German fashion group Hugo Boss has confirmed its outlook for the full year, but says sales and earnings are likely to be at the lower end of its forecast as it faces “persisting challenges” in the US market.
For the second quarter, net income fell 7.4% to EUR50m (US$55.2m) from EUR54m a year earlier, while operating profit (EBIT) increased by 3% in to EUR76, helped by higher sales and consistent cost management. Gross profit margin narrowed slightly to 66% from 66.9%.
Group-wide sales increased 3% in total to EUR675m with the online business increasing 16% – representing the seventh consecutive quarter of double-digit growth.
Sales performance in Asia/Pacific was “particularly strong,” rising by 8%. In China, Hugo Boss achieved double-digit comp-store sales growth, while in Europe, higher sales in Great Britain and France offset a decline in Germany. Overall, currency-adjusted sales in Europe were up 2%.
Due to the “persistently difficult market environment” in the US, sales in the Americas were down 3% on the prior year.
Meanwhile, the wholesale business was stable, with sales in Europe and Asia/Pacific above the prior-year level.
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By GlobalDataCEO Mark Langer says the group continues to expect a “significant acceleration” in sales and operating profit for the second half of the year, but full-year sales and earnings are forecast at the lower end of its outlook.
The second half sales growth will be driven by its own retail business, where currency-adjusted sales growth is expected in the mid to high single-digit percentage range in the full year. In addition to an acceleration in comp-store sales growth, the company expects an additional boost from online concession partnerships and the ongoing optimisation of its store network.
Meanwhile, a “significant acceleration” is also expected in operating profit development, with Hugo Boss forecasting EBIT growth at the lower end of its existing outlook for an increase at a high single-digit percentage rate.
