Hugo Boss sees revival plan bearing fruit in 2018

Wed Nov 16, 2016 6:31am EST
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By Emma Thomasson

BERLIN (Reuters) - The new chief executive of Hugo Boss (BOSSn.DE: Quote) said a plan to revive the struggling German fashion house by cutting brands and seeking to appeal to fashion-conscious younger customers will only bear fruit from 2018, sending its shares lower on Wednesday.

Mark Langer is returning Hugo Boss to its roots selling premium men's clothing, reversing the course of his predecessor Claus-Dietrich Lahrs, who sought to make the label more of a luxury brand and invested heavily in womenswear.

Langer told an investor day the company will now focus on two main brands, one higher-priced premium line and another at lower prices for younger consumers, seeking to complement its smart business suits with more casual and sports outfits.

"We have placed a too-strong focus on a push into luxury price points," he said. "We have to make sure we are perceived as a lifestyle brand beyond our suiting capabilities."

Lahrs quit in February after a severe slowdown in luxury demand led to a steep fall in Boss sales in the United States and China. Lahrs was appointed head of Kering's (PRTP.PA: Quote) Italian luxury leather goods maker Bottega Veneta in September.

Langer said 2017 will be a year of stabilization after an expected fall of up to 3 percent in currency-adjusted sales this year, predicting a return to growth in 2018. Analysts had on average forecast 1 percent growth in sales for 2017 and 2.5 percent for 2018.

Shares in Hugo Boss, which have narrowed their discount to luxury peers since Langer took over, were down 6.4 percent by 1023 GMT, making them the biggest fallers among German mid-cap stocks .

Shares in rivals LVMH (LVMH.PA: Quote) and Burberry (BRBY.L: Quote), which have rallied in the past month on signs of a recovery in mainland China, also fell.   Continued...

The logo of German fashion house Hugo Boss is seen on a clothing label at their outlet store in Mezingen near Stuttgart October 29, 2013.  REUTERS/Michael Dalder/File Photo