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Hugo Boss earnings hit by wholesale shift

Premium German fashion house Hugo Boss reported a fall in earnings in its third quarter, as wholesale revenues dropped 9% due to a change in delivery times.

Group sales rose 5% to €646m (£521m) in the three months to September 30 but EBITDA dropped 7% to €165m (£133m).

The cost of expanding Hugo Boss’ own retail stores and higher marketing expenses were cited as factors in this decline, alongside the changes to its wholesale arm, which meant that a “significant proportion” of the autumn collection was delivered in the second quarter rather than the third.

This saw a boost to Q2 - when wholesale revenues grew 10% - and Q4, which will see more spring 13 deliveries, as stockists spread their orders more evenly over the year.

Claus-Dietrich Lahrs, chief executive and chairman of the managing board of Hugo Boss, explained: “The change in our collection cycle has led to a sales shift in our wholesale business from the third into the fourth quarter. This had an adverse impact on our traditionally strong earnings in the third quarter. We shall, however, return to double-digit growth in sales and earnings in the fourth quarter with our winter business.”

Growth in the third quarter came from Hugo Boss’ stores, which saw a 15% sales increase, or 2% on a like-for-like basis.

The US was the main driver for growth, up 13%, as China stablised at 5% growth. Europe saw a decline of 4%, which the company put down to the growth in its wholesale division.

Lahrs added: “We are confident to reach our full year targets despite a more difficult economic environment.”

 

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