The German fashion house has cut its yearly sales guidance due to weaker demand in China.
Hugo Boss has reduced its annual sales guidance to a range of €4.20 billion to €4.35 billion, the firm said on Monday.
This is down from an earlier prediction of €4.30 billion to €4.45 billion – and marks the second time the forecast has been cut this year.
Annual operating profit (EBIT), meanwhile, is projected to be around €350 million to €430 million, down from the previously communicated guidance of €430 million to €475 million.
The German fashion house cited “macroeconomic and geopolitical challenges” as the reasons behind guidance changes, and identified China and the UK as particularly downbeat markets.
While the company’s growth trajectory continued in the Americas (+5%), it recorded moderate revenue declines in the EMEA (-2%) and Asia/Pacific (-4%) regions in the second quarter.
Overall second-quarter group sales declined by 1% on the year to €1.015 million.
Operating profit (EBIT) in the period amounted to €70 million on a preliminary basis, down from €121 million in the same period last year.
Hugo Boss is just one of a number of companies hit by a slowdown in the luxury sector, a trend particularly driven by Chinese shoppers.
After a post-lockdown splurge, spending is starting to level out in China, exacerbated by youth unemployment and downbeat economic conditions.
China’s National Bureau of Statistics said on Monday that the country’s second-quarter GDP rose by 4.7%, the slowest expansion seen in five quarters.
Certain retailers, such as Hermès and Prada, have proven fairly resilient to headwinds in the luxury sector. Others, such as Gucci-owner Kering and Burberry, are finding themselves in stormier waters – alongside Hugo Boss.
“Although the timing of any macro recovery remains uncertain, our strategy of consistently investing in our strong brands, BOSS and HUGO, gives us confidence in our ability to continue driving above-trend growth and capturing further market share,” said Daniel Grieder, Chief Executive Officer of Hugo Boss, on Monday.
The company will publish its full set of second quarter results on 1 August 2024.
