Fashion victim: Hugo Boss plans an online push to reverse flagging sales
Hugo Boss AG said on Thursday that improving its online business would be a top priority this year as the struggling German fashion house hopes to avoid another decline in sales and cement a recovery in China.
The company known for its smart men’s suits is in the midst of restructuring under new boss Mark Langer after his predecessor Claus-Dietrich Lahrs quit last February as sales slumped in China and the United States.
Hugo Boss said it expected currency-adjusted sales to be stable in 2017 after it reported a 4% fall in 2016 to €2.69 billion ($2.8 bln), with online sales down 9% percent to €76 million, less than 3% of the total.
Analysts expect online transactions to represent 20% of all luxury sales within a decade, up from 7-8% now.
“Online and retail stores must be more closely linked together,” Hugo Boss’s sales chief Bernd Hake told journalists.
The company plans to roll out services like “click and collect” to stores across Europe by the end of 2017.
Luxury goods group LVMH Moet Hennessy Louis Vuitton SE is planning a new digital platform to host all of its brands, sources close to the matter told Reuters on Thursday, as the French company steps up efforts to capitalise on the sector’s online sales boom.
E-commerce sales at Hugo Boss were disrupted in 2016 by a move to fulfil orders in Europe itself, instead of via a partner, and the relaunch of its website, but the company said they should return to growth during the course of 2017.
It also plans more digital marketing, forecasting it will spend 70% of its budget online and only 30% on print in 2017, compared to a 50-50 split two years ago.
Digital communication had been an important driver of its recent recovery in China, it said, noting a big jump in followers on Chinese social media sites WeChat And Weibo in 2016.
Hugo Boss has also slashed prices in China to bring them closer to European and US levels, helping sales there rise by almost 20% on a like-for-like basis in the fourth quarter.
The company said it had saved more than €100 million in costs and investment in 2016 and it would continue to keep a strict control on expenses in 2017, helped by renegotiated rents and the closure of loss-making stores.
Hugo Boss said that retail selling space would be stable in 2017, with 10-15 new stores planned, but another 15 closures to be completed by the end of the year.