Hugo Boss has announced that the company intends to increase currency-adjusted sales over the next four years by an average of between 5 percent and 7 percent and grow its operating margin to 15 percent. The company added that increasing the desirability of the brands Boss and Hugo is the declared objective under the 2022 strategic business plan. The company is expecting a return to sustainable profitable growth for the coming year.
“We have set ourselves high targets for the coming years”, says Mark Langer, Chief Executive Officer of Hugo Boss Ag in a statement, adding, “We want to grow faster than the market, and expect our operating profit to develop significantly better than our sales. The successful realignment of our brands Boss and Hugo has laid the foundation for this. We will further increase the personalization of our offerings in the future and speed up central processes in the course of further developing our strategy.”
Hugo Boss announces strategic plan to drive growth
To further drive the desirability of its brands, Hugo Boss said that it is focusing on two strategic priorities – personalisation and speed in its 2022 business plan. The company will substantially expand its focus on personalized offerings. In doing so, Hugo Boss is building on its strengths: its global retail network, its systematic customer relationship management, and its extensive experience in made-to-measure clothing.
The company also plans to make its business processes considerably more agile, which the Hugo Boss believes will enable the company to react to customer needs and to new market trends even more quickly and flexibly in the future. By 2022, the company expects to increase Group sales by an average of between 5 percent and 7 percent per year on a currency-adjusted basis. To achieve its target, the company will focus on significant growth in the group’s own online business, an improvement in retail sales productivity, exploiting the growth potential in Asia, and above-average growth of Hugo in the contemporary fashion segment.
While Hugo Boss plans to quadruple its sales in its own online business by 2022, the company aims to increase retail sales productivity by an average of 4 percent annually by 2022 by optimization of the store network, accelerated renovation of existing Boss stores, expansion of omnichannel services and improvements in product range. The managing board expects sales in Asia to increase on average at a double-digit percentage rate per year by 2022, with China playing a key role. In doing so, the share of sales from Asia is expected to increase from around 15 percent currently to 20 percent in 2022. Increase in EBIT margin to 15 percent is expected by 2022.
The managing board also expects to generate free cash flow of between 250 million euros and 350 million euros per year until 2022 and in light of the Group’s very healthy financial situation and its expected strong cash flows, Hugo Boss confirms its previous target range for future dividend payments. The company intends to continue to distribute 60 percent to 80 percent of net income to its shareholders.