Mar 13, 2014
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Hugo Boss sees pick up in sales and profit growth

Mar 13, 2014

FRANKFURT, Germany - German fashion house Hugo Boss predicted a pick up in sales and earnings growth this year, driven by store openings, its new womenswear designer's first collection and a brighter outlook for Europe's economy.

Hugo Boss AW14/15 | Source: PixelFormula

"I am confident that we will accelerate our rate of growth compared to the prior year," Chief Executive Claus-Dietrich Lahrs said on Thursday, as the group forecast a high single-digit percentage rise in currency-adjusted sales and earnings.

Hugo Boss, best known for its men's suits, has been moving away from selling through partners to running its own stores, where it has more control over how goods are displayed and at what price they are sold, which is helping to improve margins.

The investment in its own stores, with a further 50 planned this year, marketing around its new womenswear designer Jason Wu - a favoured designer of U.S. First Lady Michelle Obama - plus slower luxury spending in China, prompted Hugo Boss to postpone last year its 2015 target to reach a 25 percent adjusted EBITDA margin - core profit as a percentage of sales.

The group said on Thursday it now aimed to reach that margin in the medium term after posting a 2013 figure of just over 23 percent, but confirmed its sales goal of 3 billion euros ($4.2 billion) for 2015.

Analysts polled by Reuters on average saw 2014 sales up 9.2 percent at 2.65 billion euros and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 625 million euros, up by 10.6 percent.

Hugo Boss proposed raising its dividend payment to shareholders to 3.34 per share from 3.12 euros for 2012, lagging analysts' average forecast of 3.50 euros. The firm traditionally pays out around 60-80 percent of its net earnings as dividends.

$1 = 0.7192 euros

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