HUGO BOSS reported a solid start to the year as business recovery continues.
“Despite ongoing implications of the pandemic, especially in Europe, we have seen a solid and promising start into the year,” said Yves Müller, Spokesperson of the Managing Board of HUGO BOSS AG.
“I am particularly pleased by the further progress along our strategic growth drivers – Online, mainland China and casualwear – which have all seen momentum further accelerating. All this makes us confident for the remainder of the year as we expect both sales and EBIT to recover noticeably in the further course of 2021,” continued Müller.
In the first quarter of 2021, HUGO BOSS successfully continued its gradual business recovery, limiting the overall sales decline to 8%, currency-adjusted. In Group currency, sales decreased 10% to US$596 million (Q1 2020: US$666 million). While the negative implications of the COVID-19 pandemic continued to weigh on key European markets, momentum further accelerated along the Company’s strategic growth drivers – Online, mainland China and casualwear. In addition, sequential improvements in the important U.S. business as well as a robust performance of the Group’s wholesale business contributed positively to the overall sales development in the first quarter.
The pace and intensity of the Company’s business recovery significantly varied across regions in the reporting period. Sales in Asia/Pacific rose to US$121 million, reflect-ing a currency-adjusted increase of 39% compared to the prior year (Q1 2020: US$88 million). Growth was primarily driven by mainland China, where sales almost doubled as compared to the prior-year period, reflecting robust local demand as well as the successful execution of regional events such as Chinese New Year in February.
Also in the Americas, HUGO BOSS successfully continued its business recovery, with currency-adjusted sales down 11%. Consequently, in Group currency, sales amounted to US$96 million (Q1 2020: US$117 million). Also in the U.S. market, the sales decline was limited to 11% currency-adjusted, thereby recording a further sequential improvement as compared to previous quarters. This development was mainly driven by a noticeable pick-up in local demand, reflecting a robust rebound in consumer sentiment fueled by fiscal stimulus, strong economic data, as well as further progress in vaccinations.
In Europe, the lasting implications of the pandemic continued to put a strain on the Company’s business. With an average of almost 50% of Europe’s own retail points of sale closed during the first three months of 2021, in particular the extended lock-downs and accompanying temporary store closures weighed on consumer sentiment in several key markets, including the UK, France, and Germany. In addition, persisting social distancing measures and travel restrictions continued to burden the overall business recovery of the region. Consequently, currency-adjusted sales in Europe decreased 17% to US$359 million (Q1 2020: US$440 million).
The Company’s own online business gained further momentum in the first quarter of 2021, with currency-adjusted sales up 72%. Growth was driven by strong double-digit improvements at both the Company’s online flagship hugoboss.com as well as at partner websites operated in the concession model. The former also saw the further expansion of hugoboss.com into 12 additional markets during the first quarter, thereby increasing the global reach of hugoboss.com to 59 markets globally.
The acceleration in online growth partly compensated for the decline in the Group’s own brick-and-mortar retail business. Overall, retail sales decreased 14% in the first quarter, while wholesale sales were up 1%, both currency-adjusted. The wholesale channel benefitted from a robust order intake for the Spring/Summer 2021 collections of BOSS and HUGO, which were delivered to partners in the first three months of 2021. Growth was also supported by shifts in the delivery of these collections largely from the second quarter into the first quarter, aimed at ensuring product availability after the lifting of lockdowns.
While both brands, BOSS and HUGO, posted currency-adjusted sales declines of 8% and 6%, respectively, their casualwear offerings once again stood out positively. Overall, casualwear sales, which accounted for approximately 50% of total sales in the first quarter, returned to mid-single-digit growth, reflecting healthy demand across all product categories, including polo shirts, sweatshirts, tracksuits, and sneakers, as well as strong sell-through of the latest “BOSS x Russell Athletic” and “BOSS x NBA” casualwear capsules.
In March, BOSS celebrated the launch of its joint capsule collection with American sportswear pioneer Russell Athletic. The digital event was supported by many high profile influencers, creating huge buzz for “BOSS x Russell Athletic” on social media.
The collection resonated particularly well among younger customers, with many of the streetstyle-inspired casualwear pieces having been sold out shortly after the launch. In February, BOSS launched its exclusive capsule collection in cooperation with the National Basketball Association (NBA). The logo-inspired casualwear pieces were extremely well received especially among younger U.S. customers, providing further tailwind for the brand’s casualwear offering.
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In light of the persisting negative implications of COVID-19 on key European markets in particular, HUGO BOSS continued its tight cost management during the first three months of 2021, putting a particularly strong emphasis on reducing selling and distribution expenses. The savings achieved more than compensated for a decline in the gross profit margin. The latter was mainly attributable to higher markdown activity in the wake of the pandemic as compared to the prior-year period. Overall, EBIT amounted to plus US$1.2 million in the first quarter compared to minus US$16.8 million in the prior-year period.