Business Operations

Robust and efficient operational platform

The sourcing and production of high-quality products is crucial for meeting elevated customer expectations on design, functionality, comfort, longevity, and sustainability. Beyond ensuring these quality characteristics, we are constantly striving for best-in-class solutions to further enhance the efficiency, flexibility, and resilience of our global sourcing and production activities. Consequently, HUGO BOSS has built a robust and efficient operational infrastructure by significantly investing into its business in recent years, forming a strong basis for long-term growth. This also represents a crucial factor in navigating ongoing macroeconomic and geopolitical challenges. In 2025, HUGO BOSS maintained supply chain continuity amid a dynamic external environment, leveraging its well-diversified global sourcing footprint and implementing proactive measures, such as rerouting product flows in response to prolonged tariff discussions. Group Strategy, Operational Excellence

Shaping Operational Excellence

Behind every strong brand stands a strong engine. Over the past years, we have systematically built that engine, with significant investments into global operations. Now, we are shifting from building the foundation to fully leveraging it.

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Fully leveraging our robust operational platform will remain a key priority for HUGO BOSS going forward. As part of CLAIM 5 TOUCHDOWN, we continue to put strong emphasis on optimizing end-to-end operations, further improving effectiveness, and driving efficiency across our supply chain. Looking ahead, we are committed to realizing additional economies of scale to boost sourcing efficiency. In this context, we will further optimize vendor allocation, reduce collection complexity across brands, and shorten lead times. On top of that, we strive to further optimize freight modes through a sea-freight-first approach. Already in recent years, HUGO BOSS has successfully reduced its reliance on airfreight with a further reduction targeted going forward. This underscores our commitment to balancing cost efficiency with operational excellence and sustainable sourcing practices. Altogether, these measures will continue to strengthen our operational capabilities and are expected to provide tailwind to gross margin development in the coming years. Earnings Development, Income Statement

The further digitalization of our value chain remains a key priority, enabling faster responses to market trends and better alignment with customer demand. In 2025, we pushed ahead with the implementation of our Digital TWIN, a digital copy of our supply chain aimed at enhancing real-time data utilization, streamlining business processes, and enabling smarter decision-making through technology and AI. As part of this initiative, we put a particular focus on further improving demand and supply planning to optimize the procurement of products and fabrics, both in terms of timing and quantity. Along with efficient logistics planning and smart inventory allocation, we want to ensure that customer demand is met even more effectively, while also lowering cost and supporting higher full-price sell-through. At the same time, increased transparency along the supply chain enhances end-to-end product traceability, thus fully aligning with our sustainability ambitions.

Sourcing volumes and regional split

In terms of value, 17% of the total sourcing and production volume in 2025 was produced at our own production facilities (2024: 20%). Consequently, the remaining 83% were sourced from independent contract suppliers or procured as merchandise (2024: 80%).

HUGO BOSS attaches great importance to a regionally balanced strategic sourcing mix to mitigate risks such as local or regional capacity shortfalls. In 2025, 49% of our merchandise was sourced in EMEA, modestly below the prior year (2024: 53%). In line with our strategic ambition of further promoting nearshoring, we aim to align our regional sourcing activities even closer with our sales markets, to ultimately benefit from shorter lead times and increased speed-to-market capabilities. With a share of 24% of our global sourcing and production volume (2024: 26%), Turkey not only accounts for about half of our European sourcing activity but also represents by far the largest sourcing market for HUGO BOSS. Our own production in Izmir accounted for 15% of the global sourcing and production volume in 2025 (2024: 17%). Besides Turkey, Portugal, Bulgaria, and Italy also represent relevant sourcing markets within EMEA.

At 48%, the Asian share of our global sourcing and production volume slightly increased in 2025 (2024: 44%), also reflecting higher demand for casualwear. Within Asia, Bangladesh and Vietnam remain the largest sourcing markets, accounting for 12% and 9% of our global sourcing and production volume, respectively (2024: 11% and 8%). At the same time, we significantly reduced our sourcing volume in China in recent years, now accounting for only 6% (2024: 7%), down from over 20% a few years ago.

To benefit from the proximity to the important U.S. market and enhance flexibility, we are also committed to strengthening our sourcing footprint in the Americas, which currently stands at 3% (2024: 3%).

Own production as a competitive advantage

We significantly expanded our own production capacity in recent years. In addition to greater independence from external factors, this allows faster, more flexible responses to customer demand and in-season replenishment opportunities. It also strengthens our expertise in production technologies and quality standards. Our five own production facilities are located in Izmir (Turkey), Metzingen (Germany), Radom (Poland), Morrovalle (Italy), and Coldrerio (Switzerland).

Our largest own production site, in Izmir, plays a particularly strategic role. Initially focused on formalwear, our Izmir site meanwhile dedicates 30% of its production volume to casualwear (2024: more than 25%). Today, Izmir thus accounts for around 10% of our global casualwear sourcing (2024: around 10%), after the Company has significantly expanded the share in recent years. This flexibility enables us to react even faster to changes in consumer demand also in this important segment. Our production site in Metzingen mainly produces products for BOSS Camel, including tailored BOSS Made to Measure suits, along with prototypes and sample styles. Production in Radom and Morrovalle mainly focuses on business shoes and sneakers, while Coldrerio specializes in BOSS Made to Measure shirts. Product Development and Innovation

Network of experienced and specialist suppliers

To ensure excellent processing quality and high product availability, HUGO BOSS partners with a network of experienced and specialist suppliers. In fiscal year 2025, we sourced finished goods from 178 external Tier 1 suppliers (2024: 200) operating 245 production facilities (2024: 271). In addition, fabrics and trimmings were procured from 374 external Tier 2 suppliers (2024: 382) operating 395 production facilities (2024: 411).

HUGO BOSS fosters long-term strategic partnerships with its suppliers, averaging over ten years, and supports them in the continuous development of key processes. Alongside economic criteria, we attach great importance to environmental and social aspects in the selection of suppliers. Cooperation is based on respect for human rights, labor standards, and occupational health and safety, with the HUGO BOSS Supplier Code of Conduct forming the framework for all supplier relationships. More details can be found in the “Combined Non-financial Statement.” Combined Non-financial Statement, Workers in the Value Chain

Expansion of own logistics infrastructure

Our inventory storage is centered on selected sites, primarily operated by HUGO BOSS. Our distribution centers for hanging goods, flat-packed goods, and our global online business, all located in proximity to the headquarters in Metzingen, form the core of our Group-wide logistics network. The latter is supplemented by selected local or regional warehouses, including our own warehouse in Midway (U.S.) and third party-operated sites, for example in China or the UK.

As part of CLAIM 5 TOUCHDOWN, HUGO BOSS aims to fully leverage the benefits of its expanded automated logistics network. Between 2021 and 2025, the Company has made significant investments in its logistics infrastructure to increase unit capacity by around 40%. This includes the expansion of our largest central distribution center in Filderstadt (Germany), where we invested more than EUR 100 million with a strong emphasis on further digitalization and automation. Scheduled for completion in 2026, the expansion is expected to significantly increase shipping and storage capacity, further strengthening our operational platform, driving efficiencies, and supporting growth across channels.