January 22, 2019 / 6:59 AM / 4 months ago

Hugo Boss shares rise on wholesale, retail acceleration

BERLIN (Reuters) - Shares in German fashion house Hugo Boss (BOSSn.DE) jumped on Tuesday after it reported sales growth picked up at the end of 2018 across its stores, online and at its wholesale business, which benefited from a shift in deliveries to the quarter.

The logo of German fashion house Hugo Boss is seen on a clothing label at their outlet store in Mezingen near Stuttgart October 29, 2013. REUTERS/Michael Dalder/File Photo

Known for its smart men’s suits, Hugo Boss has introduced more casual and sportswear styles to appeal to a younger audience and invested heavily in its online offer after a bid to go upmarket backfired a few years ago.

Hugo Boss said on Tuesday sales rose a currency-adjusted 6 percent in the fourth quarter to 783 million euros ($889 million) in the fourth-quarter, beating average analyst forecasts for 762 million euros, according to Refinitiv data.

“We are convinced to grow sustainably and profitably in 2019 and beyond,” Chief Executive Mark Langer said in a statement.

Shares in the company, which have fallen 19 percent in the last year, were up 5.2 percent at 0945 GMT, boosted by signs of a return on the company’s investment in its brands, stores and e-commerce.

Hugo Boss said a positive trend continued in China, where it recorded high single-figure store sales growth.

Investors are worried about a slowing economy in China, and weak Chinese trade data last week hit shares in luxury goods companies that rely heavily on Chinese customers, although Cartier owner Richemont (CFR.S) still sees healthy momentum.

“Amidst a series of profit warnings in European retail in the last couple of months, an acceleration is truly impressive,” wrote Credit Suisse analysts.

Hugo Boss said online sales rose 37 percent in the fourth quarter, the fifth consecutive quarter at a double-digit rate, while its retail business saw sales rise 4 percent on a same-store basis, up from 3 percent the previous quarter.

Hugo Boss said the wholesale channel, which accounts for about a third of sales, grew 15 percent, helped by strong demand to restock garments as well as shifting delivery schedules, a factor which it said bolstered sales in Britain and France.

The company had already flagged the impact of delivery shifts in the third quarter, when they dented the wholesale business.

Hugo Boss said it expected full-year operating income before special items roughly on the prior year level as online investments and product quality improvements counterbalance strict cost control. It publishes full results on March 7.

($1 = 0.8809 euros)

Additional reporting by Bartosz Dabrowski; editing by Riham Alkousaa/Keith Weir

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