Hugo Boss Lowered Growth Forecast For 2015

In the strategic growth plan released last November, Hugo Boss AG hopes to achieve high digit growth in the next few years and plan to increase its operating margin to 25%.

However, as the luxury market in Europe and Asia continues to tighten, the group now expects to have a median growth in sales in the 2015 fiscal year after the exchange rate is cut off, and the operating profit growth is expected to be between 5%-7% and 12% of the market expectations.

Hugo Boss AG (BOSSn.DE) opened 3.78% lower on Thursday and reported 114.55%, then widened to over 4%.

Citigroup Inc. NYSE:C (NYSE:C) Citigroup analyst Thomas Chauvet believes that Hugo Boss AG (BOSSn.DE) will continue to be under pressure in the short term, but he has maintained a "buy" rating, suggesting that investors wait and see the recovery of the European market and group deepening.

The success or failure of category development.

The group has announced 2014 fiscal year results in early February: pre tax profits rose 0.9% to 437 million euros in the fiscal year ended December 31, 2014, less than 470 million euros in the market forecast.

Operating profit was 591 million euros, an increase of 4.6% over 2013, and operating margins shrank by 20 basis points to 23%, while gross margins rose by 120 basis points to 66.1%.

Despite the slowdown in earnings growth, Hugo Boss AG recommended an annual dividend of 3.62 euros per share, an increase of 8.38 over the 3.34 euros in fiscal year 2013.

The annual revenue growth is 5.8% to 2 billion 570 million euros, and the market is expected to be 2 billion 590 million euros, which is in line with the group's expected reduction in November last year.

Retail business with 12% growth is still the main driving force under the fixed exchange rate. The same store sales increased 3% year-on-year, and the retail network grew by 31 stores to a total of 1041 stores.

Wholesale business has not increased throughout the year.

By region,

Sales increased by 7% to 1 billion 567 million euros per year, and the Americas increased 2.9% to 587 million euros, and the Asia Pacific region increased 4% to 361 million euros. Under the fixed exchange rate, the Americas and the Asia Pacific region had 4% and 7% growth respectively. The group pointed out that the market share in China was improved, and other Asian Pacific countries also had steady growth.

According to category, BOSS Womenswear, the women's clothing brand, recorded a rapid growth of 18% in the direction of creative director Jason Wu, pushing women's clothing business up 10% to 289 million euros over the same period.

The group said the market environment in the four quarter deteriorated significantly compared with the previous quarter. Sales increased by 5.4% to 684 million euros compared with the same period in 2013, but fell 4.5% from 717 million euros in the three quarter.

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For the 699 million euro, there is only a 3% increase under the fixed exchange rate.

Operating profit was 167 million euros, an increase of 6.4% compared with the same period last year, but also lower than the market forecast of 173 million euros, but the operating profit margin increased by 30 basis points to 24.5%.

The gross margin increased to 80 on a year-on-year basis, from 68.2% to 69% in the previous year.

Hugo Boss AG will accelerate the tightening of control over retail channels this year. It has announced that it will withdraw all franchises from China, South Korea and the Middle East from its partners. The specific measures are to take over 17 South Korean stores operated by partner TDCo TDCo before March 1st, and take over 21 Chinese stores responsible for Wenzhou's lofty department stores and new self distribution companies in Dubai before April 1st.

After April 1st, the total number of group stores in China reached 130.

This decision is consistent with the "recycling franchise and store store" policy mentioned in the "strategic growth plan" mentioned above, which will help offset the weakness of the European luxury market.