Hugo Boss shares fall after US sales decline

Hugo Boss shares fell the most in five months as weakness in the US kept the German clothier’s sales revival in check.

Hugo Boss shares fall after US sales decline

US sales declined 7%, the company said, after it stopped selling goods to outlet stores that carry different brands at discounts.

The shares fell as much as 6.4% in Frankfurt, the steepest intraday decline since last November.

The shares have, however, risen this year, by 14.5%.

Boss is seeking to revive under the leadership of Mark Langer, the former finance chief who was promoted to chief executive officer a year ago.

In November, Mr Langer said the company will return to growth in 2018 as it eliminates brands, slows down store expansion and sells more apparel online.

Hugo Boss has limited distribution in the US to the likes of Bloomingdale’s and Nordstrom after discounting in the wholesale market there led to a loss of pricing power.

The quarter was characterised by “difficult trading conditions in key markets and continued e-commerce disruption,” Citigroup analysts Thomas Chauvet and Silky Agarwal said in a reserach note.

Mr Langer said the company failed to offer enough entry-level products especially in its e-commerce business, a lapse the company is trying to make up for.

Overall, the US business is still “very much driven by discounts also outside the outlet stores, and we have some homework still to do, also within our collections, to bring back brand desirability,” the executive said.

While business in the US will improve during the year, the Americas will remain a region with weaker development in 2017 compared with Asia and Europe, Mr Langer said.

The company is also closing unprofitable stores after doubling its shop network between 2010 and 2015.

Comparable sales at the company’s own retail stores worldwide declined 3%, the same rate as in the fourth quarter last year. Currency-adjusted sales rose 1%.

  • Bloomberg

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