Hugo Boss expects business recovery only in 2027

Shareholders of fashion group Hugo Boss will need to remain patient as the company continues to navigate a challenging market environment. After feeling the impact of weak consumer sentiment in recent months, Hugo Boss has signaled that 2026 will serve as a transition year, with significant adjustments planned across its assortment and distribution strategy. Both revenue and earnings before interest and taxes (EBIT) are expected to decline before the business begins to show meaningful improvement from 2027 onward. The update was met with disappointment in the stock market.

“2026 will be a year of adjustment, characterised by the streamlining of processes, the revision of the assortment and the optimisation of the distribution network,” the company announced on Tuesday evening. Consequently, revenue is expected to fall in the mid-to-high single-digit range on a currency-adjusted basis in the coming year. Earnings before interest and taxes are expected to reach 300 to 350 million euros.

The Metzingen-based company had already become more cautious for 2025 in early November due to the difficult economic environment and negative exchange rate effects. Since then, chief executive officer Daniel Grieder expects only the lower end of the forecast ranges for group sales of 4.2 to 4.4 billion euros and an operating profit (EBIT) of 380 to 440 million euros.

Hugo Boss aims to grow again from 2027

The MDax-listed group intends to grow again from 2027. The pace is expected to pick up in 2028. Profitability is also set to improve from 2027, the statement continued.

Thanks to savings, the company aims to achieve an average annual free cash flow of around 300 million euros from 2026. This figure excludes the accounting standard IFRS 16.

This did not console shareholders regarding the bleak revenue and profit outlook for 2026. The share price slumped by almost 10 percent to 35.40 euros on the Tradegate trading platform compared to the Xetra close. Consequently, the price in Xetra main trading threatens to slip below the recently formed support level of 36 to 37 euros. The annual loss would expand to a good fifth.

The share price development on Wednesday is also likely to depend on the upcoming details regarding the strategy. The update has been planned for some time.

Disputes between Hugo Boss and Frasers Group under scrutiny

Recent disputes between Hugo Boss’s largest shareholder, Frasers Group (Frasers), and the supervisory board are also likely to raise questions. Frasers no longer supports supervisory board chairman Stephan Sturm, as became known before the weekend.

With a direct stake of 25 percent, the investor is by far the largest shareholder in the group. As has been known since the summer, the group holds more than 30 percent including financial instruments. If it were to convert the financial instruments into “real” shares, a mandatory takeover offer would be due.

Disagreements between the management of Hugo Boss and the major shareholder recently arose regarding the dividend policy. Frasers considers Hugo Boss to be undervalued on the stock market, according to a mandatory announcement from July. The investor believes that Hugo Boss should not distribute dividends at present. Instead, the funds should be used to increase the value of the company.

This article was translated to English using an AI tool.

OR CONTINUE WITH

Frasers Group Plc

Hugo Boss