Hugo Boss reports comparable sales rise of 7 percent in Q1

Hugo Boss said that the company achieved sales growth in all three regions in the first quarter. Group sales increased by 5 percent to 650 million euros (779.7 million dollars). The company added that group’s own retail business again provided the growth driver, with comp store sales up 7 percent. The company-owned online business also grew at double-digit growth rates, while sales in the wholesale business also increased slightly. At 99 million, euros (118.7 million dollars), Hugo Boss said, the operating profit was up slightly compared with the prior year.

“We made a good start to 2018,” said Mark Langer, CEO of Hugo Boss AG in a statement, adding, “Our growth is broad-based. The strong increase in the group’s own retail business shows that our new collections are being well received by customers. This positive performance strengthens our confidence, that we will achieve our sales and earnings targets for the full year.”

Sales increased across Hugo Boss’s core markets

The company further said that sales growth in Europe was underpinned by the group’s own retail business and by the wholesale business. In Great Britain and the Benelux countries, Hugo Boss recorded sales growth of 12 percent and 7 percent respectively on a currency-adjusted basis. Sales in France rose by 2 percent, while reflecting a difficult market environment, sales in Germany declined by 5 percent.

In the Americas the positive sales momentum in the group’s own retail business continued and in the US, comp store sales growth again was in the double digits. Overall, sales increased by 6 percent in the US, Canada and Latin America supported the positive trend in the region with growth in the double digits and mid-single digits, respectively.

The Asia/Pacific region benefited from favourable market environment in China. With double-digit growth rates, the business in Hong Kong and Macau developed positively. Comp store sales in Mainland China were up at a high-single percentage rate. Overall, sales in China rose by 11percent in local currencies. In Japan and South East Asia, the group also achieved double-digit sales growth on a currency-adjusted basis.

Hugo Boss’s performance across retail channels

In the group’s own retail business including outlets and online stores, the positive sales momentum continued in the first quarter, with currency-adjusted sales up 8 percent. Sales grew by 7 percent on a comp store and currency-adjusted basis with distribution from all channels and regions. In Europe and the Asia/Pacific region, sales increased by a mid and high single-digit percentage rate, respectively. In the Americas, sales grew by a double-digit percentage rate on a comp store and currency-adjusted basis.

Overall, sales in the group-owned retail business in Europe climbed by 4 percent to 210 million euros (251.8 million dollars). Sales in the Americas amounted to 76 million euros (91 million dollars), equivalent to a currency-adjusted increase of 13 percent. In the Asia/Pacific region, sales increased by 11 percent in local currencies to 91 million euros (109 million dollars). Sales in freestanding stores and shops-in-shops rose by 6 percent over the prior year on a currency-adjusted basis. Outlet sales were up 7 percent, and in its online business, Hugo Boss achieved a 43 percent increase in sales.

The main reason for the increase in sales in the wholesale business, the company said, was the positive development in Europe. At 206 million euros (247 million dollars), currency-adjusted wholesale sales in Europe were 2 percent higher than in the prior year. In the Americas, sales decreased by 3 percent on a currency-adjusted basis to 41 million euros (49 million dollars). The Asia/Pacific region recorded a currency-adjusted increase in sales of 19 percent to 8 million euros (9.6 million dollars).

Sales in the license business declined by 1 percent to 16 million euros (19 million dollars).

The company’s sales development across brands

The sales development of Boss and Hugo, the company added, was impacted by changes in the distribution strategy, which will see Boss is taking over selling space from Hugo in certain product categories in the wholesale channel and the group is reducing the presence of Hugo in the outlet channel.

While the sales development of the Boss brand benefited in particular from growth in casualwear at Hugo, double-digit growth in casualwear could not make up for declines in businesswear. Sales of menswear increased driven by growth in casualwear but sales decreased in womenswear due to the Boss brand and reduction in retail space, which was not offset by the growth in the Hugo brand.

EBIT and the group’s net income were up on the prior year due to the decline in operating expenses. EBITDA before special items was also slightly higher than in the prior-year period.

For FY18, the company expects, currency adjusted group sales to increase a low to mid-single digit percentage rate, gross profit margin to remain largely stable, EBITDA before special items to develop within a range of negative 2 percent to positive 2 percent and consolidated net income to increase low to mid-single digit percentage rate.



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