Annual Report 2023

Topics filter


HUGO BOSS is subject to a variety of external risks, mainly in connection with the overall economy, politics and society, as well as environmental and health aspects.

Macroeconomic risks

As a global company, HUGO BOSS is exposed to macroeconomic risks in terms of global economic trends. This means that an economic downturn might lead to a decline in demand for premium and luxury goods, which can have a negative impact on the Company’s top- and bottom-line performance. Economic effects can occur globally as well as regionally, and may influence each other.

In order to reduce the impact of economic volatility, as part of its “CLAIM 5” strategy, HUGO BOSS aims to further balancing its global footprint across regions but also between developed and emerging markets. The Group continuously monitors the macroeconomic environment as well as relevant industry developments in order to identify risks at an early stage and be able to react as quickly as possible. Internal early indicators are analyzed regularly to allow a forecast of the impact of potential macroeconomic risks. Possible responses to a cyclical downturn in demand include, in particular, reducing production and sourcing activity, stricter managing of trade net working capital, further optimizing the global distribution network, increasing cost controlling, and implementing price adjustments. Group Management, Group Strategy, “Organize for Growth”

In its publication in January 2024, the IMF anticipates global growth at a level of 3.1% in fiscal year 2024 and thus on the prior-year level (2023: 3.1%; 2022: 3.5%). This forecast reflects ongoing elevated inflation and interest rate levels, mounting geopolitical tensions, and overall weak global trade and investment flows, all weighing on the global economic outlook. As interest rates appear to remain close to their peak in most economies, monetary policy is likely to remain restrictive until there are clear signs that inflationary pressures are durably cooling off. As a result, the global economy’s future health depends crucially on the successful calibration of monetary policy during the course of the year while also the further development of military conflicts such as those in Ukraine and the Middle East are likely to add further uncertainty. Outlook

Political and social risks

HUGO BOSS is exposed to political and social risks, reflecting the global nature of its business activities. For example, changes in the political and regulatory environment, geopolitical tensions, military conflicts, changes in government, or terrorist attacks can have a negative impact on consumer sentiment. In light of HUGO BOSS’ global business activities, with distribution in more than 130 markets, the Company is naturally hedged to a certain extent against adverse developments in individual markets or regions.

Global uncertainties in the context of political and social developments are expected to remain elevated also in 2024. In this context, geopolitical tensions, including those in Ukraine and the Middle East, the potential escalation of trade conflicts, the outcome of key elections, or the ongoing threat of terrorist attacks pose a significant risk for the global apparel industry and thus also for the Group’s business development. Geopolitical tensions in particular might result in the temporary loss of important trade routes such as the Red Sea route, leading to rising transportation costs or possible shortages due to longer lead times. In addition, a significant escalation or further expansion of ongoing conflicts may increase the risk of a noticeable global economic downturn and consequently have a significant impact on global consumer sentiment, with a potentially negative impact on the sales and earnings development of HUGO BOSS.

Due to its increasing importance in the medium and long-term, HUGO BOSS assesses the risk resulting from political and social changes as an “emerging risk.” It raises strategic questions, for example regarding the influence of demographic changes on consumer behavior, its global business activities, and the future setup of supply chains. This reveals the close link between social risks, industry risks, and the risks associated with suppliers and sourcing markets. Due to this broad spectrum of risks, future developments are characterized by a high level of uncertainty, which might lead to unknown, potentially significant effects in the long term. In evaluating and managing the risk, the risk owners and risk experts at HUGO BOSS work in interdisciplinary teams on the ongoing analysis and monitoring of current political and social developments and their impact on the Group’s business activity. The central Risk Management & Internal Controls department coordinates and supports this process.

Environmental and health risks

The global value chain of HUGO BOSS is subject to environmental and health risks that may result from pandemics, environmental and natural disasters, as well as the consequences of climate change and the loss of biodiversity. With regards to the outbreak of future pandemics, HUGO BOSS has drawn up appropriate emergency plans, building on the experience gained from the COVID-19 pandemic. As part of a climate risk analysis, we regularly assess risks to our business arising from climate change enabling us to take appropriate countermeasures in good time.

HUGO BOSS has implemented a central emergency management system in order to be able to react promptly and appropriately to all kinds of emergencies, including an environmental or natural disaster occurring. Its structural organization pools cross-functional skills needed to handle emergencies and is intended to ensure efficient coordination with clear decision-making paths.