Rebounding gradually from a strong coronavirus hit, Hugo Boss reported sales in the third quarter decreased 24 percent, currency adjusted, to 533 million euros.
In the first half of the year, sales were down 38 percent due to pandemic-related lockdowns. “We made further progress in the recovery of our business, with great contribution coming from online and mainland China. Our profitability returned to positive territory,” company spokesperson and board member Yves Müller said in a statement.
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Due to ongoing uncertainty though, it wasn’t possible to give guidance for the full year, Hugo Boss said. The past nine months had seen sales fall 33 percent to 1.36 billion euros.
The company was happy with results in mainland China, where sales gained 27 percent. However this wasn’t enough to bring the Asia-Pacific region back into the positive: Sales in the territory as a whole were down 14 percent in the third quarter, totaling 76 million euros. It’s likely restrictions on tourism, and the resulting lack of big-spending Chinese visitors, is causing a slump in neighboring nations, Hugo Boss said.
While sales in greater China are a strategic goal for Hugo Boss, analysts have previously pointed out that a recovery there won’t be enough to make up for a shortfall in Europe, where the German brand makes most of its money. There was some recovery in the U.K. and France, but Germany continued to suffer – most likely, the company said, because it had more brick-and-mortar stores there. European sales fell 21 percent to 369 million euros. Meanwhile in North America, sales dropped 41 percent to 73 million euros. All figures are currency adjusted.
Both of the company’s brands – Boss, which is focused on more formal wear, and Hugo, which is the more casual line – suffered, with sales falling 24 percent and 25 percent respectively.
Although earlier this year Müller had spoken about a pent-up demand for formalwear as weddings and other occasions return, it’s also clear that, with so many people working from home and fewer large events happening, there is a move away from suiting. The company is adapting. Hugo Boss’ latest collaboration is with American sportswear brand Russell Athletic and the spring-summer 2021 collection recently shown in Milan, “continued the decisive move towards casualization, revealing a sportier and younger version … than ever before,” the company said in its statement.
The Q3 results were roughly in line with market predictions and there were two bright spots for Hugo Boss.
The COVID-19 pandemic has accelerated online shopping everywhere and Hugo Boss was no exception. The company’s own-name website was rolled out in a further 24 territories over the summer and e-commerce increased 66 percent to reach 48 million euros for the German business in the third quarter.
Hugo Boss reported EBIT of 15 million euros between July and September, explaining that this was due to reduced expenses in sales and distribution, administration and marketing. During Q3 in 2019, EBIT had totaled 83 million euros. For the first nine months of the year though, the picture looked less rosy: Hugo Boss’ EBIT so far in 2020 is at minus 249 million euros.