HUGO BOSS confirms sales and earnings outlook for 2019
“The ongoing momentum in our strategic growth market China and in the important online business shows that our strategy is taking effect,” says Mark Langer, Chief Executive Officer of HUGO BOSS AG. “At the same time, the U.S. market proved to be weaker than expected. Moreover, investments in the digitization of our business model and in the organizational structure weighed on our operating result in the first quarter. However, they will help us to further accelerate important operational processes and to significantly improve our cost efficiency in the current year. I am very confident that we will achieve our targets for the full year and beyond.”
In the first quarter, HUGO BOSS increased currency-adjusted sales by 1% to EUR 664 million. This corresponds to an increase in sales of 2% in the reporting currency. However, there were significant regional differences. While in the Americas, the challenging U.S. market and the ambitious comparison base of the prior year in particular led to a currency-adjusted sales decline of 8%, currency-adjusted sales in Asia once again increased disproportionately, by 4%. In Mainland China in particular, where HUGO BOSS recorded double-digit growth on a comp store basis, the momentum of previous quarters continued. In Great Britain, the Group once again achieved double-digit retail sales growth, adjusted for currency effects. Business in Germany developed stable. In total, sales in Europe were up 2% compared to the prior year.
Overall, retail sales on a comp store basis increased by 4% in the first quarter. With currency-adjusted growth of 26%, the Group’s own online business again increased disproportionately. In addition to double-digit growth of the Group’s own online store, hugoboss.com, the further expansion of the concession model in the online business also contributed to the increase. However, sales in the wholesale business decreased, as expected. This development was mainly due to delivery shifts compared to the prior year.
Despite the decline in earnings in the first quarter, HUGO BOSS confirms its sales and earnings outlook for the full year 2019. The Group continues to expect currency-adjusted sales to increase at a mid-single-digit percentage rate in 2019. Main driver should be the Group’s own retail business, which is expected to contribute with comp store sales growth in the mid-single-digit percentage range, adjusted for currency effects.
In addition, the Group expects the intensification of partnerships with online retailers in the concession model and the renovation of strategically important BOSS stores over the course of the year to significantly drive growth.
Apparel categories sales performance:
In the first quarter, sales of the BOSS brand were on the prior year level. Sales growth in casualwear and athleisurewear compensated for a slight decline in sales in businesswear. The HUGO brand benefited from double-digit sales growth in casualwear. This development was partly compensated by declining sales in businesswear.
Sales in menswear were slightly above the prior year level due to growth in casualwear and athleisurewear.
The decline in sales in womenswear is attributable to lower sales from businesswear. Growth in casualwear could only partially compensate for this.
HUGO BOSS continues to anticipate an increase in Group sales in 2019 at a mid-single-digit percentage rate on a currency-adjusted basis. This forecast is based on the assumption that comp store and currency-adjusted retail sales will also increase at a mid-single-digit percentage rate in full year 2019.
As a result, the Group continues to expect an increase in EBIT (excluding the anticipated effects of IFRS 16) at a high single-digit percentage rate in 2019. Above all, the predicted increase in gross profit will contribute to this.
Source: Hugo Boss Headquarters- Metzingen, GermanyEurope News Retail