Affordable luxury brand Hugo Boss said 2016 operating profit would fall less than first predicted, after the German firm smashed out a fourth-quarter sales recovery thanks to increased spending in China.
Hugo Boss said market revenues soared in Asia, with sales gaining a currency-adjusted 5% in the fourth quarter, a huge uptick from a 3% fall in the third.
The shift in sales comes after Hugo Boss decided to cut prices in China, making them more in line to European and U.S. prices.
As a result, the firm said like-for-like sales had risen almost 20% in mainland China, adjusted for currency effects. Hugo Boss forecast operating profit for 2016 would take on the top end of its forecast for a decline of between 17 and 23%.
The Hugo Boss outfit makes almost a fifth of total sales in this region, it said in a statement, thanks to countries like China, which remains the biggest buyer of luxury goods.
In recent months, more Chinese shoppers have been lured back to luxury spending, as the Chinese government continues to encourage local consumption and loosens its grip on ostentatious spending.
Despite the Asia upturn, fourth-quarter sales fell 3% to 725 million euros, down 1% on a currency adjusted basis, but an improvement on a third-quarter adjusted fall of 6%
Sales fell a currency-adjusted 14% in the Americas, where Hugo Boss is stopping selling the brand at discount-only outlets. But it saw strong sales growth in Britain, which helped sales in Europe rise 2%.
Hugo Boss’s new Chief Executive Mark Langer proposed last year he would return Hugo Boss to its foundations –men’s suits – after previous CEOs shifted the Hugo Boss focus to womenswear, in a bid to make the label more of a luxury maison.
Langer also announced plans to close underperforming stores and eliminate Hugo Boss’s higher-priced line and another at lower prices for younger consumers.