BERLIN (dpa-AFX) - German luxury fashion brand Hugo Boss (HUGSF.PK) said that it will consider the improvement of cashflow and the financial outlook of the Group when it formulates its dividend proposal for 2016.
At the Annual Shareholders' Meeting 2016, the Chief Executive Officer, Mark Langer said, 'We acknowledge that the stable dividend cannot compensate for the share price decline last year. Of course, we as the Managing Board are also not satisfied with this performance. However, rest assured that we together with our employees will do our best to bring the company back to its successful growth track.'
In the US market, the compnay will focus on improving the quality of distribution in the wholesale channel, which continues to be of great importance to it.
The company noted that it is scaling back the presence of its core brand in 'off-price channels,' where its collections have been sold at high discount rates in the past. This is a painful process and will take its toll on sales in 2016. However, its brand will benefit from this in the medium and long-term future.
Despite its actions in the US and China, the company can only expect very modest sales growth this year. We need to accommodate this outlook by adjusting its cost development.
The company will reduce its investments by around EUR 50 million in comparison to the previous year.
The company expects Group sales to grow in the low single-digit percentage range. A positive trend in Europe will likely offset the decline in sales in the Americas and Asia. In terms of sales by channel, Group sales growth will be carried by own retail business. New openings and takeovers of the past year will support sales increases. On the other hand, it expects to see a mid to high single-digit percentage decline in sales in the wholesale business. The reasons for this are the structural changes to its distribution in the United States as previously described and takeover effects. Given the muted overall sales growth and pressure on the gross profit margin from price adjustments in Asia, it is anticipating a low double-digit decline in operating profit, that is, EBITDA before special items.
Copyright RTT News/dpa-AFX