Hugo Boss lowers full year sales and earnings forecast

In the second quarter, Hugo Boss increased currency-adjusted sales by 2 percent and 3 percent in reporting currency to 675 million euros (745.8 million dollars). Operating profit (EBIT) increased by 3 percent to 76 million euros (84 million dollars). While on the basis of the half-year results, the company confirms its outlook for the full year 2019, it now expects sales and earnings to reach the lower end of the existing outlook of increase at a mid-single-digit percentage rate, taking into account the persisting challenges in the US market in particular.

“In an ongoing challenging market environment, we have increased both our sales and operating profit in the second quarter,” said Mark Langer, Chief Executive Officer of Hugo Boss Ag in a statement, adding, “For the second half of the year, we are now expecting a significant acceleration in sales and operating profit development. This will make a decisive contribution to the achievement of our full-year targets. Key drivers will be our partnerships in the online business and the ongoing optimization of our store network.”

Review of Q2 performance of Hugo Boss

The company said, group-wide retail sales in the second quarter increased 3 percent in total and 2 percent on a comp store basis, both adjusted for currency effects, while the online business increased by 16 percent adjusted for currency effects. The wholesale business developed stable, with sales in Europe and Asia/Pacific above the prior year level.

Hugo Boss added that sales performance in Asia/Pacific was once again particularly strong. Currency-adjusted sales growth accelerated there to 8 percent. In China, the company achieved double-digit comp store sales growth, while in Europe, sales increases in Great Britain and France offset a decline in Germany. Overall, currency-adjusted sales in Europe were up 2 percent. The company further said that due to the persistently difficult market environment in the US, sales in the Americas were down 3 percent on the prior year driven by easing of the positive effects of the tax reform, a weaker business with tourists and a highly promotional market environment in general weighed on sales performance.

In the second quarter, Hugo Boss said, at Boss, growth in both businesswear and casualwear led to higher sales, while performance in athleisurewear was stable. Hugo continued to benefit from strong double-digit growth in casualwear. This was partly compensated by lower sales in businesswear. The sales development of menswear in particular benefited from growth in casualwear, while the decline in sales in womenswear is mainly due to lower sales in businesswear and is primarily attributable to the reduction of retail space of the Boss brand in freestanding stores in 2018.

Hugo Boss confirms full year outlook

Hugo Boss recorded currency-adjusted sales growth of 1 percent in the first half of 2019. In the reporting currency, this is equivalent to a 3 percent sales increase to 1,339 million euros (1,479 million dollars). At 130 million euros, EBIT was 9 percent below the prior year level.

The company expects that currency-adjusted sales growth will reach the lower end of the existing outlook. The acceleration in sales in the second half of the year will be driven by the own retail business, which is forecast to achieve currency-adjusted sales growth in the mid to high single-digit percentage range in full year 2019. In addition to an acceleration in comp store sales growth, the company expects further growth stimuli for the second half of the year from intensified online partnerships under the concession model and from the ongoing optimization of its store network.

For the second half of the year, the company also anticipates an acceleration in operating profit development. The company expects to achieve EBIT growth at the lower end of the existing outlook of increase at a high single-digit percentage rate for the full year excluding the expected effects of IFRS 16.

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