BERLIN — A change in the collection cycle pushed net income down 14 percent in the third quarter at Hugo Boss, while higher marketing expenses and costs related to the group’s retail expansion negatively impacted earnings before interest, taxes, depreciation and special items.
Sales for the Metzingen-based group rose 5 percent in the period.
Net income reached 103.4 million euros, or $129.4 million, in the period ending Sept. 30. Earnings before interest, taxes, depreciation and amortization before special items decreased 7 percent to 165 million euros, or $206.5 million. Dollar ﬁgures are converted from the euro at average exchange rates for the periods to which they refer.
Chief executive officer Claus-Dietrich Lahrs said, “The change in our collection cycle has led to a sales shift in our wholesale business from the third into the fourth quarter. This had an adverse impact on our traditionally strong earnings in the third quarter. We shall, however, return to double-digit growth in sales and earnings in the fourth quarter with our winter business.”
Sales for the group reached 646.3 million euros, or $808.8 million, compared to 615 million euros, or $870.8 million, a year earlier. On a currency-adjusted basis, group sales were ﬂat for the quarter. Sales in Europe were down 4 percent (on a currency-adjusted basis), due to the development of the wholesale business, which in total fell 9 percent in local currencies due to the changed delivery cycle.
Previously, the fall-winter collection was delivered in the third quarter, which, as a result, was always a very strong quarter, with business weakening in the fourth. The new delivery schedule aims to spread shipments more evenly over the year, and has split spring-summer and fall-winter into separate deliveries.
Part of the fall collection was already delivered in the second quarter of 2012, with the main fall deliveries made in the third quarter. The winter collection will now be delivered in the fourth quarter versus the third. “The winter collection is very important for us, and so we know we are on track [for the full year],” a spokeswoman said.
Sales in the Americas grew 13 percent (after adjustment for currency effects), with the U.S. the main growth driver. Asian sales were stable in local currencies, with sales in China gaining 5 percent while the Australian and Japanese markets weakened.
Boss reconfirmed its outlook for 2012, despite a more difficult economic environment. The group is projecting currency-adjusted sales growth of up to 10 percent in 2012, with all regions contributing to the results. Boss expects the wholesale business to remain “roughly stable” but forecast a double-digit increase in the group’s own retail business for the full year. Operative earn- ings (EBITDA before special items) are forecast to increase between 10 and 12 percent.
Analysts from Citibank described third-quarter sales as “a bit disappointing” and the lowest growth observed so far. The Citi Research report further noted that the sales performance “is consistent with the slowdown witnessed in the broader premium and luxury apparel sector (Burberry, LVMH, Puma, Chinese Golden Week).”
In the report’s view, the earnings shortfall in the third quarter is “unlikely to be fully recouped in the fourth quarter, potentially leading to small consensus earnings downgrades.”
Citi, The Commerzbank and Bankhaus Lampe have retained or upgraded Boss shares to “buy.” Citi sees long-term opportunities in retail expansion in Asia and the U.S., product diversiﬁcation and sales productivity improvement. It further noted the shares have outperformed the luxury sector year-to-date, rising 35 percent versus the sector’s 17 percent.
Toward the end of trading in Frankfurt Tuesday, Hugo Boss shares were up 3.38 percent to 76.73 euros, or $99.58 at current exchange.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
This Just In: Industry sources have told WWD that Anastasia Soare is rumored to be considering selling her beauty business, @anastasiabeverlyhills. According to those sources, Soare has tapped investment bank Imperial Capital to explore sale options for her eponymous beauty brand –– and with at least $340 million in net sales, this would be a big deal. Put in context of other recent transactions for makeup companies, Soare’s price tag could be in the billions if she were to sell the whole thing. #wwdnews #wwdbeauty (📷: @clint_spaulding)
@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)