Hugo Boss Second-Quarter Earnings Beat Estimates on Retail Sales

FRANKFURT, Germany — Hugo Boss AG reported second-quarter earnings that beat estimates, with the gross margin improving, after the German luxury-clothing maker opened more stores.

Earnings before interest, taxes, depreciation, amortization and one-time items rose to 101.8 million euros ($135 million) from 77.9 million euros a year earlier, the Metzingen-based company said in a statement today. The average estimate of 11 analysts surveyed by Bloomberg was 98.1 million euros. The gross margin widened to 65.8 percent of sales from 62.4 percent. The average estimate of eight analysts was 63 percent.

"In an economic environment, which has not become any easier in all relevant sales markets, we continued to grow in the first half of the year," Chief Executive Officer Claus Dietrich Lahrs said in the statement. "The investments in our brands as well as our collections will be the cornerstone for a successful second half year."

Retail sales will be the "growth engine" this year, Lahrs said in March. The company added 61 directly-operated stores in the first half. Hugo Boss has moved toward the higher-end premium segment after merging its Boss Selection range with the core Boss brand a year ago, and has worked on improving its womenswear by appointing Jason Wu as creative director for the division in June.

Second-quarter sales jumped to 531.7 million euros from 485.3 million euros. The average estimate of 14 analysts was 539.3 million euros. Wholesale revenue rose 6 percent on a currency-adjusted basis because of the new collection cycle while retail sales increased 15 percent.

Forecast Kept

Ebitda before special items and sales on a currency- adjusted basis will rise at a high single-digit rate this year, Hugo Boss reiterated today. The company’s forecast is “ambitious, as it calls for double-digit profit growth” in the second half of the year, Andreas Riemann, an analyst at Commerzbank AG in Frankfurt, wrote in a report this month.

Hugo Boss aims for revenue of 3 billion euros and Ebitda of 750 million euros in 2015, with the retail business representing about 55 percent of revenue by that year.

Permira Advisers LLP, based in London, acquired a majority holding in Valentino Fashion Group SpA in 2007. Valentino was Hugo Boss's parent company at the time. The private-equity firm owns about 56 percent of Hugo Boss after selling a 10 percent stake in an accelerated bookbuilding in May.

By: Julie Cruz; Editors: Thomas Mulier, Tom Lavell