Hugo Boss shows better operational control amid tough market: RBC
Investing.com -- Hugo Boss has demonstrated improved execution this year by focusing on cost efficiency in a challenging premium apparel market environment, according to RBC.
The company has shown strong cost control, with operational expenses growing just 1% over the last 12 months.
RBC analysts noted a narrowing gap between Hugo Boss’s constant currency sales growth and its operational expense growth from early 2024, coinciding with moderating sales growth.
RBC expects further savings to come in the second half of 2025, particularly as Hugo Boss continues to generate efficiencies from its store portfolio and administrative expenses.
The company has also taken reassuring actions to mitigate the impact of US tariffs.
Despite global consumer uncertainty and US tariff news creating a tough backdrop for premium apparel, some positive trends have emerged in key markets in July.
UK apparel sales have accelerated, and US airport footfall has shown an inflection point. Hugo Boss is also expected to see support in the second half from moderate price increases, which should benefit gross margin.
The company’s valuation remains undemanding at approximately 12x CY25e P/E, implying more than a 50% discount to the wider luxury sector compared to a historical average discount of 33%.
RBC believes Hugo Boss is seeing valuation support from Frasers Group’s stake, which now exceeds 50% on a total basis (approximately 25% direct). This support is not expected to ease soon, as Frasers Group has been steadily increasing its exposure for over a year.
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