Hugo Boss set to raise 2015 margin target

Hugo Boss is set to raise its 2015 profit margin target this fall, helped by the vigour of the global luxury market and improved productivity, sources close to the German fashion brand said. The maker of sharply cut men’s suits has already met its 2015 underlying profit margin target while bigger luxury rivals such as PPR, LVMH and Burberry  published record results last month.“If we don’t get a recession, Hugo Boss is on track to raise its midterm target,” a source close to Hugo Boss told Reuters.Hugo Boss posted a margin for EBITDA (earnings before interest, depreciation and amortisation) of 20.6 per cent at the end of June, already above its 2015 target of 20 per cent which it repeated in March.Even if stock markets became more bearish, which would impact the portfolios of the affluent potential buyers of Hugo Boss suits, several analysts said they still expected the company to lift its 2015 target on its investor day of Nov.8 “Many analysts are expecting Hugo Boss to raise their guidance,” Commerzbank analyst Andreas Riemann said. Analysts said they expected the company to raise its 2015 EBITDA margin to at least 23-24 per cent while they see the margin reaching 22.8 per cent on a full-year basis in 2011, up from 20.2 per cent in 2010 and 17.1 per cent in 2009.“Anything below 23 per cent would be a disappointment,” one Frankfurt-based analyst said. “They would have to raise their guidance as otherwise, it would mean they are going backwards.”On on Wednesday, Hugo Boss shares, which have gained 22 per cent since Jan.1, were up nearly 7 per cent at 67.88 euros by 1057 GMT, outperforming the DAX index of German blue chips which was up 2 per cent. Hugo Boss is controlled by private equity firm Permira which has a 72 per cent stake. The Marzotto family, one of Italy’s best-known textile names, also owns Hugo Boss shares indirectly through investments in Permira.In spite of the stock price rise, a source close to the company’s shareholders said they were not planning to cash in on their investment for now.The luxury goods market has been surprisingly buoyant in spite of concerns about a potential consumer spending slowdown. From / Gulf Today