Hugo Boss sees Q4 recovery but China stays weak and 2025 sales may undershoot 2024’s

Hugo Boss’s Q4 and full-year results on Thursday talked of a “strong performance” during the quarter, with profitability set to increase “despite challenging market conditions”.

The company appeared to rebound in Q4, but said that the current quarter remains muted and its expectations for the full year are for sales that might rise a little but that might fall.

More of that later. For now, let’s look at the past year and quarter. Currency-adjusted group sales for the year increased 3% to a record €4.3 billion in 2024, fuelled by a 6% Q4 rise.

That came after the company had clearly struggled earlier in 2024 with Q3 currency-adjusted sales, for instance, having been up only 1% and the business having issued an earlier profit warning.

In the past three months the company saw “accelerating momentum in the Americas” with full-year sales up 8% but Q4 rising 13%, and in EMEA those figures were up 3% and 6% respectively.

However, Asia/Pacific was down 2% in both the year and the quarter, “impacted by subdued consumer demand in China”. That’s clearly not showing any signs of bouncing back just yet.

Back with the positives, the company said it saw “robust revenue improvements in brick-and-mortar wholesale” with the year up 8% but Q4 rising 11%, and physical retail returned to growth with a flat figure for the year as a whole but a 2% rise in Q4.

It also saw gross margin improvements of 30bps for the year and 90bps for the quarter, “driven by substantial efficiency gains in sourcing”.

Earnings before interest and tax (EBIT) fell to €361 million from €410 million, “impacted by retail impairments”, but free cash flow jumped to €497 million in 2024 from €96 million in 2023, “fuelled by improvements in trade net working capital and CapEx efficiency”.

Net income was down to €223.6 million from €269.8 million a year earlier.

As for its expectations for 2025, it said the “macroeconomic and geopolitical volatility [will] remain elevated, with business performance impacted by subdued consumer sentiment”.

Group sales should be anywhere from down 2% to up 2% but EBIT should rise between 5% and 22% to €380 million-€440 million. 

CEO Daniel Grieder was cautiously upbeat, saying: “Since 2021… we have made significant progress on our strategic journey and delivered above-trend growth. In 2024, we continued our growth trajectory, hitting record sales, supported by a strong performance in the final quarter. This success underscores the increased relevance of Boss and Hugo and highlights the great potential of our two brands.

“Yet the macroeconomic challenges intensified in 2024 and led to a sharp industry slowdown. We therefore focused even more on customer centricity and on our most impactful initiatives. From welcoming David Beckham for a multi-year partnership with Boss to unveiling our new denim line Hugo Blue and launching our new customer loyalty programme Hugo Boss XP, we kept customers inspired and engaged throughout the year. 

“We have not only capitalised on our growth opportunities, but also placed equal emphasis on improving cost efficiency. And I am very pleased that we made substantial progress in the second half. We managed to unlock meaningful productivity gains, which effectively limited expense growth and supported our bottom-line development. At the same time, we generated strong free cash flow in 2024, highlighting the strength of our business model.”

He reiterated that the firm’s “focus on delivering profitability improvements is sharper than ever. The solid foundation we have built over the past years fills us with confidence in our ability to succeed. At the same time, macroeconomic and geopolitical volatility remains high, weighing on consumer sentiment and impacting our business performance since the beginning of the year. Against this backdrop, we stay focused and vigilant, closely monitoring global market developments.”