Hugo Boss Forecasts Profit Gain On Outlet Takeovers

METZINGEN, Germany — Hugo Boss AG, the German purveyor of angular suits and Berlin brand handbags, predicted profit growth this year as the company takes control of more stores to offset slower growth at home.

Earnings before interest, taxes, depreciation and amortization and excluding special items will increase by 5 percent to 7 percent in 2015, the Metzingen-based company said in a statement. Sales excluding currency effects will rise by a mid-single-digit percentage.

"We will again be able to master the macroeconomic challenges this year," Chief Executive Officer Claus-Dietrich Lahrs said in the statement. "Looking ahead over the next few years, Hugo Boss faces excellent prospects for growth."

Hugo Boss is taking over more of its stores in Asia and the Middle East to capitalize on rising luxury clothes and accessories demand there as European shoppers curtail high-end purchases. In a preliminary fourth-quarter earnings report Feb. 4, Lahrs said that this year “will not become any easier in light of the many economic and political uncertainties,” including a slowdown in spending by Russian tourists.

Fashion retail sales in Germany declined 8 percent in the fourth quarter, according to Kepler Cheuvreux. Goldman Sachs Group Inc. last month said the European luxury industry will be in “transition” this year, trimming its forecast growth rate and advising clients to sell Boss shares.

Boss said last month it would take over 17 franchise stores in South Korea, set up its own distribution company in Dubai and take over all its stores in China, where it will operate 130 outlets.

The company today reaffirmed preliminary fourth-quarter results. Sales increased 5 percent to 684 million euros ($721 million) and Ebitda rose 6 percent to 167 million euros.

Shares of Boss have gained 17 percent this year, compared with a 16 percent gain in the Bloomberg Intelligence global luxury goods index.

Investor Permira Holdings further reduced its stake in the German clothier to less than 14 percent last month. Permira has been cutting its Boss holding for the last two years. The private-equity company acquired a majority stake in 2007.

By: Aaron Ricadela; editors: Matthew Boyle, Thomas Mulier and Tom Lavell.