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FRANKFURT, Germany — Hugo Boss AG, the German luxury clothing maker, reported second-quarter earnings that met analysts' estimates as the company opened more of its own stores to showcase its goods and rely less on outside retailers.
Earnings before interest, tax, depreciation and amortization and excluding special items increased 8 percent to 110 million euros ($147 million), Metzingen-based Boss said in a statement today. That compares with analysts’ 109.6 million-euro average estimate.
"Our consistently strong growth in Europe and our upturn in the Americas form the basis of these very solid quarterly results," Chief Executive Officer Claus Dietrich Lahrs said in a statement. "Despite the persistently difficult environment in some key markets, we will grow even faster in the second half of the year."
Lahrs is expanding the number of company-owned stores and has hired designer Jason Wu and opened a new distribution center in Germany. He's also exerting more control over the way Boss's clothes are displayed in high-end stores including Saks Fifth Avenue Inc. in New York, Printemps in Paris and London's Selfridges & Co. The company said today it plans to add about 50 stores, excluding takeovers.
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Revenue rose 5 percent to 559 million euros. That compared with the average 569.6 million-euro estimate of analysts surveyed by Bloomberg.
‘Ticks Boxes’
“Boss ticks key boxes that make an investment attractive,” Andreas Inderst, an analyst at Exane BNP Paribas, said in a July 14 note to clients. He has an outperform recommendation on the stock. “This includes benefits from a better brand image, improved presentation at points of sale” and investments in technology and distribution.
Analysts on average expect Ebitda to increase 9 percent this year as a result of the spending. The growth rate has decelerated from 40 percent in 2011.
“In terms of earnings, the momentum has got to speed up,” Volker Bosse, an analyst at Baader Bank, said in a July 24 note to clients.
Shares of Hugo Boss, which is majority owned by private equity firm Permira Advisers LLP, have increased sixfold in the past five years, while Germany’s DAX Index almost doubled.
Sales through company-owned stores rose 18 percent last year, adjusting for currency effects. Boss operated 1,007 of its own stores at the end of the first quarter including outlets, an online store and “shop within a shop” areas, according to Citigroup.
The company has almost tripled its store count in the past four years, according to Bloomberg Intelligence data.
By Aaron Ricadela, Corinne Gretler; editors: Celeste Perri, Thomas Mulier, David Risser.
