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Hugo Boss: "2012, most succesful year ever"

By FashionUnited

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Fashion

The German fashion company has closed 2012 breaking its records, with sales were up 10 percent to 2.35 billion euros that sent earnings up by 13 percent to 529 million euros. Hugo Boss has to thanks its “most successful year in its history” to

the ever growing demand in the US.

"The positive business performance in 2012 has brought us a good step closer to achieving our medium-term targets", comments Claus-Dietrich Lahrs, CEO of Hugo Boss AG. "Despite the still challenging market environment, I am confident that we will continue to post stronger growth than the overall market in 2013."

The hikes in both sales and
earnings were driven by a strong performance in the last quarter of 2012, when sales were up 18 percent, stressed the German fashion house. In euro, the group generated sales growth of 22 percent to 607 million euros.

The luxury-clothing maker, controlled by Permira Advisers LLP, reported fourth- quarter operating profit that topped analysts’ estimates, reminded Bloomberg. Earnings before interest, taxes, depreciation, amortization and one-time items gained 42 percent to 138 million euros. This compares to the average analyst estimate of 129 million euros, according to data compiled by Bloomberg.

“We expect own retail sales to benefit from new stores, franchise acquisitions and concession takeovers,” Claus Roller, a London-based analyst at Bank of America Merrill Lynch, wrote in a report to investors on the break of the news. “Higher frequency of new product deliveries and a new pricing architecture should help gross margin.”

Aimed by these strong figures, Lahrs said he expected the company to outperform the luxury market as a whole: "Despite the still challenging market environment, I am confident that we will continue to post stronger growth than the overall market in 2013," he said.

Hugo Boss shares jumped 45 percent last year, compared with a 34 percent increase for the German MDAX index. Hugo Boss is trading at around 17 times its 2013 estimated earnings, according to data compiled by Bloomberg.

The wholesale business presented an especially strong development, with a slid two-digit growth. Meanwhile, Hugo Boss own retail business benefited from the continued expansion of the store network and from comp store sales growth of 4 percent.

Yet if there is some aspect that has been highlighted by both the company and the market, is the fact that despite the profit margin was badly hit and dropped 170 basis points to 64.5the earnings before taxes, depreciation, amortization (EBITDA) and before special items climbed by 42 percent to 138 million euros.

Net income attributable to equity holders amounted to 70 million euros in the fourth quarter of 2012 (+30 percent). At the end of the year, trade net working capital was up 3 percent year-on-year at 418 million euros. Inventories declined by 6 percent to EUR 430 million (2011: EUR 458 million). As a result of the significant improvement in free cash flow, “net debt was reduced by another 19 million to 130 million euros –that compare to 149 million euros a year earlier-.

It is worth of mention that Hugo Boss is currently experiencing its fastest growth in the US, where affluent consumers are snapping up its Boss suits. However, demand for its products in China - which has been driving the luxury market over the last few years - slowed in 2012, reported Reuters.

The company didn´t provide a full outlook for 2013 yet it will publish full results on March 14.

Photo: Hugo Boss
FashionUnited