Hugo Boss eyes China, own stores for growth in 2011

today Mar 29, 2011
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METZINGEN, Germany, March 29 (Reuters) - German fashion house Hugo Boss (BOSG_p.DE) said it expects the Chinese market and its expanding network of own-branded stores to drive double-digit growth in both sales and earnings this year.

Hugo Boss
Hugo Boss - AW 2011/12 - Photo : Pixel Formula

The group, known for its sharp suits, said it expects sales to grow at least 12 percent and underlying earnings to rise at least 15 percent.

"We closed 2010 with excellent results and have maintained this dynamic into the new year," Chief Executive Claus Dietrich Lahrs said on Tuesday.

Hugo Boss had already published preliminary results in February, showing sales of 1.7 billion euros ($2.40 billion) and EBITDA of 350 million euros.

It reported 7 percent sales growth for 2010 as a whole, with the pace of improvement picking up to 24 percent in the final quarter of the year as the luxury market continued to rebound.

Hugo Boss said European brands in particular were expected to benefit most from rising wealth in China.

LVMH, the world's largest luxury goods company, last month said Chinese clients were "infatuated" with its Louis Vuitton brand.

Hugo Boss said growth in North and South American markets would also exceed that of Europe, where fiscal restraints are expected to weigh on consumer spending.

Hugo Boss, majority-owned by private equity firm Permira [PERM.UL], also said growth in 2011 would be driven by a strategy to open more of its own stores. It ended 2010 with 537 stores, compared with 438 a year earlier.

Last month, for example, it took over 15 franchise stores in the UK from retailer Moss Bros (MOSB.L). Hugo Boss said the integration of the stores would have a positive effect on sales and profit from April this year.

Other clothing groups including Gerry Weber (GWIG.DE), Adidas (ADSGn.DE) and Burberry (BRBY.L) have also been expanding their network of own stores to take advantage of the higher margins they bring.

CEO Lahrs told Reuters in an interview earlier this month that Hugo Boss would focus on organic growth and did not expect to take part in the wave of consolidation sweeping the luxury industry.

(Reporting by Victoria Bryan; Editing by Hans Peters)

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