Hugo Boss AG warned that its full-year sales and operating profit will be lower than expected due to “substantial slowdown” in industry growth in Europe.
The German luxury fashion house said it expects revenue to grow between 6% and 8% on a currency-adjusted basis this year, lower than its previous projection of a high single-digit increase. Operating profit is now estimated to be up in the range of 5% and 7%, also down from a high single-digit forecast.
“Over the last few weeks, our business has been increasingly feeling the effects of the weak performance of the sector in Europe and uncertainties in Asia,” CEO Claus-Dietrich Lahrs said in a statement.
The company reported a 9% increase in net sales to €716.5 million during the third quarter, compared to last years result of €657.9 million. In Europe, the Middle East and Africa, Hugo Boss stated net sales of €458.3 million in the recent quarter, compared to €423.1 million of last years Q3. The region accounted for around 62% of all sales.
The Americas also enjoyed a healthy growth of 9% in net sales to €156.2 million, versus last years result of €143 million. Star players in the region were the companys premium and luxury products, which benefited from improved economic conditions, rising consumer confidence and strong tourist demand.
Gross profit stood at €459.2 million, or a 10% increase compared to a year earlier. Gross profit margin was widened by 180 basis points to 65.3%. The company said that the increase is mostly due to the above-average growth of retail business, which gained 12% in the third quarter to €357.5 million.
“In Eastern Europe, the sector felt the effects of the protracted Ukrainian conflict, which were also reflected in a reduced number of Russian tourists in other parts of the region,” the company said referring to the retail sector. “Despite this, tourist demand continued to spur market growth particularly in the metropolitan regions of Western and Southern Europe.“
Net income edged up 3% to €114.7 million, or €1.67 earnings per share, compared to €110.9 million, or €1.61 per share, a year earlier.
Hugo Boss AG fell 0.66% on Monday and closed at €105.15. The stock lost 4.09% by 14:12 GMT to trade at €100.85 in Frankfurt, marking a one-year increase of 4.70%. The company is valued at €7.4 billion. According to the Financial Times, the 26 analysts offering 12-month price targets for have a median target of €110.00, with a high estimate of €125.00 and a low estimate of €88.00. The median estimate represents a 4.61% increase from the previous close of €105.15.
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