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Hugo boss profit misses forecasts, but guides for improvement ahead

Hugo Boss AG on Tuesday reported a fall third-quarter earnings but said it expects sales and operating profit for the next quarter to increase significantly.

The German premium-apparel company’s net profit fell to 56 million euros ($62.5 million), from EUR66 million a year earlier, missing analysts’ expectations of EUR75 million, according to a consensus estimate provided by FactSet.

The company last month released third-quarter figures and cut its operating profit and sales outlook, citing weak demand in Hong Kong and North America.

Boss had said that its third-quarter sales, adjusted for currency effects, were EUR720 million, just 1% higher than the year previous.

The U.S. market environment worsened during the third quarter, Boss said. “Besides lower local demand, also sales generated with tourists decreased in this market,” Boss said.

Operating profit for the quarter fell to EUR83 million from EUR92 million, coming below expectations due to lower-than-forecast sales and higher operating expenses, mainly from investments in Boss’s own retail business.

For the fourth quarter, Boss said it expects its sales and operating profit to significantly increase.

In October the company lowered its guidance. It now expects operating profit for 2019 to be between EUR330 million and EUR340 million excluding the effects of the IFRS 16 accounting standard, down from the EUR347 million last year. It expects currency-adjusted sales for the year to rise “at a low single-digit percentage rate.” Boss expects a net profit for the year to decrease at a mid to high single-digit percentage rate.

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