Hugo Boss results underline luxe recovery, China, Europe, UK are strong but US struggles

German fashion house Hugo Boss reported a better-than-expected increase in first-quarter sales and net profit on Wednesday, helped by a recovery in China as well as growth in Britain, where the weak pound has boosted tourist spending.

Hugo Boss said net profit rose 25% to €48 million (£40.3 million) on sales up 1% to €651 million, beating average analyst forecasts for €46 million and €641 million respectively, according to a Reuters poll.

The results add to signs of a pickup in demand for luxury goods, particularly in China, with companies including LVMH, the world's biggest luxury goods group, and Hermes recently reporting a recovery.

Hugo Boss reconfirmed its outlook for 2017, including a forecast for currency-adjusted sales to be stable and for net income to rise by a low double-digit percentage.

The company, best known for its men's suits, is in the midst of restructuring, slashing prices in China to bring them closer to European and U.S. levels, and reining in costs by renegotiating rents and closing lossmaking stores.

Hugo Boss said sales in China rose 3%, boosted by marketing on social media, with double-digit growth on a like-for-like basis on the mainland compensating for a weaker performance in Hong Kong and Macau.

In Europe, sales rose a currency-adjusted 3%, helped by local demand and a recovery in purchases by tourists, that had been hurt a year ago by attacks in France and Belgium, with sales in Britain up 7%.

However, sales continued to fall in the Americas, dropping a currency-adjusted 7% as the brand limits distribution to discount chains and is also hit by falling shopper numbers in stores as retailing shifts online.