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Hugo Boss Cost Cuts Bear Fruit; Kate Spade Warns of Holiday Pricing Pressure


Markdowns may have helped total sales increase 0.4% year-to-date at Next, but full-price sales have suffered. The British high-street clothing chain further narrowed its full-year sales guidance Tuesday to between -1.75% and 1.25%, compared to its previous range of -2.5% to 2.5%, after a tough third quarter.

Full-price sales tumbled 7 percent in August, which Next attributed to its end-of-season sale in July, while a strong year-on-year comparison contributed to a 5.1% decline in September. Despite a 1.3% pickup in sales in October, full-price sales were down 3.5% in Q3, as in-store sales declined 5.9% and Next Directory (e-commerce and catalog) was unchanged from last year.

Kate Spade & Company

Kate Spade & Company posted a 14 percent increase in net sales to $39 million in its third quarter ended Oct. 1, in spite of a challenging retail environment and fewer tourists shopping at its stores. But while the company delivered direct-to-consumer comparable sales growth of 6.7%, that was mainly thanks to e-commerce. Excluding online sales, comps were flat compared to last year.

That being said, quarterly profits increased to $29.6 million and 23 cents per diluted share, up from $2.3 million and 2 cents per diluted share a year ago. But after cautioning that pricing pressures could affect sales in the crucial holiday quarter, shares (KATE) fell 2.51% Tuesday and dropped 8.14% Wednesday.

Hugo Boss

Cost reductions introduced earlier this year helped Hugo Boss survive another quarter of dwindling sales and the storied German brand said Wednesday that full-year earnings will be supported by higher cost savings than initially thought, largely due to renegotiated store leases.

Hugo Boss sales decreased 6 percent to 703 million euros ($781 million) in the third quarter, as the brand recorded declines everywhere but Central and Latin America. In fact, the decision to intentionally limit wholesale distribution in the U.S. caused sales there to plunge 14 percent in Q3. But savings of 65 million euros ($72 million), compared with the 50 million euros ($55 million) originally planned, bodes well for the brand, which plans to update investors on its long-term strategy on Nov. 16.

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