Q1 sales up 9 percent at Hugo Boss, affirms FY15 outlook

Wednesday, 06 May 2015

REPORT Hugo Boss remained on its growth path in the first quarter of 2015, with the group reporting sales of 668 million euros (750.3 million dollars), representing a rise of 9 percent on the prior year. The company expects sales and profit growth to accelerate compared to the first quarter as the year progresses, confirming its positive outlook for the full year.

“The apparel industry is currently feeling the effects of strong consumer restraint in Europe in particular. Hugo Boss coped well with this difficult environment,” said Claus-Dietrich Lahrs, CEO of Hugo Boss, adding, “We are therefore continuing to strongly invest in brand presentation this year. We are convinced that we will return to stronger growth in the next few quarters.”

Exchange rate effects, above all the appreciation of the US dollar, positively influenced growth in euro terms. After currency adjustment, the company reported a 3 percent increase in sales. This performance was underpinned by all regions. Sales in Europe rose by 3 percent. The core markets in Great Britain and Germany, reported above-average growth. In the Americas, sales were up 2 percent on the prior year in the first quarter in local currencies. The US market expanded by 4 percent. Adjusted for currency effects, sales in Asia/Pacific were up 1percent on the previous year. In China, the macroeconomic slowdown as well as the difficult industry environment exerted pressure on business. Sales in this market decreased by 3 percent after currency adjustment. On the other hand, Australia and Japan performed well.

The group's own retail business including outlets and online business achieved a 6 percent increase in sales in local currencies in the first quarter. Comp store sales development accelerated compared to the end of 2014 and amounted to 3 percent after currency adjustment. Online sales grew by 14 percent on a currency-adjusted basis, supported by the successful relaunch of Hugoboss.com. The outlet business sales also increased at a double-digit rate. The group had a total of 1,060 own stores at the end of the first quarter.

Currency-adjusted wholesale sales were 2 percent down on the prior year in the first quarter. Menswear sales climbed by 2 percent in local currencies, whereas womenswear registered a 4 percent increase. The core BOSS brand, which is being overseen by Artistic Director Jason Wu, even posted double-digit growth.

The Hugo Boss group's management expects sales and profit growth to accelerate in the further course of the year, underpinned in particular by the group's own retail business. Against this backdrop, the company reconfirms its guidance that sales will grow at a mid-single-digit rate after currency adjustment in 2015. All regions should contribute to the achievement of this goal. Growth in its own retail business should again outpace the group average. Retail comp store sales are expected to rise in the low-single digits. In addition to the opening of around 50 new stores, takeovers will contribute to further growth in this distribution channel. Revenues in the wholesale channel will decline slightly particularly as a result of sales shifts caused by takeovers.

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