Hugo Boss misses quarterly sales forecast, sees soft China, UK demand

By Linda Pasquini

(Reuters) -German fashion group Hugo Boss on Tuesday reported quarterly sales below expectations, citing softer demand in Britain and China and a weaker dollar.

The group's sales fell 4% to 989 million euros ($1.15 billion) in the third quarter, hit by a weaker U.S. dollar. That was below analysts' forecast of 1.01 billion euros in a company-provided poll.

"It was another challenging quarter, during which our revenue declined slightly due to weak consumer sentiment and the euro appreciating against several currencies," Chief Financial Officer Yves Mueller said on a media call, pointing to the dollar in particular.

"To give you a sense of the scale: On average, the dollar was worth 6% less in the third quarter than a year ago," he added.

Excluding the impact of currency changes, sales fell 1%, dragged down by lower revenues in its key markets China and Britain. That weakness outweighed improvements in Germany, France and the U.S., it said.

The group said its full-year sales would be at the low end of its forecast range, although that was in line with analysts' expectations.

The group also flagged a sales decline in the brick-and-mortar wholesale business in the third quarter, citing the timing of deliveries.

"These revenues have not been lost, but will only be recognised later," Mueller said.

The company's gross margin rose to 61.2% of sales from 60.2% a year earlier, beating analysts' expectations of 60.5%, helped by cost cuts and lower global freight rates, the company said.

"Looking at the detail, we actually find the mix better than it looks" because the timing of deliveries which caused the wholesale decline will shift some revenues to the fourth quarter instead, analysts at JP Morgan said in a note.

Its full-year sales and operating profit would likely come in at the lower end of its guidance of between 4.2 billion and 4.4 billion euros and between 380 million and 440 million euros respectively, it said, citing rising macroeconomic uncertainty and adverse currency movements.

Analysts have forecast annual sales of 4.2 billion euros and annual EBIT of 379 million euros.

($1 = 0.8575 euros)

(Reporting by Linda Pasquini in Gdansk, editing by Matt Scuffham, Louise Heavens and Susan Fenton)

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