Due to weak global demand, particularly in China and the UK, Hugo Boss has adjusted its sales forecasts for 2024 downwards. Despite a strategy of expansion and increased marketing investment, the Group’s performance fell short of expectations.
Difficult macroeconomic and geopolitical conditions continue to weigh on global consumer demand. Hugo Boss, the German fashion house, recently revised its sales forecasts for 2024 downwards, citing weakening global demand, particularly in China and the UK.
The group now expects sales of between 4.20 and 4.35 billion euros (+1% to +4%), compared with a previous estimate of 4.30 to 4.45 billion euros (+3% to +6%).
Preliminary figures for the second quarter of 2024 show a 1% drop in sales to 1.02 billion euros, with “difficult macroeconomic and geopolitical conditions weighing on global consumer demand”, says the group.
Operating profit (Ebit) for the period came to 70 million euros, well below the company’s consensus of 104 million euros (-42%).
This underperformance led to an 8% fall in the share price on the Frankfurt Stock Exchange, to its lowest level since 2021.
Revision of annual outlook
The high-end clothing brand has embarked on an expansion with the opening of 102 new points of sale in 2023 and an increase in advertising expenditure. Despite these efforts, preliminary results for the second quarter were disappointing.
Hugo Boss management now expects annual operating profit of between €350 and €430 million, down significantly from the previous forecast of €430 to €475 million.
This revision marks the second reduction in sales prospects this year for the Group. At the time of publication of its first-quarter results, Hugo Boss had already reported a drop in demand in China and concerns about US consumer morale in the run-up to the presidential election.
The luxury sector in dire straits
The luxury goods sector in general is going through a difficult period. The world’s leading watchmaker Swatch and the British luxury group Burberry also reported sharp falls in sales and profits, attributed to weak Chinese demand. Swatch saw its share price fall by 9.8% in Zurich, while Burberry lost over 18% in London.
These disappointing performances put pressure on the entire luxury goods sector on the Paris Bourse.
Despite this trend, Daniel Grieder, CEO of Hugo Boss, remains optimistic about a possible recovery. “By translating this sales performance and focusing even more on operational efficiency, we have the capacity to return to profitable growth in the second half of the year,” he said.
Hugo Boss will publish its full first-half results on August 1, which will provide a clearer picture of the company’s financial performance in a changing global economic environment.
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Featured photo : © Hugo Boss
