November 2, 2017 / 6:59 AM / a year ago

UPDATE 2-Hugo Boss lifts 2017 sales guidance

* Says now sees low single-digit pct rise in 2017 sales

* Previously saw 2017 sales flat from 2016

* Q3 sales up 1 pct, in line with consensus

* Shares gain 6 percent (Adds CEO comments on investments, new store concept)

By Maria Sheahan

FRANKFURT, Nov 2 (Reuters) - German fashion house Hugo Boss raised its sales guidance for 2017 after a robust third quarter and said it was confident its new digital store concept would take off.

After a string of profit warnings, the group known for its smart men’s suits has cut prices in China to bring them closer to European and U.S. levels, made efforts to appeal to younger customers, invested in its website and closed loss-making shops.

Chief Executive Mark Langer is also revamping core brands BOSS and HUGO and has launched a new store concept that combines bricks-and-mortar outlets with digital services such as online ordering and interactive “smart mirrors” which can, for example, suggest other products to go with what a customer is trying on.

“We are very confident that we have developed a better store design,” Langer said, but added Hugo Boss would wait for feedback on the first three stores it has opened under the new concept before adding more.

Hugo Boss now expects its 2017 group sales to grow by a low single-digit percentage rate from 2.7 billion euros ($3.1 billion) last year, on a currency-adjusted basis, having previously guided for flat sales.

Shares in Hugo Boss were up 6 percent at 79.65 euros, their highest in almost two years, by 0954 GMT.

In the third quarter through the end of September, currency-adjusted sales rose 3 percent to 710.7 million euros ($827 million), helped by a 6 percent gain in Hugo Boss’s own retail stores and meeting analysts’ consensus forecast in a Reuters poll.

Online sales, which account for around 5 percent of overall revenue, grew at about the same pace, Langer said.

Core profit (EBITDA before special items) eased by 1 percent to 142.9 million as Hugo Boss spent more on marketing, and even though it pushed back upgrades to some of its retail stores until 2018 due to the rollout of its new concept.

Hugo Boss said it now saw its full-year core profit before special items remaining stable from 2016’s 493 million euros, compared with a previous forecast for anything between a 3 percent decline and a 3 percent rise.

$1 = 0.8593 euros Editing by Christoph Steitz and Mark Potter

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