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Hugo Boss turnover increases, forecasts sales and profit growth in FY19

By Prachi Singh

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Business

For the full year, sales of the Hugo Boss Group, the company said in a statement, rose by 2 percent to 2,796 million euros (3,160.7 million dollars) in 2018 and on a currency-adjusted basis, the increase was 4 percent. The company added that decline in gross profit margin is mainly due to investments in the product quality and negative currency effects. EBIT rose by 2 percent, however, the EBIT margin declined by 10 basis point and net income was also up by 2 percent in fiscal year 2018.

"2018 was a good year for Hugo Boss. 2019 will be an even better year for our company,” said Mark Langer, CEO of Hugo Boss, adding, “The current year will be all about the execution of our Business Plan 2022. With the focus clearly set on our strategic priorities, we are ensuring profitable growth in 2019 and beyond. Strong momentum in our own online business and in Asia will make a significant contribution this year.”

Hugo Boss reports strong growth in FY18

Currency-adjusted sales in the group’s own retail business grew by 4 percent, supported by strong growth of 41 percent in the company’s own online business, while comp store sales were up 5 percent and wholesale currency-adjusted sales increased 5 percent. Sales in the license business were down 4% on the prior year.

Among brands, the company added, while Boss achieved currency-adjusted sales growth of 6 percent, Hugo recorded a sales decrease of 4 percent. Boss benefited in particular from high single-digit growth in businesswear and casualwear. Hugo recorded strong double-digit growth in casualwear, which was more than offset by declines in businesswear caused by changes in the distribution strategy.

The company further said that the number of own freestanding retail stores increased by three in fiscal year 2018, to 442. 13 newly opened Boss stores, mainly in Europe and Mainland China, were offset by 22 closures of Boss stores with expiring leases or relocation in two cases. In addition, twelve Hugo stores with their own store concept were opened in selected major cities, including London and Paris.

Hugo Boss expects mid-single-digit revenue rise in FY19

Hugo Boss expects to increase group sales in 2019 at a mid-single-digit percentage rate on a currency-adjusted basis. The group assumes that sales in Europe will increase by a low to mid-single-digit percentage rate adjusted for currency effects. Based on the assumption of further increases in the US business, currency-adjusted sales in the Americas are expected also increase at a low to mid-single-digit percentage rate in 2019. In Asia, currency-adjusted sales are forecast to grow by mid- to high single-digit percentage rates, driven by significant growth in the Chinese market.

For the group’s own retail business, sales in 2019 are expected to grow at a mid to high single-digit percentage rate on a currency-adjusted basis. The forecast is based on the assumption that comp store sales will grow at a mid-single digit percentage rate and that the online business will contribute over-proportionately to the growth of the group’s own retail business again in 2019. Wholesale sales for the current year are expected to be slightly below the prior year’s level, mainly reflecting the ongoing conversion of online platforms into concession businesses. License sales are expected to grow in the mid-single-digit percentage range.

Hugo Boss aims to increase the group’s gross profit margin in 2019 by up to 50 basis points compared to the prior year. The group expects EBIT to increase at a high single-digit percentage rate in 2019. Above all, the predicted increase in gross profit is expected to contribute to this. The group’s net income is also forecast to grow at a high single-digit percentage rate compared to the prior year.

The managing board and supervisory board of Hugo Boss Ag intend to recommend a 5 cent increase in dividend, to 2.70 euros per share, at the annual shareholders’ meeting for fiscal year 2018.

Picture:Facebook/Boss

Hugo Boss