 Hugo Boss reported Friday a 19% rise in sales and a 34% growth in profits in 2011 thanks to wealthy Asian buyers' demand for luxury European brands. 2012 had also begun strongly for the German firm, which also announced
it expects to finish its net debt by next year.
The firm said 2011 sales jumped 19 percent to 2.06 billion euros ($2.7 billion) and core profit climbed 34 percent to 469 million. It had previously forecast 2011 sales to rise by 15-17 percent and profit by 25-30 percent, reminded Reuters.
"Performance in the final quarter of the year was stronger than management had initially expected," the group said in a statement on Thursday. Hugo Boss also reported a 26 percent gain in fourth-quarter operating profit and is confident about the outlook for its business not just in Asia but also in Europe.
Hugo Boss plans to open as many as 20 stores a year in China and expects sales in Asia to represent more than 20 percent of group sales by 2015, compared with 13 percent at the end of 2010. “We’re quite confident that this trend of up to 20 new openings on an annual basis will continue in China for the near future,” Chief Financial Officer Mark Langer said. The company owned 179 stores in the Asia- Pacific region as of the end of September.
The company, controlled by private equity firm Permira Advisers, may be in “cash positive territory” by 2013 or 2014 and won’t need any major refinancing, Langer said in an interview at the company’s headquarters in Metzingen, Germany, reported Bloomberg. Hugo Boss has cut borrowings by about 75 percent since 2008. Net debt wast 247 million euros ($328 million) as of Sept. 30 and was “slightly” below 150 million euros at the end of 2011, Langer said.
Hugo Boss forecasts revenue earnings before interest, tax, depreciation and amortization of 3 billion euros by 2015 as it opens more shops and increases sales in Asia and the U.S. The formula to achieve this goal: increase free cash flow through “profitable growth” and “tight capital management.”
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