Hugo Boss Gains as Sales Increase Reassures Amid Profit Setback

  • Investors comforted by growth in fourth-quarter sales, profit
  • Full-year profit set to miss clothier's forecast range

German clothier Hugo Boss AGreassured investors by announcing growth in fourth-quarter sales and profit, sending the shares higher.

Revenue rose 10 percent and operating profit 2 percent, the Metzingen-based company said Friday in a statement, easing concern over the impact on business of November’s Paris terror attacks and unseasonably mild weather.

Boss shares gained 3.2 percent to 73.15 euros at 5:16 p.m. in Frankfurt, reversing an earlier drop of as much as 4.6 percent. Investors looked beyond full-year profit that missed analysts’ estimates and the German fashion label’s own forecast.

“I don’t think the market was expecting them to hit that growth anyway after the events in Paris and the mild weather,” said John Guy, an analyst at MainFirst Bank AG in London, who has an outperform rating on the shares. “The market was more bearish. The question is whether the relatively resilient trading in Europe is sustainable into the first quarter.”

Group sales rose 9 percent last year, or 3 percent in local currencies, to 2.81 billion euros ($3.1 billion). Analysts had expected 2.79 billion euros, according to estimates compiled by Bloomberg.

China Decline

Earnings before interest, tax, depreciation, amortization and other items increased 1 percent to 594 million euros, the company said. Analysts had expected a figure of 605.5 million euros, according to the average of estimates compiled by Bloomberg. The company itself had forecast 3 percent to 5 percent growth.

Discounting amid mild winter weather and weak sales in China weighed on the results. Sales in China fell by double digits in the fourth quarter, pulling Asian revenue down by 7 percent adjusting for currency effects. Sales in the Americas region fell by 1 percent.

“We will take decisive action to improve our business in China and the U.S. despite the difficult industry conditions we are facing in these markets,” Chief Executive Officer Claus-Dietrich Lahrs said in the statement.

The company is scheduled to report full financial results for last year on March 10.

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