Pedestrians walk past a German luxury fashion brand Hugo Boss store at Shenzhen Bao’an International Airport.
Alex Day | Sopa Images | Light Rocket | Getty Images)
Hugo Boss The company’s shares plunged 10% on Tuesday after the company cut its sales forecast, becoming the latest high-end fashion brand to warn of the luxury industry’s ongoing woes.
The German fashion house said on Monday it expected full year sales Up to 4.35 billion euros ($4.73 billion), slightly less than previous predictions Up to 4.45 billion euros.
The company attributed the revised outlook to “ongoing macroeconomic and geopolitical challenges,” citing China and the United Kingdom as the most challenging markets.
The stock narrowed its losses slightly, falling 8.8% as of 9:53 a.m. London time.
“We are in a period of significant global macroeconomic uncertainty, which also impacted our second quarter results,” Chief Executive Daniel Grieder said in a statement.
He added: “While the timing of macroeconomic recovery remains uncertain, our strategy of continuing to invest in strong brands such as BOSS and HUGO gives us confidence in our ability to continue to drive above-trend growth and gain additional market share. “
The cut is the company’s second so far this year, after the retailer said in March that sales growth could slow to 3% to 6% in 2024. Monday’s revision lowered the group’s currency growth target further to 1% to 4%.
Hugo Boss said on Monday that second-quarter group sales fell an initial 1% to 1.02 billion euros, driven mainly by falling sales in Asia and Europe.
The company said in a preliminary report that second-quarter operating profit fell 42% year-on-year to 70 million euros, reflecting “softer sales trends and strategic investments in the business.”
Grider said he expects the company to return to profitable growth in the second half of the year.
The revised outlook comes as macroeconomic and geopolitical concerns put broader pressure on the luxury goods industry, with other high-end brands such as Burberry and LVMH reporting slowing sales.
Burberry shares fell 16% on Monday after disappointing first-quarter results led the company to issue a profit warning, replace its chief executive and cut its dividend. The company’s shares were down 1.3% as of 9:50 a.m. London time.
Swiss luxury goods group Richemont on Monday report Sales in the first quarter grew only 1% at constant exchange rates as declining sales in China affected the company’s performance.
Weak demand in the once lucrative Chinese market has been a clear pressure on the luxury goods industry for several quarters as the world’s second-largest economy struggles to recover from the epidemic.
Swetha Ramachandran, global equity fund manager at Artemis Fund Managers, told CNBC that the slowdown in consumer spending in China may be exaggerated, as many Chinese shoppers are once again making big-ticket purchases overseas.
She told CNBC’s “Squawk Box”: “Before the outbreak, about 70% of Chinese consumers’ luxury demand was outside of mainland China. With the lockdown, no one was able to travel, and all of that demand was shipped back. to mainland China.
“Now that people are moving again and going back abroad, this explains some of the advantages of other Asian destinations that Chinese tourists are currently prioritizing,” she added, noting that Japan has proven particularly popular with international tourists. ,shopper.
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