A rough first half of the year for German luxury house Hugo Boss (BOSSY) has led to a decrease in full-year guidance.
Hugo Boss saw same-store sales decline 8% in the second quarter and wholesale sales fell by 1%. It put the declines down to "a very difficult environment." In euro terms sales were down to €622 million ($692.66 million). That beat consensus analysts of €612 million put together by FactSet.
The group's shares rose more than 5% in early morning trading on Friday.
The company said sales were down in France and the Benelux region because of weak tourism due to the ongoing terrorism attacks.
In the second quarter sales in Asia were down 6% compared with last year. The Chinese market saw sales decrease by 16%. Sales in the U.S. fell by 21%.
To combat falling earnings Hugo Boss today said it would close 20 freestanding stores globally over the next 18 months. This is in addition to the closure of its Chinese portfolio. The company said it is also taking a more "disciplined" approach to pricing and reducing costs.
Hugo Boss will also focus its U.S. wholesale business on high-quality and profitable formats.
The company now expects sales in the full year to remain stable or decline by up to 3%.
It said full-year retail sales won't fall more than they did in the first, half, when same-store sales plunged 7%. In the first quarter Hugo Boss said it expected sales in the retail division to be up in the mid to high single digits for the full year.
In the wholesale division sales are expected to contract by 10%.
Ebitda before special items is expected to decline between 17% and 23% in the full year. "Cost savings initiatives to increase operating efficiency will cushion the effects on profit of the anticipated comparable same store decline in own retail," the company stated.
CEO Mark Langer said, "To return to profitable growth again in the medium term, we have made decisions that are painful to begin with. These include the closure of stores and a structural change of our distribution in the U.S. wholesale channel."