(Reuters) – The German luxury group Hugo Boss fell on the stock market on Tuesday after publishing an operating profit below expectations for the fourth quarter despite an increase in its sales.
On the Frankfurt Stock Exchange, Hugo Boss shares plunged 11% in the morning.
According to preliminary results, the German fashion house’s earnings before interest and taxes came in at 121 million euros in the fourth quarter, below analysts’ average estimate of 129 million euros.
The redesign of the Hugo Boss brand in 2022 allowed the luxury group to resist the slowdown in the markets in the United States and Europe and to support its sales in Asia, but at the cost of significant investments.
Citi analysts emphasize that the disappointing operating result is “a reminder of the scale of the investments made by the company to support the turnover dynamic”.
Quarterly sales increased 13% at constant exchange rates to €1.18 billion, driven by a 33% jump in the Asia-Pacific region, including a double-digit sales improvement in China.
For the whole of 2023, turnover reached 4.2 billion euros compared to 3.65 billion a year earlier, which is slightly above analysts’ estimates of 4.19 billion euros, according to a consensus provided by the company.
Hugo Boss expected sales of between 4.1 and 4.2 billion euros.
For 2023, Hugo Boss recorded an operating profit of 410 million euros, which corresponds to the midpoint of its forecast range between 400 and 420 million euros, but is 6% below the consensus according to JP Morgan analysts.
“We wonder if Hugo Boss did not experience a little more promotional activity during the quarter, given the weather conditions and the general clothing context in Europe and the United States, which could have weighed heavier than what we and the market had expected,” observe JP Morgan analysts.
Hugo Boss is due to publish its final annual results and outlook for 2024 on March 7.
(Reporting by Linda Pasquini, with contributions from Helen Reid; by Dagmarah Mackos, edited by Blandine Hénault)
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