Hugo Boss takes control in Asia

German luxury fashion retailer Hugo Boss is forging ahead with plans to take direct control of its Asian store network as it looks to the region to offset stagnant sales growth in Europe.

Hugo Boss says it will take over 17 franchise stores in South Korea and set up its own distribution company in Dubai.

It will also take over all of its stores in China, currently operated by a joint venture, with plans for 130 shops in the mainland.

The Russian market is crumbling, on concert with its currency, the rouble. And Germany’s luxury fashion market has lost its lustre in recent times. Fashion retail sales slid eight per cent in the fourth quarter of 2014 according to independent data. Investment house Goldman Sachs Group has advised clients to sell Hugo Boss shares, predicting little growth for the company in 2015.

But the German company remains optimistic, focusing its hopes on Asia, especially China, where it says there is a growing thirst for luxury fashion.

“Looking ahead over the next few years, Hugo Boss faces excellent prospects for growth,” said Claus-Dietrich Lahrs, CEO, in a statement.

In its latest quarterly earnings statement, Hugo Boss reported group-wide sales growth of five per cent to US$721 million and pre-tax earnings of $176 million.