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Hugo Boss profits drop

Hugo Boss has reported a fall in operating profit (EBIT) of 22% to €55m (£47.1m) in the first quarter of 2019, as a result of high investments in the digital transformation of its business model and reorganisational measures.

The group’s financial report added that the “appreciation of the US dollar against the euro also had a negative impact on earnings”.

In the same quarter,  currency-adjusted sales increased by 1% to €664m (£569m).

Despite the decline in earnings in the first quarter, Hugo Boss has confirmed its sales and earnings outlook for the full year 2019. It expects currency-adjusted sales to increase at a mid-single-digit percentage rate in 2019.

Hugo Boss said the main driver should be the group’s own retail business. It also expects the intensification of partnerships with online retailers in the concession model and the renovation of strategically important stores over the course of the year to “significantly drive growth”.

It has also predicted a substantial acceleration in profits for the rest of the year. It said that positive effects from the reorganisation measures completed in the first quarter and the offsetting of phasing effects related to marketing expenses should significantly contribute to this.

“The ongoing momentum in our strategic growth market China and in the important online business shows that our strategy is taking effect,” Mark Langer, chief executive officer of Hugo Boss said. “At the same time, the US market proved to be weaker than expected. Moreover, investments in the digitisation of our business model and in the organisational structure weighed on our operating result in the first quarter.

“However, they will help us to further accelerate important operational processes and to significantly improve our cost efficiency in the current year. I am very confident that we will achieve our targets for the full year and beyond.”

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