Hugo Boss third quarter 2015 profits in decline

German fashion house Hugo Boss expects strength in Europe to help sales and earnings to a fourth-quarter recovery, it said on Tuesday, though it sees no immediate prospect of a pick-up in China and the United States.

Hugo Boss said its performance is expected to be particularly strong in Britain in the fourth quarter, but that recent weakness in the United States and China could persist into 2016.

“We expect tough trading to continue to the end of 2015 and possibly also the beginning of 2016,” Chief Executive Claus-Dietrich Lahrs told a conference call with analysts, referring to the U.S. and Chinese markets.

Finance chief Mark Langer said that while sales had fallen 20 percent in China in the third quarter, purchases by Chinese tourists in Europe were up more than 50 percent.

Hugo Boss cut its 2015 sales and profit outlook last month because of the weakness in China and reiterated that on Tuesday, saying it expects sales and core profit to each rise by between 3 percent and 5 percent on a currency-adjusted basis.

Hugo Boss has been investing heavily in expanding its own retail network, opening a net 64 new stores in the first nine months to bring its total to 1,105, and shifting away from selling its sharp suits wholesale through other outlets.

In the third quarter, sales from its own stores rose 6 percent in local currencies and were stable on a currency-adjusted basis, helped by 20 percent currency-adjusted growth in sales via its website, while wholesale sales fell 7 percent.

Hugo Boss Fall Winter 2015-16 ad campaign