Hugo Boss

PARIS Hugo Boss slightly raised its full-year forecasts as it reported flat earnings for the third quarter, flagging improved business in its own stores.

The German fashion group, which is in the process of bolstering its business online, expects a small increase in sales this year, up from a previous target of largely stable sales and earnings.

Net income was unchanged at 80.3 million euros over the quarter, while sales inched up 1 percent to 710.7 million euros, with growth driven by business in Europe and its own retail network. The company’s own stores accounted for 5 percent sales growth on a like-for-like basis.

“We are well on track to achieving our goals for 2017 or even exceeding some of them,” said the group’s chief executive officer Mark Langer.

The sales figure was broadly in line with consensus estimates, noted Barclays in a research note to clients. Luca Solca of Exane BNP Paribas also said the sales were overall in line with expectations, but noted like-for-like growth beat expectations.

“Virtually all of the good news should be already priced in,” however, said Solca. Shares closed up 1.6 percent at 76.40 euros.

Hugo Boss is a mature company in a mature market segment, with a better perspective though, after the midprice repositioning,” Solca added.

Hugo Boss noted an improvement in its own retail business in the U.S. for the first time in two years and highlighted growth in the U.K. and China over the quarter. Growth was stronger in mainland China, Langer said in a conference call with analysts, noting more “muted development” in Hong Kong and Macau.

Sales in Europe rose 4 percent over the quarter to 474 million euros, fueled by growth in the U.K., up 9 percent when adjusted for currencies.

Sales in the Americas region declined 8 percent, dragged down by a double-digit decline in the U.S. wholesale business, while business improved in its own stores in the country.

The group’s wholesale business overall continued to decline, the company said.

Hugo Boss is working to overhaul the company by stepping up the online component of its wholesale channel and rolling out a new store concept. It recently reopened stores in Geneva and Birmingham under the concept, and is gearing up for new stores across Europe including Amsterdam, London, Paris and Berlin in the spring. The company pushed a number of renovation projects to next year in order to incorporate findings from those already refurbished, Langer said. The company has been revisiting its network of more than 400 stores, and has closed four in the U.S. since the beginning of the year.

In the online sphere, a priority for the company, executives are working on improving the brand’s web site as well as better using digital capacities for operational processes, Langer explained.

The company just started taking orders from its digital Hugo showroom.

The group has also been promoting its notoriety, with a social media campaign called “own your journey” for the Boss brand.

Hugo Boss is working on “upping our game in digital marketing,” said Langer, noting the process entailed generating a lot of digital content.

The company has turned its focus on the increasing popularity of leisurewear, a category that accounts for more than half of company sales.

The group said it expects sales in its own stores to increase at a midsingle-digit percentage rate, adjusted for currencies, with its license business growing at a double-digit percentage rate, while wholesale sales will decline in the low- to midsingle-digit rate.

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