Moss Bros will sell the outlets back to Hugo Boss for £16.5m, helping finance turnaround plans for its core business.
The group, which has 155 stores in the UK and Ireland, added that ongoing cost-cutting efforts were paying off as it confirmed second half trading held up well despite the pre-Christmas snow disruption.
Like-for-like sales rose seven per cent in the 26 weeks to January 29 – a slight slowdown on the 8.3 per cent reported in early December.
Moss Bros said it wants to use the Hugo Boss money to revamp core stores and finance new initiatives, such as the roll out of its Moss Bespoke tailoring service.
It will also invest cash in its online offering and said the deal will mean it can operate debt free.
Moss Bros, which also trades as Savoy Taylors Guild and Cecil Gee, has operated Hugo Boss stores under franchise since 1995. But it said it will continue to maintain a wholesale relationship with Hugo Boss and stock the label in certain Moss Bros and Cecil Gee stores.
Brian Brick, chief executive of Moss Bros, said: “This is a transformational deal for Moss Bros and absolutely in line with our recently developed strategy of focusing on growing our own brands.”
Moss Bros sales rose 9.1 per cent in the 52 weeks to January 29, 2011.