Marketing Salery

Hugo Boss suspends Russia trading but forecasts “record” year

Hugo Boss suspends Russia trading but forecasts “record” year
Written by publisher team

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Hugo Boss sales rose 43 per cent to €2.8 billion in 2021 bringing the brand back to pre-pandemic levels during CEO Daniel Grieder’s first year and forecasting a €300 million to €400 million sales increase this year. That’s despite the conflict in Ukraine forcing the temporary closure of its 28 stores in Russia.

Grieder launched a new strategy to more strongly differentiate between Hugo for Gen Z and and Boss for millennials, with celebrity-backed campaigns and TikTok marketing, a digital push, and a combined direct-to-consumer and wholesale model, prompting its strongest quarterly sales in the group’s history. Boss menswear is the largest unit accounting for €2.2 billion, followed by Hugo at €400 million. Europe and the US drove growth in the fourth quarter. Sales in the US surged 78 per cent compared to 2020, and rose 4 per cent compared to 2019. In Europe, revenue rose 41 per cent.

Hugo Boss joins a long list of brands including Hermès, Chanel and Nike, who have suspended their retail operations in Russia. Last week, the German brand halted all it’s marketing and e-commerce activities in Russia and closed all its brick-and-mortar stores on 9 March. The concern, Grieder emphasises, is on the safety of the employees. “We decided to really also go to the next step and actually close our stores, but we will continue to pay roughly 200 employees their salary.”

Still, Russia and Ukraine account for 3 per cent of overall sales. Ukraine is less than one per cent of the group’s total sourcing volume, and the brand is evaluating relocating production to other parts of Europe, chief finance officer Yves Müller said. Hugo Boss does not have any physical stores in Ukraine as business is handled by its franchise partners, Müller adds.

“We cannot predict what will happen, but for this moment, we are convinced that we can compensate for that business in other areas or other parts… We hope that in the second half of the year stores are going to reopen,” Grieder said.

The brand expects 2022 sales will increase to between €3.1 billion and €3.2 billion.

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