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BUSINESS / BUSINESS FEATURES

By Martino Carrerawith contributions from Cathrin Schaer on February 13, 2020

MMIILLAANN —— Hugo Boss is feeling the pressure of an activist

investor.

London-based Bluebell Capital Partners, which took a minority,

undisclosed stake in the German marquee apparel company last

December, addressed the board and the company’s president

Michel Perraudin with a letter urging an overhaul of the firm’s

strategy refocusing on fundamentals such as products, flagships

and communication.

Speaking with WWD on Thursday, Francesco Trapani, the

former Bulgari and LVMH Moët Hennessy Louis Vuitton

Models wear Hugo Boss in Milan.Courtesy Photo

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executive and chairman of Bluebell Capital Partners, said Hugo

Boss’ structure “is big and articulated and the company

generates strong profits but its performance in the past three to

four years has been unsatisfying when compared to other

similar businesses.”

The entrepreneur offered other investors share the same

sentiment although he declined to provide specific names.

Headquartered in Metzingen, Germany, Hugo Boss is listed on

Frankfurt’s Stock Exchange. The company’s 88 percent of shares

are on the free float, while other main shareholders include PFC

Srl and Zignago Holding SpA, both controlled by the Marzotto

family, which together retain a 10 percent stake in the firm.

Contacted by WWD, a Hugo Boss spokesperson said the

company “maintains an open dialogue with all shareholders

that are interested in the company and looks forward to

continuing to discuss its strategy aimed at creating long-term

shareholder value. As a general policy, we do not comment on

any investor interactions.”

After praising the company for having “a strong brand and an

articulated distribution structure with directly operated stores,

a strong wholesale network and franchises,” Trapani

underscored that “most recently the management focused on

the quantitative aspects, including cost-cutting and stock

rotation ratio, which are all important sides [of the business],

but these companies succeed if they are able to engage

customers via products, communication and stores. We believe

the company should focus on them to widen its breadth, which

got somehow lost.”

The executive insisted a key pillar to the strategy encompasses

increasing the firm’s like-for like sales. “They need to try to

increase the existing stores’ turnover while at the same time

reducing the wholesale network, [a strategy] they already

started to implement but that should be carried out more firmly

with the goal to protect the directly operated shops,” Trapani

contended.

He also sees potential in opening additional units, eyeing the

Asian market “not necessarily in this moment but after the

[coronavirus] crisis there is resolved.”

According to preliminary 2019 figures, Hugo Boss posted

revenues of 2.88 billion euros, up 3 percent at current exchange

rate or 2 percent at constant exchange rate. Earnings before

interests and taxes decreased 4 percent to 333 million euros.

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T R E N D I N G

Final results will be released on March 5.

“Beyond the business plan they presented in 2018, financials

have not been satisfying, there’s too little growth,” said Trapani,

noting that turning a plan into concrete and successful actions

can at times be compelling.

In particular, Hugo Boss’ chief executive officer Mark Langer

said in 2018 the company would focus on personalization and

speed, aiming to increase sales and improve its operating

margins over a four-year period. “We want to grow faster than

the market, and expect our operating profit to develop

significantly better than our sales,” he commented at the time.

Milan-based market sources believe the activist fund would be

pleased with a change of management at the German apparel

giant with key hires coming from the marketing and

communication fields. One source in particular contended

Bluebell Capital Partners has been in informal talks with

potential candidates to be submitted to the board.

Talking about Hugo Boss’ financial position, Trapani offered

that a buyback strategy of part of its floating shares would also

be desirable.

Italian daily Corriere della Sera first reported of the letter sent to

Hugo Boss’ president, which came after the apparel company

released preliminary 2019 figures last month.

Established at the end of 2019, Bluebell Capital Partners is

spearheaded by Trapani along with former investment bankers

Giuseppe Bivona and Marco Taricco. The fund describes itself as

a long-term investor focused on European public equities.

business plan Hugo Boss LVMH Moët Hennessy Louis Vuitton

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German apparel giant switchesmotor racing sponsorship fromFormula One to Formula E.

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The German company reporteda 2 percent rise in currency-adjusted sales to 675 million eu-ros.

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The Hervé L. Leroux label is retur

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