Whats Next for Hugo Boss?
After Permira exit the german company needs to reinvent.
Permira announced two weeks ago that Red & Black, the holding company controlled by the Permira IV Fund, has placed a total of 8.4 million shares in Hugo Boss, selling its remaining 12% stake in the fashion company. This marks the full exit of the Permira funds from Hugo Boss after over seven years of successful partnership and following the sale of Valentino in 2012.
“We’re very proud to have backed Hugo Boss over the past seven years, as it became one of the eight most valuable global fashion brands”, says Jörg Rockenhäuser, Managing Partner at Permira in Germany. “With the backing of the Permira funds, Hugo Boss was transformed from a wholesale supplier into a fast-growing branded retailer. The Group is outstandingly positioned today to capture future growth opportunities particularly as it continues to expand its own retail operations and its womenswear portfolio”.
Under Permira IV’s ownership, Hugo Boss established a strong position within the luxury segment and its international growth significantly gained pace, particularly in Asia. The company is now present in more than 130 countries and it more than tripled the number of directly operated high-margins retail stores. Since the Permira funds invested in 2007 and under CEO Lahrs’ leadership, sales at Hugo Boss increased by 60% to EUR 2.6 billion (2014) while EBITDA more than A doubled from EUR 275 million (2007) to EUR 591 million (2014).
The share price also performed strongly, recently reaching an all-time high. At the same time, net debt was reduced significantly. As a result of this positive business performance and a recognising the strength of its brand, Hugo Boss received the German “Best Brands 2015” Award in the fashion category.
And now what. This is what everybody is thinking in the industry. Hugo Boss needs a strategy, a new strategy after being place in the «luxury map» again. And its not easy, the company confronts a very strong competitions in all its business, even still the favorite brand in Germany. Today Hugo Boss operates 388 stores, 531 shops and 122 Outlet locations.
The company also has a wholesale business of approximately 1.04 Billion Euros. In 2014 Boss Black was the largest segment consisting of 72% of all sales in 2014. The remainder is Orange 12%, Hugo 9%, Green 8%. Boss Black increased 8% in the past year over the previous year. The «problem» still in the rest of the world, selling its suit factory in Ohio, the US market looks squeezing. «Made In America» is now a plus for any luxury company. Problems arrises also en Asia where China sales are slowing down.
