Hugo Boss hit by Q2 currency effects, Beckham helps Boss Menswear to strong performance

Hugo Boss on Tuesday reported revenue edging up just 1% in Q2 against an “ongoing challenging market environment”. Boss Menswear was the standout while Womenswear and Hugo struggled, but profit just beat expectations.

The problem geography was Asia Pacific which was down 5% on a currency-neutral basis as “muted consumer sentiment” in China had a big impact. But EMEA was up 3% and the America’s rose 2%, returning to growth.

The company saw “solid” currency-neutral growth in digital (+7%) and physical wholesale (+3%), although those figures were just 0% and 5%, respectively, on a reported basis as currency exchange effects clearly had a negative impact. Meanwhile “momentum in brick-and-mortar retail improved slightly” but revenue there was still down 1%, although it rose 1% when adjusted for currency effects.

Group sales overall were €1.015 billion with Boss Menswear (helped by its David Beckham link-up) leading the charge, while its Womenswear and Hugo were weaker, as mentioned earlier. 

By brand Boss Menswear was up 2% (or +5% currency neutral) at €794 million. Boss Womenswear was down 10% (or -8% currency neutral) at €68 million and Hugo fell 14% (or -12% currency neutral) to €152 million.

The group said it has “taken proactive steps to strengthen the long-term performance of Boss Womenswear and Hugo. Strategic initiatives, such as streamlining the product assortment and refining sales activities, are designed to enhance efficiency and drive sustainable growth”. 

Regional ups and downs

The company cited “muted consumer confidence and softer store traffic” that weighed on several key markets, with demand in China remaining “particularly subdued”.

As mentioned, sales in the EMEA region were up 3% currency-neutral although they only rose 2% on a reported basis. This performance was primarily driven by revenue gains in Germany and France, which more than offset a slight decline in the UK. 

That aforementioned 2% currency-neutral rise in the Americas actually turned into a 6% fall on a reported basis. The rise mainly reflected a modest revenue increase in the US market, where demand strengthened following a softer start to the year. At the same time, it said “Hugo Boss maintained its robust growth trajectory in Latin America”.

The 5% drop in Asia Pacific currency-neutral looked even worse on a reported basis at -6% as China struggled. But revenues in Southeast Asia & Pacific “remained on par with the prior-year level, supported by a solid performance in Japan”. 

Meanwhile licensing revenue fell 9% both reported and currency-neutral, “reflecting a tough prior-year comparison that had benefitted from a contract renewal in the eyewear segment. At the same time, the ongoing strong performance of the fragrance business provided underlying support”.

Profit rises

The gross margin was “stable… as further efficiency gains in sourcing compensated for [the] adverse channel mix effects and overall market headwinds”.

Importantly too, operating expenses were below the prior-year level ( down 3%), reflecting “ongoing strict cost discipline and additional efficiency gains across key business areas”.

The company also said EBIT returned to growth (+15%), resulting in a profit on that basis of €70 million and an EBIT margin increase of 120 basis points to 8.1% in Q2. Net income increased 28% to €39 million.

The full-year 2025 outlook was also confirmed with group sales to remain “broadly stable between” although that could mean anything from a 2% fall to a 2% rise, it said. But EBIT should increase by 5%-22%. The EBIT margin is targeted between 9% and 10%. The wide range of options there underlines how difficult forecasting is in the current conditions.

The company explained that macroeconomic volatility will “remain elevated, fuelled by ongoing tariff uncertainty” while “subdued global consumer sentiment continues to weigh on industry development”. But “key strategic initiatives” will support the business performance in H2, including the launch of a new brand campaigns and Boss Fashion Show in Milan.

CEO Daniel Grieder said the quarter saw global consumer confidence remaining at a low level but “against this backdrop, we delivered solid top- and bottom-line improvements, supported by further efficiency gains through our rigorous and sustainable cost discipline. Importantly, we remain committed to our long-term ambition of strengthening brand relevance over short-term gains. The successful launch of our Beckham x Boss collection in April is just one example of how we are continuing to drive brand momentum, even in a volatile environment”.

And he added that “our focus remains on what we can control. Building on four consecutive quarters of strict cost discipline, we are well positioned to drive further sustainable efficiencies. By intensifying our focus on fixed cost management and maintaining disciplined execution, we are confident of strengthening our profitability in the quarters ahead. At the same time, we will not compromise on our long-term strategy of further investing into our brands, product quality, distribution excellence, and our strong operational platform.

“Looking ahead, we remain confident in the great potential of our brands and our business model. By continuing to invest in brand-building initiatives, strengthening global relevance, and fostering customer loyalty, we are reinforcing our commitment to long-term profitable growth and creating sustainable value for our shareholders”.