Hugo still aims to be boss as group sees sales lift in China

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FASHION house Hugo Boss said it was seeing some signs of improvement in China, with sales picking up there in the third quarter.

“We do see stabilisation but no recovery in consumer confidence in China yet,” chief executive Claus-Dietrich Lahrs said in the company’s quarterly report yesterday, as it published third-quarter earnings showing flat sales and a drop in core profits.

Warnings on slowing demand from China from luxury companies such as Burberry have spooked the luxury sector in the last couple of months, sending shares lower. Shares in Hugo Boss, which has stores in Leeds and Sheffield, and an outlet in York, have lost 13 per cent of their value over the last three months.

Consultancy Bain & Co this month forecast global luxury sales growth would slow sharply to 5 per cent this year from 13 per cent in 2011 as Chinese and European consumers cut spending.

Other luxury goods companies to warn of a slowdown in China in recent weeks include Mulberry, Louis Vuitton and PPR’s Gucci. Hugo Boss said sales in China rose 5 per cent compared with just 1 per cent in the second quarter.

In total, the German group reported third-quarter net sales of 646 million euros, flat on a currency-adjusted basis after a rise of 14 per cent in the second quarter.

That was partly down to a change in the number of collections it produces each year, which means that more wholesale partners now order in the second and fourth quarters, rather than the third quarter as they did previously. Earnings before interest, tax, depreciation, amortisation (EBITDA) and special items dropped 7 per cent to 165 million euros as it invested in its shops and marketing.

“We shall, however, return to double-digit growth in sales and earnings in the fourth quarter with our winter business,” Mr Lahrs said.

The group performed best in the United States.