Illustration of risks

Risks identified in the risk management process with at least essential potential impact on HUGO BOSS are detailed below in descending order of their potential financial impact. In contrast, risks assessed as having only a low or moderate impact are not explained in more detail, including risks related to changes in interest rates, competition, counterparties, facilities, financing and liquidity, legal, occupational health and safety, product piracy, and vision and direction. In general, it is possible that further latent risks or risks currently assessed as immaterial may have a greater adverse effect on the Group’s future development than anticipated. Regardless of the measures implemented to manage the identified risks, business activity is always exposed to residual risks that cannot be entirely avoided.

Risks associated with suppliers and sourcing markets

Risks associated with suppliers and sourcing markets relate to potential dependencies on individual suppliers or production sites, rising product costs, and a possible divergence between production and sales.

HUGO BOSS attaches great importance to the careful selection of suppliers and long-term strategic partnerships. However, there is a risk that production may be temporarily interrupted at one or more suppliers due to supplier-related or regional events, such as trade conflicts and restrictions introduced by governments. Excessive dependence on individual suppliers or production sites could lead to disruptions in the Group’s supply chain and thus to operational shortcomings. HUGO BOSS therefore pursues a regionally balanced strategic sourcing mix, in order to minimize risks such as local or regional capacity shortfalls as far as possible. In this context, the production and sourcing process is coordinated centrally by Business Operations. Supplier relationships are regularly monitored and evaluated to identify risks in a timely manner and initiate appropriate measures to safeguard product availability. In fiscal year 2025, the largest external supplier accounted for 5% of the total sourcing volume (2024: 5%), with the largest single external production site also accounting for 5% (2024: 4%).

Within the framework of nearshoring, HUGO BOSS is pursuing the strategic ambition of establishing a balanced sourcing footprint that is closely aligned with its largest sales markets EMEA and the Americas, thereby also aiming to reduce negative environmental impacts associated with long-distance transport. In 2025, 49% of the Company’s merchandise was sourced in EMEA (2024: 53%), with our own production in Izmir (Turkey) accounting for 15% of the global sourcing and production volume (2024: 17%). This approach is intended not only to bring HUGO BOSS closer to its most important sales markets and enable faster replenishment, but also enhances the Company’s resilience by reducing reliance on external factors. Business Operations

In view of earthquake risks and possible risks due to political uncertainties, HUGO BOSS has implemented comprehensive measures at its largest production site in Izmir to limit the impact of a potential production downtime on product availability and consequently also on Group revenues. For the majority of the production volume, contingency plans are in place to transfer production to external suppliers, while the financial risk from earthquakes is partially covered by insurance policies.

Rising wages in sourcing countries and higher prices for raw materials like cotton, wool, or leather may lead to higher production costs and thus negatively impact gross margin and the Group’s profitability. HUGO BOSS counters these risks with margin-based collection planning, measures to improve efficiency in its production and sourcing processes, continuous optimization in the use of materials, and regular reviews of its pricing policy.

Ongoing geopolitical tensions and the risk of new or increased trade barriers, particularly between major economic regions such as the U.S., China, and Europe, may adversely affect sourcing and manufacturing costs. In particular, tariffs and other trade restrictions represent a major concern, as they can directly increase duties, disrupt supply chains, and put significant pressure on margins. Cost increases passed on to consumers may also dampen demand, especially in price-sensitive markets. To mitigate these risks, HUGO BOSS closely monitors global trade and geopolitical developments and integrates potential impacts into its sourcing, production, and pricing strategies. As part of our broader risk-mitigation efforts, in 2025, we have increased our inventory coverage in the U.S, successfully rerouted product flows from China to other regions, and further optimized our global vendor base. Business Operations

The forecasting of sales volumes, planning of production capacities, and allocation of raw materials and finished goods as part of the sourcing process involves scheduling risks. Deviations from the appropriate allocation can lead to over-scheduling, resulting in elevated inventory levels. On the other hand, it may also lead to under-scheduling with the risk of missed sales opportunities. To reduce scheduling risks, HUGO BOSS is working on constantly improving its forecasting quality. This involves further increasing the transparency along the value chain as well as growing flexibility of merchandise management across distribution channels and markets. In this context, in 2025, HUGO BOSS pushed ahead with the implementation of its Digital TWIN initiative – a smart and tech-driven business operations platform aimed at strongly enhancing real-time data utilization. By creating a digital copy of the Company’s supply chain and leveraging the power of artificial intelligence, HUGO BOSS aims to further improve demand and supply planning and better align its various planning activities. This, in turn, is intended to provide the most accurate procurement of products and fabrics, both in terms of timing and quantity. Business Operations

Sales and distribution risks

Sales and distribution risks exist in connection with the Group’s own retail activities, in particular with regard to inventory management as well as the duration of storage and consequently the recoverability of merchandise. In the wholesale business, sales and distribution risks mainly relate to a possible dependence on individual wholesale partners as well as bad debt losses.

The aim of the Company’s centrally organized inventory management is to ensure the forward-looking, optimal allocation of Group-wide inventories while, at the same time, maintaining flexibility in order to be able to respond to demand fluctuations at short notice. Material downturns in demand or misjudgments of sell-through rates can have a negative impact on inventory turnover. HUGO BOSS therefore strives to continuously improve its inventory management. Granting additional discounts as a potential countermeasure for excess inventory inevitably may weigh on the gross margin and ultimately on the Group’s profitability and is therefore constantly monitored by the central Business Planning & Analysis department. A centrally managed pricing policy, differentiated retail formats, and collections tailored to these formats are aimed at achieving a constant improvement in efficiency in own retail.

Inventory risks may result from increased storage periods and a related potential reduction in the marketability of inventories. In line with the principle of net realizable value, impairments on inventories are recognized accordingly and reviewed on a monthly basis based on a seasonal approach, to account for changes in demand and marketability throughout the year. Notes to the Consolidated Financial Statements, Note 12

In its wholesale business, HUGO BOSS pays close attention to ensuring a balanced customer structure to avoid a potential overdependence on individual customers. Business Planning & Analysis constantly monitors key metrics such as order intake, delivery quotas, and sell-through providing regular reports to the Managing Board. This enables prompt action to mitigate potential risks. Group Management

HUGO BOSS is exposed to the risk of bad debt losses due to the potential insolvency of wholesale partners or cumulative losses from economic slowdowns in specific markets. To mitigate this, the Group-wide receivables management applies uniform receivables management policies, including credit rating checks, customer credit limits, receivables aging monitoring, and strict handling of doubtful accounts. In some cases, deliveries are only made upon prepayment, or business relationships with high-risk customers are discontinued. The Internal Audit department regularly reviews compliance with the respective Group guidelines. As of the reporting date, there was no significant concentration of default risks from individual customers. Notes to the Consolidated Financial Statements, Note 13

Logistics risks

HUGO BOSS is exposed to logistics risks that relate to potential interruptions in the transport of goods, for example due to a possible shortage of sea and airfreight, or insufficient warehouse capacity. This directly involves risks of a global increase in freight costs as well as significantly delayed product availability. In 2025, HUGO BOSS further reduced its reliance on airfreight, highlighting our commitment to balancing cost-efficiency with operational excellence, while at the same time emphasizing sustainable sourcing practices. Looking ahead, HUGO BOSS is committed to continuing reducing airfreight dependence while ensuring on-time product availability.

Amid ongoing geopolitical tensions, global transport and logistics capacity remained under pressure throughout 2025, particularly on major East–West trade lanes such as Asia–Europe. Continued security risks in the Red Sea led many shipping lines to reroute vessels, resulting in longer transit times and elevated logistics costs. While the overall situation in the Red Sea showed signs of partial stabilization, shipping patterns have not yet fully normalized and freight rates remain volatile, influenced by geopolitical developments, capacity dynamics and higher security-related costs. Looking ahead to 2026, renewed escalation of geopolitical conflicts in the Middle East could again disrupt key maritime trade routes, further straining global logistics capacity and increasing transportation costs. HUGO BOSS will continue to closely monitor developments and implement appropriate measures where necessary. While no material impact on product availability is currently expected, potential supply chain disruptions and related risks, including lost sales opportunities, cannot be entirely ruled out. Business Operations

In addition, the temporary downtime or loss of warehouse locations or conveyor systems may lead to missed sales opportunities. Ensuring sufficient warehouse capacity and a seamless delivery of goods forms an essential aspect as part of Company’s growth ambitions. The storage of inventories is centered on selected sites, with most of them directly operated by HUGO BOSS. The Group’s own central distribution centers for hanging goods, flat-packed goods, and the Company’s own online business, all located in proximity to the headquarters in Metzingen (Germany), form the core of the Group-wide logistics network. Overall, capacity bottlenecks caused by strong top-line growth represent a noticeable risk as they may lead to delayed delivery of goods or interruptions in product availability at the point of sale. With the aim of constantly improving the efficiency and flexibility of its logistics setup while minimizing the associated risks as far as possible, HUGO BOSS has gradually optimized its global logistics platform in recent years. In this context, the strategic expansion of one of our key logistic hubs was initiated already in 2023 with completion expected in 2026 and intended to increase the delivery and storage capacity of this warehouse location by around 75%. This multiyear project aims to significantly increase both shipping as well as storage capacity while also focusing on the further digitalization and automation of key processes. In addition, compliance with comprehensive fire protection and safety measures is continuously monitored at all warehouse locations. HUGO BOSS has also taken out insurance to cover the direct financial risk from a loss of goods or equipment stored in warehouses. Business Operations

Governance and compliance risks

All HUGO BOSS employees are required to comply with the Code of Conduct applicable throughout the Group and the compliance rules applicable in specific areas. The Group companies are subject to regular risk analyses and detailed audits where applicable. Adherence to the compliance rules is monitored by the central Compliance department and any breaches are reported accordingly to the Managing Board and Supervisory Board. Corporate Governance and the Corporate Governance Statement, Combined Non-financial Statement, Own Workforce

Breaches of data protection laws represent a substantial compliance risk. The Group counters this risk using a system complying with data protection laws and via appropriate technical and organizational measures. All employees are educated on data protection matters through activity-related training courses, the obligation to adhere to the Code of Conduct, and a separate duty of confidentiality. All internal processes and systems for processing personal data are assessed on an ongoing basis and continuously improved to ensure compliance with legal data protection requirements. Combined Non-financial Statement, Consumers and End-Users

IT risks

Smooth business operations with efficient processes are strongly dependent on a powerful and secure IT infrastructure, uniformly implemented throughout the Group. Serious failures of the Group’s IT system may result in significant business interruptions. In addition, cyberattacks can lead to major and long-lasting system interruptions, loss of confidential data, and the ensuing loss of reputation and liability claims. A long-lasting system interruption might have a significant impact on business operations, for example on the processing of goods in key warehouses. In order to reduce these risks, the central IT department conducts regular maintenance and security checks, has implemented multilevel security and antivirus concepts, and has assigned job-related access rights. In addition, access control systems, daily data backups of the Group-wide ERP system, an uninterrupted power supply, as well as regular online training sessions for staff aim to increase IT security within the Group. Internal Audit regularly monitors the security and reliability of the IT systems as well as the effectiveness of implemented control mechanisms.

HUGO BOSS anticipates global cyberattacks to continue increasing in the long term, driven by mounting geopolitical tensions and advancements in artificial intelligence. As reliance on technology deepens, the potential financial impact of cyberattacks is likely to grow, posing unknown but potentially severe risks. Consequently, HUGO BOSS classifies cyber threats as an “emerging risk”. To strengthen its resilience, the Company remains committed to continuously enhancing its information security program. In this context, HUGO BOSS has implemented a dedicated security information and event management system, designed to provide a comprehensive overview of the Group’s IT security landscape.

Tax risks

As a globally operating Company, HUGO BOSS is subject to a variety of tax laws and regulations. Changes in this area could lead to higher tax expenses and tax payments, and also impact recognized current and deferred tax assets and liabilities. All tax-related issues are regularly analyzed and evaluated by the Group Tax department, supported by external experts such as lawyers and tax advisors. Tax audit risks exist for all assessment periods still open. Sufficient provisions were recognized for known tax risks, with the amount based on various assumptions, for example the interpretation of respective legal requirements, the latest court rulings, and the opinion of the authorities, which is used as a basis for measuring the loss amount and its likelihood of occurrence.

The Group Tax department regularly assesses the likelihood of the future recoverability of deferred tax assets that have been recognized on unused tax losses. This assessment takes into account various factors, such as future taxable results in the planning periods, past results, and measures already implemented to increase profitability. HUGO BOSS applies a forecast period of four years for this purpose. Actual figures may differ from the estimates in this regard. As for taxes, risks may occur primarily from modifications of tax legislation in various countries, due to varying assessment of existing topics by tax authorities or tax field audits. There are also risks in transfer pricing in relation to the Company’s business model. Notes to the Consolidated Financial Statements, Note 5

Collection risks

Changing fashion and lifestyle trends can cause collection risks, with challenges primarily occurring in identifying and incorporating trends quickly into commercially successful collections. To mitigate these risks, HUGO BOSS comprehensively analyses relevant target groups and markets, uses artificial intelligence to identify trends, and evaluates sell-through rates of previous collections. Beyond that, direct customer interaction in our brick-and-mortar retail and own digital business, feedback from wholesale partners, as well as insights gathered via our customer loyalty program HUGO BOSS XP and relevant social media platforms enable early detection of shifts in buying behavior for future collections. As part of our CLAIM 5 TOUCHDOWN strategy, we aim to reduce product complexity and streamline our product variety, thereby reducing the risk from individual collections. Product Development and Innovation, Consumer Touchpoints

Political and social risks

HUGO BOSS is exposed to political and social risks due to its global business activities. Political and regulatory changes, geopolitical tensions, military conflicts, government transitions, and terrorism can all negatively impact consumer sentiment. However, in light of its global distribution footprint with a presence in approximately 130 markets, the Company benefits from a natural hedge against challenges in individual regions.

Global political and social uncertainties continue to represent a significant risk factor also in 2026. Geopolitical tensions, including those related to the conflicts in Ukraine and the Middle East, the potential escalation of trade conflicts, policy shifts and regulatory changes, and the broader security environment pose significant risks for the global apparel industry and thus also for the Group’s business development. Such developments may disrupt key trade routes, result in higher transportation costs and longer lead times. Furthermore, an escalation or expansion of geopolitical conflicts could negatively impact the global economic environment, weaken consumer sentiment, and adversely affect the sales and earnings performance of HUGO BOSS.

Due to its increasing relevance, HUGO BOSS classifies risks from political and social changes as an “emerging risk.” These risks pose strategic challenges, such as the impact of demographic shifts on consumer behavior, global business activities, and supply chain structures – highlighting the close connection of social, industry, and sourcing risks. Given the broad spectrum of risks, future developments are characterized by a high level of uncertainty, which might lead to unknown, potentially significant effects in the long term. In evaluating and managing these risks, the risk owners and risk experts at HUGO BOSS work in interdisciplinary teams on the ongoing analysis and monitoring of current political and social developments and their impact on the Group’s business activity, with Risk Management & Internal Controls coordinating and supporting this process.

Environmental and health risks

The global value chain of HUGO BOSS is subject to environmental and health risks from pandemics, environmental and natural disasters, the impact of climate change, and the loss of biodiversity. Building on the experience gained from the COVID-19 pandemic, HUGO BOSS has drawn up appropriate pandemic emergency plans. At the same time, HUGO BOSS conducts regular climate risk analyses to identify potential business impacts and enable timely countermeasures. A central emergency management system ensures prompt and effective responses to all kinds of emergencies, including extreme weather events and natural disasters. This system integrates cross-functional expertise and facilitates efficient coordination with clear decision-making processes.

Global economic risks

HUGO BOSS is exposed to global economic risks that can impact demand for premium and luxury goods. Consequently, economic downturns, whether global or regional, may weigh on the Company’s top- and bottom-line performance. Additionally, regional economic challenges can have ripple effects across markets, further influencing business performance.

In 2026, global growth is expected to remain subdued as the global economy continues to face several challenges. In particular, economic policy uncertainties have further intensified, driven by uncertainty around global policy settings, ongoing political instability in certain regions, and persistent geopolitical tensions. Further details on the global economic outlook for fiscal year 2026, including risks and uncertainties, are provided in the “Outlook” chapter. Outlook

To mitigate economic volatility, identify risks at an early stage, and respond as quickly as possible, the Group actively monitors the macroeconomic environment and global industry trends. Internal early indicators are analyzed regularly to allow a forecast of the potential impact of macroeconomic risks. Actions to address downturns in demand include adjusting production and sourcing activity, more strictly managing trade net working capital, further optimizing the global distribution network, tightening cost controls, and implementing price adjustments. Group Management

Quality risks

When sourcing materials and manufacturing its products, HUGO BOSS places the highest emphasis on quality. To uphold these standards, the Company consistently utilizes premium materials and innovative production techniques. Comprehensive quality controls at all stages of production and the incorporation of customer feedback are intended to contribute to the continuous improvement of the production process and mitigate inherent risks. In addition, both the Company’s own production sites as well as those of its partners are regularly monitored to ensure strict compliance with central quality guidelines. Incoming goods inspections as well as intensive quality tests at the Group’s headquarters in Metzingen (Germany) are designed to ensure the high-quality standards of HUGO BOSS. Generally, HUGO BOSS also incorporates risk criteria into its product development, aiming to constantly reduce return rates and thus minimizing the impact on sales development. Product Development and Innovation, Business Operations

Personnel risks

The successful execution of our Group strategy and the financial and operational performance of HUGO BOSS are largely dependent on the expertise, commitment, and performance of our global workforce. A fair and value-based corporate culture serves as a crucial foundation for fostering employee engagement and long-term success. Personnel risks mainly relate to recruitment bottlenecks, shortages of specialists, and excessive employee turnover. HUGO BOSS counters these risks with a value-based corporate culture, forward-looking personnel planning, comprehensive development and training measures, the continuous development of its performance-based compensation system, as well as flexible working models to better combine work and private life. To measure employee satisfaction on a regular basis, HUGO BOSS conducts an annual employee survey in cooperation with Great Place to Work Germany. In this context, in 2025, the overall satisfaction increased to 78% (2024: 69%). The positive development reflects the impact of targeted engagement measures implemented at selected locations following site-specific challenges identified in the prior year, alongside generally stable satisfaction levels across the Group. Looking ahead, we remain committed to sustaining a satisfaction level of at least 75% across the Group, consistent with previous years. Combined Non-financial Statement, Own Workforce

Risks associated with brand and corporate image

The occurrence of risks related to brand and corporate image may have adverse effects on the financial and operational performance of HUGO BOSS. Such risks may arise, for example, from insufficient product or service quality in the Group’s own retail business, inadequate pricing and markdown management, the use of distribution channels that are not aligned with brand positioning, ineffective marketing activities or brand partnerships, negative public discourse on social media, or non-compliance with applicable laws, standards, or social requirements.

Against this backdrop, protecting and strengthening brand and corporate image remains a key priority at HUGO BOSS. In recent years, the Company has comprehensively renewed the brand images of BOSS and HUGO as part of its former CLAIM 5 strategy, resulting in a more emotional, and more contemporary appearance. In parallel, both brands were further developed into 24/7 lifestyle brands through the introduction of new brand lines, supporting a more consistent and differentiated brand positioning across occasions and touchpoints. These strategic initiatives are complemented by a globally consistent brand and shopping experience, strict quality controls, centrally managed pricing policies, a robust compliance management system, targeted employee training for customer-facing functions, and defined occupational and social standards. Legal trademark protection and the active prosecution of product piracy further contribute to safeguarding brand integrity.

Looking ahead, HUGO BOSS is committed to further advancing Brand Excellence as part of CLAIM 5 TOUCHDOWN by elevating BOSS and HUGO across brand dimensions. A new organizational setup with dedicated menswear and womenswear powerhouses is intended to strengthen brand-specific expertise, unlock synergies, and ensure a more consistent implementation of the respective brand identities across regions and channels. These powerhouses will work closely with marketing, sales, and retail functions to deliver globally coherent brand storytelling, and a seamless brand experience along the entire customer journey. By tightening end-to-end brand governance, HUGO BOSS aims to further reduce brand dilution risks, strengthen long-term brand desirability, and support sustainable value creation. Group Strategy, Brand Excellence

At the same time, external communication and stakeholder engagement continue to be centrally coordinated by Corporate Communications and Investor Relations, ensuring a consistent dialog with key stakeholders. Compliance with relevant laws, standards, and internal guidelines is regularly reviewed across the Group and its partners, supporting a credible and resilient corporate image over the long term.

Investment risks

The Group’s own retail activities are exposed to investment risks, particularly in connection with the optimization and modernization of its store network, selective new openings, as well as the cross-channel integration and digitalization of its own retail activities. The risk of misinvestments relates in particular to investments in stores for which long-term lease agreements are concluded but which subsequently do not meet the Group’s expected returns. In addition, misinvestments may arise in the development and implementation of new store concepts or digital elements that may not lead to operational investments.

The risk associated with potential impairment of property, plant and equipment, intangible assets, right-of-use assets at the level of the Group’s own retail stores, as well as goodwill, represents the most significant risk within the category of investment risks. In principle, a deterioration in the business outlook or changes in market rental conditions may result in impairment losses on the Group’s assets. Any such impairments would be non-cash in nature. Notes to the Consolidated Financial Statements, Note 10

At HUGO BOSS, major investment projects are subject to a defined approval process. In addition to qualitative assessments, such as evaluations of potential store locations, this process includes a detailed analysis of each project’s net present value. The central Business Planning & Analysis department regularly evaluates planned investment projects with regard to the Group’s profitability targets. In addition, subsequent analyses are conducted at regular intervals to assess the performance of implemented projects. Appropriate countermeasures are initiated in the event of any negative deviations from the initial profitability targets. Group Management

Currency risks

Due to the global nature of its business activities and the Group’s internal financing activities, HUGO BOSS is exposed to currency risks that may have an impact on its profitability, net income, and equity. Currency risks are managed centrally by the Group Treasury department. Corporate guidelines provide the framework for managing currency risks. They define the strategic selection and scope of hedging and ensure strict functional separation between the trading, settlement, and control of all financial market transactions. The primary objective is to mitigate currency exposure through natural hedges. By doing so, foreign currency exposures from business operations across the Group are offset as far as possible, thereby reducing the complexity of the exposure, the scope of hedging measures, and the associated costs. Foreign exchange forwards and swaps as well as plain vanilla options can be used to hedge the remaining exposure. Notes to the Consolidated Financial Statements, Note 22

In the Group’s operating business, currency risks primarily arise due to products being sourced and sold in different currencies (transaction risk). In particular, HUGO BOSS does not hedge the transaction risk in connection with its global sourcing activities as these are mainly denominated in U.S. dollars with the corresponding exposure being largely offset by means of a natural hedge via revenues generated in the U.S. market. Currency risks in financial result mainly occur from financial receivables, liabilities, and loans to finance Group companies (transaction risk). As of the reporting date, the main financing loans were hedged via foreign exchange forwards and swaps. In addition, currency risks exist in connection with the translation of financial statements of Group companies outside the eurozone into the Group currency, the euro (translation risk). While this risk is continuously monitored, it is not hedged, as its impact on the Group’s statement of financial position and income statement is non-cash in nature. Notes to the Consolidated Financial Statements, Consolidation Principles

Future cash flows from the Company’s production activities in Turkey nominated in Turkish lira may be hedged by using forward transactions. The corresponding future cash flows are thus designated as an effective hedging relationship recognized on the balance sheet (hedge accounting). As of December 31, 2025, there were no such hedging transactions for future cash flows in place.

In accordance with the requirements of IFRS 7, HUGO BOSS has determined the impact of transaction risk on the Group’s net income and equity based on the balance sheet currency exposure as of December 31, 2025. The exposures include cash, receivables, and liabilities, as well as intercompany loans and deposits held in currencies other than the functional currency of the respective Group company.

HUGO BOSS applies the value-at-risk method to quantify and manage currency risk. In this context, it can be assumed that the total financial currency exposure and its hedging ratio as of the reporting date are representative for the entire reporting period. Due to the method’s limitations, the actual impact on the Group’s net income may deviate from the values determined using the value-at-risk method.

Aggregated across all currencies considered, the diversified portfolio risk for the Group’s net income after hedging amounted to plus EUR 6 million at the end of fiscal year 2025 (2024: minus EUR 6 million). Hedging costs and returns for concluding forward exchange transactions are not included. The risk value reduced slightly compared to the previous year due to changes in the underlying exposure. The largest foreign currency exposure results from the balance sheet exposure towards the U.S. dollar, Japanese yen, and Chinese renminbi.