Hugo Boss raises FY17 outlook on upbeat Q3 results

For the third quarter of fiscal 2017, currency-adjusted sales at Hugo Boss were up 3 percent to 711 million euros (828 million dollars), while retail comparable store sales rose 5 percent. The company said EBITDA before special items was broadly stable at 142.9 million euros (166 million dollars). The company now expects sales increase at a low single-digit percentage rate in 2017 accompanied by a stable operating profit before special items.

“We are well on track to achieving our goals for 2017 or even exceeding some of them,” sais Mark Langer, Chief Executive of Hugo Boss in a press statement, adding, “In particular, the performance of our own retail business is highly satisfying. We are making good progress in repositioning Boss and Hugo. In a few weeks’ time, our customers will be able to buy first parts of our spring/summer 2018 collection in stores.”

Positive Q3 prompts Hugo Boss to raise FY17 outlook

The company said its third quarter was underpinned by Great Britain, China and, for the first time in two years, by the company’s own retail business in the United States. The group’s own online business also grew in the quarter under review. On the other hand, Hugo Boss said, sales in the wholesale channel declined as well as operating profit fell short of the prior year’s figure due to intensive marketing activities for the Boss and Hugo brands, spending on the digital transformation of the business model as well as negative currency effects.

The favorable business performance in the year to date has prompted Hugo Boss to raise its full-year sales guidance. It now expects group sales to increase by a low single-digit percentage rate on a currency-adjusted basis in 2017. Europe and Asia/Pacific are particularly expected to contribute to this growth. The company now assumes that sales in its own retail business will increase by a mid single-digit rate, while the unchanged forecast for wholesale sales is a decline in the low to mid single-digit percentage rates. License business is expected to grow at a double-digit rate. In addition, the group now expects EBITDA before special items to remain broadly stable.

The group expects currency-adjusted sales in Europe to rise by a percentage rate in the low single-digits (previously: stable development). In the Americas, currency-adjusted sales should remain more or less stable (previously: slight decline). Currency-adjusted sales in Asia/Pacific are expected to rise by a percentage rate in the low to mid single-digits (previously: slight increase). Comp store sales are expected to rise by a percentage rate in the low single-digits (previously: change between -3 percent and 3 percent).

Hugo Boss results across geographies and brands

Sales growth in Europe was underpinned by the group’s own retail business and by the wholesale business. Great Britain recorded a currency-adjusted sales increase of 9 percent, while sales rose by 5 percent in Germany and 4 percent in the Benelux countries. Sales in France climbed by 1 percent. Double-digit growth in the group’s own retail business, the company added, offset a decline in wholesale business in this market.

Business in the Americas developed disparately. Whereas the group’s own retail business recorded an increase in comp store sales in the United States, timing shifts and challenging market conditions caused business to contract in the wholesale channel. Overall, sales decreased by 9 percent in the United States. The group however recorded sales growth in Canada and Latin America.

Sales in Asia/Pacific benefited again from the continued upswing on the Chinese market in the third quarter. With growth in comp store sales in the high single-digits, the Chinese mainland continued to perform significantly better than Hong Kong and Macau. Overall, sales rose by 5 percent in China. Japan achieved double-digit sales growth thanks to strong business with tourists.

Sales in the Group’s own retail business (including outlets and online stores) continued to develop positively in the third quarter. On a comp store and currency-adjusted basis, sales growth accelerated to 5 percent, with stores and shop-in-shops performing more favorably than the outlet business. All regions contributed to this. Mid single-digit percentage growth was achieved in Europe and the Americas. Sales in Asia/Pacific rose by a percentage in the low to mid single-digits on a comp store and currency adjusted basis.

Overall, sales in the group’s own retail business in Europe climbed by 5 percent to 244 million euros (284 million dollars). Sales in the Americas amounted to 91 million euros (106 million dollars), a currency-adjusted increase of 7 percent. In Asia/Pacific, sales also grew by 7 percent in local currencies to 74 million euros (86 million dollars). Sales generated in freestanding stores and shops-in-shops rose by 4 percent and 9 percent respectively over the prior year on a currency-adjusted basis. Outlet sales were up 6 percent. Also in its online business, Hugo Boss achieved a 6 percent increase in sales.

Overall, sales in the wholesale business were slightly down on the prior year. Delivery shifts as compared to the prior year supported the sales performance in Europe whereas they burdened sales in the Americas. At 230 million euros (268 million dollars), wholesale sales in Europe were 4 percent higher than in the prior year. In the Americas, sales fell by 21percent on a currency-adjusted basis to 44 million euros (51 million dollars). The Asia/Pacific region recorded a currency-adjusted decrease in sales of 17 percent to 7 million euros (8 million dollars).

Sales in the license business grew by 24 percent to 20 million euros (23 million dollars) particularly as a result of higher license income from fragrances. Sales of the Boss core brand particularly benefited from the double-digit growth in the athleisure offering, which in 2017 is still sold under the Boss Green brand line. Businesswear and casualwear sales also rose in currency-adjusted terms. Hugo generated double-digit growth in casualwear, while a slight decline was recorded in businesswear.

Menswear particularly benefited from the favorable performance of the Hugo brand and the Boss Green brand line. The decline in womenswear sales, the company said, is attributable to the Boss brand, which was not fully offset by growth in the Hugo brand.

Picture:Facebook/Hugo Boss