Will Hugo Boss Start Its China Expansion Early?

What happened : Today, Hugo Boss, the German fashion group that owns businesswear and casualwear brands HUGO and BOSS, reported a 17-percent sales drop in the first quarter of 2020 to $602 million (€555 million). The group’s Asia-Pacific region, which includes China, was hurt extensively in the first quarter due to store closures, lowering regional sales by 31 percent. Europe and America shed 14 percent and 17 percent, respectively. The group remains optimistic about mainland China, as it’s already seen a gradual recovery in store sales and strong momentum in online sales in the region. Yet over 75 percent of the group’s stores worldwide remain closed, and the group’s main markets of Europe and America, which respectively made up 62.5 percent and 19.4 percent of its business in 2019, have yet to fully reopen. As a result, the group expects “sales to decrease by at least 50 percent in the second quarter.” The company also suggested that the retail environment might begin improving in the third quarter and onward. Jing Take : With the uncertain situation in Europe and America, would Hugo Boss move up its scheduled plan to open additional retail stores in China, as mentioned in its 2019 annual report? Throughout this pandemic, brands have learned that now not the time to hunker down but rather an opportunity to reposition their businesses. Hugo Boss has called China a “strategically important market” in this quarter’s financial release while praising its recovery and digital growth in a separate section — proof that the German fashion group is watching the market closely. Although the segment has expanded its earnings from 14 percent to 15.2 percent over the last five years, Hugo Boss’s Asia-Pacific region still places third behind America and Europe in terms of market size, but that might change soon. The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

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Will Hugo Boss Start Its China Expansion Early?