Hugo Boss sees coronavirus hit to sales spreading from Asia

BERLIN (Reuters) – German fashion house Hugo Boss (BOSSn.DE) warned on Thursday that the coronavirus will have a significant impact on its first-quarter results, with sales falling particularly in Asia, but also in other key markets.

Hugo Boss said it expects a gradual normalisation by the middle of the year, but it still foresees a major hit to 2020 results. It forecast currency-adjusted sales will rise from zero to 2% in the full year, including a single digit decline in Asia/Pacific.

Asia/Pacific accounted for 15% of sales in 2019, making Hugo Boss less exposed than other luxury brands like Burberry (BRBY.L), but the region had been its biggest growth driver, expanding 5% in 2019 and at double-digit rates in mainland China.

After a very encouraging start to the year in the region, Hugo Boss now expects significant sales losses as more than half its 150 points of sale in China have been closed since the end of January, with shopper traffic well down at those still open.

It added it was currently recording a “noticeable decline” in sales in other key markets.

It forecast 2020 earnings before interest and taxation (EBIT) to come in at 320 million-350 million euros ($356-390 million) after a 4% fall to 333 million in 2019 as it invested in sprucing up its store network.

Hugo Boss cut its 2019 earnings forecast in October, citing weak demand in the United States and Hong Kong, but it then went on to report better than expected fourth-quarter sales growth, helped by strong demand online and at its renovated stores.

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