Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Hugo Boss Sees Recovery Elsewhere After Hong Kong Hit

The German luxury house predicts a rise in operating profit in the fourth quarter, despite falling sales in the US and declining growth in Asia.
Hugo Boss store | Source: Shutterstock
By
  • Reuters

METZINGEN, Germany — Hugo Boss expects sales and operating profit to recover in the fourth quarter, helped by more modern stores and growth in mainland China and e-commerce, after the German fashion house reported falling sales in the United States and Hong Kong.

Last month, Hugo Boss cut its 2019 earnings forecast and reported preliminary third quarter results that were below its expectations. It confirmed them on Tuesday.

Chief Executive Mark Langer said he expected a "significant" increase in operating profit in the fourth quarter, citing expansion in mainland China and the booming online business, which grew by 36 percent in the third quarter.

E-commerce was powered by improvements to the Hugo Boss website and expansion into Scandinavia and Ireland, and Langer said he expected the strong online momentum to continue into the fourth quarter.

ADVERTISEMENT

Shares in Hugo Boss, which are down by almost 40 percent in the last year, were flat at 9.13am GMT.

Hugo Boss also expects to reap the fruits from investment in sprucing up its stores, like its flagship on the Champs-Élysées in Paris, where Langer said sales had been very strong in October, as well as recent fashion shows in Milan and Shanghai.

Known for its smart suits, the company's strategy of introducing more casual and sportswear styles to appeal to a younger audience has been paying off, with third-quarter sales of its trendier Hugo label rising a currency-adjusted 6 percent.

However, sales fell 8 percent in the Americas, which Hugo Boss blamed on a fall in demand in the US from locals and tourists, as well as a decline in the wholesale channel as it sells more garments online.

Overall, the group's own retail business, which includes e-commerce, saw currency-adjusted sales rise by 3 percent in the third-quarter, while the wholesale business fell 5 percent.

Sales growth slowed to 2 percent in Asia due to a "significant double-digit" sales decline in Hong Kong, which usually accounts for a quarter of its greater China sales, partially offset by continued strong momentum on the mainland. Thriving demand in mainland China also helped luxury handbag maker Hermès offset a sales growth slowdown in Hong Kong in the third quarter, and the company said that the momentum had carried on into October.

As unrest escalates in Hong Kong, Langer said he did not expect any recovery soon, noting stores had been forced to close on important weekend shopping days, prompting Hugo Boss to shift stock from Hong Kong to other Asian markets.

By Emma Thomasson; editors: Michelle Martin and Emelia Sithole-Matarise

In This Article
Topics
Organisations

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Luxury
How rapid change is reshaping the tradition-soaked luxury sector in Europe and beyond.

Marine Serre: From Radical to Pragmatist

Serre, who grew sales by 20 percent in 2023, has been named Pitti Uomo’s next guest designer. She’s using the opportunity to show her men’s collection for the first time.


view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
CONNECT WITH US ON
BoF Professional - How to Turn Data Into Meaningful Customer Connections
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
BoF Professional - How to Turn Data Into Meaningful Customer Connections