Hugo Boss Trims Outlook

Profits, sales fall in quarter at Hugo Boss.

BERLIN — Against a backdrop of uncertain economic conditions in key world markets and a sales slowdown in the second half of the year, Hugo Boss AG has downwardly revised its full-year sales and earnings forecast for 2008.

This story first appeared in the October 31, 2008 issue of WWD.  Subscribe Today.

The German fashion group is now expecting currency-adjusted sales growth to come in at the lower end of its previous guidance range of 6 to 8 percent. The company is also projecting earnings before interest and taxes to be slightly lower than 2007, compared with the original forecast of 8 to 10 percent before one-time effects. Boss is now anticipating 2008 EBIT of between 210 million and 220 million euros, or $271.1 million to $284 million, compared with 220 million euros in 2007.

“We are still optimistic but realistic,” said Boss spokesman Philipp Wolff. “We can bring this company forward. And with all the changes under way we are quite prepared. But one can’t be naïve.”

Both sales and earnings came under pressure in the third quarter. Group sales were roughly flat at 533 million euros, or $803.1 million at average exchange. Boss men’s wear sales were flat and women’s wear slipped 4 percent, while Hugo gained 8 percent in the quarter.

Group EBIT was down 11 percent to 111.1 million euros, or $167.4 million, and net income dropped 23 percent to 68.5 million euros, or $103.2 million. The operating results for the quarter and for the first nine months were primarily impacted by one-time extraordinary expenses resulting from changes in the management board, as well as one-time consulting expenses, Boss said.

The German market softened in the third quarter, with sales down 5 percent. The remainder of Europe saw a 1 percent downturn, while sales in the Americas were up 2 percent (11 percent in local currency) and 16 percent (22 percent on a currency adjusted basis) in Asia-other regions. Boss called the development in China “particularly pleasing,” with sales growing 35 percent in the first nine months.�