Hugo Boss: strongest half year ever

2011 Second quarter definitely suits the German fashion brand, which just published its EBITDA before special items more than doubled in the second quarter. Core force behind the scenes: sharp suits that arise passions in America and China.

Following its luxury peer retailers, Hugo Boss posted second quarter of 2011 sales up by 29% on a currency-neutral basis. In euro, the German label achieved sales growth of 25% to EUR 405 million, compared to last year´s EUR 325 million. All regions showed impressive double-digit growth, being America and Asia Pacific the most prolific ones, adding +31% and +65% and respectively.

Note apart deserves the wholesale business, which sales were up 13% year-on-year after adjustment for currency effects. The own retail business (including outlets and online stores), sales increased by 47% after adjustment for currency effects, partially boosted by the consolidation of the joint venture with the Rainbow Group in China and the acquisition of the Moss Bros franchise stores in the UK. Sales also increased on a comparable store basis, improving by 12% after adjustment for currency effects. Thanks to these figures, the group’s own retail business has rapidly become the main driver of the rise in the gross profit margin by 510 basis points to 63.5%, whereas it posted a 58.4% increase same period last year.

EBITDA before special items rose to EUR 63 million, over doubling 2010 EUR 31 million. As a result, the adjusted EBITDA margin climbed 590 basis points to 15.6% in the second quarter, once more above previous 9.7%.

“HUGO BOSS is posting continued high growth in all regions and distribution channels as well as with all brands,” commented Claus-Dietrich Lahrs, Chairman of the Managing Board of HUGO BOSS AG, at the publication of the first half year report. “We are therefore confident that we will significantly exceed the previous year’s results in the second half of the year, too.”

Standing on its own but in the same vein than LVMH, Burberry, VF Corporation, Hermés or Luxottica, just to name a few, Hugo Boss has raised its forecast for year as a whole. The management now anticipates a currency-neutral sales increase of 15% to 17% in 2011 and hope to underly profit to rise by 25 and 30 percent. The group earlier this month raised its outlook, publishing second-quarter results ahead of time. It said sales rose 29 percent to 405 million euros ($588.3 million) with underlying earnings doubling to 63 million.

Hugo Boss shares were trading lower this morning, downing by around 4.60% midday trade.

Angela González-Rodríguez