Hugo Boss targets faster sales growth

German fashion house Hugo Boss expects sales growth to accelerate and margins to improve in the coming years as it upgrades its core brand and pushes ahead with moves to sell more womenswear and expand its own retail network.

In a statement ahead of an investor event, Hugo Boss said it would aim for average sales growth in the high-single digits in coming years, something the firm said earlier it would have trouble achieving in 2014, when it expects 6-8 per cent growth.

The statement made no mention of a previous target for 2015 sales to reach €3 billion, a goal that analysts have said will be tough to achieve.

It also reiterated a target to increase its operating margin to 25 per cent.

The metric slipped to 22.4 per cent in the first nine months from 22.8 per cent a year ago.

Best known for its men’s suits, Boss said womenswear should grow at double-digit annual rates over the next few years

The group said it would upgrade its core Boss brand by investing in its range of high-quality clothing and sportswear, while it hones its brand communications, adding in future it would seek to mainly sell the brand in its own stores.

Best known for its men’s suits, Boss said womenswear – boosted by collections from designer Jason Wu it is promoting heavily – should grow at double-digit annual rates over the next few years to account for 15 per cent of sales by 2020.

It also reiterated a drive to sell more goods through its own stores rather than third parties, setting a goal for retail sales to account for more than three-quarters of the total by 2020 from just over half now.

Earlier this month, Hugo Boss shares fell after it trimmed its 2014 sales and profit forecasts.

Even before the European economy started to slow, the global luxury goods industry was struggling as the conflict in Ukraine hit demand in Russia and demonstrations in Hong Kong added to concerns about softer demand from China due to its weaker economy and a crackdown on conspicuous spending.

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