Hugo Boss cuts prices in 12-month turnaround plan
German fashion house Hugo Boss says it will not return to growth until 2018 as it launches a turnaround that includes eliminating brands, slowing down store expansion and selling more online.
CEO Mark Langer says 2017 will be a transition year as it reorganises its struggling wholesale unit that sells to US department stores. Already the company has cut €65 million (US$68.86 million) in costs.
With Hugo Boss shares losing more than a third of their value in the past year, Langer’s recovery plan involves making more affordable clothing, in a move away from a declining luxury market. It will produce clothes only under the Hugo and Boss brands, narrowing its focus to casualwear and business attire. The Boss Orange and Boss Green labels will be folded into the Boss brand, and Hugo’s entry-level prices will be about 30 per cent lower than the Boss.
Womenswear, which accounts for about 11 per cent of revenue, will become a lower priority with Boss withdrawing from New York’s fashion shows next year. There will also be more focus on casual clothes and shoes.
Price tags will be adjusted internationally to close gaps caused by currency fluctuations, with prices in Asia coming down by about 15 per cent while European prices rise slightly.
Langer predicts that wholesale revenue via department stores in the US will decline by at least 10 per cent next year, with that business hit lately by high-level discounting to lure shoppers.