Hugo Boss

Company Update:
Frasers Group is launching a bid on Hugo Boss in terms such that they hope to breach the 30% threshold without effectively going for 100% control. The method is simple: just offer a 4% premium. Unicredit has been using the same tactics with CBK. Once the threshold has been crossed buying more shares does not trigger a full bid. Up until market regulations are tweaked. Anyway, Frasers already has 25% and will make their voice louder in board meetings. Frasers owns stakes in Asos, Currys and Puma. Their strategy is to act as an influential minority partner rather than steering the firm. May be not so good news for HB true minorities.

Expert Opinion:
Not a game changer in our opinion. This is a very competitive segment. Valuation isn't especially cheap unless there is a massive turnaround. Many believe that Frasers Group, if they are fully in control of Hugo Boss, could turn things around, leveraging their large retail network and potentially generating operational synergies notably on the supply chain.  However, Hugo Boss is a premium brand and Frasers, despite their elevation efforts are still viewed as a classic retailer, if not a discounter (Sports Direct, House of Fraser), a positioning and experience that is at odd with Hugo Boss's positioning. 

If you believed in the restructuring story, nothing changed; if not, I see no reason to commit any capital to the name. 

For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu