Strong growth in China and the Americas helps lift Hugo Boss sales

Berlin

GERMAN fashion house Hugo Boss reported that first-quarter sales rose by a currency-adjusted 5 per cent, powered by strong growth in China and the Americas, while operating profit increased slightly, allowing it to confirm its 2018 outlook.

After a string of profit warnings as sales fell in China and the United States, Boss has reversed efforts to take the brand more upmarket and expand in women's wear, and has refocused on premium men's clothing, but with a modern twist.

It is also investing in better integrating e-commerce and stores and said online sales rose by 43 per cent in the quarter, helped by improvements to its website.

Boss shares, which are up 12 per cent in the last year but still trade at a discount to luxury players such as Kering and LVMH, were indicated up 1.9 per cent in pre-market trade.

Boss reported sales of 650 million euros (S$1.04 billion), just shy of average analysts forecasts for 654 million euros, with a currency-adjusted rise of 12 per cent in Asia-Pacific and 7 per cent in the Americas.

A recovery in spending by Chinese shoppers over the past 18 months has fuelled revenue rises for many top luxury brands, although the sector still faces pressure, such as a strong euro and simmering US-China trade tensions.

Earnings before interest, taxation, depreciation and amortisation before special items rose to 99 million euros, ahead of average analyst forecasts for 97 million euros, with the depreciation of currencies outside the eurozone weighing.

The Boss brand saw sales rise a currency-adjusted 7 per cent, while Hugo, aimed at a younger audience, slipped 6 per cent, which the company said was due to Boss taking over selling space from Hugo, which is also paring its presence in outlet stores. Menswear grew 6 per cent, while womenswear slipped 3 per cent. REUTERS