Hugo Boss, the German premium fashion brand, reports significant financial setbacks amid declining consumer demand.
- The company experienced a 42% drop in operating profit in the second quarter, amounting to €70m (£59m).
- A notable 1% decline in group sales was observed, with EMEA and Asia Pacific regions showing particular weakness.
- In response to economic and geopolitical challenges, Hugo Boss downgraded its 2024 financial outlook.
- CEO Daniel Grieder affirms commitment to strategic growth despite challenging market conditions.
Hugo Boss has disclosed a substantial 42% decline in operating profit, contributing to an overall figure of €70 million in the second quarter. This announcement comes following the company’s strategic decision to revise its annual sales and profit forecasts due to a noticeable decrease in consumer demand globally.
Group sales saw a year-over-year decline of 1%, amounting to €1.01 billion. The company attributes this downturn to prevailing macroeconomic and geopolitical challenges, which have severely impacted consumer demand across key regions, including China and the UK. Revenue gains in the Americas were insufficient to counterbalance the declines experienced across the EMEA and Asia Pacific regions.
Within the Americas, Hugo Boss recorded a 5% increase in currency-adjusted sales, driven by its strategic lifestyle positioning. However, this positive result was overshadowed by a 2% decline in EMEA sales and a 4% decline in the Asia Pacific region. These figures reflect ongoing consumer sentiment challenges, notably in the UK, and decreased sales in China linked to muted consumer confidence.
The deteriorating market conditions prompted Hugo Boss to adjust its financial projections for 2024. The company now anticipates sales growth of only 1% to 4% in group currency, ranging from €4.20 billion to €4.35 billion. Previously, the sales growth forecast was between 3% and 6%, with expectations set between €4.30 billion and €4.45 billion.
Similarly, Hugo Boss forecasts EBIT (Earnings Before Interest and Taxes) to range from a decrease of 15% to an increase of 5%, amounting to approximately €350 million to €430 million. The previous EBIT growth outlook ranged from 5% to 15%, with expectations between €430 million and €475 million.
CEO Daniel Grieder acknowledged the challenging market environment, stating: “The global market environment deteriorated substantially in the first half of 2024. The weakening consumer sentiment in most markets led to a rapid slowdown in growth across the entire industry, which we could not completely escape from.” He reaffirmed the company’s dedication to pursuing growth beyond market trends and enhancing organizational efficiency.
Hugo Boss continues to navigate challenging economic conditions with strategic adjustments and a focus on growth.
