Hugo Boss Warns Profit May Miss Forecasts on Coronavirus

(Bloomberg) --

German clothier Hugo Boss AG warned that the coronavirus will have a significant impact on sales from Asia, possibly resulting in full-year profit lower than analysts were forecasting.

• The company forecast total operating profit of 320 million euros ($356 million) to 350 million euros. Analysts had predicted 348 million euros.

Key Insights

• Profit may fall this year from the 333 million euros it earned in 2020. The company is taking a hit as its turnaround plan was banking on annual sales growth of at least 10% from Asia through 2022. Hugo Boss forecast revenue there to drop by a single-digit percentage.
• Total sales growth already was weak last year, at 2%, which is less than half of the company’s long-term target. The company also named Heiko Schaefer, who has been chief executive officer of Tom Tailor, to become its chief operating officer, to be in charge of sourcing and manufacturing.
• Since late January, many of the company’s stores in mainland China, Hong Kong and Macau have been either closed or operated at limited hours. This puts Hugo Boss’s turnaround plan in disarray, and its shrinking operating margin may mean its target of reaching 15% by 2022 will be harder to reach.

Market Reaction

• The shares fell as much as 1.1%, bringing its drop over the past two weeks to 13%.

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