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UPDATE 2-Hugo Boss aims to almost double core profit by 2015
April 12, 2010 / 7:57 AM / in 8 years

UPDATE 2-Hugo Boss aims to almost double core profit by 2015

* Aims for 2015 core profit of 500 mln eur, sales of 2.5 bln

* Hugo Boss expects core profit to outpace sales in 2010

* Says sees muted sales in H1, stabilisation in H2

* To open 50 own stores in 2010

* Shares fall 1.3 pct, underperforming mid-cap index (Adds detail and background)

METZINGEN, Germany, April 12 (Reuters) - German premium fashion house Hugo Boss BOSG_p.DE aims to almost double core profits by 2015, counting on strong growth in Asia and the Americas to make up for a slow economic recovery in Europe.

“The global economy is slated to recover slightly, but consumer spending is likely to remain subdued in many parts of the world,” Chief Executive Claus-Dietrich Lahrs said.

“Nevertheless, we intend to go on the offensive and have set ourselves new goals. We want to grow again,” he added.

By 2015, Hugo Boss wants to almost double its core profit to 500 million euros ($679.8 million) and reach sales of 2.5 billion euros, up from 1.6 billion last year, it said.

The premium and luxury goods industry was hit hard by the global recession last year as the world’s rich tightened their purse strings, but sales are seen to recover this year along with the global economy.

To cushion the impact of what Boss CEO Lahrs has called one of the most demanding years for the industry, Hugo Boss closed underperforming stores and some showrooms, renegotiated contracts with suppliers and stopped delivering to high-risk customers in eastern Europe while pushing overseas expansion.

As a result, Hugo Boss expects this year’s earnings before interest, tax, depreciation and amortisation (EBITDA) to grow faster than sales, which it sees growing at a single-digit rate, it said.


The suit maker already reported in February a 6 percent drop in full-year underlying EBITDA to 270 million euros on sales of 1.56 billion euros, down 7 percent. [ID:nLDE612225]

In its search for growth, Boss focuses on Asia and other growth markets. “The burgeoning middle and upper classes in these markets will use their greater financial freedom to buy high-quality fashion, among other things,” it said.

“After all, global democratisation processes create more stable systems, and thus additional lucrative sales markets.”

Hugo Boss shares fell 1.3 percent 28.12 euros by 1445 GMT, while the German mid-cap index .MDAXI fell 0.3 percent.

The company, in which private equity group Permira [PERM.UL] holds 88 percent of the voting rights, trades at about 15 times projected 2011 earnings, while Polo Ralph Lauren (RL.N), and Burberry (BRBY.L) are at a multiple of around 18, according to Thomson Reuters StarMine, which weights analysts’ forecasts according to their track record.

Analysts blame lower visibility and sweeping management changes following the 2007 takeover by Permira for the discount. ($1=.7355 Euro) (Reporting by Alexander Huebner; writing by Eva Kuehnen; editing by Simon Jessop)

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