Annual Report 2021

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Letter to Shareholders

Dear Shareholders,
Dear Readers,

HUGO BOSS looks back on a very successful 2021. With our momentum strongly accelerating across all brands, regions as well as consumer touchpoints, we paved the way for future growth. Already in the third quarter, revenues and earnings returned to pre-pandemic levels. And in the fourth quarter, we achieved the highest quarterly sales in our Company’s history. As a result, we exceeded our full year sales and earnings targets, which we increased back in October, and finished the year with the strongest free cash flow to date.

It is our ambition to double our business and become one of the top 100 global brands.

Daniel Grieder, Chief Executive Officer

Most importantly, we introduced our strategic roadmap until 2025 – called “CLAIM 5” – which lays the foundation for a new era. It is our vision to establish HUGO BOSS as the leading premium tech-driven fashion platform worldwide. Our ambition is to double our business to EUR 4 billion in revenues and to become one of the top 100 global brands. To claim back the lead, we will revolutionize the way in which we interact with our customers, placing them at the center of everything we do. And with our new boldness and confidence, we will turn consumers from all over the globe into true fans of our strong brands, BOSS and HUGO.

Highlights NEW Branding – Hailey Bieber (photo)

NEW Branding

Driving brand relevance is the top priority as part of “CLAIM 5”. We therefore implemented a new brand strategy to refresh BOSS and HUGO and launched two star‑studded global campaigns.

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Driving brand relevance is the top priority as part of our “CLAIM 5” growth strategy. In order to “Boost Brands,” we have implemented a new brand strategy to refresh BOSS and HUGO. Both brands undertake a new, modern brand identity focused on a younger and more global demographic. One of my personal highlights of the last weeks has been the record-breaking launch of our star-studded global campaigns. Our striking #BeYourOwnBOSS and #HowDoYouHUGO campaigns created a phenomenal digital buzz around the world – with a total of 6 billion impressions and more than 300 million engagements in only six days. High-profile celebrities including top-models Kendall Jenner and Hailey Bieber, famous rappers Future and Big Matthew, as well as our two new BOSS brand ambassadors, Italian tennis champion Matteo Berrettini and TikTok superstar Khaby Lame, led to an impressive digital activation, making the campaigns the most successful ones in our Company’s history.

With our new boldness and confidence, we will claim back the lead.

Fully in line with our strategic claim “Product is King,” we will further strengthen the premium positioning of BOSS – without compromising on quality. Instead, we will step up investments in our products to ensure premium quality, as well as high levels of innovation and sustainability. And by further driving casualness and comfort across all wearing occasions, we will position BOSS as a true 24/7 lifestyle brand. HUGO, with its strong focus on commercial and contemporary styles, will become the first touchpoint for young, unconventional, and progressive people who live life on their own terms. With our new Spring/Summer 2022 collections – the first collections to fully embody our bold branding refresh – we are already living up to our promise that “Product is King.” And I am particularly proud that feedback on these collections was overwhelmingly positive, both from our consumers and wholesale partners.

Digital will be key for our successful journey towards 2025. Not only because today the customer journey starts online, but also because the future will be all about human creativity and data-driven insights. As part of “CLAIM 5,” we are fully committed to “Lead in Digital” as we want to exploit the great potential that comes with it. Consequently, we will further digitalize our business activities along the entire value chain – from digital trend detection and product development to the global rollout of our brand new digital showrooms. Our newly established HUGO BOSS Digital Campus represents the very heart of our digital journey, as it will significantly improve the customer experience by leveraging data. One of its first priorities has been the successful global relaunch of earlier this year, providing a complete new look and feel as well as an engaging experience for our customers.

Our refreshed digital flagship is building a cornerstone of our future omnichannel strategy. Already today, HUGO BOSS can rely on a unique distribution network. It is our goal to leverage our distribution variety to ensure a seamless brand experience across all consumer touchpoints and to translate our new brand power into all points of sale. As part of our claim “Rebalance Omnichannel” we will therefore boost our digital business and, equally important, take our physical business to new heights. In this regard, both retail and wholesale play crucial roles. This includes turning our points of sale into true points of experience, as we want to drive emotional connectivity with our customers and experience per square meter. I am already very much looking forward to the grand opening of our first global anchor store on London’s iconic Oxford Street, fully reflecting the bold branding refresh, in spring 2022.

To succeed in our “CLAIM 5” strategy, two factors will be absolutely crucial – an industry-leading organizational setup as well as having a strong and flexible platform in place. Fully in line with our fifth strategic claim “Organize for Growth,” we have therefore further strengthened our organizational structure and implemented a true growth culture. We have also successfully implemented a number of important personnel changes within our senior management team including key brand, sales, and marketing functions, all aimed at ensuring rigorous execution of “CLAIM 5” in the years to come. At the same time, we have made strong initial progress in leveraging our resilient supply chain into an industry-leading platform for speed and growth. Over the coming years, we will further shorten lead times and reduce the complexity of our collections. Strengthening our own production capabilities at our biggest site in Turkey is key in this regard. It will not only enable us to increase proximity to our largest sales region Europe, but also add significant flexibility to react as quickly as possible to any changes in consumer demand and customer preferences. This, in turn, will have an immediate, positive impact on our sustainability efforts, because products that better meet our customers’ needs have a significantly lower impact on the environment.

Speaking of the environment, “CLAIM 5” also contains a strong commitment to the important topic of sustainability as we want to fully live up to our corporate responsibility. Sustainability is at the core of HUGO BOSS. As part of “CLAIM 5,” we will therefore act sustainably throughout to drive measurable impact for the environment and society alike. In this context, we are aiming for climate neutrality within our own area of responsibility by 2030 and throughout the entire value chain by 2045. We are also making great strides in increasing the proportion of more sustainable materials in our collections and establishing an end-to-end circular business model. Our recent partnership with Swiss innovator HeiQ – which enables us to substitute synthetic fibers with a recyclable cellulosic yarn – is a prime example of our ambitious sustainability efforts. It clearly illustrates our firm ambition to drive change for the better in the fashion industry and is thus fully in line with our bold mission statement “We Love Fashion, We Change Fashion.”

Together as a team, we will exploit the great potential of HUGO BOSS.

Now, all this is just the beginning of our “CLAIM 5” journey. I am absolutely convinced that 2022 will be another great year for HUGO BOSS. The successful execution of “CLAIM 5” will no doubt take center stage among all our initiatives, as we want to make further strong progress in reaching our 2025 targets. Based on our successful branding refresh and ongoing investments into our business, 2022 will see a step change when it comes to driving brand relevance and claiming our position in the consumers’ minds. This will enable us to increase our revenues by between 10% and 15% to a new record level of between EUR 3.1 billion and EUR 3.2 billion in 2022. At the same time, we expect our EBIT to grow between 10% and 25% to an amount of between EUR 250 million and EUR 285 million.

Dear shareholders, it is of great importance to us that you participate in the success of “CLAIM 5”. Our strategy therefore also contains a strong commitment towards future dividend payments, as reflected by a dividend payout ratio of between 30% and 50% of net income attributable to shareholders. In view of our strong financial and operational performance in 2021, our extremely solid financial position as well as our confidence in the success of “CLAIM 5,” we will resume dividend payments, and propose a dividend of EUR 0.70 per share for fiscal year 2021. At the same time, our dividend proposal will ensure we have all the flexibility needed to further invest in our business, build and leverage our platform, and thus drive long-term growth for HUGO BOSS.

Dear readers, I would like to conclude on a personal note: From the very first moment I joined HUGO BOSS back in June 2021, I was extremely impressed by the highly motivated and experienced people and teams. Our employees are our greatest asset and key to ultimately becoming the leading premium tech-driven fashion platform worldwide and one of the top 100 global brands. Based on their strong passion, our entrepreneurial spirit, and team mentality, I have no doubt that together as a team we will exploit the tremendous potential of HUGO BOSS. In this regard, I would like to thank our more than 14,000 employees for their tireless efforts, high passion, and the great dedication they put into the success of our Company each and every day.

Highlights NEW Spirit – Employees & Teams (photo)Highlights NEW Spirit – Employees & Teams (photo)

NEW Spirit

Our entrepreneurial spirit, our team mentality, and the strong passion of our more than 14,000 employees are key to the successful execution of “CLAIM 5”.

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The most exciting time in fashion is right now, and the best is yet to come! Based on our bold vision, mission, and ambition, we will embrace the challenges of today’s rapidly changing world and seize new and exciting opportunities. Our aim is to grow our Company in a fast but sustainable way, and I am absolutely convinced that we have an excellent team and strategy in place to successfully lead HUGO BOSS into the future.

Thank you for your support!

Sincerely yours,

Daniel Grieder, CEO – signature (signature)
Daniel Grieder
Chief Executive Officer

Have you already heard of our new growth strategy “CLAIM 5”?

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The HUGO BOSS Managing Board Team

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