Global spread of coronavirus pandemic weighs on Hugo Boss results
First quarter sales at Hugo Boss decreased 16 percent overall to 555 million euros (605 million dollars), corresponding to a currency-adjusted decline of 17 percent. The company said in a statement that after a very encouraging start to the New Year, the global spread of the coronavirus led to a significant impact on the business. The double-digit sales decline significantly weighed on earnings with EBIT amounting to minus 14 million euros (15.2 million dollars) compared to 57 million euros in the same quarter of 2019.
“The Covid-19 pandemic is an unprecedented exceptional situation for our company too,” said Mark Langer, Chief Executive Officer of Hugo Boss AG, adding, “We have done our utmost to ensure the financial flexibility and stability of our company. I am absolutely convinced that together we will safely navigate Hugo Boss through this unusual time.”
In the Asia/Pacific region, the effects began to be noticeable from late January, and currency-adjusted sales were down by a total of 31 percent in the first quarter. The company added that decline in currency-adjusted sales in Europe and the Americas was less pronounced at 14 percent and 17 percent, respectively.
The company further said that while the vast majority of the company-owned store network was affected by temporary closures in the first quarter, the group’s own online business saw currency-adjusted growth of 39 percent. In total, retail sales decreased 17 percent in the first quarter, while wholesale revenues declined 18 percent.
Unlike in Europe and the Americas, where business is still significantly impacted as a result of the pandemic and the continuing closures of points-of-sale, Hugo Boss is currently seeing steady improvements in mainland China. The company said, since the end of March all Hugo Boss retail stores and shop-in-shops have been reopened over there, and the sales achieved in April were around 15 percent to 20 percent below the prior year level.
The company further said that temporary closure of a large number of stores of Hugo Boss will weigh on the group’s sales and earnings development for the full year. Hugo Boss expects both sales and earnings declines in the second quarter of 2020 to be more pronounced than those recorded in the first quarter due to the continuing closures of the group’s own stores as well as points-of sale at important partners in Europe and the Americas. Overall, these two regions combined usually contribute around 85 percent to group sales. In total, the company expects currency-adjusted group sales to decrease by at least 50 percent in the second quarter.
Intu appoints chief restructuring officer as Covid-19 crisis grows
Shopping centre owner Intu has appointed David Hargrave as chief restructuring officer to help the company through the Covid-19 pandemic.
Hargrave has 20 years of experience as a partner in the restructuring practices of both PwC and EY, specialising in business turnarounds across many sectors, and his role as chief restructuring officer at Intu is to assist the shopping centre owner “work through its strategy to fix the balance sheet”.
This appointment comes as Intu shared an update on market conditions stating that since its Covid-19 update on March 26 it has only received 40 percent of the rent and service charge for the quarter and it is looking to take “robust action” to enforce the terms of its leases to collection outstanding rent.
In a statement, Intu said that it was now offering monthly rents to the end of 2020 and that it was in “advanced discussion” with customers representing a further 28 percent of the rent due, with the remainder of customers are at various stages of discussions regarding revised payment plans.
However, it did accuse some retailers of not engaging to find a “consensual solution” amid the coronavirus crisis, adding that these were “large, well-capitalised brands who have the ability to pay but have chosen not to”. In these instances, Intu said it was prepared to take “more robust action to enforce the legally binding terms of those leases”.
Currently, Intu centres are operating on a “semi-closed basis” explained management, with only essential stores remaining open. This has led the company to furlough 60 percent of staff in the centres and around 20 percent at its head office.
In addition, the Board have agreed to a 20 percent salary reduction for the next three months and the business has also identified around 3 million pounds of cost savings in the short-term as it looks to support its retailers by reduce service charge costs.
Intu also confirmed that it has agreed waivers on its revolving credit facility until June 26, 2020, as well as reaching an agreement on interest rate swaps which had a mandatory break at the end of April. The amounts due on the close of these swaps is now to be paid on the June 26, 2020, or a later date if agreed.
On the waivers, Intu explained: “We believe that these actions are another step forward that will allow us to extend our engagement to key stakeholders of the group at the asset level as we explore all options, including potentially seeking standstills to overcome the current market dislocations. This forms part of our ultimate strategic objective to fix the balance sheet over the medium term.”
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