BERLIN — Shares in Hugo Boss sank more than 5 percent in morning trading on the Frankfurt stock exchange after it reported a slower pace of growth in the third quarter.
Citing increasing challenges on a macroeconomic level and the marked slowdown in Europe’s industrial growth in recent weeks, the German fashion giant downwardly adjusted its full-year outlook.
The group now expects currency-adjusted sales growth of between 6 to 8 percent, versus the prior forecast of high-single digit sales growth, and operating profit (EBITDA) to rise between 5 and 7 percent, versus a high single-digit increase. The group’s own retail business is still expected to generate double-digit growth, with wholesale remaining more or less on last year’s levels.
Net income in the third quarter rose 2 percent to 115 million euros or $152.6 million, with EBITDA before special items up 5 percent to 181.9 million euros, or $241.4 million.
Dollar figures are converted from the euro at an average exchange rate for the period to which they refer.
Sales in the quarter rose 9 percent to 716.5 million euros, or $950.7 million, supported by all regions and distribution channels. “Thanks to improving business in the Americas and Asia/Pacific together with continued good expansion in Europe, we were able to achieve very solid growth in the third quarter,” said chief executive officer Claus-Dietrich Lahrs. However, he said over the last few weeks, Boss “had been feeling the effects of the weak performance of the sector in Europe and uncertainties in Asia.”
In local currencies, the Americas grew 11 percent, with improved wholesale business buoying performance in the U.S. Wholesale also helped drive gains in China, which contributed to a 13 percent sales gain in the Asia/Pacific region. On a currency adjusted basis, sales in Europe gained 8 percent, though Boss noted the momentum slowed across all regions at the end of the reporting period, particularly in the group’s own retail business.
Retail sales rose 11 percent in the quarter on a currency-adjusted basis, with comp store growth up 4 percent. Boss plans to open around 50 new stores, excluding takeovers, in 2014.
Despite the slowdown, Lahrs said the group remains confident of achieving “solid full-year sales and earnings growth and, thus, outpace the luxury goods sector as a whole.”