German Fashion House Expects Modest Growth In 2010 After Dip In Sales Last Year#
This May, Jing Daily reported on rumors that Hugo Boss was thinking of forming a joint venture with the Macau-based fashion retailer Rainbow "to tap rising Chinese consumer spending power and retail consumption." As we noted at that time, though joint ventures are commonplace in the Chinese auto and tech industries, we haven't seen many in the fashion world. This weekend, speculation on Hugo Boss's plans for expansion in the China market was confirmed with the announcement that the company had finally sealed a deal with Rainbow, forming a new joint venture over which Hugo Boss will hold 60% ownership to Rainbow's 40%.
According to Chinese-, German-, and English-language sources, the Hugo Boss-Rainbow joint venture, which will be officially launched later this year, could help China become the German fashion house's third-largest global market after the U.S. and Germany. Currently, the Rainbow Group operates 31 Hugo Boss retail outlets in Macau, along with 57 throughout mainland China. Hugo Boss executives have previously announced that the company plans to open around 20 new locations per year in China, a plan which looks even more reasonable with the signing of this joint venture agreement.
According to Hugo Boss CFO Mark Langer, the company is on track to realize single-digit growth in the remainder of this year, following a 7% dip in sales last year.