Mike Ashley tightens grip on Hugo Boss amid dividend demand
Frasers Group, the retail empire controlled by billionaire Mike Ashley, has tightened its grip on Hugo Boss after upping its stake.
The owner of Sports Direct and House of Fraser has increased its shareholding in the German giant to in excess off 32 per cent.
In a statement, Frasers Group said it “continues to consider the acquisition of shares Hugo Boss AG as a strategic investment”.
It added that the group is not ruling out the possibility of buying further shares over the next 12 months but said it depended on market and company developments.
Frasers Group, which was founded by Mike Ashley – an investor in City AM‘s parent company, THG Ingenuity – added that it “is not currently seeking to make any significant changes” to Hugo Boss’ capital structure.
However it did say it believes Hugo Boss should redeem all treasury shares which it currently holds.
Mike Ashley’s empire wants dividend scrapped
In the statement, Mike Ashley’s empire also said it believes that Hugo Boss’ share price is “undervalued” and that the management and supervisory board “should focus on shareholder value through the increase of its share price as opposed to dividend payments”.
Frasers Group said it “does not agree” with Hugo Boss’ current dividend policy and said one should not be paid “at this time”.
The group said the retained cash “would better support ego Boss’ long-term growth and financial flexibility”.
As a result, Frasers Group said it intends to vote against any proposed dividend.
The increase in Frasers Group’s shareholder comes after its chief executive Michael Murray, who is Mike Ashley’s son-in-law, joined the supervisory board of Hugo Boss in May.
Earlier this week, the group also replaced its existing £1.65bn financing facilities with a new £3bn term loan and revolving credit facility.
The potential £3.5bn war chest includes an option to increase borrowing by a further £500m.
Hugo Boss hits back at Frasers Group
Responding to Frasers Group, Hugo Boss said: “Hugo Boss acknowledges the perspectives shared by Frasers Group and appreciates their continued engagement.
“We maintain an active and constructive dialogue with all our shareholders, seeking and valuing their views as we strive for meaningful shareholder value creation.
“Our existing capital allocation approach reflects a balance between growth investments and shareholder participation.
Hugo Boss’ managing board and supervisory board have initiated a process of developing a new strategy to succeed ‘Claim 5’ and build on its achievements.
“This strategy will focus on sustainable profitable growth. In addition, it will include a careful evaluation of all aspects of capital allocation to continuously align shareholder interests with the company’s long-term objectives.
“It remains our intention to share this strategy with the capital market in the final quarter of 2025.
“Whilst we have not seen any downside in keeping the 1.4m treasury shares acquired under the share buyback program between 2004 and 2007, we are now assessing prerequisites for their potential redemption. At present, Hugo Boss has no plans to utilise these shares.”