Almost 25 % drop in Hugo Boss' profit

Almost 25 % drop in Hugo Boss' profit

German luxury fashion brand Hugo Boss' third quarter profit has dropped considerably with mainly weaker Chinese and American sales to blame.

Slower growth in third quarter

Only last month, Hugo Boss issued a profit alert for its full fiscal year, because of slower Chinese and American sales. The news resulted in a huge drop for the share on the Frankfurt stock exchange.

 

Therefore, it could be expected that the German company's recently published quarterly results were not as good: turnover only grew 4 % to 744 million euro, but that was only because of advantageous exchange rate fluctuations. Its net profit dropped to 88.5 million euro, which is a 23 % drop compared to the same time frame last year.

 

Nevertheless, CEO Claus-Dietrich Lahrs remains optimistic: "Fiscal year 2015 is proving to be a further year of growth for Hugo Boss. After the first nine months of the year, sales are up on the previous year, although momentum slowed in the third quarter. Our business in Europe is growing. However, this was not sufficient last quarter to offset the effects of the more muted performance in China and the United States. Trends deteriorated in both markets. That said, we assume that sales and earnings will improve in the final quarter."

 

Most growth comes from online

Over the past 9 months, Hugo Boss' own retail sales (including outlets and online) grew 8 %, excluding exchange rate fluctuations. The biggest growth comes from its online branch, which grew 22 %. Hugo Boss currently has 1,105 online boutiques, up 64 compared to last year. On a like-for-like basis and including exchange rate fluctuations, turnover grew 3 %.

 

Wholesale sales dropped 4 % in local currency, mainly because of decreased demand in the third quarter, even though the floor space integration in its retail channel also played its part.

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