German company Hugo Boss revised its forecast for the year downward this week because of “persistent macroeconomic and geopolitical challenges that are dampening global consumer demand.”
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In a preliminary release, the men’s and womenswear brand reported that, in currency-adjusted terms, sales had fallen 1 percent over the second quarter of the year to bring in 1.01 billion euros.
Over the same period last year, Hugo Boss saw 1.02 billion euros in sales. Analysts noted this was the weakest quarter Hugo Boss had seen since new chief executive officer Daniel Grieder had come on board in 2021 and instituted a new action plan.
“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” Grieder said in a statement.
The company also revised its outlook for the whole year down. Hugo Boss now expects sales to increase between 1 and 4 percent during 2024, totaling somewhere between 4.2 and 4.35 billion euros. Previously the company had expected sales to increase by between 3 and 6 percent and hit up to 4.45 billion euros.
Earlier this year, Hugo Boss said that it would not be achieving its stated ambition of bringing in 5 billion euros annually by 2025.
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Slack demand in the U.K. and China were causing problems, the company explained, even while the American market was still doing well and had actually seen an increase of 5 percent in sales during the second quarter.
Hugo Boss management also significantly reduced expectations for its EBIT — earnings before interest and taxes — for the year. Instead of coming in between 430 million and 475 million euros, it would now end up somewhere between 350 million and 430 million euros. The original EBIT forecast for 2024 had already been below market expectations of 490 million euros.
As a result of the announcement, Hugo Boss shares fell significantly on the German stock markets on Tuesday, losing as much as 10 percent in value during trading.
Hugo Boss is not alone in such worries. Other mid-tier luxury brands have had comparable problems, with Burberry and Swatch recently issuing similar warnings. High-end luxury brands, such as those owned by LVMH and Kering, have also reported drops but are generally proving more resilient.
Hugo Boss will publish official second-quarter results on Aug. 1.
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