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Hugo Boss Net Falls 27 Percent in 2008

German firm says fourth-quarter sales rose 6 percent; profitability improving.

Extraordinary expenses related to a special dividend and writedowns on hedging transactions pushed Hugo Boss into the red in the fourth quarter of 2008 and weighed on results for the full calendar year, while special items arising from board changes and the company’s restructuring impacted operating results.

Net losses for the fourth quarter were 15.6 million euros, or $20.6 million, compared with net profits of 900,000 euros or $1.2 million, for the period a year previously. For the year, net income fell 27 percent to 112 million euros or $164.8 million. All dollar figures are calculated at an average exchange rate for the period to which they refer.

Fourth-quarter EBIT saw losses of 9.3 million euros, or $12.3 million, compared with EBIT of 2.6 million euros, or $3.4 million. Before special items, however, fourth-quarter EBIT rose 11.2 percent to 10.9 million euros or $14.4 million.

For the year, EBIT was down 13.7 percent to 190.1 million euros, or $279.7 million. Nevertheless, Boss noted that adjusted for special effects, 2008 EBIT rose 9 percent to 226 million euros, or $332.5 million.

The sales picture at Hugo Boss was more positive. In the fourth quarter, sales rose 6 percent to 322.5 million euros, or $425.3 million, while for the year, sales rose 3 percent to 1.69 billion euros, or $2.48 billion. On a currency adjusted basis, sales for the year rose 6 percent.

Boss said Asia and Eastern Europe and the group’s own retail business helped drive sales. Boss sales in Europe were up 2 percent for the year, while at home, German sales slipped a percent. Despite the turbulence in the American market, however, sales gained 4 percent, with currency-adjusted growth hitting 12 percent.

The Boss brand, including Boss Black, Boss Selection, Boss Orange and Boss Green, grew 2008 sales 3 percent to 1.53 billion euros, or $2.25 billion. Hugo boosted sales by just under 10 percent to 158 million euros, or $232.5 million.

The group’s women’s wear business increased 5 percent, while shoes and leather accessories gained 15 percent.

Boss did not set specific sales and earnings targets for the year ahead, but said it expects a declining sales performance in 2009 “due to the extremely weak global economic situation.” Nevertheless, Boss also noted the expected decline in traditional markets could be partially offset by growth in Asia and other emerging countries.