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)
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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)

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.



Boohoo Names Finley as CEO against Frasers Demand to Pick Mike Ashley

FILE PHOTO: A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
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Boohoo Names Finley as CEO against Frasers Demand to Pick Mike Ashley

FILE PHOTO: A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration/File Photo
FILE PHOTO: A woman poses with a smartphone showing the Boohoo app in front of the Boohoo logo on display in this illustration taken September 30, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

British online fashion retailer Boohoo on Friday appointed Dan Finley as its new CEO, effective immediately, in a blow to top investor Frasers which had attempted to appoint its controlling shareholder Mike Ashley to the role.
Boohoo's shares rose 3% on the news of the appointment of Finley, who is currently head of Boohoo's digital department store unit Debenhams and who will replace John Lyttle.
Frasers last week requisitioned a general meeting at Boohoo to appoint British entrepreneur Ashley as CEO. A week prior, Boohoo had said Lyttle would step down and also announced a strategic review that could see it broken up.
Controlled by Ashley, the British sportswear and apparel retailer is Boohoo's biggest shareholder with a stake of about 27%.
Boohoo's board was unanimous in its decision to appoint Finley as CEO, the company's Deputy Chairman Alistair McGeorge said in a statement.
Frasers did not immediately respond to a Reuters request for a comment.
Under Finley's leadership, Debenhams has a gross merchandise value (GMV) annual run rate of about 800 million pounds ($1.03 billion) due to a capital-light and cash generative model, Boohoo said.
Analysts at Jefferies said the GMV was well ahead of the brokerage's estimate earlier this year of about 400 million pounds.
Boohoo, in response to Frasers last week, had said it was willing to discuss board representation but that there needed to be "appropriate governance" to protect its commercial position.
Boohoo had noted that Frasers also owns a 23.6% stake in ASOS, which operates in similar markets to both Boohoo and Frasers.
Frasers also owns stakes in the likes of British luxury brand Mulberry, where a takeover attempt by Frasers failed last month, and British electronics retailer AO World .
It also invested 150 million pounds in Debenhams, which went out of business in 2021 and was bought by Boohoo out of administration.