Hugo Boss to cut investment, reviews store growth

German fashion house Hugo Boss is taking a range of steps to try to revive its fortunes, including reviewing the further expansion of its own stores, after its chief executive stepped down last month following a profit warning.

Hugo Boss, which went on a global expansion drive under former Chief Executive Claus-Dietrich Lahrs, said it was reviewing its cost structure and cutting investment in 2016 to below 200 million euros (154.56 million pounds) from 220 million in 2015.

Known for its sharp suits, Hugo Boss used to sell most of its range wholesale to outlets like department stores, but opened about 100 new stores a year under Lahrs, with more than 60 percent of sales coming from its 1,113 own stores in 2015.

Brands that sell from their own retail space can boost margins and maintain more control over how their garments are presented, but the strategy can leave them more exposed in a downturn due to fixed rental and staff costs.

Lahrs announced last month he was stepping down after eight years at the helm after the share price tumbled following a profit warning on weak sales in China and the United States.

Hugo Boss gave no update on the hunt for a successor. It is due to hold a results news conference later on Thursday.

Boss shares, which are down 29 percent this year to trade at a big discount to rivals like LVMH and Burberry, were indicated up 2 percent in pre-market trade.

Under Lahrs, Hugo Boss increased sales by almost two thirds, expanding into women's wear and positioning what had been a mid-market label as more of a luxury brand, particularly in China.

The company, which had already cut prices in China to bring them closer to the European level, said it would close around 20 stores in China and make extensive renovations to others there.

It also plans to expand its digital activities and bring the running of its online business in Europe in-house in the second quarter to better coordinate with its stores.

It reiterated a forecast it gave last month for 2016 sales to grow at a low single-digit percentage rate and for adjusted operating profit to fall at a low double-digit percentage rate.

$1 = 0.9107 euros