Hugo Boss Q1 sales and profits drop as it works through its updated strategy

Hugo Boss’s Q1 results on Tuesday saw sales and profits falling but the decline was “deliberate” as it focused on its ‘CLAIM 5 Touchdown’ strategy and its operating profit figure was above analysts’ estimates.

The German premium fashion giant said group sales fell 6% to €905 million, reflecting its deliberate brand and channel realignment.

That divided into sales from the Boss brand falling 3% currency neutral or 7% reported to €779 million and the much smaller Hugo brand dropping a larger 21% currency neutral and 23% reported to €125 million.

At Boss, key brand initiatives “continued to support overall brand momentum, [and] performance was shaped by strategic actions to strengthen brand equity over the long term, particularly in Womenswear. At the same time, Menswear proved more resilient during the quarter supported by casualwear-oriented product assortments”.

At Hugo, the strategy to “strengthen long-term brand equity” has “a clear focus on sharpening its identity around contemporary tailoring. As part of this process, Hugo is streamlining its product offering into one overarching brand line, supporting a focused and consistent assortment across wearing occasions”.

Sales in the EMEA region fell 8% currency neutral and 10% reported to €568 million with the Americas down 5% currency neutral and 11% reported to €188 million. Meanwhile Asia pacific returned to growth with a 1% increase on a currency neutral basis although reported sales still fell 6% to €123 million.

Its performance in retail dropped 3% currency neutral or 8% reported to €510 million as the company optimised its store network and closed 15 standalone stores globally, largely through expiring leases.

Meanwhile, wholesale was down more. It fell 10% currency neutral and 12% reported to €369 million, with the “focus on distribution excellence, including more selective assortments and partner network optimisation” being a culprit here. But the performance was also hit by a deliveries timing shift of around €20 million from the first quarter of 2026 into the fourth quarter of 2025.

Partly countering the declines, its gross margin improved by 110 basis points to 62.5%, mainly driven by sourcing efficiencies. Operating expenses also fell by 4% as selling and marketing costs dropped.

Profit on an EBIT basis — or operating profit — was €35 million, down from €61 million the year before. Analyst had expected around €30 million this time. The EBIT margin was 3.9% down from 6.1%.

Free cash flow before leases increased to €33 million from a negative €66 million in the previous Q1, supported by a reduction in inventory level levels that were down 13% year on year.

Fashion show success

Key developments during the quarter included marketing investments adding up to 7.3% of sales. There was the Boss Fashion Show in Milan, which placed it “among the top 10 most engaging brands during Milan Fashion Week”.

Boss also saw its third David Beckham drop with exclusive activations in Berlin at the Kurfürstendamm store and a dedicated pop-up at KaDeWe, “driving strong social media engagement”.

Both brands launched SS26 collections in the quarter and at Hugo this was supported by a dedicated campaign under its new brand message ‘Red Means GO’.

The company also put in place a new organisational set-up with two “dedicated powerhouses” for menswear and womenswear implemented, “strengthening gender-specific expertise and marking a key milestone in the ongoing brand realignment” of the brands.

This is all intended to lay the foundation for sustainable, profitable growth but in the short tern, the macroeconomic and geopolitical backdrop “will remain volatile, with recent developments in the Middle East adding further uncertainty”.

Still, the company’s outlook was reaffirmed with currency adjusted group sales to decline in mid-to-high single-digits. And EBIT will range between €300 million and €350 million.

CEO Daniel Grieder said that “following our successful finish to 2025, we entered the year with a clear roadmap. However, the market environment has become more challenging over the course of the first quarter, caused by recent developments in the Middle East. Against this backdrop, we focused on what lies within our control and moved decisively into the execution phase of CLAIM 5 Touchdown. 

“We made tangible progress in implementing our targeted brand and channel realignment, including streamlining product assortments and refining our global distribution footprint. As expected, these deliberate actions are reflected in our top-line performance and mark the first concrete steps in structurally refocusing the business and strengthening long-term earnings quality.

“At the same time, we continued to invest in brand equity and relevance, including key highlights such as the Boss Fashion Show in Milan and the launch of our spring/summer 2026 collections, which resonated strongly with consumers. In parallel, we successfully leveraged sourcing efficiencies and pricing discipline to deliver a meaningful improvement in gross margin, and maintained cost discipline across the organisation.”