Investing.com -- Shares of Hugo Boss AG (ETR:BOSSn) were up on Thursday after the company reported its Q2 results, posting a shift towards enhancing cost efficiency and improving gross margins.
At 7:46 am (1146 GMT), Hugo Boss was trading 6.3% higher at €39.065.
In Q2, Hugo Boss posted sales of EUR 1.02 billion and an EBIT of EUR 70 million. The company also achieved a 50 basis points year-over-year increase in gross margin, reflecting gains in global sourcing efficiency and favorable product and freight costs.
The company has secured robust wholesale orders for the upcoming Winter 2024 and Spring 2025 seasons, said analysts from UBS Global Research in a note.
However, analysts at RBC Capital said “We think weaker consumer demand in the premium apparel space continues to weigh on performance for BOSS.”
Channel Performance
-
Brick and Mortar wholesale: Reported a 5% year-over-year increase in Q2, bolstered by strong order intake for Winter 2024 and Spring 2025.
-
Brick and Mortar retail: Reported a 2% year-over-year decline in Q2 due to subdued global consumer demand, particularly in critical markets like China and the UK.
Geographic Performance
-
EMEA sales: Declined by 2% year-over-year in constant currency, affected by market weaknesses in the UK, Germany, and France.
-
Americas sales: Increased by 5% year-over-year in constant currency, driven by growth in the US and LATAM, while sales in Canada remained flat.
-
APAC sales: Decreased by 4% year-over-year in constant currency, mainly due to declines in China. However, Southeast Asia and the Pacific region saw high single-digit growth, with Japan performing particularly well.
Cost Efficiency and Margins
-
Gross margin: Improved by 50 basis points year-over-year in Q2, attributed to sourcing efficiencies and favorable cost conditions.
-
Operating expenses: Rose by 9% year-over-year, with increases in selling, marketing, and administrative expenses. However, the rise in marketing costs is seen as a change in phasing, with overall H1 marketing expenses remaining flat year-over-year.
Outlook
Hugo Boss tempered its full-year outlook, anticipating group sales growth of 1% to 4% in local currency. The company cited ongoing economic uncertainties as the primary factor influencing this adjustment.
The company plans to intensify its focus on cost efficiency in H2 by adopting a more selective hiring approach, curtailing non-essential spending, and carefully evaluating the capital intensity of projects.
Additionally, a new BOSS brand campaign featuring David Beckham and Naomi Campbell will launch at the end of August, aiming to boost consumer engagement and drive sales.