March 14, 2012 / 7:23 AM / 5 years ago

UPDATE 2-Hugo Boss sees sales growth slowing in 2012

* Expects sales growth of no more than 10 pct vs 19 pct in 2011

* Profit to rise at faster rate

* CEO says outlook is only "first sense" of 2012 sales

* Southern European wholesalers get more time to pay

* Shares decline 0.3 percent

BASEL, Switzerland, March 14 (Reuters) - German fashion house Hugo Boss AG said sales growth would halve in 2012, cooled by a likely slowdown in red-hot Chinese demand for must-have designer labels.

Sales and profit at luxury goods companies such as LVMH , Richemont and Burberry jumped last year but many are braced for a less dramatic rise in 2012 after China cut its growth forecast for this year.

Hugo Boss, known for its sharp men's suits, said it expected currency-adjusted sales to rise by up to 10 percent in 2012, with growth coming from all regions, compared with 19 percent in 2011. China grew 33 percent last year.

Core profit -- earnings before interest, tax, depreciation, amortisation and special effects -- would rise at a faster rate than sales, the group said on Wednesday.

Hugo Boss shares fell 0.3 percent to 84 euros by 1225 GMT, while Germany's mid-cap index was up 0.65 percent.

Chief Executive Claus-Dietrich Lahrs told Reuters the sales outlook was just a "first sense" of the year. Forecasting was harder now that more revenue comes from own retail stores rather than wholesale deals.

The outlook is in line with the Thomson Reuters StarMine SmartEstimate, which weights analyst estimates according to their track record and puts consensus at a 9.7 percent increase.

Hugo Boss is also giving wholesalers in southern Europe more time to pay as they struggle to obtain financing from banks amid the European sovereign debt crisis.

"Some of them got longer targets for payment from us, but we have to make sure the bills are paid," Lahrs told Reuters in an interview. "We have this on the radar and are in intense talks."

Hugo Boss, controlled by Permira, had already reported preliminary 2011 results showing sales of 2.06 billion euros ($2.7 billion) and core profit up 34 percent to 469 million.

The company, which aims for 3 billion euros in sales and core earnings of 750 million euros in 2015, raised its dividend per ordinary share to 2.88 euros from 2.02 and to 2.89 euros from 2.03 for each preferred share.

Hugo Boss also announced plans to convert all its preference shares into ordinary shares, rekindling speculation that Permira could seek an exit soon. The private equity company last denied any imminent exit plans in November.

It "seems as if Permira is slowly preparing for its exit," a Frankfurt-based trader said.

Analysts said the move to have only one share class should make the share structure more transparent and boost Hugo Boss's weighting on the German mid-cap index.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below