Hugo Boss AG (BOSS) trimmed targets for the year, citing a “substantial slowdown” in Europe and as pro-democracy protests in Hong Kong deter shoppers. The stock fell 5 percent.
Revenue will rise 6 percent to 8 percent, excluding currency effects, down from a previous forecast for high single-digit growth, the German maker of $1,000 suits said today. Operating profit will grow 5 percent to 7 percent, it said, also down from a prediction for high single digits.
Chief Executive Officer Claus Dietrich Lahrs is facing European demand that tailed off in September and October. Chinese and Russian tourists have curtailed spending amid political unrest in Hong Kong and Ukraine, and shoppers in Germany are spending less too, the company said on a conference call with analysts today, putting pressure on a longstanding goal to reach 3 billion euros ($3.8 billion) in sales next year.
“Hugo Boss is not immune to a general negative fashion trend across Europe with customer traffic being the main problem,” said Jurgen Kolb, an analyst at Kepler Cheuvreux who recommends holding the stock. “We don’t see a positive share-price trigger anytime soon.”
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The stock fell 5.3 euros to 99.85 euros at the close of trading in Frankfurt.
The shares have dropped 3.5 percent this year, compared with a 16 percent decline in a Bloomberg Intelligence group of luxury stocks. Permira Advisers LLC cut its stake in Metzingen-based Boss by selling an 11.2 percent stake on Sept. 3.
Harder Target
“Performance deteriorated in September,” Chief Financial Officer Mark Langer said on the conference call. The sales target of 3 billion euros for 2015 is now “more difficult,” partly because currency fluctuations have worked against European companies in the past few years, he said.
The company may have sales of 2.84 billion euros next year, according to the average of analyst estimates compiled by Bloomberg.
The slowdown has been caused by “a mixture of bad weather conditions in Europe — it’s been too warm for the fall selection — and the geopolitical situation,” said Volker Bosse, an analyst at Baader Bank near Munich, who recommends buying the shares.
Sales Growth
Today, Boss reported third-quarter sales of 716.5 million euros, topping the average 712.7 million-euro estimate of analysts surveyed by Bloomberg. Adjusted earnings before interest, taxes, depreciation and amortization rose 5 percent to 181.9 million euros, falling short of analyst estimates.
“Over the last few weeks, our business has been increasingly feeling the effects of weak performance of the sector in Europe and uncertainties in Asia,” Lahrs said in a statement. “That said, we are still confident of being able to achieve full-year sales and earnings growth and thus, outpace the luxury goods sector as a whole.”
Boss a year ago hired Jason Wu, whose designs have been worn by First Lady Michelle Obama at both of her husband’s inaugural balls, to turn around its womenswear line. Sales of womenswear were up 14 percent in the third quarter, double the growth pace of apparel for men.
Date: November 04, 2014