Hugo revenues for the year.”

Hugo Blue was launched in Berlin at an event for more than 1,000 guests featuring 3D, immersive experiences. Other recent campaign events include 33-foot-high hologram of retired supermodel Gisele Bündchen in Hugo Boss next to London’s iconic Tower Bridge, the signing of U.S. tennis star Taylor Fritz, and this coming weekend, the launch of Hugo Boss’ Formula 1 apparel sponsorship in Miami.

Increasing spend on marketing and image has lifted Hugo Boss results significantly. But that was also on the back of several years of staid sales and the impact of the COVID-19 pandemic on formalwear sales.

“Following three years of nearly flawless execution and delivery on ever-increasing market expectations, the company is facing a more subdued demand environment for premium casualwear,” analysts at Citi Research wrote after the first-quarter results were released. There are also concerns about brand fatigue and Hugo Boss’ high dependence on developed markets and aspirational customers, among other issues, they added.

Has Hugo Boss now run out of room for further improvement?

“I know that since our brand renewal began two years ago, the recent growth dynamic was higher,” Mueller conceded. “But the environment in which we are moving worldwide has also changed significantly.”

Despite this, Hugo Boss has seen growth across all brands and all markets, he argued, and economic conditions are the main reason for the slight slowdown. “If you compare [our results] with how our competitors are doing, you can see we are in a phase where consumer sentiment has dampened. But we are still winning market share,” he told WWD.

Hugo Boss saw growth in all sales territories. Revenues in Europe, the Middle East and Africa increased 5 percent, even though sales in Great Britain remained problematic for the company.

Sales in North America gained 11 percent and the company was particularly pleased with progress there, Mueller said, noting that the brand’s repositioning as a “24/7 lifestyle brand” was paying off. The company had also recently increased the number of Macy’s stores it works with, Mueller reported, and now has around 200 shops-in-shop in the bigger department stores.

In the Asia Pacific region, Hugo Boss sales were up 2 percent in currency neutral terms. While Japan and countries in Southeast Asia had seen positive sales, business in China actually decreased by a high-single-digit percentage, Mueller noted.

However, this was explained by unfavorable quarterly comparisons, he said, recounting that after COVID-19 lockdowns ended in China, in late 2022, there was a lot of shopping done in the first quarter of 2023. “We only do around 8 percent of our group business in China,” Mueller continued. “That’s not a lot compared to other brands. So we see strategic room for growth in China and we will continue to increase our market share there.”

Operating expenses for Hugo Boss rose over the first quarter, reflecting the increased costs of sales and marketing, but fell as a percentage of sales. Earnings before interest and taxes rose slightly, going from 65 million in the first quarter of last year to 69 million this year.

Grieder had already warned that the company would be taking a more conservative, cautious approach to 2024. The German menswear specialist confirmed this with its guidance for 2024: It expects sales to increase between 3 and 6 percent over the year, to bring in somewhere between 4.3 billion and 4.45 billion euros.