Wholesale sales decline affects HUGO BOSS earnings development in the first quarter
• Own retail business continues to grow at double-digit rates
• Group sales decline by 2% as a result of a different timing of wholesale deliveries compared to the prior year
• Increased gross profit margin partly compensates for lower sales and higher operating expenses
• Positive outlook for 2013 reconfirmed
“The market environment proved to be very challenging in the early months of this year”, says Claus-Dietrich Lahrs, Chief Executive Officer of HUGO BOSS AG. “With a better performance of the wholesale business in the further course of this year, we shall return to renewed growth in the second quarter already. We therefore reconfirm our sales and profit targets for 2013.”
Continued double-digit growth in own retail
In the first quarter of 2013, the HUGO BOSS Group achieved sales of EUR 593 million. This corresponds to a decline of 2% both in euro and in local currencies compared with the previous year (Q1 2012: EUR 607 million). The different timing of product deliveries compared to the prior year following the introduction of the more season focused collection cycle and the resulting increasing importance of the Summer collection, which is mainly delivered in the second quarter, had a material impact on the negative development in the wholesale business.
Overall, sales generated in the wholesale business in the first quarter were down 14% compared to the previous year after adjustment for currency effects. The Group’s own retail business (including outlets and online business) posted a sales increase of 15% in local currencies. The growth in retail comp store sales amounted to 2% after adjustment for currency effects. The Group’s own retail network was expanded by 36 in net terms to 876 locations in the first quarter of 2013 (December 31, 2012: 840).
From a regional perspective, growth was mixed in the first quarter. Sales in Europe, where wholesale remains the most important distribution channel, were down 5% compared to the previous year. In the Americas, sales in local currencies increased by 6% supported by a continued positive performance in the U.S. Slight growth in China led to a 1% increase in sales in Asia after adjustment for currency effects.
The gross profit margin improved by 80 basis points to 61.8%, which was attributable primarily to the expansion of the Group’s own retail business and the positive development in the royalty business (Q1 2012: 61.0%). Higher operating expenses, caused in particular by the continued expansion of the Group’s own retail business, led to a decrease in EBITDA before special items of 11% to EUR 133 million (Q1 2012: EUR 148 million). The adjusted EBITDA margin declined by 220 basis points in the first quarter to 22.3% (Q1 2012: 24.5%).
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