(Reuters) -Hugo Boss shares sank 10% on Tuesday after its operating profit for the fourth quarter missed expectations, though sales continued to grow.
Earnings before interest and tax came in at 121 million euros, missing analysts’ average estimate of 129 million euros. Citi analysts said the profit miss was “a reminder of how much the company is investing to support top line momentum”.
Hugo Boss last year opened a “digital campus” with consultancy Metyis, aiming to make better use of data to improve its online sales. It is also investing a total of 200 million euros ($218 million) to expand a warehouse and upgrade its headquarters.
Shares in the German premium fashion group gained 25% over 2023 as investors grew more confident about the firm’s brand revamp that has brought in new customers in Asia and helped it maintain sales momentum despite weak demand in Europe.
Sales in the fourth quarter grew by 13% at constant currency to 1.18 billion euros, boosted by a 33% jump in currency-adjusted revenue in the Asia-Pacific region, including a double-digit sales improvement in China.
For the full year, sales reached 4.2 billion euros ($4.58 billion) in 2023, up from 3.65 billion a year earlier and slightly above analysts’ estimate of 4.19 billion euros in a company-provided poll.
The company had expected sales of between 4.1 and 4.2 billion euros.
Operating profit (EBIT) for the year was 410 million euros, at the midpoint of the company’s forecast range of 400 million to 420 million euros. EBIT margin for 2023 is expected at 9.8%, up from 9.2% in 2022.
Hugo Boss has a target of 5 billion euros in revenues and an EBIT of at least 600 million euros by 2025.
The company will release full 2023 results and an outlook for 2024 on March 7.
($1 = 0.9182 euros)
(Reporting by Linda Pasquini, additional reporting by Helen Reid; editing by Milla Nissi and Bernadette Baum)
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