Hugo Boss says it expects sales to stabilise in 2017 and profitability to start to recover as the struggling German fashion house managed to turn its business around in China after slashing prices there. Sara Hemrajani reports.
Models, celebrities and glittering runway shows... But Hugo Boss is taking a step back from luxury and womenswear, instead it's returning to its roots selling smart men's suits. Executives say they're "laying the foundation" for profitable growth, expecting sales to stabilise this year. The German company has been cutting costs, shutting stores and rethinking marketing after struggling to entice customers. That strategy appears to be paying off, especially in China. Hugo Boss has been slashing prices there and that spurred a boost in demand in the second half of 2016. But while the outlook is optimistic, some analysts warn it's a difficult market environment. (Soundbite) Nick Parsons, Global Head FX Strategy, National Australia Bank, saying (English): "Certainly the clampdown that we saw in China and elsewhere around the whole process of giving gifts, and a changed climate I think in many parts of the western world around conspicuous consumption are still going to pose considerable headwinds. There's no sign it seems that conspicuous consumption is back in fashion." Still, the top luxury players are hopeful. Like Hugo Boss, LVMH, Cartier and Burberry also say their cash tills have been busier in China in recent months.