German fashion brand Hugo Boss lowers full-year outlook after weak Q2

German luxury fashion brand Hugo Boss has lowered expectations for the full year after a disappointing second quarter saw operating profit down by some 40%, the company said on Monday evening.

Second quarter sales dropped by a good 1% to €1.015 billion ($1.105 billion) on a currency-adjusted basis, according to the company.

Earnings before interest and taxes (EBIT) fell by some 40% to €70 million, Hugo Boss said, citing a 21% increase in marketing costs as well as "higher brick-and-mortar retail costs" of 12%.

As a result, the retailer updated its outlook for the full year 2024 and is now expecting group sales to grow by only 1% to 4%, or €4.2 billion to €4.35 billion.

That is down from 3% to 6% growth forecast previously.

Hugo Boss now expects full-year EBIT to reach €350 million to €430 million, ranging between a decline of up to 15% and a maximum of 5% growth.

The company attributed is poor second quarter performance and lowered expectations to "persistent macroeconomic and geopolitical challenges that are dampening global consumer demand."

Hugo Boss also pointed to key markets like China and the UK where "the overall market environment remained particularly challenging."

The company was also able to log improvements in the second quarter, however, with its inventories shrinking by 7% and the gross margin increasing 50 basis points to 62.9%.