Hugo Boss AG announced plans to eliminate two brands and slow down expansion of its store network, as chief executive officer Mark Langer resets the ailing German fashion house’s strategy six months into the job.
The company will only produce clothes under the Hugo and Boss brands, narrowing its focus to casualwear and business clothes, the Metzingen-based suitmaker said in a statement yesterday.
Hugo Boss said that next year would be a transition year and it expects a return to growth in 2018.
The company reiterated a forecast of cost savings of 65 million euros (US$61 million) this year.
The statement was “a bit light on numbers in terms of potential cost savings,” MainFirst Bank analyst John Guy wrote, adding that analysts might cut their earnings estimates for next year.
Langer needs to jump-start Hugo Boss, which ousted its longtime chief executive in May and whose shares have lost about a third of their value in the past year.
He has taken a strategy akin to Burberry Group PLC and Marks & Spencer Group PLC, which have been weeding out smaller brands amid weak consumption in Europe.
Langer has signaled that Hugo Boss will turn away from the luxury market in favor of making more affordable clothing.
The Boss Orange and Boss Green brands will be folded into the Boss brand, the company said.
Hugo’s entry-level prices are to be about 30 percent lower than Boss clothing, while Hugo Boss would expand its online business.
Womenswear is to become a lower priority.
Boss would not show a new womenswear line at fashion shows in New York next year, a break with an emphasis on that segment by Langer’s predecessor, Claus-Dietrich Lahrs, now head of the Bottega Veneta luxury brand.
Boss is also upping the assortment of casual clothes and shoes in its stores, getting in line with a trend that has seen men and women pair sneakers and other dress-down essentials with more polished outfits.
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