In connection with the successful execution of the “CLAIM 5” strategy, particular importance is attached to the early identification and consistent exploitation of business opportunities. This is an important element in sustainably increasing the value of the Company and is also closely linked to the ambition of HUGO BOSS of becoming one of the top 100 global brands. At HUGO BOSS, opportunities are defined as possible positive deviations from planned targets or corporate planning assumptions.
Opportunity management
Due to its direct link to the targets of the respective business divisions, responsibility for identifying, assessing, and exploiting business opportunities lies with the operational management in the respective regions, individual markets, and central functions. In this context, opportunities are always considered in conjunction with any associated risks. They are only pursued if they outweigh the associated risks and the risks are considered to be manageable and their potential impact limited.
Short-term opportunities, defined as potential positive deviations from the planned operating result for the current fiscal year, are discussed at regular intervals with the management of the respective market or region or with the central functions. If necessary, appropriate measures are initiated to exploit them. The long-term management of opportunities is directly linked to the Group strategy. Opportunities identified and evaluated in terms of their contribution to the enterprise value are analyzed in detail several times a year as part of the strategic planning process. On this basis, the Managing Board allocates the necessary resources to the operational units to enable them to benefit from the realization of the respective opportunities.
Illustration of material opportunities
HUGO BOSS has identified the following material opportunities, which originate both in the corporate environment and in the Group strategy “CLAIM 5” as well as in the operational execution itself.
External opportunities
As a company in the global apparel industry, HUGO BOSS can benefit directly from favorable macroeconomic developments and their impact on consumer confidence and buying behavior. For example, an earlier than expected lifting of the restrictions related to the COVID-19 pandemic could have a positive impact on the global business development of HUGO BOSS. In this context, the lifting of social distancing measures and a resulting increase in the number of social events, or a faster than expected normalization of international travel could have a material positive effect on consumer sentiment and thus also on the Company’s business. Irrespective of this, social trends that emphasize the value of high-quality premium apparel more strongly than in the past could also support the overall sales performance of HUGO BOSS, irrespective of the development of consumer confidence.
The main challenges arising from the pandemic include shortages in global production and logistics capacity as well as a related increase in material, production and freight costs. In this context, HUGO BOSS benefits, among other factors, from its well-balanced global sourcing mix and the flexibility of its own production sites. In fiscal year 2021, the Company was thus able to ensure sufficient product availability. Nevertheless, the Company expects the elevated level in material, production, and freight costs to persist also throughout fiscal year 2022. A faster than expected normalization in this respect may have a direct positive impact on the Company’s profitability. Sourcing and Production
Regulatory and legal changes can have a potentially positive impact on the Company’s sales and earnings performance. For example, more consistent prosecution and punishment of infringements of trademark rights can positively impact the sales performance. In addition, the elimination of tariffs can improve the profitability of the Company.
Financial opportunities
Favorable exchange rate developments can have a positive impact on the Company’s earnings development. The Group Treasury department continuously analyzes the market environment and is responsible for identifying and exploiting relevant opportunities within the framework of financial management principles. Financial Position
Strategic and operational opportunities
As part of its growth strategy “CLAIM 5”, HUGO BOSS aims at significantly increasing the relevance of its two brands BOSS and HUGO and thus achieving significant top- and bottom-line growth in the medium term. With an broad range of premium apparel and accessories, the Company intends to profit in particular from the globally growing middle and upper class. In this regard, the Company is particularly focusing on younger customer groups, such as Gen Z, which is particularly relevant for the consumer goods industry as it is estimated to make up the largest customer group in that sector by 2030. “CLAIM 5” growth strategy
In this context, fully in line with its strategic claim “Boost Brands”, the Company has already started in 2021 to comprehensively renew the brand image of BOSS and HUGO, making them even more appealing to consumers. In this regard, HUGO BOSS is firmly committed to increasing additional marketing investments by more than EUR 100 million by 2025. Going forward, the campaigns of BOSS and HUGO will follow a clear “social-first” approach, aimed at inspiring new and, above all, younger target groups – also through collaborations with well-known personalities – as HUGO BOSS aims at turning customers into true fans. In addition, exceptional events and collaborations will continue to help increasing brand relevance and consequently fully exploiting the related sales potential. A significant increase in brand relevance can have a positive impact on customer demand and thus also a direct positive impact on the sales and earnings performance of HUGO BOSS. Group Strategy, “Boost Brands”
HUGO BOSS also intends to fully exploit opportunities in connection with further enhancing the appeal of its product range. Under the claim “Product is King”, the BOSS brand will be established as a true 24/7 lifestyle brand, thus leveraging opportunities to attract new customer groups across all wear occasions. As the first point of contact for younger customers, HUGO focuses on a wide range of trendy and modern products while putting a strong focus on relevant product groups – including denim, jersey, bodywear and outerwear – in which the Company sees significant growth opportunities. At the same time, HUGO BOSS will strongly invest in optimizing its price-value proposition in the coming years to ensure premium quality, a high level of innovation and sustainability, and to guarantee clear distinguishing features. HUGO BOSS is also committed to exploiting the full potential of casualwear in the future, thus helping to lead the casualization trend. At the same time, the Company aims to further strengthen its important formalwear business via a modern interpretation. The latter as well as the continuing trend towards casualization thus represent enormous potential, which should enable HUGO BOSS to continue to be a leader in the upper premium segment of the global apparel market. Group Strategy, “Product is King”
As part of its distribution activities, HUGO BOSS sees particular opportunities to further drive traffic and conversion rates along all consumer touchpoints. In order to translate brand power into at all touchpoints, HUGO BOSS will further optimize its distribution structure as part of the claim “Rebalance Omnichannel”, and significantly advance its omnichannel activities in the coming years. In this context, the Company aims to ensure a seamless brand experience across all consumer touchpoints. To this end, the Company will further expand its presence at all digital touchpoints, for example via the global expansion of its online flagship hugoboss.com. In addition, the implementation of a much more emotional store concept is expected to lead to productivity increases in brick-and-mortar retail. HUGO BOSS also intends to win back market share in key product categories in brick-and-mortar wholesale. With a strong focus on its most important wholesale partners, BOSS in particular will establish itself as a true 24/7 lifestyle brand in the wholesale business. The introduction of the BOSS Camel line and the re-introduction of BOSS Black, BOSS Orange, and BOSS Green also play an important role in this context. Consistent exploitation of the various sales-related opportunities may have a direct positive impact on the business performance of HUGO BOSS. Group Strategy, “Rebalance Omnichannel”
HUGO BOSS sees digitalization as key for a personalized, omnichannel customer experience while also considering it to be a significant opportunity to further increase efficiency and flexibility along the entire value chain. Under the claims “Lead in Digital” and “Organize for Growth”, the Company is thus fully committed to the further digitalization of all business activities – from digital trend detection and product development to opportunities for AI-enabled pricing, and the Company-wide rollout of digital showrooms. In this context, HUGO BOSS plans to increase its investment in digitalization by more than EUR 150 million by 2025. The HUGO BOSS Digital Campus, established in 2021, will play a key role in this, as it is expected to further strengthen the Company’s digital expertise and bring customer experience to a new level through the targeted use of data. Data analysis can also be used to further optimize the management of sourcing, production, and sales processes. Successes in this area may have a direct positive impact on the sales and earnings performance of HUGO BOSS. Group Strategy, “Lead in Digital”, Group Strategy, “Organize for Growth”
In recent years, the importance of environmental and the climate protection has increased noticeably, including among consumers. Besides high-quality products and a unique shopping experience, customers today increasingly demand compliance with high social and ecological standards. HUGO BOSS regards the intensification of its diverse activities in the area of sustainability as an additional opportunity to win over young and sustainability-oriented customers in particular. HUGO BOSS has thus firmly embedded the topic of sustainability in its “CLAIM 5” strategy. In addition to circular products, the Company is increasingly focusing on innovative, sustainable materials and manufacturing techniques during collection creation and aims to significantly expand its RESPONSIBLE Styles offering going forward. Besides direct opportunities in terms of revenue increases and cost reductions, HUGO BOSS also regards acting sustainably as an opportunity to further enhance the general reputation of the Company and its brands. Sustainability, Combined Non-Financial Statement
Organizational opportunities
HUGO BOSS firmly believes that its employees are the foundation to the successful execution of its “CLAIM 5” growth strategy. The Company therefore aims at promoting a corporate culture in which the values of entrepreneurial spirit, personal ownership, team mentality, simplicity and quality, and youthful spirit are firmly anchored. This is accompanied by the opportunity to implement ideas and processes faster and more comprehensively than before, and consequently to achieve competitive advantages.
As an international company, diversity is a fundamental part of the corporate culture at HUGO BOSS. The Company is convinced that heterogeneous and inclusive teams can achieve better and more creative solutions to complex issues and thus make a positive contribution to the successful execution of the “CLAIM 5” strategy. In recognition of the importance of the topic, HUGO BOSS has implemented numerous initiatives to ensure a discrimination-free working environment and equal opportunities for all employees. Among other things, the position of Head of Global Diversity and Inclusion was established and successfully filled for the first time in 2021. In addition, an internal task force supports the execution of defined measures to further advance selected topics such as inclusion or diversity in leadership positions. HUGO BOSS firmly believes that intensifying its activities in the area of diversity contributes positively to employee satisfaction and is also considered a relevant factor by potential applicants.
HUGO BOSS aligns its personnel work with the goal of shaping the general conditions in the Company in a way that every employee is able to develop his or her individual talent to advance and to contribute directly to the successful execution of “CLAIM 5”. To this end, the company builds in particular on the insights from the annual employee survey. Further successes in strategic personnel work could have a direct positive impact on sales and earnings performance in the future. Employees and Teams