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Hugo Boss delivers strong results in gloomy time

04 Nov '11

4 min read

HUGO BOSS can look back on a successful third quarter, in which sales and profits recorded double-digit growth once more.

“The results of the third quarter underline the appeal and strength of our brands as well as the successful expansion of our global distribution network in both own retail and wholesale”, said Claus-Dietrich Lahrs, CEO and Chairman of the Managing Board of HUGO BOSS AG, at the publication of the nine months results. “We are very confident that we will reach our sales and earnings forecast for the year as a whole.”

Double-digit increase in EBITDA before special items in the third quarter
On a currency-neutral basis, sales rose by 16% in the third quarter. In euro, this equates to growth of 14% to EUR 615 million (2010: EUR 538 million). The increase was supported by double-digit currency-adjusted growth rates in all regions (Europe +14%, America +22%, Asia/Pacific +20%).

In wholesale, currency-neutral sales were 9% above the previous year's figure. After adjustment for currency effects, sales in own retail (including outlets and online stores) exceeded the previous year's figure by 30%. On a comp store basis, currency-neutral growth reached 6% in the third quarter.

The gross margin fell by 40 basis points to 58.8% (2010: 59.2%). This was a result of higher absolute inventory write-downs following the inventory increase despite an improvement of the write-down quota compared to the prior year quarter. Thanks to efficiency improvements, EBITDA before special items rose more strongly than sales by 18% to EUR 177 million (2010: EUR 150 million). The adjusted EBITDA margin therefore increased by 90 basis points to 28.8% (2010: 27.9%) in the third quarter.

The adjusted EBITDA margin climbed to 23.9% in the first nine months
HUGO BOSS Group sales increased by 20% on a currency-neutral basis in the first nine months of 2011. In the reporting currency, this equates to growth of 19% to EUR 1,560 million (2010: EUR 1,307 million). In Europe, sales on a currency-neutral basis rose by 15%. In America and Asia/Pacific, growth of 25% and 41% respectively was recorded. Wholesale sales increased by 10% after adjustments for currency effects.

In own retail, sales were 38% above the previous year's figure in the first nine months. Comp store sales increased 9% on a currency-neutral basis. The above-average sales growth in own retail and a higher share of sales at full price contributed to the gross margin increasing by 190 basis points to 59.9% (2010: 58.0%).

Supported by improvements in efficiency, EBITDA before special items rose 36% to EUR 372 million (2010: EUR 273 million). At 23.9%, the adjusted EBITDA margin therefore improved by 300 basis points in comparison to the previous year (2010: 20.9%).

Increase in net working capital
At EUR 329 million, net working capital was 18% above the prior year level (September 30, 2010: EUR 278 million). Inventories grew by 23% to EUR 399 million (September 30, 2010: EUR 325 million). The increase is primarily attributable to the continued expansion of the own retail business. Adjusted for currency and consolidation effects, the increase amounted to 19%.

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