German luxury fashion house HUGO BOSS has officially released its 2019 Annual Report. Although the report recorded significant sales and earnings growth in the crucial final quarter, the brand's financial development for the full year fell short compared to initial expectations. According to the report, the brand's operating result (EBIT) in 2019 amounted to EUR 333 million, 4% below the prior-year level. "This was due to lower than expected sales growth, increased markdown activity – particularly in North America – and additional investments with the retail business,” stated the company’s CEO, Mark Langer.
Although 2019 was characterised by geopolitical uncertainties and recession fears, this only slightly dampened the otherwise buying mood of investors. The report states that in particular, the continuing low-interest-rate level led investors to continue to invest actively in the equity markets in 2019. Also, the robust U.S. economy spread confidence among many capital market participants.
Nonetheless, after a positive start to the year 2019, the HUGO BOSS share came under increasing pressure as the year progressed. The report showed that, in the second quarter, the escalating trade conflict between the United States and China led to significant share price declines, particularly in the premium and luxury goods sector. In the third quarter, particular microeconomics and the challenging environment in Hong Kong caused by political demonstrations and unrest burdened the Group's sales and earnings development.
Consequently, the full-year targets resulted in a considerable decline in the share price. By the end of the year, an easing of the trade conflict between the U.S. and China meant that the company's shares were able to recover some of the price losses. Ultimately, the company's stock closed the year for EUR 43.26 that, compared with the 2018 closing price, corresponds to a decline of 20%.