Business Operations

Robust and efficient operational platform

As part of our “CLAIM 5” strategy, we are striving to generate broad-based growth across brands, regions, and consumer touchpoints. A robust and efficient operational infrastructure thereby forms the basis for supporting our long-term growth ambitions. At the same time, the sourcing and production of high-quality products are crucial for meeting high customer expectations on design, functionality, comfort, longevity, and sustainability. In addition to ensuring these quality characteristics, we are constantly striving for best-in-class solutions to further increase the resilience, efficiency, and flexibility of our global sourcing and production activities. Consequently, as part of our strategic claim “Organize for Growth,” in recent years we have optimized and increased the flexibility of our sourcing and production activities to create a strong platform for growth and speed-to-market. Group Strategy, “Organize for Growth”

Fully leveraging our robust operational platform built in recent years will remain a key priority for HUGO BOSS going forward. Therefore, we continue to put strong emphasis on optimizing end-to-end operations, significantly improving effectiveness, and driving efficiency across our supply chain. Already in 2024, significant strides were made, including realizing greater economies of scale through strategic price negotiations supported by increased order volumes. At the same time, we were successful in further optimizing vendor allocation and improving freight modes. Notably, HUGO BOSS successfully reduced its reliance on airfreight to historically low levels in 2024, despite persistent supply chain disruptions. This highlights our commitment to balancing cost-efficiency with operational excellence while emphasizing sustainable sourcing practices. Looking ahead, HUGO BOSS is committed to further reducing airfreight dependence while ensuring on-time product availability. Altogether, these measures will continue to strengthen our operational capabilities, while they are also expected to provide tailwind to gross margin development in the coming years. Earnings Development, Income Statement

The further digitalization along our value chain is a key priority, enabling us to respond even faster to changing market trends and better meet customer demand. Therefore, in 2024, we continued to push ahead with the implementation of our Digital TWIN, which serves as the backbone for our growth journey by fostering a smart, tech-driven value chain. As part of the TWIN program, we are focused on enhancing real-time data utilization, streamlining business operations processes, and enabling intelligent decision-making. By creating a digital copy of our supply chain and leveraging the potential of AI, we aim to further improve demand and supply planning and better align our various planning activities across the entire business. This, in turn, is intended to provide the most accurate procurement of products and fabrics, both in terms of timing and quantity. Along with efficient logistics planning and a smart inventory allocation, we want to ensure that customer demand is met even more effectively, while simultaneously benefiting from lower cost and higher full-price sell-through. At the same time, increased transparency fosters end-to-end product traceability, which is also fully in line with our sustainability ambitions. Building on the success of initial pilot projects, we were able to roll out key traceability features to a large majority of our supply chain partners worldwide in 2024. This achievement significantly strengthens transparency across our entire supply chain, with additional progress anticipated in 2025.

Sourcing volumes and regional split

In terms of value, 20% of the total sourcing and production volume in 2024 was produced at our own production facilities (2023: 17%), reflecting the further strengthening of our largest own production facility in Izmir (Turkey). Consequently, the remaining 80% of products were sourced from independent contract suppliers or sourced as merchandise (2023: 83%).

HUGO BOSS attaches great importance to a regionally balanced strategic sourcing mix to minimize risks such as local or regional capacity shortfalls as far as possible. In 2024, 53% of our merchandise was sourced in EMEA, representing a slight increase compared to last year (2023: 52%). In line with our strategic ambition of further promoting “nearshoring,” we have set ourselves the goal of aligning our regional sourcing activities even closer with our sales markets, aimed at ensuring shorter lead times and increasing speed-to-market capabilities. In this context, we aim to keep the share of our sourcing activities in EMEA at a level of around 50% also in the years to come. With a share of 26% of our global sourcing and production volume (2023: 26%), Turkey not only accounts for about half of our European sourcing activity, but also represents by far the largest sourcing market for HUGO BOSS. Our own production in Izmir accounts for 17% of the global sourcing and production volume in 2024 (2023: 15%). Besides Turkey, Portugal, Bulgaria, and Italy also represent relevant sourcing markets within EMEA.

At 44%, the Asian share of our global sourcing and production volume further decreased in 2024 (2023: 46%), fully in line with our medium-term ambition of around 40%. Within Asia, Bangladesh and Vietnam represent the largest sourcing markets, accounting for 11% and 8% of our global sourcing and production volume, respectively (2023: 8% and 13%). At the same time, we meaningfully reduced the share of our global sourcing and production volume in China in recent years, now accounting for only 7% (2023: 10%), down from more than 20% a few years ago.

To benefit from the proximity to the important U.S. market and enhance flexibility, we are also committed to strengthening our sourcing footprint in the Americas. While the latter currently stands at 3% (2023: 2%), it is our ambition to increase the share towards a level of around 10% in the years to come. In this context, we achieved further progress in onboarding new suppliers in 2024, mainly located in Peru.

Own production as a competitive advantage

As part of “CLAIM 5”, we significantly expanded our own production capacity in recent years. In addition to greater independence from external factors, this allows us to react more quickly and flexibly to any changes in customer demand and to fully leverage in-season replenishment opportunities. In addition, it enables us to gain important expertise in the further development of production technologies and quality standards. Our five own production facilities are located in Izmir (Turkey), Metzingen (Germany), Radom (Poland), Morrovalle (Italy), and Coldrerio (Switzerland).

Our largest own production site, in Izmir, extended with a fourth factory in 2022, plays a key role in this. Initially focused on the manufacturing of formalwear, the Izmir site now dedicates more than 25% of its production volume to casualwear, covering product categories such as trousers, jackets, and jersey (2023: around 20%). Today, Izmir thus accounts for around 10% of our global casualwear sourcing, having significantly expanded the share in recent years (2023: more than 5%). This enables us to react flexibly to changes in consumer demand also in this important segment.

Our production site in Metzingen mainly produces products for BOSS Camel, including tailored BOSS “Made to Measure” suits, along with prototypes and sample styles as part of the conventional product development process. Business shoes and sneakers are the main focus of production in Radom and Morrovalle, while BOSS “Made to Measure” shirts are produced in Coldrerio. Product Development and Innovation

Network of experienced and specialist suppliers

To ensure excellent processing quality and high product availability, HUGO BOSS works together with a network of experienced and specialist suppliers. In fiscal year 2024, we sourced finished goods from a total of 200 external Tier 1 suppliers (2023: 205) operating 271 production facilities (2023: 267). In addition, we procured fabrics and trimmings from 382 external Tier 2 suppliers (2023: 371) operating 411 production facilities (2023: 397).

HUGO BOSS fosters long-term strategic partnerships with its suppliers, with relationships averaging more than ten years. In this context, we see ourselves as a strong partner, supporting suppliers in the further development and professionalization of processes and workflows. Alongside economic criteria, we attach great importance to environmental and social aspects in the selection of suppliers. The cooperation is based on respect for human rights, compliance with applicable working standards, and occupational health and safety, with the HUGO BOSS Supplier Code of Conduct forming the framework for all supplier relationships. More information can be found in the chapter “Combined Non-financial Statement.” Combined Non-financial Statement, Workers in the Value Chain

Ongoing expansion of own logistics infrastructure

Our inventory storage is centered on selected sites, primarily operated by HUGO BOSS. Our distribution centers for hanging goods, flat-packed goods, and the Company’s global online business, all located in proximity to the headquarters in Metzingen, form the core of our Group-wide logistics network. The latter is supplemented by selected local or regional warehouses, including our own warehouse in Savannah (USA) and those operated by third parties, for example in China or the UK.

To support future growth, already in 2023, HUGO BOSS began stepping up investments into its logistics network, aiming to increase unit capacity from currently around 65 million to around 90 million in the medium term. In particular, we are significantly expanding our largest central distribution center in Germany. As part of this multiyear project, we are investing more than EUR 100 million, with a strong focus on the further digitalization and automatization of processes, and the implementation of state-of-the-art robotics solutions. Scheduled for completion by 2026, the expansion aims to increasing our warehouse’s shipping and storage capacity by around 75%, allowing us to drive further efficiencies on the logistics side.