The renewed popularity of its brands has helped fashion group Hugo Boss to start the year on an unexpectedly strong note. The Management Board is therefore more optimistic and is raising its forecasts for 2023. Among other things, the proceeds should increase by around ten percent to around 4 billion euros. Hugo Boss should therefore already achieve its medium-term sales plans this year. “We will therefore take a closer look at our goals up to 2025,” CFO Yves Müller announced to journalists on Thursday. Hugo Boss then wants to report in more detail at a capital market day in mid-June.
In the first quarter, Boss was already able to increase revenue by 25 percent to 968 million euros, which means that the first quarter on the way to the annual target is almost complete. “We have made an extremely successful start to the year after further accelerating brand momentum worldwide,” said CEO Daniel Grieder, according to the announcement. The two brands Boss and Hugo have seen double-digit percentage growth across all regions and sales channels.
Expectations were clearly exceeded
Goldman analyst Louise Singlehurst also gave the company a strong start to the year in a first comment. Sales growth at constant exchange rates significantly exceeded expectations.
On the stock exchange, the share initially climbed by almost two and a half percent on the news, but curbed the profit to around 0.6 percent at EUR 67.32. The stock has been moving sideways in a very narrow range of around EUR 2 since mid-April, but has caught up significantly since the interim low of just under EUR 55 reached in March. Since the beginning of the year, the price has increased by almost a quarter.
New image is the key to success
After difficult times in which customers increasingly turned away, Hugo Boss gave its brands a new image. Müller spoke of a “more modern and contemporary look with a high recognition value”. By addressing social media channels such as Instagram or Tiktok, the group was able to attract a much younger audience and thus broaden its customer base. In addition, luxury goods are currently a high priority among consumers, even though inflation is forcing many to keep their cash together.
As a result, Hugo Boss achieved high sales growth in core markets such as Germany and France. Above all, Müller emphasized the currency-adjusted increase of almost a third in the important US market. A few years ago, Boss had problems with acceptance there. “We haven’t always been able to raise our potential,” said the Chief Financial Officer. It is all the more gratifying that the recent strong sales momentum is continuing there. “We’re doing great in the US right now and have more in the pipeline.” Boss recently launched a limited collection featuring the National Football League.
Boss clothing is also popular in Asia – there the fashion producer was also able to achieve double-digit percentage growth, which was also due to the reopening of China. There is a lot of catching up to do on the Chinese market, said Müller, and the Chinese are also traveling more again.
Optimistic view of the future
The management team is also becoming more optimistic with regard to the operating result (EBIT) for the year as a whole. Instead of the previously targeted 350 to 375 million euros, an increase to 370 to 400 million euros is now planned. This corresponds to an increase of up to almost 20 percent.
In the three reporting months up to the end of March, earnings before interest and taxes climbed by almost two-thirds to EUR 65 million. Analysts had also expected less for this indicator. The corresponding margin improved by 1.5 percentage points to 6.7 percent – according to the CFO, this trend is likely to continue. The bottom line is that shareholders made a profit of EUR 35 million in the past quarter, compared to EUR 24 million a year earlier.
The fact that the Swabians are not raising the bar for the year as a whole given such strong growth rates was justified by the CFO in the telephone conference with the current macroeconomic and political uncertainties. Because the momentum could possibly slow down over the course of the year, Hugo Boss prefers to calculate carefully, says Müller. (dpa)
Editor’s note: This post was updated on May 4, 2023 at 12:06 p.m