Metzingen, Germany: German fashion house Hugo Boss forecast that China’s love affair with luxury would drive double-digit sales and earnings growth this year.
“We’ve had a good start to 2011 and are confident of a another record year,” chief executive Claus-Dietrich Lahrs told reporters on Tuesday.
Shares rose 2.8% to €56.72, the biggest mid-cap gainer in Germany, with analysts saying the prediction for sales growth of at least 12% and core earnings growth of 15% were above expectations.
Hugo Boss, which has been expanding its casual wear range alongside its popular suits, said European brands in particular were expected to benefit most from rising wealth in China.
LVMH, the world’s largest luxury goods company, last month said Chinese clients were “infatuated” with its Louis Vuitton brand.
Lahrs told Reuters in an interview that smaller Chinese cities were also now experiencing strong growth, as city planners develop infrastructure and shopping malls to encourage people to stay in second-tier cities instead of heading for the major centres such as Shanghai and Beijing.
Hugo Boss, majority-owned by private equity firm Permira, also said growth in 2011 would be helped by a strategy to open more of its own stores. It ended 2010 with 537 stores, compared with 438 a year earlier.
Last month, it took over 15 franchise stores in the UK from retailer Moss Bros.
Lahrs said that of the 70 new store openings planned for 2011, 20 were for China, six in the United States and the rest for Europe.
“This confirms that Europe is still an attractive market,” he said at the company’s headquarters in the southern German town of Metzingen, near Stuttgart.
Other clothing groups including Gerry Weber, Adidas and Burberry have also been expanding their network of own stores to take advantage of the higher margins they bring.
Lahrs said Latin America markets also showed promise, while US growth was expected to be better than in Europe.
“We see no interruption in US demand. Premium and luxury is seeing a rebound,” Lahrs told Reuters.
Hugo Boss had already published preliminary results in February, showing sales of €1.7 billion.