German fashion house Hugo Boss has beaten second-quarter expectations helped by restructuring and its first rise in US sales in two years, boosting its shares.
The company, known for its smart men’s suits, said US sales rose 2% while sales in China jumped 14%.
After a string of profit warnings, Hugo Boss has been slashing prices in China to bring them closer to European and US levels, making efforts to appeal to younger customers, investing in its website and closing loss-making stores.
“Our strategic realignment is beginning to take effect...We made considerable headway in the US and in online business in particular,” said Mark Langer, the former finance chief who took over as chief executive last year. Net profit jumped fivefold to €57.6m, reflecting year-ago restructuring costs. That topped an average analyst forecast of €53m.
Sales rose 2% to €636m, above the €619m expected by analysts.
Hugo Boss shares, which trade at about a 10% discount to the luxury sector, rose more than 6%, making them one of the top risers on the Stoxx Europe 600.
The most important positive from the results was a second-quarter 3% rise in sales at its own stores on a same store, currency-adjusted basis, reversing a first-quarter 3% fall, DZ Bank analyst Herbert Sturm said.
A recovery in tourism in Europe and stronger Chinese consumption are expected to lead a rebound in the luxury sector this year.
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