Retail in Asia

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Hugo Boss Asia-pacific sales down 3pc, to close 20 stores in China

Hugo Boss said on Thursday that sales in Asia-pacific declined although total sales of the group, excluding currency swings, grew 9 percent to EUR2.81 billion in 2015. Stripping out the effect of exchange rates, sales in the region dropped 3 percent for the full year.

Operating profit rose 1 percent to EUR 594 million over the full year, slightly below the company’s forecast, which was between 3-5 percent.

The German fashion house has been hit by a slowdown in luxury spending in China. Sales at constant currencies in the country registered a double-digit drop in the fourth quarter, which led to a 7 percent sales decline in Asia-Pacific.

Hugo Boss expects sales to grow at a low-single-digit rate at constant currencies in 2016, but earnings will decline at a low-double-digit rate. Sales in Asia-Pacific will continue to decline according to the group’s forecast.

To tackle the challenges in China market, the group plans to optimize its retail presence by strengthening its distribution and brand perception as well as making extensive renovations. The German retailer will close around 20 stores in the country.

"Hugo Boss remains a sound, growing company. However, in an increasingly challenging market environment, success can’t be taken for granted," says Mark Langer, CFO of Hugo Boss AG. "To safeguard our profitable long-term growth, we have to align our strategy even more rigorously with customer needs. Management has therefore initiated measures to successfully address the external and company-specific challenges. Our brand’s attractiveness, the quality of our operating platform, our financial strength and our highly motivated workforce give us strong foundations for the future."