Profit at the UK arm of Hugo Boss was slashed by almost 50 per cent in a “year of investment” as its sales fell back from a record high, it has been revealed.
The London-headquartered arm has reported a pre-tax profit of £16.8m for 2023, according to newly-filed accounts with Companies House, down from £30.4m in 2022.
Its turnover also dipped from £402.4m to £391.6m over the same period.
The division’s wholesale turnover fell from £143.7m to £131.5m in the year while its retail sales dipped from £206.9m to £204.2m. Its online turnover also went from £55.7m to ££55.9m.
During the year the average number of people employed by Hugo Boss in the UK rose from 1,146 to 1,319.
The results come after Mike Ashley’s retail empire, Frasers Group, upped its stake in the wider Hugo Boss group to around £415m in July this year.
The owner of Sports Direct and House of Fraser now holds 5.6m shares, just under eight per cent of Hugo Boss’s total share capital, as well as 13.81 per cent, via the sale of put options.
During the year Hugo Boss UK paid a dividend of £26.9m, up from the £16.3m it issued in 2022.
‘Challenging environment’ for Hugo Boss
A statement signed off by the board said: “Despite the challenging macro-economic environment within the UK retail industry, the company met management’s expectations and generated a strong performance with turnover falling marginally below the record high achieved in 2022.”
Hugo Boss added that its operating profit fell by 39 per cent to £19.7m and that its profit for the year also decreased by 50 per cent to £12.3m “directly as a result of the significant investments made during the year to support the company in achieving its ‘claim five’ targets”.
It added: “2023 was a year of investments in the company in line with the ‘claim five’ strategy.
“As part of the ‘organise for growth’ pillar of the strategy, the company has made a significant investment in the opening of a new distribution centre located in Biggleswade.
“This represents a shift in the operational model to allow the company to receive direct deliveries from suppliers as opposed to the previous central distribution centre model.
“The company has invested in people to support the new operational model accordingly.”
On its future, Hugo Boss added: “The company continues to explore opportunities for new retail stores in markets with our desire demographic, invest in its portfolio, focus on key performance indicators to drive profitability and maximise profit opportunities within our distribution channels.”
The results for the UK arm of Hugo Boss come after the wider group revealed that its currency-adjusted sales surged by 18 per cent to a record €4.2bn (£3.5bn) in 2023.
Its earnings before income tax also jumped by 22 per cent to €410m (£343.7m).