Hugo Boss Reveals New Strategy Alongside Painful Forecast for 2026

BOSSY -5.19%

Shares in Hugo Boss sank 11 percent in midday trading Wednesday after the German menswear specialist unveiled a new strategy – one that will entail significant financial pain, and have the company returning to growth in around two years’ time.“Following the successes of recent years, we are now deliberately taking a step back to prepare for tomorrow’s growth,” Hugo Boss chief executive Daniel Grieder said in a statement. “Our focus in the coming years will be on the ongoing optimization in the areas of brand, distribution and operations with the clear ambition to transform them from great to excellent.”

Hugo Boss’ current strategy, “Claim 5,” was all about growth but the next phase – “Claim 5 Touchdown” – will be about strength not speed, and “better before bigger,” Grieder said during an online press conference. “2026 will be a deliberate year to refocus, refine and realign.”

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Given the change in focus, Hugo Boss now expects revenues to fall by mid- to high-single digits throughout 2026: This would mean that operating profit amounts to around a fifth less than what was originally expected for next year, market analysts pointed out. The company’s guidance for 2025 remains unchanged.

Analysts said the sales drop may also be partially “self-inflicted” due to the company redefining its Boss womenswear line and its more casual offerings under the Hugo brand.

Boss menswear, the company’s more formal line, remains by far the largest part of its business, making up about three-quarters of all sales. But the more casual Hugo line “needs further sharpening of its identity,” Grieder conceded.

Hugo Boss also sees major potential in womenswear, executives explained. For the first time in its history, the company will set up a dedicated womenswear unit, starting January next year. Major hires have already been made, the company’s chief sales officer Oliver Timm said.

“[Having] all womenswear specialists from Hugo Boss under one roof – that’s a game changer for us,” Timm told journalists. “Womenswear has the biggest single potential to drive profitability. We will define clear DNA for our womenswear, so on the one hand, what do we stand for, but on the other hand, what do we not stand for.”

The womenswear offerings will also include more accessories, shoes and handbags, Timm noted.

While forecasting a revenue dip, Hugo Boss is promising shareholders financial and operational “excellence” that will see cashflow and shareholder returns improve. The goal is to ensure that the operating profit margin eventually hits 12 percent. Operating profit margin for the third quarter of 2025 was 9.6 percent.

Grieder insisted that at the moment the new strategy would not entail any layoffs.

“We will continue to strengthen our operational backbone to ensure operational efficiency, flexibility and scalability,” Grieder said. “We will drive sourcing efficiency, accelerate digitalization and optimize back-office functions. Our commitment remains to have disciplined approach.”

“Claim 5” was the strategy initiated by Grieder when he first took the job in 2021. The plan was to have Hugo Boss achieve 5 billion euros worth of sales by 2025.

Over 2022 and 2023, the strategy, which involved a brand refresh and lavish marketing spend, seemed to be working with revenues averaging a 20 percent improvement per quarter.

However, over the past two years, growth stalled. Earlier this year, it was clear that Hugo Boss would not be reaching the 5-billion-euro target on schedule.

Recently there have also been some tensions with Hugo Boss’ major shareholder, the Frasers Group, which owns around a quarter shares.

This week, there were reports that the activist shareholder, which also has large stakes in ASOS, Everlast and Agent Provocateur, did not support the chairman of Hugo Boss’ supervisory board, Stefan Sturm.

The reports were not confirmed by either party and on Wednesday morning, Grieder also denied that the new “Claim 5 Touchdown” strategy was something that had been pushed onto management by Frasers Group.

“We have a good partnership with them,” Grieder said, noting that Frasers Group chief executive Michael Murray now sat on Hugo Boss’ supervisory board and had offered feedback on the new strategy. “They confirm our strategy, and they stand behind the management,” he noted.

Grieder deflected questions about whether Frasers Group might want to take over the whole company.

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