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Hugo Boss sees China booming despite boycott call

Stock MarketsMay 05, 2021 04:10AM ET
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© Reuters. FILE PHOTO: 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

BERLIN (Reuters) -German fashion house Hugo Boss expects sales in mainland China to keep growing fast despite calls for a boycott of Western brands by Chinese consumers launched in late March over Western accusations of forced labour in Xinjiang.

The company known for its smart men's suits saw first-quarter sales almost double in mainland China and it expects that momentum to continue unchanged despite the boycott calls, acting Chief Executive Yves Mueller told journalists.

At least three Chinese celebrities said in March they were dropping Hugo Boss, and some internet users vowed to boycott the brand for good after it made contradictory comments over its purchase of goods and cotton from the Xinjiang region.

Compared with the first quarter of 2019, a year before the coronavirus pandemic hit the region, currency-adjusted sales rose by 29% in mainland China in the first quarter and Mueller said this trend continued at the start of the second quarter.

German sportswear company Puma said last month it expected a hit to sales from the China consumer backlash.

Overall, group sales fell 10% to 497 million euros ($597 million), while Hugo Boss just managed to turn an operating profit of 1 million euros. The average of forecasts by analysts were for 442 million euros in sales and a 28 million euro loss.

Hugo Boss shares were up 4.2% at 0742 GMT.

Mueller declined to comment on reports last month of possible interest in the company, including from French luxury group LVMH, which had boosted the stock.

The company said it was confident sales in the second quarter would almost double, and it hoped to generate a positive operating profit in the period. But it said it could not give a precise outlook.

Mueller, who will hand over to former Tommy Hilfiger boss Daniel Grieder next month, said about 20% of its sales space was still closed at the start of the second quarter, but he was optimistic for a rebound in demand as lockdowns ease.

"The desire to consume is coming back," he said, adding that he saw pent-up demand for smart clothes as people start meeting friends again and planning weddings and parties.

($1 = 0.8323 euros)

Hugo Boss sees China booming despite boycott call
 

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