Frasers Group influence: Hugo Boss cuts dividends, initiates buyback

Fashion group Hugo Boss is cutting its direct distributions to shareholders to the legal minimum. Shareholders are to receive four cents per share for the past year, the company announced in Metzingen on Monday. For the previous year, they had received 1.40 euros per share.

Meanwhile, Hugo Boss intends to buy back its own shares worth up to 200 million euros by the end of 2027. The group aims to become more financially flexible through the lower dividend and the share buyback.

Details of the buyback will be announced shortly before it begins. The fashion group then intends to cancel the shares. The Boss share price temporarily rose by almost 3 percent following the news. It was last up by only 0.1 percent in the afternoon.

On average, the minimum dividend and the share buyback would result in an annual shareholder return roughly equivalent to the level distributed for 2024, the company wrote. These calculations are difficult, as the exact impact of a share buyback on the share price is hard to determine.

By cutting the dividend, the management is accommodating its largest shareholder, Frasers Group. Hugo Boss has recently drawn attention due to disagreements with this shareholder. Frasers apparently no longer supports the chairman of the supervisory board, Stephan Sturm, as was revealed in early December.

Disagreements between the management of Hugo Boss and the major shareholder arose regarding dividend policy. Frasers Group considers Hugo Boss to be undervalued on the stock market, according to a mandatory disclosure from July. The investor believes that Hugo Boss should not currently pay out dividends. Instead, the funds should be used to increase the company's value.

With a direct stake of 25 percent, Frasers Group is by far the group's largest shareholder. As has been known since the summer, the group holds more than 30 percent including financial instruments. If it were to convert the financial instruments into “real” shares, it would have to make a takeover bid.

Shareholders of the fashion group will need patience regarding a business recovery. The year 2026 is expected to be a transitional year, as Hugo Boss announced at the beginning of December. The product range and distribution are to be adjusted; sales and earnings before interest and taxes (EBIT) are likely to fall. An improvement is not expected until 2027.

This article was translated to English using an AI tool.

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