German fashion giant Hugo Boss has shown signs of recovery as it returned to profitability in the third quarter. The company had reported losses in the second quarter due to the uncertainties brought on by the pandemic. Despite a 24% drop in quarterly revenue to €533 million, Hugo Boss managed to exceed analyst expectations with an operating profit of €15 million. However, this is still a decline from the €83 million profit reported a year ago.

To drive its business recovery, Hugo Boss has been focusing on its digital channels and the Chinese market. Sales in mainland China increased by 27% during the quarter, while online sales saw a significant surge of 66%. The company expanded its e-tail operations by opening 24 new markets between June and August. It attributed the success of its digital efforts to the accelerated shift towards online shopping, with sales on hugoboss.com and self-managed platforms on key partner websites experiencing strong growth in both traffic and conversion rates. This marks the 12th consecutive quarter with significant double-digit online sales growth for the firm.

Despite the challenges faced by physical stores, Hugo Boss remains optimistic. With the majority of its own stores back in operation, the company’s own retail business recorded a considerably more robust performance compared to the first half of the year, with revenues down by only 20%. However, the decline in sales to tourist shoppers due to international travel restrictions remains an obstacle. Sales in Europe dropped by 21%, despite some signs of demand recovery in key markets such as the UK and France. The tourism downturn has greatly affected luxury companies, including Hugo Boss.

Hugo Boss, like other brands, has adjusted its product offering to meet the demands of the “new normal” and has focused on casual clothing. This shift towards casualwear had already begun before the pandemic. The company’s youth-focused Hugo label saw only a mid-single-digit decline in casualwear sales during the quarter, highlighting the resilience of this segment.

Despite the challenges posed by the pandemic, Hugo Boss is strategically positioning itself for recovery. By capitalizing on the digital shift and the growth opportunities in the Chinese market, the company aims to regain its financial stability and continue its upward trajectory in the fashion industry.

Useful links:
Hugo Boss Official Website
Hugo Boss Online Sales Growth Statistics