Hugo Boss shares sank 10% today after its operating profit for the fourth quarter missed expectations, though sales continued to grow.
Earnings before interest and tax came in at €121m, missing analysts' average estimate of €129m. Citi analysts said the profit miss was "a reminder of how much the company is investing to support top line momentum".
Hugo Boss last year opened a "digital campus" with consultancy Metyis, aiming to make better use of data to improve its online sales.
It is also investing a total of €200m to expand a warehouse and upgrade its headquarters.
Shares in the German premium fashion group gained 25% over 2023 as investors grew more confident about the firm's brand revamp that has brought in new customers in Asia and helped it maintain sales momentum despite weak demand in Europe.
Sales in the fourth quarter grew by 13% at constant currency to €1.18 billion, boosted by a 33% jump in currency-adjusted revenue in the Asia-Pacific region, including a double-digit sales improvement in China.
For the full year, sales reached €4.2 billion in 2023, up from €3.65 billion a year earlier and slightly above analysts' estimate of €4.19 billion in a company-provided poll.
The company had expected sales of between €4.1 billion and €4.2 billion.
Operating profit (EBIT) for the year was €410m, at the midpoint of the company's forecast range of €400-420m. EBIT margin for 2023 is expected at 9.8%, up from 9.2% in 2022.
Hugo Boss has a target of €5 billion in revenues and an EBIT of at least €600m by 2025.
The company will release full 2023 results and an outlook for 2024 on March 7.
