Russia approved the sale of the Russian business of Hugo Boss to the retailer Stockmann

The government subcommittee on foreign investment approved the deal to sell the assets of the German clothing manufacturer Hugo Boss in Russia to the Russian JSC Stockmann, Deputy Head of the Ministry of Industry and Trade Viktor Evtukhov told Interfax. One of the conditions of the deal was the preservation of all jobs at Hugo Boss, he emphasized.

The transaction could be closed in the third quarter of 2024 after completion of the necessary legal and administrative procedures. At the same time, retail stores will be opened in Russia.

“We confirm the fact of the transaction. The perimeter included all Russian stores,” Stockmann CEO Gennady Levkin told Forbes. He left the details of the deal without comment.

“The deal could include inventory, fixed assets and lease agreements, as well as financial assets in the company’s accounts,” INFOLine-Analytics CEO Mikhail Burmistrov told Forbes. He called a fair valuation of the Hugo Boss Rus business from 1.5 billion to 1.8 billion rubles. In fact, taking into account the 50% discount, the transaction amount could be 700-800 million rubles, he noted.

The expert considers the deal very attractive for Stockmann, since the Hugo Boss brand will allow the company to strengthen the portfolio for its multi-brand department stores, and the locations can be used to open new stores for the retailer.

Hugo Boss temporarily closed its stores in March 2022 and suspended all retail operations and online sales in Russia. The company then promised to provide financial and operational support to employees and remain in close contact with its business partners.

In the summer of 2023, Kommersant reported, citing a Hugo Boss report for the first half of 2023, that the company would reduce its business in Russia to wholesale supplies and was negotiating the sale of assets in the country.

At the end of 2022, Hugo Boss Rus LLC operated 19 stores in Moscow and the Moscow region, St. Petersburg and Rostov-on-Don. According to SPARK, the revenue of the Russian division of Hugo Boss in 2022 decreased by 17%, to 6.3 billion rubles, the company’s net loss amounted to 26.2 million rubles against 406 million rubles in profit at the end of 2021. In 2023, the revenue of Hugo Boss Rus LLC amounted to 6.74 billion rubles, the net loss reached 418.63 million rubles.

The revenue of Stockmann JSC increased from 9.58 billion rubles in 2022 to 14.81 billion rubles in 2023. At the same time, a net profit of 533.28 million rubles at the end of 2022 was replaced by a net loss of 560.36 million rubles at the end of 2023.