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“We are confident to reach our full year targets despite a more difficult economic environment", says Claus-Dietrich Lahrs, CEO and Chairman of the Managing Board of HUGO BOSS AG. "The change in our collection cycle has led to a sales shift in our wholesale business from the third into the fourth quarter. This had an adverse impact on our traditionally strong earnings in the third quarter. We shall, however, return to double-digit growth in sales and earnings in the fourth quarter with our winter business."
New collection and delivery cycle affects performance in the third quarter
Total net sales were stable on a currency-adjusted basis in the third quarter of 2012. In euros, the Group posted growth of 5% to EUR 646 million (2011: EUR 615 million). In Europe, sales fell by 4% on a currency-adjusted basis due to the development of the wholesale business. In the Americas, the U.S. market was the main driver for growth of 13% after adjustment for currency effects.
Asia posted a stable performance on a currency-adjusted basis. While growth picked up in China in comparison with the previous quarter, standing at 5%, the Australian and Japanese markets, in particular, weakened.
Wholesale sales were down 9% year-on-year in local currencies. This trend was adversely affected by the change of the collection and delivery cycle and the resulting delivery of a significant proportion of the Fall collection already in the second quarter. In addition, many retail partners now spread their orders more evenly over the year as a consequence of the more season focused collection cycle, which means that the second and fourth quarters become continuously more important.
The Group’s own retail business (including outlets and online business) posted growth after adjustment for currency effects of 15%. On a comparable store basis, the increase amounted to 2%.
The Group’s gross profit margin increased by 130 basis points to 60.1% (2011: 58.8%) mainly because of the higher proportion of sales from the Group’s own retail business. EBITDA before special items decreased by 7% to EUR 165 million (2011: EUR 177 million) because of the increased costs associated with the expansion of the Group’s own retail business and higher marketing expenses, which could not be offset by matching growth in sales in the third quarter.
The adjusted EBITDA margin fell by 320 basis points to 25.6% in the third quarter (2011: 28.8%). Special items of EUR 2 million (2011: EUR 0 million) were associated with the simplification of the brand structure announced in July and the bundling of the creative areas under the core BOSS brand.
Group sales grew by 11% in the first nine months of 2012
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