Hugo Boss today reports that its second-quarter sales fell by more than half when its shops shut during Covid-19 lockdowns. Online sales grew by more than 74% – but that wasn’t enough to stave off a bottom line loss.
The upmarket fashion brand, which recently announced the opening of a new flagship store in New York’s Soho (pictured), today reported group sales of €275m (£244.8m) in the second quarter of its financial year. That’s down by 59% compared to the same time last year.
Hugo Boss’ own retail sales fell by 58% as, on average, half of its stores closed temporarily during the second quarter, amid Covid-19 lockdowns around the world. Wholesale revenues were still harder hit, falling by 64% during the quarter. However, online sales grew by 74% during the quarter, while sales in mainland China returned to double-digit growth in June. Overall, earnings before interest and tax came in at a loss of €124m (£110m) at the retail brand, ranked Top150 in RXUK Top500 research. When asset writedowns including the value of its inventory were included its second quarter earnings came in at a loss of €250m (£222.5m).
The retailer said the “vast majority” of its shops and concessions in its largest markets of Europe and the Americas had been closed between mid-March and the end of May, while wholesale deliveries had been “significantly lower” during the quarter. But online sales improved across Europe, the Americas and the Asia Pacific region, and Hugo Boss said the quarter had been the strongest for ecommerce for 11 quarters – or nearly three years.
Sales across the Asia Pacific region were down by more than a third (36%) but Hugo Boss said sales in mainland China had continued a gradual recovery that started towards the end of March. The retailer took action to cut operating costs, reduce incoming stock, and postpone non-essential investments. It also put in place borrowing facilities of €633m, of which €212m was used by the end of June.
Yves Müller, spokesperson of the Hugo Boss managing board, said the second quarter had been “as challenging as expected” although measures to protect the brand’s financial stability had yielded strong cash flow. He said: “It is equally encouraging to see that the momentum along our strategic growth drivers China and online has either returned quickly or further accelerated. Now, we will put all our effort behind the further recovery of our operations in order to return to top and bottom-line growth as soon as possible.”
Hugo Boss said that sales had improved from month to month in the second quarter and that trend had continued into the third quarter, but it was too soon to predict how its business would develop in 2020.