Hugo Boss remains an attractive asset for investors
British retailer Frasers Group has acquired a stake in fashion company Hugo Boss. In cash terms, its stake in the fashion company is worth £305 million. Including the latest acquisition, Frasers owns 2.5% of Hugo Boss’ share capital. The British group also owns around 14% in the form of options.
The share purchase surprised analysts. Previously, Frasers’ representatives had announced the decision to reduce its stake in the brand. At the beginning of 2023, the group sold some securities as shares and options. At that time, its stake was almost 4% of the share capital and 25%, including other securities (offers). Since then, the holding has been gradually reduced.
It is also worth noting that the company regularly increased its presence in the fashion house before the transaction in 2023. In 2022, Frasers’ representatives spoke about their interest in the brand.
The British company first announced an investment in Hugo Boss in 2020. The move was part of a strategy to improve the company’s positioning. The retailer wanted to raise its profile and use the brand to move into the prestige category. However, other deals with fashion industry representatives followed the acquisition of a stake in the fashion house. These included fast fashion companies such as:
– Missguided;
– Asos;
– N Brown and others.
Investing in these companies went against the original positioning plans.
The financial health of the brand
As far as Hugo Boss is concerned, 2024 was quite a good year for the company financially. The company reported the following results for the first quarter:
– sales totalled more than €1 million;
– an increase of 6% compared to the previous quarter;
– analysts noted revenue growth across the fashion house’s two brands and all channels;
– EBIT increased by 6% to €69 million;
– EBIT margin increased by ten basis points to almost 7%.
Brand Director Daniel Grider said the company remains committed to its previously outlined strategy. It aims to capitalise on various opportunities to help the company grow and develop. Overall, Grider was optimistic about the company’s position in 2024. In the three months, sales of the menswear line increased by 5% and the womenswear line by 7%. The new Hugo Blue range, which consists of various styles of denim clothing, is also performing well.
The fashion house reported that sales increased in all regions. Sales improved in Germany, which had previously been in decline. Sales in the Americas increased by 11% and APAC by 4%. However, the momentum in China slowed compared to previous years.
