Hugo Boss reports slow down in Q4

Hugo Boss Orange 2015 Ad campaign

Hugo Boss AG reported fourth-quarter sales and profit that missed estimates as the German clothier contended with sluggish demand for high-priced fashion in economically stagnant Europe.

Revenue rose 5% to 684 million euros ($783.9 million), Metzingen, Germany-based Boss said in a preliminary statement today, compared with the average estimate of 699.4 million euros. Earnings before interest, tax, depreciation and amortization gained 6% to 167 million euros, excluding special items. Analysts had expected 172.8 million euros.

Chief Executive Officer Claus-Dietrich Lahrs is opening more Boss-branded stores in Asia and the Middle East to compensate for slowing western demand for luxury goods. The maker of narrow-cut suits and Jason Wu-designed dresses  a bright spot in its line-up  expects another challenging year.

“2015 will not become any easier in light of the many economic and political uncertainties,” Lahrs said today. The company will report its full 2014 results on March 12.

Hugo Boss shares fell as much as 5.7% in Frankfurt, the most since Nov. 4 when the company lowered its targets for 2014. They were down 4.5% at 108.5 euros as of 9:08 a.m., trimming this year’s advance to 6.7 %.

Hugo Boss is targeting high single-digit percentage sales growth in coming years by focusing on emerging economies in Asia, eastern Europe and the Middle East. A sluggish economy in Europe and political unrest in Ukraine have hurt luxury consumption on the continent and in Russia.

Boss said today it’s taking over 17 Korean stores it had managed through a partner as of March 1 to capitalize on tourism and a “booming” womenswear market. It’s setting up its own distribution company in Dubai and taking over all its stores in China, where it will operate 130 stores.

For the full 2014 fiscal year, Boss sales were 2.6 billion euros, representing growth of 6 percent on both a statutory and currency-adjusted basis. In November, the company projected a gain of 6 percent to 8 percent, excluding currency effects.

Pretax profit for the year was 1 percent higher at 437 million euros, including a 19 million-euro charge related to taking over its Middle East business.