Hugo Boss Reports Disappointing Results

Hugo Boss, the German manufacturer of luxury clothing, has disappointed the market by presenting results well below that expected by the consensus of analysts. However, its shares on the stock market reacted well after the promises of an improvement in the rest of the year.

Going ahead, first reviewing what happened in the first quarter. The company has posted a net profit of €75.6 million, a 7% lower than in the same period year earlier. Experts had expected a figure close to €82 million, so it’s logical the market disappointment. However, sales met expectations, with an increase by 9% to €668 million, fully in line with the consensus of the experts.

We need to remember that just a month ago the German company already warned that things are not going well and that this year would sell less than expected because of lower spending of Russian and Chinese clients. Europe is not better: the main geographical region of Hugo Boss –it gets two thirds of its revenues in this area- just grew 4%. However, in other regions such as America and Asia sales have grown at rates of 21 and 17% respectively.

These results have led to a fall of the stock in the Frankfurt Stock Exchange with an initial setback of 2%. However, after it has turned around following statements by the CEO, Claus-Dietrich Lahrs, which has recognized the bad times, but he assured that the European economic situation is more optimistic now that both sales and profit will accelerate in the rest of the year, allowing them to meet objectives

It is also clear that the focus of the company is to grow outside Europe, where as seen in the first quarter its success is unquestionable, with growth rates of around 20%. This certainly improves investor sentiment. If Hugo Boss is able to present improvements in the second quarter it would not be surprising to see it again trading around record highs in April, when it reached 120 euros per share.