FRANKFURT, Germany — German fashion label Hugo Boss AG raised its target for store expansion this year as new shops helped boost second-quarter sales, offsetting rebates and inventory writedowns.

The company will open 65 new stores, Hugo Boss said Tuesday. In May the retailer said it aimed to add 50 shops. Sales rose 16 percent to 647 million euros ($708 million) in the second quarter, fuelled by gains in Europe. That topped the 628 million-euro average estimate of analysts surveyed by Bloomberg.

"Because of our strength in the European market, we expect the favorable trend to continue in the second half, even though conditions in the U.S.A. and China remain difficult," Chief Executive Claus-Dietrich Lahrs said in a statement.

The stock traded 0.3 percent lower at 109.85 euros as of 9:08 a.m. in Frankfurt. The company also said its full-year gross profit margin will increase less than it previously expected as it offers higher discounts and writes down inventory. That margin narrowed to 66.5 percent from 66.7 percent in the second quarter.

Earnings before interest, taxes, depreciation and amortisation and excluding special items rose 12 percent to 123 million euros, compared with analysts’ 121 million-euro average estimate. The second-quarter adjusted Ebitda margin narrowed by 0.6 percentage point.

"Hugo Boss is sustaining huge operating expense cost inflation," said Cedric Rossi, an analyst at Bryan Garnier & Co., who recommends buying the shares.

Hugo Boss also raised its forecast for full-year retail same-store sales to a “mid-single digit” increase from low single digits previously.

By Aaron Ricadela; editors: Matthew Boyle, Thomas Mulier.