German fashion house Hugo Boss is taking full control of its store network in China and Macau as it seeks to improve the way its brand is presented, a move that mirrors a broader trend by luxury goods groups in emerging markets. Big brands have been opening more directly-operated stores, buying back franchises and taking stakes in retail partners in Asia, Russia and the Middle East to give them more control over store design and how their goods are marketed.
Luxury brands that have bought out their retail partners include Gucci, Hermes and Prada in Russia, Burberry in China and Japan and watchmaker Swatch in the Middle East. Hugo Boss said in a statement it was buying a 40 percent stake in its joint venture in China and Macau from franchise partner Rainbow Group but did not say how much it paid. The operations comprising 55 stores generated sales of 94 million euros ($128 million) in 2013, contributing to total sales in China of 211 million euros from 126 stores and concessions, about 9 percent of group sales.
“The consolidation of our distribution activities in China will further elevate the quality of brand presentation, increase productivity and contribute to the strength of our operational platform,” Chief Executive Claus-Dietrich Lahrs said.
Hugo Boss is seeking to run more of its own stores around the world instead of selling through partners and saw a 16 percent increase in own retail sales in the first quarter.