* Q2 sales 485 mln eur vs poll avg 462 mln
* Q2 core profit 78 mln eur, up 23 pct
* Sees profit up 10-12 pct in 2012
* China sales rise just 1 pct in Q2, US next big driver
* Shares down 5.5 pct, top MDax faller
By Victoria Bryan
FRANKFURT, July 31 German fashion house Hugo
Boss said shoppers in brand-hungry China were
postponing or cancelling purchases of luxury items and forecast
that the United States could take over from Asia as its biggest
driver of growth.
Asian demand for high-end brands has helped shield luxury
companies from the worst of the European slowdown, but with
China on track for its slowest full year of growth since 1999,
there are concerns over luxury sales.
Hugo Boss, known for its sharp suits, said on Tuesday that
sales growth in China slowed to just 1 percent in the second
quarter, a far cry from the rates of over 10 percent seen by the
likes of LVMH, and predicted full-year profit short of
"All the major malls in China are seeing a loss of traffic.
The consumer is quite insecure," Chief Executive Claus-Dietrich
Lahrs told analysts, saying shoppers were being hurt by changes
to the availability of credit.
China's growth rate slowed for a sixth successive quarter in
the three months through June to 7.6 percent, the slackest pace
in more than three years.
Like Burberry, which said earlier this month sales
had been hit by a slowdown in China, Hugo Boss said it still
believed the Chinese market had huge potential and would invest
in new stores as new or refurbished shops had performed better.
"While we are disappointed, we have by no means changed our
view on the region's mid-term growth potential," CFO Mark Langer
He told Reuters that the United States, where Hugo Boss has
recorded consistently good growth rates over the last year,
would likely overtake Asia as the biggest driver of growth at
"We don't see any considerable change of business sentiment
for us as a brand in this part of the world," CEO Lahrs said.
Shares in Hugo Boss closed down 5.5 percent at 82.03 euros,
the top faller on Germany's midcap index.
The group said it expected 2012 core profit to rise by 10-12
percent, disappointing some analysts who had expected rises as
high as 15 percent.
Citi analyst Thomas Chauvet said he expected consensus
forecasts would come down by around 2-4 percent after Tuesday's
Before the second-quarter results, the average analyst
forecast according to Thomson Reuters I/B/E/S had been for
profit of 531.7 million euros for 2012, after 469 million in
2011, equivalent to a 13.4 percent increase.
Hugo Boss reported second quarter sales of 485 million euros
($594 million), a rise of 14 percent on a currency-neutral
basis, compared with analyst forecasts for 462 million.
Sales rose by 17 percent in Europe, with Germany and the UK
strong, by 11 percent in the Americas and just 4 percent in
Asia. First-quarter sales in Asia were up 9 percent.
Hugo Boss confirmed a forecast for sales to rise by up to 10
percent in 2012, with growth slowing in the second half as the
It reported second-quarter earnings before interest, tax,
depreciation, amortisation and special items (EBITDA) of 78