Frasers Group warns against dividend payouts to boost Hugo Boss value

In a significant move, Frasers Group, the retail company owned by billionaire Mike Ashley, has intensified pressure on the German fashion house Hugo Boss by declaring that it will vote against any proposed dividends. This announcement was made as Frasers Group, which now holds 25% of voting rights in Hugo Boss, continues to expand its stake and influence over the brand. Frasers argues that instead of distributing dividends, Hugo Boss should focus on fostering long-term growth and maintaining financial flexibility, citing concerns over the current undervaluation of the company's stock. Frasers Group’s relationship with Hugo Boss is longstanding, rooted in collaborative retail efforts where Frasers sells Hugo Boss products across its multi-brand store chains and online platforms. In a statement issued by Frasers, the company criticized the notion of prioritizing dividends, asserting that redeeming treasury shares would be a more prudent strategy to enhance value for all shareholders. Hugo Boss, while appreciative of Frasers' input, insists that it already has a solid developmental plan in place and keeps an active line of communication with its shareholders. The tension surrounding dividends comes at a time when Hugo Boss is navigating its financial landscape amid fluctuating market conditions. The company recently reported a slight decline in revenue across various regions, including EMEA and the Americas, while noting a more pronounced impact in Asia due to depressed consumer demand, particularly in China. While the digital segment continues to show growth, the physical retail environment remains challenging, leading Hugo Boss to consider strategies to adapt to evolving market dynamics. As part of efforts to enhance its capital access, Hugo Boss successfully established a commercial paper program intended to facilitate short-term funding. This program allows the company to issue unsecured notes which can reach a total amount of up to approximately $585 million, aimed at supporting general corporate purposes. The discussions and strategic planning are expected to culminate in a detailed presentation of core strategies during Hugo Boss's upcoming capital markets day in the fourth quarter, aiming to address both shareholder concerns and growth aspirations in a highly competitive industry landscape.