Frasers is exerting pressure on Hugo Boss
In an unprecedented move, Sports Direct's parent company, Frasers Group, has expressed its intention to vote against a dividend payout at Hugo Boss's annual general meeting. The major reason behind this decision is Frasers' belief that Hugo Boss should prioritise funding long-term growth and maintaining financial flexibility over distributing cash to shareholders at this time.
Frasers, Hugo Boss's major shareholder, believes that the company's stock is undervalued and wants it to focus on value creation through reinvestment rather than dividends. Additionally, Frasers has called for Hugo Boss to redeem all its treasury shares, reflecting their broader strategic approach to capital allocation.
Despite opposing dividend payments, Frasers continues to support Hugo Boss CEO Daniel Grieder and the supervisory board chair Stephan Sturm in growing the company. Hugo Boss acknowledges Frasers' views and maintains an active dialogue with all shareholders. The company has indicated it is working on a new strategy to succeed its current plan "Claim 5," focusing on sustainable profitable growth and a careful evaluation of capital allocation—including dividends. This new strategy is expected to be shared with the market later in 2025.
The annual general meeting of Hugo Boss, scheduled for later this year, is expected to discuss the current dividend policy and potential changes proposed by Frasers. The board and supervisory board of Hugo Boss are advised to carefully consider the implications of the proposed change in dividend policy and its potential impact on shareholders.
If the board and supervisory board of Hugo Boss decide to change their dividend policy, it could potentially lead to an improvement in the company's share price performance. Frasers suggests that the focus of the board and supervisory board should be on increasing the share price rather than paying dividends. The change in dividend policy suggested by Frasers focuses on prioritising share price growth over dividend payments.
This move by Frasers underscores the growing concern among investors about Hugo Boss's share price growth. If the annual general meeting results in a vote against a dividend payout, it would mark a significant shift in the company's financial strategy and could potentially pave the way for a more focused approach towards long-term growth and share price improvement.
Frasers advocates for Hugo Boss to focus on value creation through reinvestment and stock buybacks, rather than distributing dividends, as a means to improve share price growth. In alignment with this strategy, Frasers has also urged Hugo Boss to redeem all its treasury shares.
