Hugo Boss shares plummeted due to a forecast of falling revenue. Will a relaunch help it?

Hugo Boss shares fell almost 12% after the premium apparel maker warned of lower revenue in 2026. The company expects revenue growth only in 2027, counting on assortment renewal, cost optimization and margin improvement. Citi analysts said the weak guidance and uncertain recovery scenario looks disappointing.

Shares in German fashion house Hugo Boss collapsed nearly 12% in German trading after the company shared its plans for next year. The company said currency-adjusted revenue in 2026 will fall by a few percent and earnings before interest and taxes (EBIT) will be in the range of €300-350 million. That forecast fell short of analysts' consensus estimates citedby Bloomberg.

According to Hugo Boss, growth will resume in 2027 and accelerate in 2028 thanks to a new strategy to reduce assortment and optimize costs. The company intends to partially raise prices to boost gross margin in 2026 and beyond. In the long term, the premium apparel maker reaffirmed its goal of reaching a profit margin of around 12%, a figure previously expected as early as 2025.

The strategy relaunch followed a challenging period, with CEO Daniel Grider forced to push back mid-term targets set in 2021, including a plan to reach €5 billion in revenue by 2025, Bloomberg notes. Grider had been betting on attracting a younger audience, but demand - especially in China, where consumers have cut back on spending on premium clothing amid a weak economy and increased competition from local brands - has been markedly below expectations. Since the beginning of the year, quotations of Hugo Boss have already fallen by more than 20%.

"After several successful years, we are deliberately taking a pause to lay the groundwork for future growth," Grider said in presenting the company's strategy through 2028.

Despite the renewal of the Hugo and Boss brands, the women's line remains a weak link. According to Bloomberg Intelligence estimates, its contribution is only about 10% of sales, so strengthening this segment could be key to boosting traffic in stores. The company said it plans to rebuild the women's assortment around basic models and give the Hugo brand a more affordable line with an emphasis on modern cuts.

"Boss is clearly relaunching the business to lay the groundwork for future profitable growth," RBC analysts said in a review. - We also note Frasers Group's strategic interest in Boss, which we believe is looking to take a more proactive stance."

Frasers Group is Hugo Boss' largest shareholder with a 25% stake. Earlier this year, Frasers threatened to vote against paying a dividend, saying the company should allocate resources to long-term development. The group also said last week that it no longer supports supervisory board chairman Stephan Sturm. Hugo Boss noted that Sturm intends to continue in office.

According to Citi analysts, while the brand refresh looks justified and timely, the weak guidance for 2026 and the uncertain recovery outlook for the next two years looks disappointing, The Wall Street Journal reports.

This article was AI-translated and verified by a human editor