By increasing its stake in Hugo Boss, British retailer Frasers, owned by billionaire Mike Ashley, confirms its commitment to the German fashion house and its upmarket evolution.
The Frasers clothing group has just announced that it has further increased its stake in premium label Hugo Boss.
In a press release dated May 31, the British group revealed that it now holds around 1.74 million shares, or 2.47% of Hugo Boss capital, and almost 13.92% of the capital via put options on shares in the German House. This represents an exposure to the German group of around 360 million euros.
Frasers Group thus becomes a significant Hugo Boss shareholder alongside the other main existing shareholders, namely the Italian investment fund Zignago Holdings (9.03% of the capital), PFC (5.77%), DWS investment (5.74%) and Janus Henderson (4.15%).
Hugo Boss shares up, Frasers shares down
The announcement also boosted Hugo Boss shares, which gained 1.06% to 48.51 euros on the Mdax, the Frankfurt Stock Exchange index, at around 09:50 GMT. A welcome breath of fresh air for the stock, which had lost 28% since the beginning of 2024.
By contrast, Frasers’ shares on the London Stock Exchange were down 0.51% at 870.50 pence ((51.1 euros).
In the first half of 2024, Hugo Boss had disappointed the market despite reporting record sales for 2023, up 18% (on a currency-adjusted basis) to 4.1 billion euros, and operating profit (EBIT) up 22% to 410 million euros. This increase was lower than management had hoped for (20 to 25%).
In March, the German group had also continued to disappoint, forecasting sales up by “only” 3% to 6% to 4.30 to 4.45 billion euros, and EBIT below expectations in 2024, due to the lack of consumer appetite, particularly in Europe. It had also lowered its forecasts for 2025, with its sales target of 5 billion euros likely to be reached later than expected.
A more upmarket evolution for Frasers
British businessman Mike Ashley first developed the Sport Direct group in the sports retail segment in the 1980s. But it’s been several years now since his group, renamed Frasers, began its transformation towards a high-end positioning.
Stating his intention to transform it into the “Selfridges (London department store) of sport”, Mike Ashley has instead expanded its scope into fashion in the broadest sense. In 2017, he acquired “Agent Provocateur”, the high-end lingerie chain co-created in 1994 by Viviane Westwood’s son, Joseph Corré.
In 2018, Mike Ashley also acquired the British department store chains Flannel and House of Fraser, which carry Hugo Boss, among other brands.
By early 2020, the group had clearly demonstrated its interest in luxury goods, with the acquisition of a 12.54% stake, more than doubled to 29.65% by the end of 2020, in its compatriot, the leather goods house Mulberry.
In mid-2023, in another segment, that of e-commerce and fast fashion, Frasers took a 5% stake in Asos before gradually increasing its stake to almost 20% in August, becoming its second-largest shareholder.
Arrival at Hugo Boss
In 2020, Frasers had begun to gain a foothold in Hugo Boss, taking a 5.1% stake in its capital, through shares and derivatives. At the time, the group announced its “intention to be a supportive shareholder and to create value, in the common interest of Frasers Group and Hugo Boss shareholders”.
At the end of 2022, Frasers had explained that it would increase its stake in Hugo Boss before reducing it significantly in 2023.
This new rise in the British company’s shareholding in the German company bears witness to the continuity of its commitment.
Contrasting comments
Industry analysts’ comments on this latest transaction, as gathered by Afp, were mixed.
Sophie Lund Yates, an analyst at Hargraves Lansdown, questions the “motivation” of the Frasers group, which “already brings together an eclectic mix of brands”. “If a takeover bid is in the offing, Frasers investors will be keen to see a concrete plan for these assets, which has been sorely lacking in previous acquisitions”, she added.
On the other hand, independent analyst Andreas Lipkow felt that Frasers’ growing involvement “may have a positive effect” on Hugo Boss, “the British fashion retailer” having often “shown good timing when entering the market” in recent years”…
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Featured Photo: London Boss boutique © Hugo Boss
