If Stephan Born certainly can ill afford to risk one thing, it´s a sloppy appearance. For the director of the international fashion manufacturer Hugo Boss in Spain and Portugal always a perfectly fitting suit, immaculately ironed shirts and perfectly polished shoes are almost mandatory.
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“There are worse things than having to dress up to the nines every morning”, the 42-year-old states with a winning smile. In early August he´d made a visit to the official Hugo Boss store at Palma´s elegant shopping boulevard Paseo del Borne – business as usual for the German who resides in Madrid and spends most of the time travelling. “I’m always on the move from one of our shops to the other, to assure that everything´s going fine”, Born remarks. Mallorca is always one of his favorite destinations.
The stock corporation holds 25 official dealers in Spain and Portugal, as a part of 450 Hugo Boss shops worldwide. Last year, the fashion label which is mainly owned by British financial investor Permira, achieved a turnover of 1.6 billion euro. Born is responsible for almost half of this amount, 780 million euro. So far the bulk of revenue comes from wholesale business with other retailers. Their own stores, outlet stores and corner stores, such as in the Spanish department store chain El Corte Inglés make “currently account for about one third of the total turnover of Hugo Boss”.
In spite of a centralized product manufacturing, global marketing and unified concept of location – Hugo Boss stores are always located in the most expensive and exclusive shopping districts – every store is individual.
“British and German customers will often find a different range in our Spanish stores in comparison to shops in their homeland. On the one hand this fact can be explained by our broad range of collections and labels, on the other hand by different fashion tastes in different countries”, says Born. The fact that not everybody likes the same suit, the same shirt, jersey, pants or accessories, is already being felt within Spain. “The Catalans, for example, tend to a more European look, which is reflected mostly in a preference for classic dark suits. Quite different in Madrid where our buyers are more likely to lighter, so more typical Spanish colors”, Born explains.
In general, fashion is much more important in Spain than for example in the UK or Germany. “Otherwise Northern Europeans are much more open to new styles and trends, as the Spaniards react more classical conservative”, Born relates. The very high sense for fashion of the Spaniards was previously only shown by women, but for some time already Spanish men attach high importance to a neat appearance.” And this is not only a trend of managers or business people: “In recent years we had to adapt our range of goods to the growing fashion needs outside the executive suites.”
Therefore, the brand Boss was divided into four labels: “Boss Black” for the conventional business and evening clothes, “Boss Selection” as a high-priced men’s collection, “Boss Orange” for casual recreation and outdoor clothing and “Boss Green” on Sports and golf clothing. “From 2000 to 2008 the business, particularly for us in the premium sector, was a self-selling item. Sales increases of eight to ten percent per year were normal”, recalls Born. But then the crisis came. “In the first quarter of 2009, a sudden burst of demand.” Hugo Boss suffered heavy losses in Spain and Portugal, sales fell by five percent, the revenues decreased by even 19 percent.
In addition to the global economic crisis, the company had to carry a huge debt burden, imposed by its main owners Permira. The private equity firms had paid around 3.5 billion euro for the Valentino Fashion Group – including Hugo Boss and Italian luxury tailor Valentino – in the booming spring of 2007. On the deal Permira had to collect credits totaling € 2.5 billion at several banks. Amortization and interest of this mega-credit mainly remained on Hugo Boss, because the other brands of the group provided little for sales. In Spain, Stephan Born rapidly carried out the austerity measures prescribed by the company´s central office in Metzingen, southern Germany. “We had to close a number of outlets. Since then, however, we are back on the path of consolidation”, Born argues. But it is not only the economic downturn, from which Hugo Boss must recover. A rapidly growing number of fashion companies to the low-budget range like Zara, H & M or C & A are limiting the Spanish market ambitions of Hugo Boss.
“Zara designers constantly seek out the latest fashion trends. Then a dozen new collections are brought to market in a very short time. This company never stands still. Our working philosophy is much more static, because of our high quality standards. The production process is slower”, Born explains. Thus rethinking and flexibility were necessary. “To survive in the future, Hugo Boss has to shorten its development and production process. Our speed and responsiveness must increase in order to reach the cheaper chains. On some collections for the upcoming year, the time to market is reduced from 50 to 38 weeks. Of course the company will defend its claim as a premium brand in the fashion industry – as well as the lavish and glamorous marketing concept.
Born: “Hugo Boss will keep on polishing its sporty image in the future. This is why we sponsor the big sporting events that fit the profile of our customers.” In addition to the Davis Cup in tennis there´s the global yacht race Barcelona World Race (Hugo Boss takes part in the upcoming issue next year with two high-tech yachts) as well as several PGA golf tournaments. New sponsoring partnerships shall be established with Spanish celebrities. “Rafa Nadal and Iker Casillas are already equipped by us informally, and Princess Letizia has been outed as Hugo Boss fan”, Born proudly remarks. For himself, the suits of his company have become a second skin. There are worse things, indeed.
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