Hugo Boss shares jumped as much as 10% this Monday morning once the company announced its 2016 operating profit would fall less than expected.
Thanks to a 4Q sales recovery boosted by strong sales in China and Britain. Operating profit for Hugo Boss shares is now predicted to fall closer to 17% from its previous forecast for a decline of up to 23%. In Europe sales increased 2% in the fourth quarter, mostly thanks to strong sales in the UK due to tourists talking advantage of the weak pound reports showing “robust” sales growth, thanks to a Brexit led sterling devaluation, leading to a spree of relatively cheaper designer products, a phenomena enjoyed by rivals Burberry, and other premium brands as well.
Sales in Asia rose 5% driven from a 20 percent like-for-like sales rise in China. Asia is a big market for the German fashion house as it accounts for almost 20% of its overall sales; but the trend may be a one-off as it has recently lowered its prices in China bringing them in line to European and U.S levels.
Mark Langer, Hugo Boss‘ chief executive, remains upbeat ”In China, we completed the turnaround in the second half of the year,” he said. “In Europe, we held up well in a difficult market environment.”
Longer, has only recently taken the helm, from CFO in May and has retaken the focus of the brand back towards Men’s suits, concentrating on binary approach detailing a premium line for its main customers and a more accessible catalog for its younger clientele.
Still, overall 4Q sales were negative, falling by 3 percent to 725 million euros; this is not bad news as the conservative policies Langer has taken, such as closing some stores and slowing the pace of openings have taken effect, and is an improvement on the 3Q fall of 6 percent. Reports say the company efforts to improve distribution in the U.S. also had a positive impact on performance in the fourth quarter.
The company will announce it’s final annual 2016 results and its predictions for 2017 on March 9