Q2 2025 Hugo Boss AG Earnings Call

Ladies and gentlemen, welcome to the Q2 2025 results conference call and live webcast. I am Sandra, the caller School, Operator.

I would like to remind you that all participants have been listening, and the conference is being recorded.

The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone.

For operator assistance, please press * and 0.

The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christian Stohr, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Sandra, and good morning, ladies and gentlemen.

Warm welcome to our second quarter 2025 precise presentation.

Hosting our conference call today is Eve Miller, CFO and COO of Hugo Boss.

Before we begin, please be reminded that all growth rates related to revenue will be discussed on a currency-adjusted basis unless stated otherwise.

To ensure a smooth and efficient Q&A session, we kindly ask you to limit your questions to 2. And with that, let's get started. The floor is yours.

Thank you, Christian, and a warm welcome from me. Ladies and gentlemen.

As outlined in our press release this morning at Hugo Boss, we delivered a solid second quarter performance with both sales and EBIT exceeding prior year levels.

While this reflects encouraging progress compared to the first quarter, let me be upfront.

The broader macroeconomic and industry environment remained challenging also in Q2.

Global consumer sentiment continued to be subdued, and store traffic remained under pressure in most markets.

What fueled our progress in Q2 was once again the strength of our disciplined execution. In our relentless focus on key levels within our control, we advanced strategic initiatives across brands, channels, and regions to capture growth opportunities, even in the persistently volatile environment.

Equally important, we maintained strict and sustainable cost discipline for the fourth consecutive quarter, driving further efficiency gains across our business.

These efforts translated into a 1% increase in group sales, totaling just over €1 billion in the second quarter.

This marks a clear improvement compared to Q1, when sales were still down by 2%.

At the same time, our focus on cost efficiency contributed to robust bottom-line performance.

Debit rose by 15% to €81 million, translating into an EBIT margin of 8.1%, an increase of 120 basis points compared to the prior year.

This underscores strong cost leverage, supported by a stable gross margin. I will explain in more detail shortly.

But first, let's take a closer look at our top-line performance, starting with a breakdown by brand.

In light of the challenging market environment, we remain steadfast in our focus on strengthening our brand. Momentum is our guiding principle within Claim 5.

Building on the foundation laid, we placed particular emphasis on Boss men's wear in the second quarter, thereby leveraging our 24/7 lifestyle offering.

A clear highlight in this regard was the successful launch of our first Backa Max Boss collection in April. The collection not only outperformed previous collaborations on social media, but equally importantly, delivered above-average full-price sell-throughs.

Even in a volatile environment, we identify and act on the opportunities that support our ambition of driving sustainable, high-quality growth.

As a result, revenues at Boss Men's Wear increased by 5% in the second quarter, highlighting the brand's strengths and resilience.

At the same time, in Q2, we accelerated targeted measures to enhance efficiency and strengthen the performance of both women’s and children’s longer.

To better align with evolving consumer preferences and improve sales productivity, we sharpened product assortments and implemented a more focused distribution approach.

As anticipated, these proactive steps have impacted sales development to some extent and Q2 revenues. At Boss, women's wear declined by 8%, while Hugo was down 12%.

It is worth noting that the comparison base for Boss Women's was still included sales from the Boss Camel line, a line we have now integrated into Boss Black as part of our efforts to streamline the offering.

While these changes are transitional, they are strategically necessary to position both brands for sustainable and profitable growth in the future.

We are confident that these adjustments will unlock long-term value and ensure that both Boss Women's Wear and Hugo are well positioned to meet the demands of today's consumers.

Let's now take a closer look at our performance across regions, starting with EMA, where sales return to growth and increase by 3% year-over-year.

Performance was supported by improvements in Germany, while the UK remains slightly below prior year levels.

Encouragingly, our business in the Middle East also continues on a growth trajectory.

In the Americas, revenues increased by 2%, marking a return to growth following a softer start to the year.

This improvement was particularly evident in the U.S., where we saw a gradual recovery in demand during the second quarter.

While overall consumer sentiment in the U.S. remained subdued, I'm pleased to report that our brick-and-mortar retail business achieved modest growth in Q2.

Meanwhile, our business in Latin America delivered another successful quarter with robust improvements.

Finally, in Asia-Pacific, sales declined by 5%. This largely reflects continued softness in China, where muted consumer confidence weighed on demand. By contrast, in Q2, revenues in Southeast Asia and the Pacific remained stable year-over-year, supported by another solid performance in Japan.

With this, let's now turn to our performance across distribution channels.

In our brick-and-mortar retail business, momentum improved sequentially, with sales ending just 1% below the priority level this marks. This represents a key improvement versus Q1, where we saw a 4% decline. That said, muted consumer sentiment continued to weigh on overall performance, leading to a decline in store traffic. On a positive note, we achieved slight improvements in both conversion rates and sales per transaction following our efforts to elevate the in-store shopping experience.

Looking ahead, we remain committed to continuously optimizing our retail footprint by balancing space reductions with investments in high-potential locations.

A great example is the recent opening of our Boss Halo store in Barcelona, which offers a first-class retail experience.

Moving over to brick-and-mortar wholesale, where sales grew by a solid 3% in Q2,

This performance was driven by the successful delivery of our summer and fall 2025 collections to our wholesale partners. Alongside the continued expansion of our global franchise business,

Together, these achievements more than offset the broader challenges of the whole sales sector. Headwinds, we expect, will persist in the quarters ahead.

Last but not least, our digital business continued its growth trajectory, with sales up 7%.

Growth was primarily driven by stronger digital sales through our partners. Meanwhile, hugoboss.com experienced slightly softer trends, reflecting both the subdued market environment and our focus on driving full-price sales.

With this, let's shift our focus to profit and loss, starting with the gross margin.

In the second quarter, our gross margin remained stable at 62.9%.

Efficiency gains in sourcing lower product costs and a reduced share of air freight positively contributed to margin development.

These factors enabled us to effectively offset adverse channel mixed effects, as well as several market-related headwinds, including unfavorable currency movements and a promotional market environment in light of declining store traffic.

Turning to our cost base.

In Q2, we delivered another quarter of strict cost discipline and achieved a 3% reduction in operating expenses year-over-year.

in strong cost leverage of 120 basis points, driven by further efficiency gains across key business functions, including sales, marketing, and administration.

Selling and marketing expenses were down 4% in Q2, driven by a 6% reduction in brick-and-mortar retail expenses.

This reflects our strong focus on retail efficiency, including renegotiating rental contracts and selectively closing underperforming stores, where appropriate.

As a result, total selling space was reduced by 2% as compared to last year.

Meanwhile, marketing investments declined by 10%, largely due to timing effects. Importantly, on a first-half basis, marketing spend remained broadly stable at 7.6% of group sales. This reflects our commitment to allocating marketing resources with maximum efficiency, prioritizing product-led storytelling and commercial impact. Let me be clear, marketing remains a strategic growth driver for us. It is fundamental to building brand equity and fostering customer loyalty. Both areas are essential for our sustained success. It will not be compromised.

Lastly, administration expenses declined by 2%, underscoring the success in further enhancing operational efficiency and maintaining disciplined cost management.

Turn into the bottom line.

Our focus on driving sustainable cost efficiency delivered solid earnings growth in Q2.

EBIT increased by 15% to €81 million, resulting in an EBIT margin of 8.1%, an improvement of 120 basis points compared to last year.

Earnings per share, in turn, rose by 27% to $0.68, supported by a decline in financial expenses.

This development was mainly driven by favorable currency effects but also underscores the strength of our overall financial management.

Now, to round off our Q2 review, let's take a brief look at the remaining balance sheet and cash flow items.

Trade, networking, and capital increased by 5% on a currency-adjusted basis.

Driven by a 7% rise in inventories year over year.

In transit, as well as a planned increase in inventory coverage.

The letter was particularly evident in the U.S. market, where we proactively took measures in the first half to address ongoing tariff uncertainties.

We remain confident in the quality and composition of our inventories. The majority consists of core and fresh merchandise, carefully designed to effectively meet customer demand. Considering the development of accounts receivables and accounts payable in Q2, trade networking capital as a percentage of sales improved by 150 basis points year-over-year, decreasing to 19.7%.

Turning to free cash flow, which amounted to €138 million in the second quarter, slightly below the prior year level, while improvements in Abbott and lower capital expenditure provided support.

These tailwinds were more than offset by higher cash outflows related to trade and working capital.

Ladies and gentlemen, this concludes my remarks on our second quarter performance. Let's now move on to our expectations for the remainder of the year.

As we enter the second half of the year, we remain committed to executing our strategic agenda.

Basic brand investments, seizing additional sales opportunities, and enhancing operational efficiency.

This integrated approach allows us to further strengthen the long-term relevance of BOSS and Hugo, focus on high-quality growth, and safeguard margin integrity, even in the face of external volatility.

In this context, I am excited about two key milestones that will further elevate brand health.

the upcoming launch of our four winter 2025 collections later this month, as well as our Boss fashion show in Milan in September.

Equally important is our commitment to deepening engagement with our most valuable customers, a key lever for driving customer lifetime value and brand loyalty.

Since launching our Customer Loyalty Program, Hugo Boss XP, just one year ago, we have expanded our member base by over 20%, surpassing 11 million registered customers of Boss and Hugo.

Most recently, we reached the next milestone by integrating Hugo Boss XP into WeChat, expanding our engagement in the Chinese market. The rollout in the U.S. is also planned for later this year.

At the same time, building on four consecutive quarters of strict cost management, we are intensifying our efforts even further.

Leveraging our global sourcing capabilities will remain a key driver in supporting gross margin.

Furthermore, we will accelerate targeted measures to streamline operating expenses across the organization.

This consistent focus on cost efficiency is not only critical for our profitability in the quarters ahead, but also essential for building a leaner, more scalable cost base for the future.

All this being said, we remain mindful of the ongoing macroeconomic and geopolitical uncertainties shaping the global landscape.

While our robust business model gives us confidence in navigating this dynamic environment, we continue to monitor external developments closely, particularly the evolving tariff discussions.

Since our last update in early May, we have taken concrete steps to mitigate tariff-related impacts.

Our well-diversified global sourcing footprint is a clear advantage in this regard.

It enables us to swiftly adapt to changing conditions and optimize sourcing decisions. In particular, we have increased our inventory coverage in the U.S. and successfully rebooted product flows from China to other regions.

Looking ahead, we will introduce moderate price adjustments globally with the upcoming Spring 2026 collections, which will begin delivery towards the end of 2025.

These steps aim to safeguard our margin profile while we remain aligned with broader market dynamics. Importantly, we remain fully committed to the superior price-value proposition of Boss and Hugo. Our customers can continue to rely on.

Given our solid first-half performance.

Our visibility into the remainder of the year and the current tariff environment is strong. We are reaffirming our top and bottom line outlook for fiscal year 2025.

We continue to expect group sales, in reported terms, to remain broadly in line with the prior year, ranging between €4.2 billion and €4.4 billion.

At the same time, we continue to anticipate our bottom line to improve in 2025.

Abbott is.

is to a level between 380 and...

440 million euros, leading to a margin of mine of 10%.

Before we move on to the Q&A session, let me briefly summarize today's key takeaways.

Over the past few years, we have built a robust foundation that positions Hugo Boss to navigate today's rapidly evolving environment with agility and focus. Our first half performance underscores the strength of this foundation, driven by disciplined cost management, operational excellence, and our commitment to brand elevation.

We will continue to invest in our brands with discipline, unlock additional growth opportunities, and accelerate efficiency gains across the business.

These efforts will position us to realize the full potential of our company and our two iconic brands, Boss and Hugo.

Even in the challenging environment, we remain steadfast in our commitment to brand elevation and premium execution, guided by a clear ambition to deliver sustained success for Hugo Boss. We are confident in our ability to navigate near-term challenges while shaping the future of our company and creating lasting value for our shareholders.

And with this, we are now very happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue.

If you wish to remove yourself from the question queue, you may press * and 2.

On the phone, we request that you disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question.

In the interest of time, please limit yourselves to two questions.

Anyone with a question may press *1 at this time.

Our first question comes from Grace Smallie from Morgan Stanley. Please go ahead.

Hi, good morning, thank you. Um my first 1 would just be on given the growth acceleration you saw between Q2 and q1 could you just help us with what that exit rate looked like in Q2? And then any initial comments on current trading, um, so far in in July and start with and then my second question would be on the us. We've seen um the Improvement in Trends between Q2 and q1 what do you attribute that to and is there any sign that there's any potential pull forward in terms of purchases? Whether it be from the end consumer or customers ahead of potential price increases and just any color you could share from us in terms of what you're hearing from your us wholesale partners and how they're planning their business in H2 and into 2026. Um, given the current uncertain backdrop, thank you very much.

Yeah, thank you very much. Good morning, Grace. Thank you for your two questions. So regarding our topline performance in Q2, actually we don't disclose it on a monthly basis. But overall, what I can say is that we have seen a gradual improvement in the course of Q2. With regards to the current trading, I can...

Somehow confirmed that we are performing on the same level that you have seen, uh, as an average in Q2 performance.

Um, with regards to, um, to the US, um, uh, definitely what we have to say is that we are very happy, first of all, that we are back to growth in the US, uh, and in North America, including Canada. I think this is a great achievement. I think Q1 was pretty soft after the inauguration of Mr. Trump, and especially store traffic had been very low. And you want this has gradually improved over Q2, and actually what we are seeing is that also the retail performance that we have finalized in Q2 was also in positive territory. So I would not view that these are, let's say, uh, consumer trends in terms of calling it forward. I would clearly say over this.

Kind of period of 3 months. And now looking into the July, it seems to be that there is a kind of gradual Improvement uh also in retail but it takes it certain efforts. We really have to say overall that you know, the overall uncertainty um creates a low consumer confidence and low consumer confidence results in in low store traffic. So store traffic overall is still declining and we try and our sales departments to to to do everything to compensate this with higher.

Conversions and actually with higher net sales per transactions. And this is actually what we have seen as a kind of, let's say yeah, algorithm in in Q2 which also which is also Q4 for Q2 uh in the US. And this is from my point of view, a kind of uh, this somehow underlines that our collections are working, uh, in the US. And that we are capable of somehow compensating the laws, low star trapping with higher conversion rates.

Okay, thank you. And just a follow-up in terms of what you're hearing from your U.S. hotel partners and how they're planning their business, given the current uncertainty.

It's, it's, they are, of course, there are some partners, uh, with a concession business like Hudson's Bay in Canada, which are now actually out of business. So, we have to somehow compensate this, but more or less, we have seen some flattish trends over in wholesale, uh, for the next seasons to come.

Okay, very clear. Thank you very much.

From RBC, please go ahead.

Good morning, it's mandar RBC. Um, morning East morning Christian, thank you for taking my questions. Uh, I just had 2 as well. If I met. Uh, my first question was on, on the space reduction, in, in your own retail business, I was just wondering as, as you look at the, the space exposure and the store State. Now, how much more is there to go for in terms of closing, underperforming stores and and seeing some savings through that? Uh, and then my second uh, question was on the brands. I just wondered, if you could give some color Eve on the, the performance of the Hugo brand versus the boss brand across Q2, thank you.

It didn't get the question. The second question, mangy, could you repeat that? It was just on the performance of the Hugo brand versus the Boss brand in Q2.

Okay.

Okay.

No regarding the first question. So regarding space, uh, uh, reduction. So, first of all, um, there have been these, uh, Hudson Bay shop in shops that are now out of business. So we have to include them, uh, into our considerations in terms of space. But these are, let's say, shop and Shop Concepts used to be a department stores in a variable cost business. This is, this is point 1, but we are also, I think in in these efficiency measurements and regarding our, uh, let's say freestanding stores, uh, very rigid and look at at high profitability levels. And if we are not able to somehow to renegotiate rents to the expected level that we want to see them, we would rather do go for a kind of uh closure and this has been visible. So we want to somehow establish a kind of robust uh uh retail brick and mortar business. And this was also visible. Also in Q2 and was driving

actually, our our operating, uh, our retail sales down by 6%, in comparison, to last year, I think this is a structural thing that we are doing, uh, continuously to optimize our stock portfolio, um, as a, as a reminder, we have, let's say over 120, rental contracts that via every year, and in the

These moments where store traffic is really down, uh, which is somehow the currency of the landlord, we try to be very rigid in renegotiating rents. Um, and these have some structural positive effects in the future, uh, in order to get the rents down for the future because traffic, which is, let's say, globally down, and point 1. And also we want to have a robust store portfolio. Um, uh, um, in order somehow to be more efficient in our reach, a bigger motor business.

And this, and this overall optimization will also continue in the quarters to come.

Um, the second question was related to the different performance between Boss and Hugo. Um, yes. We were growing with Boss, men's, whereby plus 5%.

Plus Men's Wear is 80% of our business. So we really focused on both these in this difficult times. I think with the launch of uh, boss X backhand, uh, we really had a, a strong collection and a strong interest of of the end consumer that was driving traffic uh, into our boss PS. So that was helping us in 5% is actually quite strong performance. Also driven by, by our green products that were performing a quite strongly and also camel regarding Hugo, we have somehow streamlined our portfolio. So we are more focusing.

Now, we have reduced the offering, and with this, we are also focusing more on street tailoring. We see that Hugo has the Heritage Inn in tailoring, contemporary tailoring, and younger tailoring. This is where we are focusing. That was, in a way, a kind of, let's say, traditional movement that we did deliberately in order to strengthen Hugo going forward.

So very good. Thank you.

The next question comes from Susie, Tiballi from UBS. Please go ahead.

Please. So the first 1, can you comment a bit on your um, wholesale Channel? How is your order book looking at the moment? Um, and also, um, any difference between, um, what you're seeing in terms of, uh,

Orders versus the ongoing replenishment business. And then, uh, secondly, regarding your overall Opex, last year in H2 is when you really started to have stricter control over costs. So now, um, you have delivered over the past four quarters really good, um, progress there. Uh, but I was wondering, as we start to annualize, um, some of those savings, do you think that Opex in H2 can still be uh, flattish to slightly down year on year? Um, or what's your overall outlook? Thank you.

So thank you very much for your questions. So so first of all, if we look at the whole set performance overall we are actually quite happy that we have improved from minus 3 in q1, to plus 3. In Q2, we have seen actually that the replenishment business, which is, let's say, 25% of our business, uh, has improved in in Q2. So this means that even with our wholesale Partners in in q1 traffic was was was fairly low. And replenishment was also uh, declining. But we have seen some some some positive Trends going into Q2.

Now, if you look at the fall and winter fall and winter, um, collections they are, they are still in and positive, uh, territories. And if we, if you then look into this, into the spring campaign, you see some softening Trends. But actually, this is what we have expected, uh, overall. And this is also backed in in our guidance because we have, we have seen now several quarters of of tremendous growth in the in the wholesale environment. We are in close collaboration with our wholesale Partners. Now, since we introduced a claim 5, we have seen uh tremendous growth rates over the last over the last quarters. So somehow we have, uh, expected a kind of softening for spring, um,

And also, we have to say that we might get some tailwind coming from our franchise business, where we are still expanding into emerging markets.

Regarding your second question. Yes, I think we really make big progress regarding, um, the Opex side. So, um, uh, Opex is the thing that we can control on our own and we have now been very disciplined over the last 4 quarters. Um, I tried to mention that we are actually try to find efficiencies in all the different areas between retail, between marketing marketing, Effectiveness and administration in all different.

RS. Uh, I have to highlight that it was also visible in in, in H1 that with our marketing spendings, staying at 7.6%, we are well in the range between 7 and 8%. So we really lay High emphasis on investing into Our Brands because we manage our business for the long term, success of the company, and we always that we will be between 7 and 8 and actually, we perform accordingly on the other side. We are really focusing on marketing Investments, uh, into backhand into into the new collections. Uh, so we so so we try to be very mindful of marketing uh um activations that have a kind of commercial focus. And yeah, our commercially relevant regarding the selling expenses. Um, I've already talked about, you know, the store portfolio. I think we are optimizing our retail costs in different

Aspects. So, we are definitely aligning our...

Our short personal also to the decreasing traffic. So we have a clear kpi, uh, FTE per visitor. So if the visitors are declining, we are adjusting this. You might have seen this also in our empty development. We have seen it kind of decline by by 2 to 3% in our numbers. So we are very mindful of this and try to manage this uh yeah. Uh yeah very tightly.

In order to achieve the necessary impacts the the the second big effect that we're seeing is coming from from the store portfolio. I touched the issue of of rental cost to get rental costs down to uh to uh close the underperforming stores. This gives us

Improvement. Uh, that we are seeing in the same is also true for, um, for the administration expenses. So we have been very selective in terms of hiring now for a very long period of more than 4 quarters, a very rigid in, in, in hiring, uh, very selective. I just pointed out our employee development. So, so you see also there some structural effects. And, of course, we want to keep our costs at least flat for the second half of the year.

Okay. Okay, so can I just, uh, quick follow up on your franchising business roughly. Uh, what's that weight of the wholesale channel?

It's around 20%.

Okay, thanks.

A question from Jeff, please go ahead.

In the morning, Eve and Christian. Thank you for taking my questions. Um, first, they're both on gross margin issues. First on the promotional environment. Can you describe what it was like in Q2 and how it was different from Q1? And whether within your store and sales mix, you're seeing the number of Outlet Stores stay constant or if it is expanding a little bit? So that's the first part, please. And then second, from a sort of higher-level perspective, it looks like it's flat gross margin in H1. Can we expect a similar trend going forward?

Gross margin performance. Um, in Arctic, thank you very much.

Yeah, thank you very much. Freddy and good morning from from, from my side. So so you had uh, the questions around gross margin. So first of all, I think we are very happy. That we kept our gross, margin stable. If you look at the different moving parts to be perhaps a little bit more explicit there. Um we have seen around this 150 basis points Improvement coming out of sourcing efficiency, a lower product cost than actually lower Air Freight share. So um so we try to manage these things. This is what we are saying. We try to control our cost, so this is also true for the coxes in our p&l. So we've seen this Improvement by 150 basis points, and they were let's say uh fully compensated by half of the effect was Channel, mixed effect. So wholesale growing faster than um um retail. Um and then 1.

Quarter of the negative effect was currency in 1 quarter, was promotional activity. What we can say is that since the store traffic, although the decline was a little bit less than a q1, you can see that the promotional activity was slightly less in Q2 in comparison to q1. So we have seen a slight Improvement, a slight Improvement there. Uh, but but but overall we, we would say that these moving parts are also visible for for the end of the year. We still have our ambition to get into the range between 62 and 64%. So we would be rather at the lower end on on the yearly perspective. So so we envisioned somehow to have a slight Improvement in gross margin and going into the second half uh, of this year. But the the big moving parts will be will be the same.

And actually, if you then compare the outlet business within our reach of business, it's rather stable. So, no big things that I would actually call out with this regard.

Fantastic. Thank you very much.

The next question comes from Jurgen, calling from Kepler. February, please go ahead.

Be you need an acquisition. Where are you looking for an acquisition to strengthen both businesses. In order to get scale back? That's the first part of the equation. And then the second part is, again, on the inventory side, uh, you mentioned that the share of goods in, in transit, um, increased obviously because you're shifting Air Freight to container. Um, do you have a number here that we could, um, relate to like the share of goods in transit in H1 this year versus last year? That would be helpful. Many thanks.

Good morning. Good morning. Thank you for your questions. So regarding those 2 different brands, uh, Hugo or both women's wear. So, first of all, I can say that, uh, Hugo blue is still growing, uh, uh, where whereas red is somehow decreasing, uh, we have taken some of, uh, the measurements like, I already said to to strengthen our our street tailoring offering. Uh, whereas we overall reduce our product assortment and on top of this, we have closed. Some of the uh, Hugo distribution. Uh, specially in the in the Western Hemisphere. We have closed some of underperforming U bugle stores. So this will then somehow Prevail for the next months to come, but I think the, the intention that we are taking is we have a long-term view because we want to strengthen the brand.

Itself. And also, we want to improve the profitability of the brand, uh, of Hugo. This is the intention.

What why we are doing this kind of exercise to really focus on the core in terms of product, assortment and and, and distribution. The same is actually to uh um for both women's wear also where we uh where we integrated boss camel back into boss black. So this has a kind of effect in terms of product assortment and on top of this what we are doing is uh we try to really to focus in our own retail environment of of of of bigger boss, women's wear appearance. So for example, in Boss region Street, you will find a nice boss women's wear uh posos but we rather uh close smaller uh boss Corners. Within a boss Men's Wear store, uh where you only have, let's say between 10 to 20 square meters, where we focus on Boss bands, where so these are, uh, measurements that we're taking on both, uh, product examine and distribution to have a clear focus on on store productivity.

uh, uh, uh, with this regard and, and to drive the profitability of our, of our brick and mortar business,

And actually, um, both businesses—I mean the Hugo business, you know, the size of the Hugo business—and most women's, where you have a decent margin with those because they are already scaling. So, for the time being, I would say we are not focusing on M&A for the time being.

Regarding um, inventories there are you are completely, right? So so yes, we are further decreasing our air freight share. Um, I always that we were on the load teams in the beginning. Uh, at the end of last year, we are now at a high signal digit number in terms of Air Freight share. So we are continuously reducing this and this leads to the fact that we have higher goods and goods and trends that we still have the Red Sea issue and, and all this. So this is good for an amount between. If I compare this year over year between 20 to 30 million euros in coxes, uh, and I also want to highlight that we took as a management team that delivered decision to, to increase our inventories in the us because we wanted to, somehow, save our gross margin. Uh, uh, uh, uh, going going forward because of the Tariff discussion. So, we have, uh, increased deliberately on the PTO position in the US.

Very good, understood. Thank you very much, Eve.

The next question comes from City. Please go ahead.

Um, I have two questions, please. Um, the first one on digital, they've had another quarter of solid growth.

7%.

Up, up more than that. And as you said, if, uh, um, HugoBoss.com. So your retail...

Was was softer, why is there such a growth Divergence between both digital channels? And and the past few quarters is it, is it mainly the the results of of heavy promotional activities at your partners, uh, driving strong sell through, um, as opposed to your, uh, maybe stricter, markdown, uh, policy in, uh, in your own uh, e-commerce.

On the shareholding structure, um, could you come back to the short statement you made last month after your largest shareholder reached the 25% threshold and notified the company of their intentions? Um, in particular, they recommended you redeem the 1.4 million treasury shares you hold. Um, and also...

Existing, not to pay any dividend to fuel investments in growth. Um, it sounds like you were open to the idea of canceling those treasury shares, as per your statement, but perhaps less so to the idea of scrapping the dividend.

It's a for assumption. And can you also remind me how the supervisory board operates with regards to approving the, um, the proposed dividend by the managing board? Is it a simple majority required? And I'm asking that as you can imagine, given, uh, phrases see, or Michael Murray has now been appointed to, to the supervisory board in, uh, in recent months. Thank you.

Uh, tomorrow for your questions. Um, regarding the first question, I think you already gave the answer because, deliberately, we took the decision for hp.com to have a stricter markdown policy because we want to really foster a full-price sales source. So we have been, uh, let's say, very disciplined when it comes to discounting. Whereas, um, the wholesale part...

Partners. Um, well let's say more active on the on the discounting part. With this driving, actually the business, uh, and of course, everything is comparable on the online side. So we deliberately took this kind of decision because we also say we because here, we also say, we want to put text, our own brand Integrity for the long term success of of Hugo Boss. So, and at the end, we look at the full result of our digital business. So, we are happy with this plus 7% overall performance. Uh, we are very mindful. We are, we are comparing comparing the numbers actually on a daily or weekly basis, uh, and and we are overall happy with the, with the numbers. But it was also a deliberate decision. Uh, not to Discount uh, as, as heavy in the online sector.

Regarding your question about phrases, just to...

To put this, uh, into perspective. So, in terms of how the process is working regarding the dividend, so it's actually the managing board. Daniel Oliver myself, to make a proposal to the supervisory board. And then you have the, uh, the, the, the M, then the supervisory board has a certain decision, uh, which is done by by majority, uh, in terms of the members of the supervisor board and then there's the kind of proposal that goes to the ATM. And at the AGM, you have the shareholders to decide it.

On the dividend, do we have a proposal regarding our dividend? Yes or no, or do we have a different proposal?

So, so definitely for for those 2 aspects, first of all regarding the dividend policy so if you look at claim 5 which has been a have been our strategy, we have a dividend policy that we have laid out from our perspective. It's a good balance between investing into the growth and on the other side, considering the interest of the shareholders. Now, as you know, uh, we are operating at the at the last year of claim 5 executive team together with the supervisory board on a new strategy, uh, where we have new long-term goals. Uh, so first of all, we we look at our strategy of the strategy as the right thing that we have a, let's say, a strategic alignment, uh, between the supervisor board and the managing board. And then, of course, we will look also at at Capital allocation, but we are very much convinced that we will find um, uh, that we will it first of all, we have a constructive.

Dialogue that we will come to a kind of, uh, conclusion there.

And with regard to the Redemption of our treasury shares. Uh, we are we are looking into this legally, uh, what are the, what are the prerequisites? That we might, uh, redeem those shares and we will, we will, we will look into this and we will give you further notice. Once we have taken the decision,

thank you.

The last question for today comes from Andreas Reman from Adobe HF. Please, go ahead.

Think we will see broad-based price increases in the U.S. market. Is that something for Q3?

And related to that, Eve, did you say you plan to raise prices? Also worldwide? If so, what regions would be affected and why exactly did you decide to raise prices globally? Because we see that sourcing, uh, costs go down the dollar a week. This would be my second question. Thanks.

Yes, thank you very much, Andreas, for your two questions regarding pricing in the U.S. Uh,

um, I think we, you will see price increases coming into the second half of the year. I think this will be visible. You see it today only on the selective basis because everything everybody was waiting, uh, until you know, the uncertainties, uh, will go away. So actually, we expect actually on the, in the second half that the US will see price increases as a matter of fact, and as, you know, there is hardly know textile or apparel industry in the US. So, everybody is actually suffering from it. Some are suffering more than others. Uh, um, uh, but definitely you will see

Price increases in the U.S. that will drive over inflation.

Um, yes, we have taken the decision to increase the prices uh globally. We have excluded, the Chinese market uh um could be very transparent but but overall on on the global scale, we do it. Uh, the price increase has been done smartly, I would say on 23rd of our on our, on our skus, but it will give us the opportunity to raise, uh, prices on between low to mid single digit, uh, price increases. We try to protect the corner prices in our portfolio, but I think we have now in in claim 5 invested heavily over the last 3, to 4 years into the product, we have invested into the distribution, we invested into the marketing. We have, we are offering a very Superior price value proposition overall. And with this price increase I think overall we are well in line with with the competition. What they are doing we have been very humble in in the the last 3 to 4 years

With only 2, mid single digit, price increases over the last 4 to 5 years, I think. Um, I think there's room for for price increases because, uh, Our Brands shows the shows the strengths, uh, the consumer sees the, uh, uh, the Investments that we have done into our stores. The customer experience is much higher. So we see room for these kind of price increases,

Okay, very clear. Thanks.

Great. Thank you, Andreas. Thanks, Eve. Um, ladies and gentlemen, that actually concludes today's conference call. Thank you very much for your participation. We very much look forward to connecting with you during our upcoming roadshows.

Wishing you a wonderful summer break. Uh, take care and goodbye.

Ladies and gentlemen, the conference is now over. Thank you for choosing Color School, and thank you for participating in the conference. You may now disconnect the lines. Goodbye.