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Hugo Boss Third Quarter Operating Profit Beats Expectations on Better Cost Control

New Hugo Boss logo and their website shop are seen in this illustration taken, May 17, 2024. (Reuters)
New Hugo Boss logo and their website shop are seen in this illustration taken, May 17, 2024. (Reuters)
TT
TT

Hugo Boss Third Quarter Operating Profit Beats Expectations on Better Cost Control

New Hugo Boss logo and their website shop are seen in this illustration taken, May 17, 2024. (Reuters)
New Hugo Boss logo and their website shop are seen in this illustration taken, May 17, 2024. (Reuters)

Hugo Boss' third-quarter operating profit slightly beat market expectations on Tuesday, as the company reported a 1% increase in currency-adjusted group sales amid persistently weak demand in China.

Quarterly earnings before interest and tax (EBIT) were down 7% on the year at 95 million euros ($103.3 million), but above analysts' estimate of 90 million euros in a company-provided poll, helped by cost management, it said.

Hugo Boss shares were indicated 2.5% higher in Lang & Schwarz premarket trade.

"Estimates for the coming quarter should be anchored today," analysts at Jefferies wrote in a note to clients, highlighting improved sales in September, better cost control and Hugo Boss' confirmed guidance for the year.

After a 2022 brand revamp boosted its resilience last year, the upmarket fashion label has been grappling with weakening consumer demand despite increasing investment in marketing and production capacity in recent months.

Currency-adjusted sales were 1.029 billion euros during the three months, slightly up from 1.027 billion last year and broadly in line with market expectations of 1.023 billion euros.

"Particularly in China, the overall market environment was affected by persistent subdued consumer demand," the company said in a statement.

Quarterly currency-adjusted sales in its third-biggest market Asia/Pacific fell 7% to 110 million euros, but increased 1% in the Europe, Middle-East and Africa region and 4% in the Americas.

The company said improvements in Germany offset softer sales trends in France and in Britain, while it also saw further sales improvements in the United States.

Hugo Boss, which is taking additional measures to enhance efficiency and effectiveness, especially around sourcing, said it continued to focus on cost control to support profitability into the fourth quarter. It maintained its full-year sales and earnings forecasts after slashing them earlier this year.

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Fashion

As Fast Fashion's Waste Pollutes Africa's Environment, Designers in Ghana are Finding a Solution

Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
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As Fast Fashion's Waste Pollutes Africa's Environment, Designers in Ghana are Finding a Solution

Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)
Attendees at a thrift and an upcycle show pose for a photograph in Accra, Ghana, Sunday, Oct. 27, 2024. (AP Photo/Misper Apawu)

In a sprawling secondhand clothing market in Ghana’s capital, early morning shoppers jostle as they search through piles of garments, eager to pluck a bargain or a designer find from the stalls selling used and low-quality apparel imported from the West.
At the other end of the street, an upcycled fashion and thrifting festival unfolds with glamour and glitz, The Associated Press reported. Models parade along a makeshift runway in outfits that designers created out of discarded materials from the Kantamanto market, ranging from floral blouses and denim jeans to leather bags, caps and socks.
The festival is called Obroni Wawu October, using a phrase that in the local Akan language means “dead white man’s clothes.” Organizers see the event as a small way to disrupt a destructive cycle that has made Western overconsumption into an environmental problem in Africa, where some of the worn-out clothes end up in waterways and garbage dumps.
“Instead of allowing (textile waste) to choke our gutters or beaches or landfills, I decided to use it to create something ... for us to use again,” said Richard Asante Palmer, one of the designers at the annual festival organized by the Or Foundation, a nonprofit that works at the intersection of environmental justice and fashion development.
Ghana is one of Africa's leading importers of used clothing. It also ships some of what it gets from the United Kingdom, Canada, China and elsewhere to other West African nations, the United States and the UK, according to the Ghana Used Clothing Dealers Association.
Some of the imported clothes arrive in such poor shape, however, that vendors dispose of them to make room for the next shipments. On average, 40% of the millions of garments exported weekly to Ghana end up as waste, according to Neesha-Ann Longdon, the business manager for the Or Foundation’s executive director.
The clothing dealers association, in a report published earlier this year on the socioeconomic and environmental impact of the nation’s secondhand clothing trade, cited a much lower estimate, saying only 5% of the items that reach Ghana in bulk are thrown out because they cannot be sold or reused.
In many African countries, citizens typically buy preowned clothes — as well as used cars, phones and other necessities — because they cost less than new ones. Secondhand shopping also gives them a chance to score designer goods that most people in the region can only dream of.
But neither Ghana's fast-growing population of 34 million people nor its overtaxed infrastructure is equipped to absorb the amount of cast-off attire entering the country. Mounds of textile waste litter beaches across the capital, Accra, and the lagoon which serves as the main outlet through which the city’s major drainage channels empty into the Gulf of Guinea.
“Fast fashion has taken over as the dominant mode of production, which is characterized here as higher volumes of lower-quality goods,” Longdon said.
Jonathan Abbey, a fisherman in the area, said his nets often capture textile waste from the sea. Unsold used clothes “aren’t even burned but are thrown into the Korle Lagoon, which then goes into the sea,” Abbey said.
The ease of online shopping has sped up this waste cycle, according to Andrew Brooks, a King’s College London researcher and the author of “Clothing Poverty: The Hidden World of Fast Fashion and Second-hand Clothes.”
In countries like the UK, unwanted purchases often end up as charity donations, but clothes are sometimes stolen from street donation bins and exported to places where the consumer demand is perceived to be higher, Brooks said. Authorities rarely investigate such theft because the clothes are "seen as low-value items,” he said.
Donors, meanwhile, think their castoffs are “going to be recycled rather than reused, or given away rather than sold, or sold in the UK rather than exported overseas,” Brooks said.
The volume of secondhand clothing sent to Africa has led to complaints of the continent being used as a dumping ground. In 2018, Rwanda raised tariffs on such imports in defiance of US pressure, citing concerns the West's refuse undermined efforts to strengthen the domestic textile industry. Last year, Ugandan President Yoweri Museveni said he would ban imports of clothing “from dead people.”
Trade restrictions might not go far in either reducing textile pollution or encouraging clothing production in Africa, where profits are low and incentives for designers are few, experts say.
In the absence of adequate measures to stop the pollution, organizations like the Or Foundation are trying to make a difference by rallying young people and fashion creators to find a good use for scrapped materials.
Ghana's beaches had hardly any discarded clothes on them before the country's waste management problems worsened in recent years, foundation co-founder Allison Bartella said.
“Fast forward to today, 2024, there are mountains of textile waste on the beaches,” she said.