FRANKFURT, Oct 30 (Reuters) – German fashion house Hugo Boss (BOSG_p.DE: Quote, Profile, Research, Stock Buzz) slashed its 2008 forecasts on Thursday, citing a decline of retail sales in important regions, and reported a decrease in nine-month operating profit.
Hugo Boss, which sells luxury clothes wear and accessories, lowered its forecast for full-year sales growth after currency adjustments to the lower end of the previous forecast of 6-8 percent.
The group, which had previously forecast full-year earnings before interest and tax (EBIT) before special effects would grow 8 to 10 percent, said EBIT was now likely to come in slightly below last year’s results to reach 210-220 million euros.
The Metzinger-based company, majority owned by private equity group Permira [PERM.UL], said the outlook cut resulted from the general economic slowdown “characterised by ongoing numerous and unclarified business uncertainties”.
Analysts have been expecting cracks to appear in the luxury goods market, as a slowdown in consumer spending stemming from the credit crisis spreads also to the wealthy. [ID:nLL245980]
Hugo Boss reported a 1 percent fall in nine-month underlying EBIT to 215.6 million euros ($274 million) and a rise in nine-month sales by 3 percent to 1.364 billio euros.
Shares in Hugo Boss were trading 0.4 percent higher on Germany’s mid-cap index at 12.87 euros.
Hugo Boss shares have fallen 67.1 percent this year, underperforming the mid-cap index by about 38 percent over the same period.
Hugo Boss is trading at around 5.9 times projected 2009 earnings, at a discount to its peers such as Hermes (HRMS.PA: Quote, Profile, Research, Stock Buzz), Christian Dior (DIOR.PA: Quote, Profile, Research, Stock Buzz) and Bulgari (BULG.MI: Quote, Profile, Research, Stock Buzz).
Permira became a large shareholder in Hugo Boss last year and made a takeover offer for the firm after securing majority control of its parent company Valentino.
Permira now controls more than 80 percent of the voting rights in Hugo Boss, which was first introduced as a classical men’s business wear line in the 1970s, and now has over 1,250 stores worldwide. (Reporting by Sarah Marsh, Editing by Michael Shields)