German Luxury Brand Cites Global Challenges For Revised Outlook
Hugo Boss has adjusted its annual forecast downward due to “persistent macroeconomic and geopolitical challenges that are dampening global consumer demand,” the company announced this week.
In a preliminary report, the German fashion brand revealed a 1 percent decline in currency-adjusted sales for the second quarter, totaling 1.01 billion euros. This is a drop from the 1.02 billion euros reported in the same period last year. Analysts noted this was the weakest quarter since Daniel Grieder took over as CEO in 2021 and implemented a new action plan.
“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” Grieder said in a statement.
As a result, Hugo Boss has revised its annual sales outlook. The company now expects sales to increase by 1 to 4 percent in 2024, reaching between 4.2 and 4.35 billion euros. This is a reduction from the previous forecast of a 3 to 6 percent increase, which anticipated up to 4.45 billion euros in sales.
Earlier this year, Hugo Boss admitted it would not achieve its goal of generating 5 billion euros annually by 2025.
The company attributed the sales decline to weak demand in the U.K. and China, despite a 5 percent increase in sales in the American market during the second quarter.
Hugo Boss has also significantly lowered its EBIT (earnings before interest and taxes) forecast for the year. The company now expects EBIT to range between 350 million and 430 million euros, down from the previous forecast of 430 million to 475 million euros. The initial forecast was already below market expectations of 490 million euros.
Following the announcement, Hugo Boss shares dropped significantly on the German stock markets on Tuesday, losing as much as 10 percent in value during trading.
Hugo Boss is not alone in facing such challenges. Other mid-tier luxury brands like Burberry and Swatch have issued similar warnings. While high-end luxury brands owned by LVMH and Kering have also reported drops, they have generally shown more resilience.
Hugo Boss is scheduled to release its official second-quarter results on August 1.