Hugo Boss Forecasts Higher 2013 Profit, Led by Retail Growth

Hugo Boss Spring/Summer 2013 Campaign | Source: Hugo Boss

METZINGEN, Germany — Hugo Boss AG, the German luxury-clothing maker controlled by buyout firm Permira Advisers LLP, forecast operating profit will rise this year after it expanded its store network by a third in 2012.

Sales adjusted for currency effects and earnings before interest, taxes, depreciation, amortization and one-time items will rise at “high single-digit rate” in 2013, the Metzingen- based company said in a statement today. Retail sales will be the “growth engine” as they grow by a “double-digit” percentage, Chief Executive Officer Claus-Dietrich Lahrs said in a television interview.

We see “major opportunities to continue to grow profitably and further enhance the perception of our brands in 2013,” especially in retail, Chief Executive Officer Claus-Dietrich Lahrs said in the statement.

The maker of men’s suits said it will spend more this year, which it expects to be “challenging,” as it expands its own store network after retail sales exceeded wholesale sales for the first time in 2012. Hugo Boss added 218 stores net last year, including in Brussels, Toronto and Melbourne, expanding the total number of stores by 35 percent to 840.

The company maintained its forecasts for revenue of 3 billion euros and Ebitda of 750 million euros in 2015 as it opens more stores and increases sales in Asia and the U.S. The clothing retailer said the retail business will represent about 55 percent of revenue by that year as it opens about 50 stores annually.

Stable Wholesale

The wholesale business will be “approximately stable” this year, Hugo Boss said.

“Plans to increase capital expenditure should not be an issue,” said Sebastian Frericks, an analyst at Bankhaus Metzler. “The outlook for both sales and earnings is no surprise.”

The retailer said yesterday it will increase its dividend to 3.12 euros a share for 2012, missing a 3.20 euro a share Bloomberg forecast.

Hugo Boss reported fourth-quarter operating profit and sales that topped analysts’ estimates last month. Sales rose 24 percent in Europe in the fourth quarter while revenue in America gained 18 percent, Hugo Boss said today.

Net debt fell to 130 million euros at the end of 2012 from 149 million euros the year before, Hugo Boss said.

Permira, based in London, acquired a majority holding in Valentino Fashion Group SpA in 2007. Valentino was Hugo Boss’s parent company at the time. Permira owns a stake of about 66 percent in Hugo Boss, according to data compiled by Bloomberg.

Hugo Boss shares have gained 13 percent this year, in line with the benchmark MDAX Index.

Editors: Thomas Mulier, Robert Valpuesta