Group Profile

Business Activities and Group Structure

HUGO BOSS strives to strengthen and expand its position as one of the world market leaders in the premium and luxury segment of the global apparel market. The Group, which is based in Metzingen in Germany and employs a workforce of almost 12,000 people, generated annual sales of EUR 2.3 billion in fiscal year 2012 and is among the world’s most profitable apparel manufacturers.

Positioning in the premium and luxury segment of the apparel market

The HUGO BOSS Group is one of the world market leaders in the premium and luxury segment of the apparel market. The Group focuses on developing and marketing high-end women’s and men’s fashion and accessories. With its brand world, HUGO BOSS targets different, clearly defined consumer groups. The brands cover an extensive product range consisting of classicmodern business wear, elegant evening wear and sportswear, shoes and leather accessories and licensed fragrances, eyewear, watches, children’s fashion, motorcycle helmets, mobile phones, mobile accessories and home textiles.

Targeted brand communication

Intensive marketing activities and the sponsorship of sports and cultural events enhance the worldwide recognition of HUGO BOSS and the image of its brands. Alongside traditional forms of advertising such as print and out-of-home, the relevant consumer groups are increasingly being addressed through new marketing instruments such as social networks. Sports sponsorship activities focus on premium sports such as Formula 1, sailing and golf and are an ideal vehicle for conveying the brand values such as dynamism, perfection and precision. In its cultural sponsorship activities, the Group highlights the similarities between art and fashion in terms of design, aesthetics and creativity. The Company also shines at high profile fashion events in the world’s fashion capitals, further emphasizing the appeal and acceptance of the Group’s brands among key target groups and emotionally charging the HUGO BOSS brand world.

Global sourcing and distribution activities

HUGO BOSS products are predominantly manufactured by independent suppliers, which are mainly based in Eastern Europe and Asia. The Company sells its products in 129 countries around the world. The sales regions of the Group are Europe (59% of sales), the Americas (24% of sales) and Asia/Pacific (15% of sales). Besides, 2% of sales are generated by royalties.

Growing importance of own retail business

Today, consumers can purchase HUGO BOSS products at more than 6,800 points of sale. In addition to multi-brand points of sale operated by wholesale partners, the importance of monobrand points of sale is growing significantly. Independent HUGO BOSS stores are operated either by franchise partners or by the Group itself. There is a total of around 1,200 stores and shop-in-shops operated by franchisees. As a result of moving forward with the Group’s own retail activities, the number of retail stores increased by 218 to 840 in the past year. This brings the total number of mono-brand stores in the HUGO BOSS Group to over 2,000 in more than 80 countries. At the same time, online sales are becoming increasingly important. The Group currently has online stores in Germany, the Netherlands, France, the UK, Austria, Switzerland and the United States. In total, 49% of sales were generated by the Group’s own retail activities in fiscal year 2012.

Legal structure of the Group characterized by dual management and control structure

The HUGO BOSS Group is managed by its parent company HUGO BOSS AG, which is based in Metzingen, Germany, and bundles all the central management functions. As a German stock corporation (Aktiengesellschaft), HUGO BOSS AG has a dual management and control structure. The Managing Board is responsible for managing the Group, while the Supervisory Board advises the Managing Board and oversees its management of the Company. In addition to HUGO BOSS AG, the Group consists of 53 consolidated subsidiaries that run local business operations. 32 subsidiaries are organized as distribution companies. With few exceptions, all subsidiaries are fully controlled by HUGO BOSS AG. All the subsidiaries are run as independent profit centers and thus hold profit responsibility.

Regionally oriented organizational structure

The HUGO BOSS Group has a regionally oriented structure and has combined its local business operations into three regional organizations: Europe including the Middle East and Africa, the Americas and the Asia/Pacific region. These three regions as well as the royalties business make up the four operative segments of the Group. Responsibility for the central functions is divided between the different Managing Board areas. In particular, the Managing Board is responsible for Group strategy. The management and collection development for all brands are also bundled at the Group’s headquarters. Other responsibilities based at the Group’s headquarters include own retail management, sourcing, logistics and IT, human resources management, financial management including corporate financing and risk management. Furthermore, in addition to internal communications, HUGO BOSS AG is also responsible for external communication, including maintaining relations with the capital market.

Regional organizations implement Group strategy

In the three regional organizations, the Group strategy is implemented in the respective market environment in close coordination with the Managing Board and under the leadership of the respective regional director. Working together with the country managers within their region, the directors are responsible in particular for the regional design of the wholesale and retail sales strategy and for the development of sales and earnings. The regionalization of the sales structures strengthens the Group’s consumer proximity and improves its ability to react to market developments and to adapt to market-specific features. It also allows for a fast exchange of best practices through the close integration of the national companies.

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