Hugo Boss reported that currency-adjusted revenues slid 8 percent in the first quarter of 2021 to 497 million euros. In 2019, which can be seen as the last “normal” financial year before the pandemic hit, Hugo Boss amassed 664 million euros in Q1 sales.
The company characterized the latest results as a positive though, stating that it was “a solid and promising start into the year.” Hugo Boss was continuing its gradual recovery after the brand, which is best known for formalwear, had been heavily impacted by the COVID-19 pandemic.
“In normal times, I would not describe a quarter with a turnover of minus 8 percent as solid,” Yves Müller, the spokesperson for the company’s board, told journalists at a teleconference announcing the results. “But we’re not talking about normal times, not now nor in the recent past. Under these difficult conditions, we can describe our results as a success.”
The same was true for market analysts from the likes of Goldman Sachs, Baader Bank, RBC and Warburg. Hugo Boss had exceeded expectations – some had predicted a bigger loss – and was heading out of the health crisis in the right direction, various analysts wrote. The company’s share prices rose on Wednesday morning’s news.
In the last half of 2020, Hugo Boss had made 533 million euros in sales in Q3, and then 583 million in Q4. This indicated an ongoing recovery as countries around the world moved in and out of lockdown and retail re-opened. The drop to 497 million euros this quarter most likely reflects those shutdowns in Europe, the market where Hugo Boss makes most of its money.
During the first three months of year, around a quarter of all of Hugo Boss’ retail points worldwide had been closed on average. In Europe, about half of the German marquee brand’s retail points had been shut. “Ongoing lockdowns had a noticeable impact on several key markets such as the UK, France and Germany,” the company said in a statement.
In Europe, Hugo Boss brought in 299 million euros of sales revenue, reflecting a fall of 17 percent, currency adjusted, compared to the previous year. In 2019, sales in Europe totaled 424 million euros.
Sales in the Americas fell 11 percent, currency adjusted, to hit 80 million euros.
Sales in the Asia-Pacific region rose 39 percent over the first quarter to reach 101 million euros, mostly driven by the return to normal life in Mainland China. This represents a slow return to pre-pandemic levels for Hugo Boss there: In the first three months of 2019, the brand had made 107 million euros in sales in the region.
Müller said that the company’s sales had not suffered from the boycott that some Chinese consumers had called for on Western brands like Nike, Adidas and H&M, because of controversy around cotton from Western China.
“We didn’t feel any impact on our revenues,” Müller said, adding that there had been no change to Hugo Boss’ “dynamics” in China. This was despite the fact that the brand lost three local ambassadors – Li Yifeng, Zhu Zhengting and Wang Linkai – after putting out what were seen as inconsistent, and also apparently unauthorized, statements about using cotton from Xinjiang on social media.
Like most other fashion brands, Hugo Boss saw its own online sales rocket up, increasing 72 percent to hit 64 million euros, even while its own retail fell 25 percent to 212 million. Wholesale sales rose 1 percent to 204 million euros, reflecting a positive reception for the company’s new summer collection, the brand said.
Hugo Boss said it had benefitted from putting more emphasis on casualwear during the pandemic, with people working from home and dressy events like weddings postponed. The company has two main lines – Boss, which is more formal, and Hugo, which is better known for casual attire. The Boss line had brought in 422 million euros worth of sales, representing a decrease of 8 percent. Hugo sales totaled 76 million euros, a decrease of 6 percent.
But within both collections, casual wear had been the winner, Müller said, noting that more casual clothing from both lines now made up as much as half of the brand’s total business. He predicted that this trend would continue, post-pandemic.
“We really believe that the difference between casualwear and formal wear will be more fluid,” he told journalists. “The fashion-conscious man will be wearing a suit jacket with a T-shirt, or suit pants with sneakers.”
Hugo Boss is also experimenting with what Müller describes as performance materials. “So you might have on a [formal] jacket but it’s unbelievably comfortable. It looks good but you have the feeling you are wearing something more casual,” he explained. “That is something we are working on a lot for our premium segment.”
Müller was enthusiastic about recent Hugo Boss collaborations with the NBA and Russell Athletic. Some items in the capsule collections sold out within hours, he boasted, and the online response was around three times as big as that for any normal collection. Perhaps even more importantly, the collaborations had brought the formalwear stalwart new, younger customers. About half of the sales of those capsule collections were to customers under 35, Müller said.
More cooperation with the NBA and Russell Athletic are planned for later in the year, with the latter slated for September.
In terms of a prognosis for the year ahead, Hugo Boss said it would continue to take a cautious approach and that it was unable to reliably forecast very far ahead. However Müller said that, based on what had happened in countries where lockdown restrictions had been loosened, they did expect there to be a catch-up effect due to repressed demand. In Great Britain, where life was slowly getting back to normal, sales figures had gone back to pre-pandemic levels fairly quickly, Müller noted.
“It’s a bit different from the first lockdown, after which everybody was a little more cautious,” he explained. “We are seeing that, when a country opens back up after a long lockdown, people have a desire to shop. If you’re meeting with friends again, you want to dress up a bit.”
