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NEW BOSS. Luxury underdog Hugo Boss (BOSSn.DE) has stepped into the limelight. Shares in the German maker of men’s suits jumped 8% on Wednesday amid rumours of potential bid interest from rivals including Bernard Arnault’s conglomerate LVMH (LVMH.PA) read more and Gucci-owner Kering (PRTP.PA). The company is certainly vulnerable. Demand for formal menswear has dried up in the pandemic. But any suitor would need to make some serious alterations to get a proper fit.
An offer at a 30% premium to Tuesday’s closing market price would value Hugo Boss at around 4 billion euros including debt. Even if the buyer could cut costs equivalent to a chunky 15% of Hugo Boss’s expenses, lifting its expected 2023 operating profit to around 350 million euros, the new owner would earn a return on investment of just 6%, Breakingviews calculations based on Refinitiv data show. That’s well below the company’s 9% cost of capital. Hugo Boss may need another spin around the catwalk. (By Lisa Jucca)
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April 21, 2021 at 10:25PM
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Capital Calls: Hugo Boss requires proper fit - Reuters
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