Hugo Boss AG raised its sales and profit guidance again for 2023 after second-quarter sales growth beat estimates on surging demand for its latest mens- and womens-wear collections.
The German fashion brand now sees full-year sales of €4.1 billion ($4.5 billion) to €4.2 billion, up from a previous forecast of €4 billion, it said Wednesday. Operating profit is expected to grow by 20% to 25%, compared with an earlier outlook of 10% to 20%.
Hugo Boss stock fell as much as 5% initially before paring back some of the losses. The stock had already risen more than 30% so far this year as investor confidence in a turnaround led by Chief Executive Officer Daniel Grieder grows.
The company revamped its Hugo and Boss brands two years ago and has been gaining market share since then, fueled by growth in all geographies as new customers, including more women, turn to the retailer.
“Younger consumers are buying Hugo Boss and you can see that across the board. All the brands and all the geographies are growing,” said Chief Financial Officer Yves Müller in a Bloomberg TV interview.
“Last quarter we were also growing 32% in Boss womenswear. This is now the fourth consecutive quarter that Boss womenswear as a business unit is outpacing the others,” he added.
A bigger presence in women’s clothing, which currently accounts for less than 10% of revenue, could be a driver of in-store traffic and future sales conversions, according to Bloomberg Intelligence.
Hugo Boss has a particular “sweet spot” in the US, where its attractively-priced premium casualwear and suits are in demand, said Müller, adding that the company sees no sign of the pullback by American consumers observed by some of the big luxury retailers, including Richemont.
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Asia is also helping to drive growth, with 41% second-quarter growth in constant currency, boosted by a recovery in China since the market reopened after the pandemic.
Analysts say Asia remains an area of potential growth for Hugo Boss, which itself said in June that it’s important it unleashes the brand’s full potential in China. The company aims to boost the region’s revenue share to around 20% by 2025 from 13% currently.
Earlier this year, Hugo Boss intentionally increased inventory to reduce the impact of supply-chain snarls, which had disturbed deliveries during the pandemic. The company will return to a normal level of inventory by the yearend.
Frasers Group Plc, the acquisitive sportswear-to-department store retailer, is one of the largest shareholders in Hugo Boss and has a wholesale partnership with the German group. Müller said the company had a “great relationship” with Mike Ashley, who founded Frasers, and his son-in-law Michael Murray who now runs the British retailer.
(Updates with additional commentson US and China from statement)
