Identifying and utilizing value-enhancing business opportunities is a key element of efforts to ensure that the Company grows profitably. In the HUGO BOSS Group, opportunities are defined as possible positive deviations from planned targets or the Company’s planning assumptions.
Due to its direct link to the targets of the respective business divisions, responsibility for the identification, assessment and entrepreneurial exploitation of opportunities lies with the operational management in the regions, individual markets and central functions. In this context, opportunities are always considered in conjunction with any associated risks. They are only pursued when they outweigh the associated risk and when the risk is assessed to be manageable and its potential impact limited.
Short-term opportunities, in the sense of potential, positive deviations from the planned operating profit in the current fiscal year are discussed with management of regional markets at regular intervals. Appropriate measures to exploit such opportunities are initiated as required. The long-term management of opportunities is directly linked to corporate planning. Opportunities identified and evaluated in terms of their contribution to the enterprise value are analyzed in detail within the context of strategic planning and annual budget discussions. On this basis, the Managing Board allocates the necessary resources to the operational units to enable them to benefit from their realization.
HUGO BOSS has identified the following key opportunities that stem from the Company’s environment, its corporate strategy and operational implementation itself.
As a company operating in the apparel industry, HUGO BOSS can benefit directly from favorable macroeconomic developments and the impact on consumer confidence and customers’ buying behavior. An improvement in the consumption climate might have a positive influence on purchasing fashionable clothing and accessories. Furthermore, social trends that enhance the value of high-quality apparel further than previously could also support the sales of HUGO BOSS on the whole, regardless of how consumer confidence develops.
Regulatory and legal changes can potentially have a positive impact on sales opportunities and the Company’s profitability. More consistent prosecution and punishment of violations of trademark law may for example improve the Company’s sales situation and the reduction of customs charges may improve profitability.
Favorable exchange rate developments can potentially have a positive impact on the development of the Group’s earnings. The Group’s central Treasury department analyzes the market environment continuously and is responsible for identifying and tapping into relevant opportunities within the framework of financial management principles. Financial Position
Strategic and operational opportunities
In many emerging markets, especially in China, economic researchers are expecting continued growth within the middle classes. This would bring about an increase in the number of people demanding products in the upper premium segment as a result of their purchasing power. The Group is working systematically to capture the identified growth potential with market entry and market penetration strategies tailored to specific countries through collaboration with business partners and independent subsidiaries. In addition to this, it is systematically strengthening its distribution activities in markets with high growth potential and low brand penetration.
In recent years, interest in fashionable clothing has grown considerably, particularly among younger men. More and more men are paying increasing attention to maintaining a fashionable appearance as a means of expressing their personality or standing out from the crowd. Clothing is also increasingly considered an important determinant of how an individual’s competence in the workplace is perceived by others. Accordingly, market observers are expecting the share of men’s fashion in the apparel market as a whole to increase in the future. HUGO BOSS seeks to make the opportunities inherent in this development work for them through a strong focus on market communication activities.
In recent years, the casualwear and athleisure segments in the global apparel market have developed faster than classic tailoring. This development underlines the trend towards a relaxed clothing style and many consumers’ need to dress in a sporty style without compromising on value or quality. Independent studies, such as the current market outlook of The Business of Fashion and McKinsey & Company, also expect above-average growth rates for the casualwear and athleisure segment in the future. With the expansion of its casualwear and athleisurewear offerings HUGO BOSS has been quick to respond to this trend. The Group will also accentuate this part of its collection in future and stress the allocation of more space in its own stores to its casualwear and athleisurewear offering. Group Strategy
In addition, the contemporary fashion segment, which means the part of the market that is even more fashionable and trend-oriented, is seeing above-average growth rates. The Company wants to exploit the opportunities that arise with the HUGO brand, which focuses on the contemporary fashion segment. Group Strategy
The rapidly increasing use of digital offerings has significantly changed consumers’ shopping habits and lifestyles over the last few years. By performing online searches, customers nowadays are far better informed before visiting a store than they were in the past. HUGO BOSS sees these changes as an opportunity. With the expansion and continuous improvement of its online presence, the Group is addressing consumers’ expectations with respect to a high-quality brand experience. The close integration of its online presence with brick-and-mortar retail and the expansion of omnichannel offerings is designed to provide customers with an appealing and uncomplicated shopping experience. Growing commercial use is also making the Company examine opportunities which previously might have arisen for digital channels used purely for commercial purposes. Group Strategy
The Group addresses its customers’ growing need for individuality with both its brand strategy and its distribution strategy. By building up and regionally extending its “Made to Measure” offering, the Group can offer a growing number of interested consumers the option of wearing individually modified and tailored products with which they can stand out from the crowd. The exclusivity of this offering is also conveyed in the shopping experience, with dedicated selling spaces specially designed for this purpose. HUGO BOSS is also creating an increasing number of personalized offerings in other product groups and price ranges, such as the HUGO brand’s personalized casualwear. Opportunities are also seen in an individual approach to customers with systematic customer relationship management. Stronger ties are forged between the BOSS and HUGO brands and their customers, and brand loyalty is strengthened by targeted phone calls, personalized mailings and individual newsletters. In the online sector in particular, analyzing user behavior provides good opportunities to further individualize the way the Company speaks to customers.
HUGO BOSS is addressing the growing importance of the Group’s own retail business by optimizing critical operational processes. Thanks to its IT-supported selling space, assortment and volume planning, the Group is in a position to align its product range even more effectively with the needs of end consumers and to flexibly respond to changes in the market. The management of the flow of goods across more and more distribution channels offers opportunities to improve the availability of merchandise and to reduce discounts, for example. The Group is also working hard to increasingly digitize various processes along the value chain to generate time and cost advantages. Therefore, increasing the use of digital prototypes in developing products shortens development times and reduces costs in the medium term. In the wholesale channel, HUGO BOSS sees opportunities to make the sales process more simple in future through the use of digital showrooms. The Group has garnered its initial experience and valuable knowledge in this area through its HUGO digital showroom. Group Strategy
HUGO BOSS has set itself the target of changing its corporate culture so that decision-making processes become faster and entrepreneurial thinking among employees is encouraged. In doing this, the Company sees opportunities to adapt to changes faster and more comprehensively than in the past and to increase customer benefits.
HUGO BOSS is aligning its human resource work towards its target of shaping the environment in the Company in such a way that employees can constantly grow and develop their full potential. The Group places a particular store by the results from the annual employee surveys in this regard. Successes on this front and recruiting highly-qualified talent can in future have a direct positive effect on the sales and earnings situation. Employees
The Group is committed to pursuing sustainability from the point of view of economic, ecological and social aspects. On the one hand, this allows it to fulfill its social responsibility. On the other, sustainable behavior offers key economic opportunities, not only with regard to direct increases in sales and reductions in costs, but also in terms of the general reputation of the Company and its brands in general. Sustainability