German premium fashion house Hugo Boss has announced a strategic reset that anticipates a temporary sales decline in 2026, with the company targeting €300 million in annual free cash flow as it refocuses on brand, distribution, and operational excellence through 2028.
Hugo Boss unveiled its CLAIM 5 TOUCHDOWN strategy on 3 December, marking a deliberate pivot from rapid expansion to consolidation and realignment. The German company expects currency-adjusted sales to decline mid- to high-single digits in 2026, with EBIT forecast between €300 million and €350 million, before returning to profitable growth from 2027 onwards.
The strategy builds on the successes of CLAIM 5 since 2021, during which the BOSS and HUGO brands delivered strong growth with a CAGR of 22% between 2020 and 2024. CEO Daniel Grieder positioned the move as strategic: “Following the successes of recent years, we are now deliberately taking a step back to prepare for tomorrow’s growth.”
Three pillars of excellence
Execution will centre on three key areas through 2028:
- Brand Excellence: BOSS Womenswear will refine its product assortment around essential items, whilst HUGO sharpens its identity with contemporary tailoring and more accessible pricing. Marketing spend is targeted at around 7% of sales, focusing on high-return partnerships like Beckham x BOSS.
- Distribution Excellence: The company will optimise its store portfolio, foster strategic wholesale partnerships, and strengthen digital capabilities, with particular focus on the U.S. and China markets.
- Operational Excellence: Priorities include sourcing efficiency, AI-enhanced planning, and leveraging the expanded automated logistics network.
Financial targets and shareholder commitment
Hugo Boss is targeting approximately €300 million in annual free cash flow through 2028—nearly triple recent levels—supported by reduced capital expenditure (3-4% of sales) and strict working capital management. The company maintains a firm commitment to shareholder returns via dividends and/or share buybacks whilst strengthening its balance sheet.
CFO Yves Müller stated: “With this stronger financial foundation, we are well positioned to return to top- and bottom-line growth from 2027 onward and progress toward our long-term EBIT margin ambition of around 12%.”
Frasers Group backs the strategy
The announcement comes one day after major shareholder Frasers Group—led by Mike Ashley—reaffirmed confidence in Hugo Boss’s turnaround plan despite its own challenges. On 3 December, Frasers reported a 2.8% decline in adjusted profit but maintained annual guidance, citing weak UK consumer confidence and heavy discounting across the retail sector.
Frasers’ continued support signals institutional backing for Hugo Boss’s deliberate strategic reset, even as the premium fashion sector navigates a challenging macroeconomic environment.
Hugo Boss will present detailed 2026 guidance and shareholder return specifics on 10 March 2026 alongside its full-year 2025 results.
