Hugo Boss sees coronavirus hit to sales spreading from Asia
German fashion house Hugo Boss warned on Thursday that the coronavirus will have a significant impact on its first-quarter results, with sales falling particularly in Asia, but also in other key markets, Trend reports with reference to Reuters.
Hugo Boss said it expects a gradual normalization by the middle of the year and forecast that currency-adjusted sales will rise from zero to 2% for the full year, including a single digit decline in Asia/Pacific.
Its shares were up 0.3% by 1119 GMT, making them one of the few gainers on the German mid-cap index on Thursday as analysts said the full-year outlook was better than expected given the circumstances and the company hiked its 2019 dividend.
Asia/Pacific contributed 15% of the retailer’s sales in 2019, making Hugo Boss less exposed than other luxury brands like Burberry, but the region was its fastest growing, expanding 5% and at double-digit rates in mainland China.
After a very encouraging start to 2020 in the region, Hugo Boss now expects significant sales losses as more than half its 150 points of sale in China have been closed since the end of January, with shopper numbers well down at those still open.
It said there was a “noticeable decline” in sales in other key markets too.
Chief Executive Mark Langer told journalists that the first quarter hit was in the low single-digit million euros, while there was no significant negative impact on the supply chain.
It forecast 2020 earnings before interest and taxation (EBIT) of 320-350 million euros ($356-$390 million) after a 4% fall to 333 million euros in 2019 as it invested in sprucing up its store network.
Hugo Boss cut its 2019 earnings forecast in October, citing weak demand in the United States and Hong Kong, but it then went on to report better than expected fourth-quarter sales growth, helped by strong demand online and at its renovated stores.