BERLIN — Hugo Boss AG on Wednesday reported a 5 percent increase in operating profits on a 6 percent rise in sales for 2014, in line with its guidance late last year.
Operating profits (earnings before interest, taxes, depreciation and amortization before special items) increased to 591 million euros, or $785.6 million, on sales of 2.57 billion euros, or $3.42 billion. The group’s own retail business grew at double-digit rates, and continued to drive overall growth.
All dollar figures are converted from the euro at an average exchange rate for the period to which they refer.
In the fourth quarter, operating profit (EBITDA before special items) hit 167 million euros, or $208.6 million, a rise of 6 percent in reporting currency. The profit increase came on top of a 17 percent surge in the corresponding period a year earlier.
Fourth-quarter sales reached 684 million euros, or $854.4 million, a gain of 3 percent on a currency adjusted basis. In the reporting currency, sales for the period were up 5 percent. In 2013, currency fourth-quarter sales rose 10 percent.
Boss noted sales in Asia-Pacific and Europe performed above the group average, but nonetheless pointed to a general slowdown in Europe, despite ongoing double-digit gains in markets such as the U.K. and Spain. For stores owned by the company, fourth-quarter comp-store sales were stable after adjusting for foreign exchange effects.
In a key shift, the Boss Womenswear business, now under the design direction of Jason Wu, grew stronger than the group average in the quarter. The group said the rise in women’s wear sales made up for a decrease in gross margin and higher operating expenditures.
Looking ahead, Boss chief executive officer Claus-Dietrich Lahrs said “2015 will not become any easier in light of the many economic and political uncertainties, but we are confident it will be another growth year for Hugo Boss.” The group will present its audited financial results as well as its 2015 outlook March 11.
Analysts remain optimistic about the group’s long-term outlook, and expect Boss to reach its goal of 25 percent EBITDA margin in 2017. The company’s shares have also continued to outperform the luxury sector in five of the last six years, and on Wednesday closed at 111.40 euros, or $127.90.
In a separate announcement, Boss said it is taking full control of its business in Asia and the Middle East. In Korea, Boss will take over all 17 franchise stores effective March 1 from its partner, Tdco Ltd., as well as manage seven duty-free stores in close cooperation with its partners. In China, following last year’s buyout of its venture with the Rainbow Group, Boss will take full control of 21 franchised stores operated by Wenzhou Noble, effective April 1. Upon completion of the takeover, Boss will operate 130 stores in Mainland China.
In the Middle East, Boss plans to set up its own distribution company in Dubai in 2015, to handle operations in the United Arab Emirates. Boss said it intends to take over distribution in the various markets as of Jan. 1, 2016.