Hugo Boss firing on all cylinders in Q1 despite China weakness

Hugo Boss has announced a 5% rise in group sales for Q1, hitting €1.014 billion, which is an increase of 6% currency-adjusted. Both its Hugo and Boss brands, as well as all regions and all channels, contributed to the growth.

It also said that its profit on an EBIT basis rose 6% to €69 million and the EBIT margin was up 10 basis points. It’s not holding too much excess stock either and its inventories declined by 2%, resulting in free cash flow of over €13 million.

CEO Daniel Grieder said that “in a volatile market environment, we remain focused on rigorously executing our ‘CLAIM 5’ strategy, capitalising on our numerous growth opportunities. By leveraging our strong business platform, we remain equally committed to realising further efficiencies. All of this will enable us to continue our profitable growth trajectory also in 2024.”

Digging deeper into the detail, brand and product initiatives were behind the growth for both labels and it said they enjoyed “robust demand in the first quarter”.

The SS24 collections have been “well received among consumers and wholesale partners alike”. And the company said two accompanying brand campaigns, innovative marketing activations around the globe, and impactful collaborations “further fuelled brand relevance” in the three-month period. 

Currency-adjusted sales for Boss Menswear were up 5%, while revenues at Boss Womenswear increased by 7% during the first three months of the year. At Hugo, currency-adjusted sales grew by an even better 9%, supported by the “successful launch” of its new, denim-focused brand line Hugo Blue.

As for the regional improvements, in EMEA, currency-adjusted revenues increased by 5%, mainly reflecting robust sales improvements in Germany as well as double-digit rises in emerging markets. 

In the Americas, revenues were up 11% currency-adjusted with all key markets contributing to growth. This also includes a double-digit uptick in the important US market. 

Sales in Asia/Pacific were up only 4% currency-adjusted in the first quarter. The problem here? While Southeast Asia & Pacific once again posted double-digit growth, sales in China “remained below the prior-year level, reflecting overall muted local demand”. 

The group’s digital business continued its double-digit growth with currency-adjusted sales up 10%, reflecting improvements at hugoboss.com as well as an increase in digital sales generated with partners. And physical stores managed to rise too, with sales up 3% currency-adjusted as its own stores, reflecting both further store productivity improvements as well as moderate space expansion over the past 12 months. 

Currency-adjusted sales in physical wholesale expanded by 8% as both labels further improved visibility and penetration at key department stores.

The company also confirmed its outlook for the full year and continues to expect group sales in the reporting currency to increase within a range of 3% to 6% to between €4.30 billion and €4.45 billion. EBIT should grow between 5% and 15% to between €430 million and €475 million.