Hugo Boss China plans to cull more stores

The cull of Hugo Boss China stores will continue after a first round downsizing helped the German retailer’s bottom line.

Hugo Boss revealed its quarterly operating profit on Friday, beating forecasts and giving incoming CEO Mark Langer a mandate for his tough strategy to return to profit growth.

In March the company said it would close about 20 of its 145 stores in Greater China. Now, Langer says another 20 will follow over the next 18 months.

“To return to profitable growth again in the medium term, we have made decisions that are painful to begin with,” Langer said. “The market environment will remain difficult for the foreseeable future.”

Hugo Boss earnings fell 13 per cent to 108 million euros (US$120 million) in the second quarter on sales down 4 per cent to euro 622 million. Net profit has hit by 57 million in extraordinary items, largely costs relating to closing stores.

Langer’s strategy to improve Hugo Boss’ earnings includes renegotiating rents, shutting stores and refocusing marketing spending on its core menswear range rather than womenswear, a category his predecessor diversified into.

He also plans to sell the brand in high-quality stores in the US market, to try to reduce discounting.

Hugo Boss’ share price rose 6 per cent on Friday after the results were revealed and some analysts are now recommending investors buy the stock.