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Hugo Boss Sells Russian Business to Wholesale Partner Stockmann

The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
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Hugo Boss Sells Russian Business to Wholesale Partner Stockmann

The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP

Hugo Boss has sold its Russian business to wholesale partner Stockmann for an undisclosed fee, the German fashion house said on Monday, joining the ranks of Western brands to exit the Russian market over the war in Ukraine.
The German fashion company suspended its retail business in Russia soon after Moscow invaded Ukraine in February 2022. It also paused its e-commerce activities in the Russian market and stopped advertising, Reuters said.
"We can confirm that our Russian subsidiary has been sold to Stockmann JSC - a company belonging to one of Hugo Boss's long-standing wholesale partners in the country," Hugo Boss said.
Neither party has disclosed financial terms of the deal, but Russia demands that foreign companies sell assets at discounts of at least 50%. Stockmann did not respond immediately to a request for comment.
Russian corporate filings showed that the deal closed on Aug. 2 and that Stockmann JSC now owns 100% of Hugo Boss Rus with a nominal value of 40 million roubles ($470,588).
Hugo Boss had come under pressure from organizations such as B4Ukraine for continuing to supply some goods to Russia. B4Ukraine is a coalition of civil society groups seeking to compel Western companies to sever ties with Russia.
"In terms of our wholesale business, we were fulfilling the contractual obligations to our partners," Hugo Boss said in April. "In this context, Hugo Boss is and has been complying with existing EU sanctions at all times."
Stockmann in Russia operates independently to its former Finnish owner, which sold its Russian business after Moscow's 2014 annexation of Crimea.

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Hugo Boss May Push Back 2025 Targets as Luxury Sector Falters

The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
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Hugo Boss May Push Back 2025 Targets as Luxury Sector Falters

The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP
The Hugo Boss logo is seen at one of the brand's stores in Hong Kong. CREDIT: BUDRUL CHUKRUT/AP

Hugo Boss may push back key sales and profit targets beyond 2025 when it reports its second-quarter results on Thursday, as investors watch for updates on trading and cost-cutting plans.
Shares in the company fell as much as 10% in July as it cut its full-year sales and earnings forecasts, citing weakening global consumer demand, especially in China and Britain, said Reuters.
It warned in March that its target of reaching 5 billion euros ($5.4 billion) in annual revenues in 2025 might be delayed, but said it still expected its margin on earnings before interest and taxes (EBIT) to reach at least 12% next year.
"Besides comments on current trading, which will be closely watched by investors, we would not rule out an update on Hugo Boss' mid-term targets," said Felix Jonathan Dennl, analyst at Metzler Capital Markets in Frankfurt.
Some analysts, including Dennl, expect Hugo Boss to hit its mid-term sales target two to three years later than originally forecast, and to reach its mid-term EBIT margin goal after 2028.
"If Hugo Boss can't provide more visibility, the revenue and EBIT targets should be in doubt," Alexander Zienkowicz, senior analyst at Mwb Research said.
In an average of estimates last updated ahead of the company's preliminary results in mid-July, analysts had forecast sales of 4.65 billion euros and an operating profit of 519 million for 2025, corresponding to an EBIT margin of 11%.
Cost cuts are also going to be in focus, said Joerg Philipp Frey, analyst at Warburg Research. He highlighted the company's 21% jump in marketing spend and higher brick-and-mortar retail expenses in the second quarter from a year earlier, in contrast with its quarterly sales decline.
The upmarket fashion brand has been on an expansion drive, increasing marketing spend and opening 102 new points of sale, including own stores, "shop-in-shops" and outlets, in 2023. It is trying to stem a slowdown in sales growth which has contributed to the company's shares almost halving in value this year.
"To lift the share price, it will be important for Hugo Boss to demonstrate effective management of the issues at hand and a credible path to recovery," Zienkowicz said.
The luxury sector is grappling with weaker sales and pressure on margins as inflation-hit shoppers hold off from splashing out on designer fashion. A property slump and job insecurity in China has exacerbated the problem.
Earnings from luxury companies this quarter have demonstrated the strains that the sector is under with both LVMH and rival Kering falling short of forecasts.