February 10, 2017 / 8:47 AM / in 8 months

BUZZ-Hugo Boss: suits Investec AM

** Michael Spinks, co-Head of Multi Asset Growth at Investec Asset Management, is backing German suitmaker Hugo Boss

** Hugo Boss has significantly underperformed its luxury peers following steep falls in its US and China sales which culminated in CEO Claus-Dietrich Lahrs’ exit last February

Chart: reut.rs/2kvkAKl

** But with signs of strength in Chinese demand for luxury goods and a new strategic plan outlined by Lahrs’ successor, Mark Langer - refocusing on core brands and increasing efficiency - Investec AM saw upside to earnings v expectations

** Investec AM, which flags Boss’s brand value, potential for through-the-cycle growth & dividend yield >6%, started position in co June 2016 in Investec Diversified Growth Fund

** Consensus bearish Hugo Boss, despite Q4 sales recovery in China and Britain; co given worst score in European Luxury by StarMine’s ARM model, a measure of change in sellside sentiment (14 out of 100)

** Exane BNP Paribas on Thursday becomes 5th broker since late December to downgrade stock (to ‘neutral’, suffering from being a traditional company in a mature category (formalwear) and disruption from new entrants)

** AllianzGI’s Morris-Eyton sold out of Boss after slight recovery in shares end-2016 (RM: tricia.wright1.thomsonreuters.com@reuters.net)

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