Hugo Boss posts business recovery in Q3, returns to profitability

In the third quarter, Hugo Boss Ag said that the company continued its gradual business recovery. With the vast majority of its own stores back in operation, particularly the group’s own retail business recorded a considerably more robust performance as compared to the first half of the year, with own retail revenues down by 20 percent, currency-adjusted. Overall, group sales amounted to 533 million euros in the third quarter, representing a currency-adjusted decline of 24 percent or 26 percent in the reporting currency, against the prior year period. Despite the overall sales decline, the group generated a positive EBIT of 15 million euros and the net income also returned to positive territory and amounted to 3 million euros.

“We made further progress in the recovery of our business, with great contribution coming from online and mainland China. Our profitability returned to positive territory, and we even accelerated our strong cash flow generation,” said Yves Müller, Spokesperson of the managing board of Hugo Boss AG in a statement.

Review of third quarter results at Hugo Boss

The company added that the group’s own online business saw currency-adjusted sales up 66 percent driven by the expansion of Hugoboss.com to 24 additional markets in June and August. While all three regions recorded a business recovery in the third quarter, the pace of recovery was most pronounced in Asia/Pacific, with currency-adjusted sales down 14 percent. Mainland China, a strategically important market for Hugo Boss reported revenue rise of 27 percent currency-adjusted.

In Europe, currency-adjusted sales declined by 21 percent against the prior-year period. The company said, while the region saw a solid rebound of local demand in key markets such as the UK and France, the restraint in tourism continued to weigh on its overall business recovery. In the Americas, currency-adjusted sales were down 41 percent, as the negative implications of the pandemic continued to weigh on the company’s U.S. business, both in own retail and wholesale.

Performance of Hugo Boss’ retail channels in Q3

The company further said that currency-adjusted sales in the group’s own retail business (including freestanding stores, shop-in-shops, outlets, and online stores) were down 20 percent on the prior-year level. On a comp store and currency-adjusted basis, sales decreased 23 percent, with Asia/Pacific showing a more robust performance as compared to Europe and the Americas.

The group’s own online business posted currency-adjusted sales rise of 66 percent in the third quarter. Overall, sales in the company’s own retail business declined 17 percent in Europe on a currency adjusted basis, and amounted to 212 million euros. At 53 million euros, the company’s retail sales in the Americas decreased by 38 percent, while in the Asia/Pacific region, own retail sales declined by 11 percent on a currency-adjusted basis to 70 million euros.

Sales in the wholesale business were down 30 percent, at 157 million euros, currency-adjusted sales with wholesale partners in Europe were 26 percent below the prior-year level, in the Americas, currency-adjusted sales declined by 48 percent to 20 million euros and the Asia/Pacific region saw a 37 percent decrease in currency-adjusted sales to 5 million euros.

The difficult market environment also weighed on sales in the license business, which were down 35 percent on the prior-year level, currency-adjusted. At Boss, all three wearing occasions decreased by low double-digit percentage rates, however, the brand’s casualwear and athleisure wear offerings once again showed a more robust performance compared to formalwear, reflecting the ongoing trend towards a more casual lifestyle. Also for Hugo, casualwear proved to be more resilient than formalwear. Consequently, casualwear sales were only down by a mid-single-digit percentage rate.

In the first nine months of the year, nine Boss stores were newly opened. In addition, five Boss stores in the United Arab Emirates have been added to the group’s own store network following a change in the basis of consolidation. On the other hand, thirteen Boss stores with expiring leases were closed globally.

Picture credit:Hugo Boss