Apr 29, 2011
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Rush for luxury drives strong Q1 at Hugo Boss

Apr 29, 2011

April 28 - German fashion house Hugo Boss followed luxury peers LVMH and Burberry with a jump in sales and profits for the start of 2011 as Asian demand for European luxury labels continues unabated.

Hugo Boss
Hugo boss BOSS Selection

Hugo Boss forecast 2011 sales up at least 12 percent and core profit up 15 percent, with growth to be driven by China and the United States and expansion of its network of own stores.

Shares in the group, known for its suits, hit an all-time high of 66.41 euros after the results, with analysts saying the group's guidance for the year now looks too conservative.

Hugo Boss shares had already doubled over the past year and Thursday's gains are more good news for Permira, the private equity firm that owns 72 percent of the group. It has previously said it is in no hurry to sell its stake in the group.

As the world recovers from recession, makers of luxury goods from shoes to handbags, wine and watches, have enjoyed soaring sales over the past year, driven by China's love of chic brands. LVMH and Burberry said last week they had made a good start to the year, despite fears that the earthquake in Japan would halt demand in the region.

Hugo Boss added on Thursday it had been able to maintain prices, thus improving its gross profit margin in the quarter.

That contrasts with retailers at the lower end of the scale, such as Primark and H&M, which are being forced to keep prices low and absorb higher cotton costs themselves in order to hang on to bargain-hunting customers.

Hugo Boss also expects good sales in the United States, where its message of quality, European design, has attracted shoppers.

"The first quarter results confirm that we have carried our momentum from 2010 into 2011," Hugo Boss Chief Executive Claus-Dietrich Lahrs said in a statement on Thursday.

Group sales for the first quarter rose 21 percent to 539 million euros ($790.7 million), with core profit before special items up 43 percent at 132 million.

Net income for the first quarter rose 48 percent to 83.5 million euros.

Analysts were on average expecting Hugo Boss to report sales of 531 million and net income of 70.6 million, according to a Reuters poll.

(Reporting by Victoria Bryan; Editing by Jon Loades-Carter)

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