Claus-Dietrich Lahrs, CEO and Chairman of the Managing Board comments :
In Europe the trends emerging in the first half of the year continued almost unchanged. The United Kingdom was still the fastest growing core market within the region, although our business in Germany and France also exhibited solid growth. We are thus benefiting from the generally upbeat environment for consumer spending, which is spurring local demand. At the same time, our business with tourists is expanding particularly in the major European cities. Consequently, we have registered a more than 50% increase in sales to Chinese travelers across Europe. In the United Kingdom, sales to tourists from the United States have more than doubled, making them the most important group of foreign customers in that market.
However, business in Asia/Pacific was dampened by industry trends on the Chinese mainland and in Hong Kong in particular. This was reflected in a sharp drop in footfall in our stores. However, this is a challenge which the entire premium and luxury segment of the apparel industry is facing in this market. Against the backdrop of slower economic growth and the turmoil afflicting stock markets in China, the HUGO BOSS customer has become noticeably more reticent in buying premium apparel. In this environment, we will be devoting all the more attention to presenting our brand core in menswear, upgrading our network of stores and improving our retail business to strengthen our market position relative to our peers.
Business performance in the important U.S. market was worse than had been expected just a few months ago, too. Lower footfall in our Group’s own retail stores took its toll on sales, while muted demand on the part of our large business partners dampened our wholesale business. We are addressing the challenges being posed by this market by working on improvements to our inventory position. At the same time, we plan to enhance the quality of our brand presentation in the wholesale channel. To this end, we will be modifying our distribution strategy by replacing the previous BOSS core brand range with HUGO and BOSS Green in category business, i.e. in the traditional multi-brand departments. Instead, we will be selling BOSS solely via shop-in-shops, which we are increasingly operating ourselves. This distribution model has already been received very well in Europe.
We do not expect any swift upswing either in China or the United States especially as there is no sign of any
improvement in market conditions. Even so, we assume that thanks to our strength in Europe we will be able
to achieve at least stable comp store sales in own retail in the final quarter of the year again. Overall, we
should be able to report substantially improved top and bottom-line growth in the last three months. Accordingly, Group sales should be up by between 3% and 5% on a currency-adjusted basis, with operating earnings
also set to grow by the same rate. As a result, we will be able to look back on another year of solid growth
despite many challenges."
source : Hugo Boss Nine Months Report 22 October 2015
