BERLIN — Citing strict cost and rebate management, Hugo Boss paved the road back to stabilization with sales and earnings growth in the first quarter of 2017.
The German fashion group, which had been battered by a series of problems and losses in the period a year previously, saw first-quarter net profit rise 25 percent to 48 million euros, or $51.1 million. Dollar figures are converted at average exchange for the period to which they refer.
Earnings before interest and taxes (EBIT) advanced 20 percent to 64.4 million euros, or $68.6 million, while EBITDA before special items was up 4 percent to 97.4 million euros, or $103.7 million. The gross profit margin increased by 30 basis points to 64.4 percent, benefiting from what the company noted was a significantly lower rate of discounts compared to the prior-year period.
Group sales for the quarter inched up 1 percent to 651 million euros, or $693.2 million. Boss said growth in Europe (up 3 percent) and Asia (plus 3 percent) more than compensated for further sales declines in the Americas, especially in the U.S., where turnover was down 7 percent.
Own retail hit a bump, with first-quarter turnover flat in reported terms. On a like-for-like and currency-adjusted basis, own retail sales fell 3 percent, mainly due to weak performance in the Americas, where sales fell in the mid-single digit range. The group’s online sales were down 27 percent in the period. The wholesale business, however, grew 3 percent, fueled by positive developments in Europe, which benefited from delivery shifts compared to the prior year, the company said.
“We’ve made a solid start to the current fiscal year,” said Boss chief executive officer Mark Langer, who reconfirmed the group’s full-year financial outlook. This calls for stable sales, with EBIT developing more or less in line with sales. EBITDA before special items is forecast to develop within a corridor of minus 3 percent to plus 3 percent compared to 2016.
Boss is in the midst of a significant brand realignment, now focusing on two brands only: Boss and Hugo. This will first be reflected in the spring 2018 collection which retailers will be seeing in the coming weeks, and Boss will stage a Hugo show at Pitti Immagine Uomo in Florence in mid-June and a Boss show at New York Fashion Week in July.
In the first quarter, net sales for the Boss brand slipped 1 percent to 554.3 million euros, or $588.8 million, while Hugo booked a 17 percent upswing to $96.7 million, or $103 million.
Breaking out sales by gender for the first time in several years, Boss reported the group’s men’s wear business in the first quarter was up 1 percent to 577.1 million euros, or $614.5 million, with women’s wear up 3 percent to 73.9 million euros, or $78.7 million.
Another important step in the months ahead, particularly in the second half of the year, is an expanded entry-level offering and a bolstered casual wear section.
Moreover, Boss is set to implement a “comprehensive set of measures” to increase customer footfall as well as optimizing the group’s web site to bring e-commerce back on track. The company said it consequently expects its own retail business to increase during the rest of the year.