Group Strategy

At HUGO BOSS, we see considerable business opportunities in today’s rapidly changing world and are committed to fully exploiting these opportunities in the coming years. With our two unique brands, BOSS and HUGO, and their broad range of premium apparel, shoes, and accessories, we are well positioned to benefit in particular from a globally growing middle and upper class. In this context, we are especially focusing on younger consumers, such as millennials and Gen Z. The latter is particularly relevant for the premium apparel industry, as it is estimated to make up the largest consumer group within the sector by 2030. To meet the high demands of these consumer groups, we strive to further increase the relevance of both BOSS and HUGO in the coming years, based on appealing brand initiatives, products with superior price-value proposition, and a seamless consumer experience across all touchpoints. In this context, we aim to fully exploit the great potential of digitalization, making our value chain even more efficient and flexible, while consistently focusing on driving sustainability.

“CLAIM 5” growth strategy

Against this backdrop, we introduced our “CLAIM 5” growth strategy in August 2021, outlining our 2025 financial ambition. At the very heart of “CLAIM 5” is our aim to substantially increase brand relevance, drive superior top-line growth, and thus strongly increase market shares of BOSS and HUGO.

“CLAIM 5” is closely linked to our vision and ambition of being the leading premium tech-driven fashion platform worldwide and becoming one of the top 100 global brands. In this context, we are putting consumers at the center of all our activities, as we aim to turn them into true fans of BOSS and HUGO and retain their loyalty. Our strategy is based on five strategic claims: “Boost Brands,” “Product is Key,” “Lead in Digital,” “Drive Omnichannel,” and “Organize for Growth.” It also includes a strong commitment to sustainability, together with a rigorous executional road map, and a firm commitment on empowering people and teams. Employees and Teams

Since the introduction of “CLAIM 5,” we have achieved significant progress across all five strategic priorities. Driven by the powerful and rigorous strategy execution and supported by our bold branding refresh initiated in early 2022, momentum for both BOSS and HUGO has since accelerated sharply. In doing so, both brands made significant progress in increasing brand relevance and strongly expanded market shares worldwide. In this context, after having surpassed the EUR 3 billion threshold for the first time in 2022, Group sales already exceeded our initial mid-term financial ambition of EUR 4 billion in fiscal year 2023, thus two years ahead of plan. Consequently, at its Capital Markets Day in June 2023, HUGO BOSS provided an update on its “CLAIM 5” growth strategy and raised its mid-term top- and bottom-line ambition, Hugo Boss is now aiming for sales of EUR 5 billion and an EBIT margin of at least 12%.

With 'CLAIM 5,' we have introduced the right strategy at the right time. Thanks to the dedication and passion of our teams, we delivered exceptional results and exceeded our initial mid-term financial ambition of EUR 4 billion already in 2023, two years ahead of plan.

And we have everything it takes to continue our success story. By rigorously executing 'CLAIM 5,' we have every confidence of delivering superior top- and bottom-line improvements also in the years to come.

To maintain our strong momentum and deliver on our updated mid-term financial ambition, the rigorous execution of our “CLAIM 5” strategy will take center stage also going forward. At the same time, we will continue to invest into our business. In this context, we are committed to making further progress along our five strategic claims, leverage global growth opportunities, and drive noticeable top- and bottom-line improvements also in the years to come. Group Strategy, 2025 Financial Ambition

CLAIM 1 – Boost Brands

To significantly increase the relevance and perception of our brands, we comprehensively renewed the brand images of BOSS and HUGO in 2022 – from logos, to product and marketing, up to new design concepts for our physical and digital consumer touchpoints. Since the successful branding refresh, both brands present themselves significantly bolder, younger, and more emotional than ever before. Going forward, we will build on the robust brand momentum of BOSS and HUGO to further anchor our position in the consumers’ minds and drive brand power in the coming years.

To further increase brand relevance, particularly among the younger audience, HUGO BOSS will continue to pursue and develop its two-brand strategy. This will continue to be supported by two clearly distinguishable marketing strategies for BOSS and HUGO aimed at activating consumers across all touchpoints and maximizing consumer impact. As part of “CLAIM 5,” we will therefore continue our successful digital-first marketing strategy, supported by star-studded campaigns, inspiring collaborations, and unique brand events. To realize this, marketing investments will remain at a level between 7% and 8% of Group sales until 2025. This is aimed at further increasing the brand value of BOSS and HUGO in the years to come. Fully in line with this range, in fiscal year 2023 our marketing investments amounted to 7.8% of Group sales, and thus broadly at the prior-year level (2022: 7.9%). Combined Non-Financial Statement, Brand Power

Following up on the comprehensive branding refresh in 2022, the launch of our brands’ latest global marketing campaigns represented a particular highlight in 2023. To further engage with BOSS and HUGO fans worldwide, the 360° campaigns continued to significantly drive momentum, attracting new and younger consumers while also strongly engaging our existing customer base. The BOSS campaigns for Spring/Summer and Fall/Winter 2023 – embodying the striking slogan “BOSSes aren’t born. They’re made.” – once again featured a star-studded diverse cast, including top models Naomi Campbell and Gigi Hadid, NFL superstar Patrick Mahomes, as well as our BOSS brand ambassadors, runner Alica Schmidt, tennis champion Matteo Berrettini, and TikTok superstar Khaby Lame. The simultaneous HUGO campaigns – reinforcing the brand’s mantra “HUGO your way” – focused on stars of the Gen Z, with brand ambassador and TikTok creator Bella Poarch headlining as the face of the campaigns.

To further drive brand heat and engage with consumers all over the world, both BOSS and HUGO regularly host exciting brand events. In 2023, these included highly successful see-now-buy-now fashion shows for BOSS in Miami and at Milan Fashion Week as well as popular sporting events in areas such as skiing, motor sports, and tennis. In March 2023, fully in line with our strategic claim “Lead in Digital,” BOSS presented selected pieces from the Spring/Summer 2023 collection virtually at Metaverse Fashion Week. HUGO, on the other hand, celebrated London Fashion Week with the launch of its HUGO x Bella Poarch capsule collection while also hosting the live music event series “HUGO Nights” in Shanghai, among other places. On top of that, various collaborations with inspiring personalities and brands spurred momentum throughout 2023.

Altogether, our numerous brand initiatives in 2023 once again resulted in a global buzz on social media and beyond as well as a strong outperformance compared to key competitors. This became particularly evident on TikTok, where both our brands strongly outgrew key competitors in terms of reach, while BOSS also continued to outperform key peers in terms of follower growth on Instagram. Overall, this enabled us to further increase our brand value in 2023, bringing us one important step closer to our ambition of becoming one of the top 100 global brands. Combined Non-Financial Statement, Brand Power

HELLO Brands

To become one of the top 100 global brands, we pour all our passion into driving brand relevance for BOSS and HUGO with innovative marketing and product initiatives.

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CLAIM 2 – Product is Key

Our products are at the very heart of all our business activities. As part of “CLAIM 5,” we will keep investing to maintain our superior price-value proposition. Ensuring premium quality, a high level of innovation and sustainability, and guaranteeing clear distinguishing features is intended to further strengthen the positioning of BOSS and HUGO in the premium and affordable luxury segment of the global apparel market. In this context, we will continue to put strong emphasis on further enhancing both brands’ 24/7 lifestyle images, ensuring that our customers are perfectly dressed for every occasion – from the office and formal occasions to leisure and sport.

By unlocking the full potential of BOSS and HUGO, we are targeting strong growth across all our brands. At BOSS, we aim at further strengthening our premium positioning in both menswear and womenswear, with a particular focus on millennials. To live up to this target and further strengthen our 24/7 lifestyle promise, at BOSS Menswear, we will continue to fully exploit the potential of the brand lines BOSS Black, BOSS Orange, BOSS Green, as well as of the exclusive BOSS Camel line introduced in late 2022. With the latter being well received across several key markets in 2023, we plan to expand the BOSS Camel product offering in 2024 and beyond, thus further strengthening our affordable luxury positioning. In 2023, building on the success within BOSS Menswear, the Camel line was also introduced to Womenswear while also having reintroduced the Orange line. Products ranging from high-end tailoring to smart casual and active lifestyles will therefore be part of both BOSS Menswear and BOSS Womenswear from now on. At HUGO, we aim at attracting particularly the Gen Z and young-minded consumers. Consequently, HUGO focuses on a broad range of both commercial and contemporary products, reflecting the brand’s authentic and unconventional style while ensuring customers a stylish appearance in every situation. In this context, we will explicitly seize opportunities in denimwear with the launch of the HUGO BLUE brand line in early 2024. At the same time, the existing product range will be available under HUGO RED from now on, placing a strong emphasis on street tailoring.

To further increase the brand relevance of BOSS and HUGO, the launch of various capsule collections and high-impact collaborations plays a key role along with both brands’ main collections. In 2023, BOSS developed and launched several capsule collections with brand ambassadors such as Naomi Campbell as well as strong partners including Porsche, Samsonite, and the American football league NFL. HUGO, on the other hand, teamed up with audio lifestyle company Urbanista and brand ambassador Bella Poarch, among others. On top of that, both brands aim to leverage the full potential of new and existing hero products, such as the innovative BOSS Performance Suit, the iconic BOSS Statement Sweater, or the trendy HUGO Outerwear Jacket. Product Development and Innovation

In terms of wearing occasions, and fully in line with both brands’ 24/7 lifestyle images, we are committed to leveraging our growth potential across all brands and all wearing occasions. In this context, we continue to exploit the full potential of casualwear to be among the forerunners of the trend towards a more casual lifestyle. Already today, our casualwear business accounts for around 50% of Group sales. In addition to offering a wide range of casualwear styles, the ongoing expansion in this segment also focuses on continuing to blur the lines between casualwear and formalwear. As these two occasions have become increasingly interlinked, HUGO BOSS has been able to seamlessly close the gap between tailoring and sportswear. At the same time, we will further strengthen our formalwear business, as tailoring remains firmly anchored in our Company’s DNA. Through a modern interpretation, innovative product solutions, and the continuing trend towards a more casual lifestyle, formalwear continues to offer enormous potential for both our brands. Accounting for around 25% of Group sales, our brands’ formalwear offerings comprise a broad variety of sharp business outfits, elegant evening wear, and innovative casual-tailoring combinations. The latter also includes our BOSS performance offering, which combines formalwear outfits with a particularly high level of comfort ranging from super-stretchable to machine-washable styles. We thus remain fully committed to being a leader in the upper premium segment of the global formalwear market also in the years to come. Our 24/7 product range is rounded off by a comprehensive range of shoes and accessories as well as other items such as bodywear and hosiery, also contributing around 25% to Group sales.

CLAIM 3 – Lead in Digital

Digitalization is an important enabler to deliver on our vision of being the leading premium tech-driven fashion platform worldwide. An essential part of our Group strategy is therefore our clear commitment to further driving digitalization along the entire value chain. Since the introduction of “CLAIM 5,” we achieved strong progress in digitalizing important business activities – from digital trend detection and product creation to AI-enabled pricing, digital showrooms, and innovative experiences in the metaverse. In particular, the ongoing digitalization of our product development is of high strategic importance. As part of “Lead in Digital,” we have set ourselves the goal of developing more than 90% of our products digitally by 2025 (2023: around 65%). Overall, and compared to 2019, HUGO BOSS plans to step up its investment in digitalization by more than EUR 150 million by 2025, with a significant increase already recorded in the past two fiscal years. Report on Economic Position, Earnings Development

The HUGO BOSS Digital Campus, launched in 2021 and physically inaugurated in Porto (Portugal) last year, is at the heart of our digital journey. It significantly expands our Company’s digital analytics capabilities, first and foremost aimed at taking the consumer experience to new levels through the systematic use of data. Serving as an innovative and creative data hub, the Digital Campus puts strong emphasis on strengthening our global online business while driving meaningful insights and efficiencies along the entire value chain. Following the successful implementation of the global relaunch of hugoboss.com in 2022, in the past fiscal year, the Campus drove the integration of key digital features such as interactive shoppable videos and virtual try-ons, as well as the successful relaunch of the hugoboss.com app. Building on these successes, the Campus will continue to work on numerous digital initiatives, all aimed at continuously improving traffic and conversion rates in our global online business. In this context, HUGO BOSS also aims to make the best-possible use of the many advantages offered by AI. Among other things, this should enable us to link digital and physical retail even more closely in the future, to provide consumers with a seamless, best-in-class omnichannel experience.

CLAIM 4 – Drive Omnichannel

Since the introduction of “CLAIM 5” in 2021, we have made substantial progress in translating our regained brand power into the various customer touchpoints, thus providing consumers with a best-in-class omnichannel experience. Going forward, HUGO BOSS will continue to fully leverage its high-quality channel mix on a global scale, while continuing to ensure a seamless brand experience across all consumer touchpoints.

With brick-and-mortar retail contributing more than 50% of Group sales also going forward, this channel is, and will remain, by far our largest in terms of revenues. In this context, we aim to further improve store productivity by at least 3% per annum to a level of more than EUR 13,000 per sq m by 2025 (2023: EUR 12,400 per sq m). This will be supported by cumulative investments in our brick-and-mortar retail business of up to EUR 600 million between 2021 and 2025, to further optimize, modernize, and selectively expand our global retail footprint. In this regard, the ongoing rollout of our latest BOSS and HUGO store concepts, which aim to be significantly more emotional, appealing, digital, and productive than the previous ones, remains key to developing our stores into true points of experience. Overall, as of December 31, 2023, around 200 BOSS and HUGO freestanding stores worldwide have been refreshed or equipped with the latest store concepts, including key halo stores in London, Dubai, and Guangzhou. By 2025, we intend to grow our freestanding store network to around 500 points of sale, with a clear focus on driving expansion across Asia/Pacific. To surprise and connect with our BOSS and HUGO fans, we are also taking over exciting locations with engaging pop-ups and hospitality concepts around the globe, such as the BOSS Bar at our store on London’s Regent Street or AURA Skypool in Dubai.

At the same time, brick-and-mortar wholesale is expected to continue contributing around 25% of Group sales. Since the introduction of “CLAIM 5,” we have made important progress in fostering our position in brick-and-mortar wholesale, having noticeably increased visibility and market presence of both our brands at key European and U.S. department stores. Going forward, with a particular focus on our most important business partners, we aim to fully leverage all BOSS and HUGO brand lines to deliver a true 24/7 brand experience and drive further market share gains in wholesale. As part of our omnichannel strategy, and to take our business in emerging markets to the next level, we will also further strengthen our global franchise business by increasing the total number of freestanding franchise stores from currently around 350 to 500 over the coming years. On top of that, we continue to exploit the great potential of digitalization also in brick-and-mortar wholesale. For example, our virtual showrooms offer a seamless and expedited sales process, while simultaneously fostering sustainability and efficiency within wholesale.

HELLO Customers

We remain steadfast in our commitment to 'Drive Omnichannel,' ensuring that every customer interaction with our two brands, BOSS and HUGO, is nothing short of exceptional.

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Digital revenues are expected to continue their double-digit growth trajectory also in the years to come. Accordingly, the share of our digital business is targeted to increase to a level of more than 20% of Group sales by 2025. Above all, we aim to continuously improve the digital journey and drive further market share gains – from our own online flagship hugoboss.com, to our online concession business as well as digital wholesale. In 2023, we further enhanced the digital experience to support growing both traffic and conversion, which enabled our brands to drive further market share gains in the digital sphere. In this regard, the strongly enhanced e‑commerce experience offered at hugoboss.com as well as the successful relaunch of our hugoboss.com app both played an important role. Going forward, further optimizing and geographically expanding our global digital footprint will remain key to successfully continue our growth trajectory. 

For its license business, which among others includes fragrances, eyewear, and watches, HUGO BOSS sees revenue potential of up to EUR 200 million as part of “CLAIM 5." We see considerable growth opportunities, with both existing and new product groups, and have set ourselves the target of successively exploiting this potential in the coming years. In 2023, BOSS extended its 24/7 lifestyle offering by selectively expanding its product offering into iconic lifestyle areas such as equestrian or cycling.

Besides further growing across all consumer touchpoints, as part of “CLAIM 5,” it is our clear ambition to continue driving broad-based growth and gaining market shares across all geographies. In the EMEA region, key markets such as Germany, the UK, and France, as well as important growth markets such as the Middle East, are all set to contribute to further revenue improvements. Growth will be supported by further enhancing and upgrading our distribution network, accelerating our franchise business, and capitalizing on business opportunities across brand lines. In the Americas, we will continue to push our 24/7 brand image particulary in the important U.S. market, where we recorded exceptionally strong momentum over the past two years. On top of that, HUGO BOSS aims to further expand visibility in U.S. department stores, rolling out digital marketplaces, and strengthening its store network in Latin America. For Asia/Pacific, the region’s revenue share is expected to grow to around 20% as part of “CLAIM 5." In this context, HUGO BOSS will continue to unleash the brands’ full potential in both China and Southeast Asia & Pacific. To secure our affordable luxury position across the region, we will further strengthen our distribution footprint, which also includes boosting digital and social commerce with key partners. Report on Economic Position, Earnings Development

CLAIM 5 – Organize for Growth

In order to ensure long-term success for HUGO BOSS, as part of our claim “Organize for Growth,” we aim to transform our entire organization into a platform of speed and growth. Since the introduction of “CLAIM 5,” we have successfully converted our operating model to a platform approach and implemented a streamlined, brand-led organizational setup, ensuring rigorous strategy execution at a global level. On top of that, we have set the path for further growth by expanding and enhancing our headquarters in Metzingen, Germany. Between 2021 and 2025, we are allocating a total investment of more than EUR 100 million in upgrading our headquarters, which also includes a new office building to be completed by 2025. In addition, to foster growth and further drive efficiencies going forward, HUGO BOSS will step up investments into its supply chain. In 2023, we launched our important Digital TWIN initiative, aimed at enabling smart decision-making through a tech-driven business operations platform while being a key enabler to meeting consumer demand even better in the future. Intended to further increase the flexibility and transparency of our supply chain, the Digital TWIN is set to positively contribute to our Company’s future growth, profitability, and sustainability ambitions.

HELLO Digital

To 'Lead in Digital,' we are fully committed to embracing digital innovation. Our Digital TWIN is set to fuel sustainable, profitable growth, while enabling end-to-end traceability.

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At the same time, we are continuing our nearshoring initiatives to better align our regional sourcing and production activities with our sales markets, particularly in EMEA and the Americas. This also includes our commitment to further expanding our own production in the coming years. The strengthening of our production site in Izmir (Turkey), which is by far our largest factory, plays a key role in this. Already in 2022, we have taken an important step by opening an additional plant in Izmir dedicated to the production of casualwear. On top of that, to support long-term growth, we aim to expand our global logistics capacities by around 40% by 2025. This also includes the strategic expansion of one of our key logistics hubs near our headquarters in Metzingen initiated in late 2023. This multiyear project aims to significantly increase both shipping as well as storage capacity while also focusing on the further digitalization and automation of key processes. Our strategic initiatives will enable us to react even faster and more flexibly in the future, meeting consumer demand in the best-possible way. Product Development and Innovation, Sourcing and Production

Sustainable Throughout

Sustainability continues to be at the heart of “CLAIM 5” – a cause that is essential to our corporate responsibility and ongoing business activities. We will therefore further intensify our efforts in this important area, focusing primarily on making an imminent contribution to a planet free of waste and pollution. As part of our sustainability strategy, we will, among other things, strongly increase our circularity initiatives, drive digitization and data analytics, leverage nature-positive materials, fight microplastic, and keep pushing towards zero emissions. Further details on our sustainability strategy and key sustainability targets can be found in the chapters “Sustainability” as well as “Combined Non-financial Statement” of this Annual Report. Sustainability, Combined Non-financial Statement

Our 'CLAIM 5' strategy provides us with a strong foundation for the sustainable, long-term success of HUGO BOSS.

Thanks to our powerful organizational setup, our unwavering commitment to sustainability, and our highly motivated and passionate teams worldwide, we are all the more confident in continuing our growth trajectory also in the coming years.

2025 Financial Ambition

Driven by the powerful and rigorous strategy execution, HUGO BOSS raised its mid-term top- and bottom-line ambition in June 2023, two years after its introduction. After having exceeded our previous mid-term sales target of EUR 4 billion already in fiscal year 2023, HUGO BOSS aims to generate revenues of around EUR 5 billion by 2025. This represents a strong CAGR of 10% compared to the base year 2019, thus well above the anticipated industry growth. At the same time, since providing the "CLAIM 5" update, the macroeconomic and geopolitical uncertainties have increased noticeably. Against this backdrop, HUGO BOSS might reach its sales ambition with a slight delay.

Our top-line target is coupled with the ambition of achieving noticeable improvements in EBIT margin. The latter is targeted to increase to a level of at least 12% by 2025. Besides an increased focus on achieving additional efficiency improvements, this also reflects the Company’s gross margin projection, which is anticipated to range between 62% and 64% until 2025. Gross margins are expected to particularly benefit from the ongoing strong brand momentum of BOSS and HUGO as well as additional efficiency gains to be realized in operations. Overall, this will more than compensate for further investments into our products, brands, digital capabilities, logistics, and distribution networks as part of “CLAIM 5.”

In light of the anticipated improvements in sales and profitability, HUGO BOSS has the ambition to generate a cumulative free cash flow (including the effects of IFRS 16) of around EUR 2.5 billion between 2021 and 2025. This is aimed to be supported by strict management of trade net working capital, which is expected to improve to a level of 16% to 18% of Group sales as part of “CLAIM 5.” In particular, HUGO BOSS strives to further optimize its inventory position, aiming to bringing inventories down to a level of below 20% of Group sales by 2025. At the same time, capital expenditure is targeted to range between 6% to 7% of Group sales in both 2024 and 2025.

The majority of expected cumulated free cash flow will either be reinvested in the Company or distributed to shareholders through regular dividend payments. On the latter, the payout ratio is expected to remain between 30% and 50% of net income attributable to shareholders by 2025. In line with our vision of being the leading premium tech-driven fashion platform worldwide, we continue to consider strategic investments in the areas of product and brand, sales, and digital expertise. In this context, HUGO BOSS successfully entered into a long-term strategic partnership with Swiss innovator HeiQ already in 2022. In addition, we announced our investment into a climate-first venture capital fund based in Luxembourg in late 2023, aimed at supporting start-up companies in the development of innovative solutions and technologies in the area of sustainability. Finally, in the event of excess liquidity, we also consider special dividends and share buybacks as viable alternatives to return cash to our shareholders. Sustainability

To deliver on our mid-term financial ambition, the rigorous execution of “CLAIM 5” will continue to take center stage. Against the backdrop of our regained brand momentum and taking into account the strong progress we have made along our various strategic initiatives, we have created a solid foundation for sustainable and profitable growth in the years to come. Therefore, even though our industry continues to face increased macroeconomic and geopolitical uncertainties, HUGO BOSS remains confident to continue gaining market share, achieving robust earnings improvements and generating strong free cash flow to ensure sustainable value creation for shareholders until 2025 and beyond.

Our targets for fiscal year 2024 are presented in the Outlook section. Outlook