BERLIN — Having met its sales and earnings targets for 2017, boosting consolidated net income 19 percent along the way, Hugo Boss is now looking to step up the pace of growth in 2018.
Noting the group’s strategic realignment is taking effect, Boss is forecasting accelerated sales growth in the low- to mid-single-digit range, after currency effects, in 2018. The group’s own retail business is expected to increase in the mid-single-digit range, with the Boss wholesale business returning to growth.
For 2018, Boss noted the operating result, or EBITDA, will most likely lie in the minus 2 percent to plus 2 percent range compared to 2017, offset by negative currency effects and further investments in the group’s future growth, particularly in the digital transformation of the business model. Consolidated net income is expected to grow at a low- to mid-single-digit percentage range.
Also on 2018’s growth plan: the ongoing improvement of the hugoboss.com website; the renovation of about 150 retail spaces featuring a new store concept; the opening of Hugo stores in selected major European cities, and added personalized and digital services.
The Metzingen-based group also announced a proposed 2017 dividend rise to 2.65 euros per share, compared to 2.60 euros in fiscal 2016.
In final 2017 figures released today, Boss reported group sales gained 1 percent to reach 2.73 billion euros. In currency-adjusted terms, sales grew 3 percent.
Sales growth was largely powered by the group’s own retail business, where nominal sales gained 3 percent to hit 1.73 billion euros, outperforming expectations. Comp sales rose 1 percent.
Own retail now provides 63 percent of group sales, up from 62 percent the year previously. Boss operates 439 freestanding retail stores, in a total retail network operated by Hugo Boss worldwide of 1139 doors, including shop-in-shops and outlets.
Wholesale, on the other hand, was down 3 percent, which Boss attributed to a more selective distribution in the U.S. market as well as some takeovers of shop-in-shops.
Earnings before interest and taxes surged 29 percent to 341 million euros, while operating profit was flat at 491 million euros, in line with the group’s forecast. Boss said operating profit was impacted by a strong euro, and investments in the repositioning of the Boss and Hugo brands as well as the digital transformation of the group’s business model.
Net income grew to 231 million euros, up from 194 million euros in 2016.
Now focusing solely on the Boss and Hugo brands, 2017 saw sales of the Boss core brand rise 1 percent, while Hugo grew 3 percent. In terms of gender, men’s wear, which continues to generate 89 percent of group sales, gained 2 percent, while women’s wear was down 2 percent.
Hugo Boss chief executive officer Mark Langer, whose tenure, as reported, was extended for a further three years, said feedback from the Boss men’s wear and Boss women’s wear presentations in New York was “very positive.”
Men’s wear has introduced a number of new concepts, including sports tailoring, whereas the future direction of the Boss women’s wear range remains less clear, following the recent departure of artistic director Jason Wu. Wu had been brought in in 2013 to rev up the house’s lackluster women’s collections.