METZINGEN (dpa-AFX) - While things have been crunching in the fashion industry for months, Hugo Boss is unimpressed by inflation and consumer slack. The group instead raised its medium-term targets on Thursday, saying its growth strategy is paying off faster than expected. Investors, however, initially cashed in on the news. The stock lost ground after performing very well so far this year.

Hugo Boss wants to achieve even higher sales by 2025 than previously planned, and the profit margin before interest and taxes is also expected to be higher. Instead of 4 billion euros, the board expects sales to reach 5 billion euros by two years from now, the group announced at an investor day in Metzingen on Thursday. The previous sales target is to be reached this year.

Earnings before interest and taxes (Ebit) are now expected to rise to at least 600 million euros by 2025, compared with 480 million euros previously. The Group's management is now targeting a margin of at least 12 percent, compared with around 12 percent previously.

Although the share price was still rising at the start of trading in the morning, the wind then shifted. Most recently, the stock lost more than three percent, having previously marked another high since 2018 at just under 71 euros. Since the beginning of the year, the share price has risen by a good 26 percent, making it one of the top stocks in the MDax.

The fact that business is going well this year is not new. After the presentation of the latest quarterly figures, the Management Board had already announced that the medium-term targets would have to be put to the test.

However, the extent of the forecast increase was a positive surprise for experts, wrote analyst Thomas Maul of DZ Bank. The new targets for sales and operating profit are up to 12 percent above market expectations. Supported by star-studded marketing campaigns, sales momentum should remain high, the industry expert judged. Maul expects Hugo Boss to continue to be able to sell a high proportion of its products at full price.

Manjari Dhar of Canadian bank RBC highlighted strong brand momentum and robust demand for high-end apparel, from which the group is benefiting. Cost efficiencies and high selling prices mitigated headwinds to margins. Boss' experienced management should also be able to deal with short-term headwinds from the economic side. Dhar also takes a positive view of Boss in the longer term.

"We put in place the right strategy at the right time," Group CEO Daniel Grieder told reporters Thursday. However, the board did not want to comment on the question of what Hugo Boss was doing better than others in the industry. Almost two years ago, the then new group CEO had presented his growth plans including a new strategy. Since then, among other things, the logo has been overhauled, a lot of money has been spent on marketing and the products have also been geared to a younger target group.

At the same time, many fashion companies are feeling the headwinds of inflation and sluggish consumer spending. Cost-cutting programs, discount battles and full warehouses have been frequent topics in the industry in recent months./knd/tav/mis