BERLIN — Hugo Boss is firing on all cylinders.

This story first appeared in the March 15, 2012 issue of WWD. Subscribe Today.

After outpacing original sales and earnings forecasts in 2011, the Metzingen, Germany-based company said it expects to further improve its record results in 2012.

In final figures released Wednesday, Boss reported net income surged 54 percent to 291 million euros, or $405.6 million.

As reported in February, group sales grew 19 percent in 2011 to 2.06 billion euros, or $2.87 billion, with earnings before interest, taxes, depreciation and amortization before special items increasing by 34 percent to 469 million euros, or $653.7 million.

All dollar figures are converted from the euro at an average exchange rate for the period to which they refer.

The group’s continued buildup of directly operated stores was a major factor in the strong earnings performance, further boosted by improved efficiency and process optimization. After adjustment for currency effects, sales in the group’s own stores were up 35 percent. Hugo Boss operates 622 directly operated stores among 1,600 monobrand Hugo Boss stores in 80 countries. Boss products can be bought at 6,300 points of sale worldwide.

Boss no longer breaks out men’s and women’s sales figures or sales and earnings of individual brands (Boss Black, Boss Selection, Boss Orange, Boss Green, Hugo), but said all lines contributed double-digit gains.

“The Hugo Boss product performed very well and is wanted in all markets. We’re attracting a lot of customers,” commented Philipp Wolff, senior vice president of communications.

“Concentrating on the luxury sector with Boss Selection and made-to-measure (at selected stores in Europe and Asia) gave us more credibility, and we’ve shown at Pitti Uomo that we can do a real, upscale product. The lines benefit from each other,” Wolff added. “Selection has increased awareness for Hugo Boss overall, plus Boss Black and Hugo have also been getting very positive reviews.”

In geographical segments reporting in the annual report released Wednesday, all regions posted double-digit sales and earnings gains. Sales in Europe (including the Middle East and Africa), which contributed 61 percent of 2011 group sales, rose 15 percent in local currencies, and 16 percent in euro terms to 1.25 billion euros, or $1.74 billion. Profits for the region gained 23 percent.

The Americas posted a 24 percent sales increase in local currency, and a 19 percent gain on a euro basis to 455 million euros, or $634.3 million, largely due to significant increases in the U.S., the company said. Profits rose 29 percent to 122 million euros, or $170 million.

Sales in the Asia-Pacific region swelled 34 percent in local currencies and euro terms to 309 million euros, or $430.7 million, with sales in China up 60 percent in local currency (57 percent in euros). Profits also increased by 39 percent to 111 million euros, or $154.7 million.

For 2012, Boss is projecting group sales growth of up to 10 percent after adjustment for currency effects, with operating profits growing stronger than sales. All regions and distribution channels are expected to contribute to sales growth. Boss plans to open about 50 stores over the course of the year.

On the basis of the group’s strong earnings performance in 2011, a dividend increase of more than 40 percent will be proposed at the annual shareholders’ meeting on May 3. The dividend per ordinary share for 2012 is to increase to 2.88 euros, or $3.75 at current exchange, and preferred shares to 2.89 euros, or $3.76, up from 2.02 euros and 2.03 euros, or $2.63 and $2.64, respectively, in 2011.

In a separate announcement, Boss said the managing and supervisory boards intend to propose a 1 to 1 conversion of all nonvoting preferred shares into ordinary shares with voting rights at the annual meeting. Boss said the goal is to increase the trading liquidity and weighting of Hugo Boss shares in the MDAX, and will not change the amount of the company’s share capital.

After conversion, each share will grant one voting right. No additional cash payments are intended for shareholders of either ordinary or preferred shares. In addition, the company intends to change its bearer shares into registered shares, allowing direct communication between the shareholders and the company, and increasing transparency of the shareholder structure.

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