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Mike Ashley’s Frasers has warned Hugo Boss that it will vote against dividend payments and said the luxury German brand, in which it has a stake, should focus on expanding the business instead.
The UK retailer, which first started buying shares in Hugo Boss in 2020 as part of a wider strategy to invest in seemingly undervalued brands, said Hugo Boss “should not pay any dividend at this time” in a statement published late on Thursday.
Frasers added that the German fashion house should use the capital for “other value-enhancing measures” that would ultimately lead to long-term growth and financial flexibility.
Although it was supportive of chief executive Daniel Grieder and chair Stephan Sturm, Frasers said Hugo Boss’s stock was undervalued and the board should focus on increasing the share price. Hugo Boss shares rose almost 4 per cent in morning trading on Friday.
The FTSE 250 company, formerly known as Sports Direct, has a history of agitating for change at many of the brands it builds stakes in. It now holds more than 25 per cent of voting rights in Hugo Boss, according to the statement, and 32 per cent of the shares through sold put options.
In response to Frasers’ comments, Hugo Boss said it maintained “an active and constructive dialogue with all shareholders” and that it would unveil a new strategy focused on profitable growth, including a review of its capital allocation, at a meeting with investors this year.
Frasers has not ruled out buying more shares in the German group, according to the statement, which comes after Michael Murray, Frasers chief executive and Mike Ashley’s son-in-law, joined the board of the upmarket brand in May.
Last year Frasers dropped a €50mn lawsuit against Morgan Stanley after it accused the bank of “snobbery”. The case was related to a $1bn margin call Morgan Stanley made to cover derivative positions in Hugo Boss.
The retailer had claimed that the evidence suggested Morgan Stanley’s decision to impose the margin call was “at least partly the result of snobbery”. However it withdrew the lawsuit following a trial that concluded in March last year.
