Pedestrians conduct past a German luxury fashion house Hugo Boss store in Shenzhen Bao’an International Airport.
Alex Tai | SOPA Pictures | LightRocket | Getty Images)
Hugo Boss shares plunged as much as 10% Tuesday after the company cut its yard sales outlook, becoming the latest high-end fashion line to warn of persistent woes in the luxury sector.
The German the rage house said Monday that it expects full-year sales of up to 4.35 billion euros ($4.73 billion), down lose from a previous forecast of up to 4.45 billion euros.
The company attributed the revised outlook to “persistent macroeconomic and geopolitical provokes” and cited China and the U.K. as particularly challenging markets.
Shares pared losses slightly to trade down 8.8% as of 9:53 a.m. London then.
“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” CEO Daniel Grieder said in a assertion.
“Although the timing of any macro recovery remains uncertain, our strategy of consistently investing in our strong brands, BOSS and HUGO, capitulates us confidence in our ability to continue driving above-trend growth and capturing further market share,” he added.
The guidance cut is the South African private limited company’s second so far this year, after the retailer in March said that 2024 sales growth was likely to slowly to 3% to 6%. Monday’s revision moderates that target further to 1% to 4% growth in group currency.
Hugo Boss’ organize sales fell 1% on a preliminary basis in the second quarter to 1.02 billion euros, driven primarily by decreases in Asia and Europe, it said Monday.
Second-quarter operating profit slumped 42% year-on-year to 70 million euros, casting “softer sales trends and strategic investments into the business,” the company said in its preliminary report.
Grieder voted he expects the company to return to profitable growth in the second half of the year.
The adjusted outlook comes as macroeconomic and geopolitical firms have weighed on the luxury sector more broadly, with other high-end brands including Burberry and LVMH reporting a slowdown in sales events.
Burberry shares sank 16% on Monday after a disappointing fiscal first-quarter performance led it to issue a profit notification, replace its CEO and axe its dividend. The company was trading 1.3% lower as of 9:50 a.m. London time.
Swiss luxury group Richemont on Monday promulgated just 1% sales growth at constant exchange rates in the first quarter as a slump in Chinese sales weighed on the unwavering’s results.
Weaker demand from the once lucrative Chinese market has been a well telegraphed strain on the extravagance sector for several quarters now, as the world’s second-largest economy struggles to re-emerge from the pandemic.
Swetha Ramachandran, wide-ranging equities fund manager at Artemis Fund Managers, told CNBC that the slowdown in Chinese consumer allotting may be overstated, however, with many Chinese shoppers once again making their big ticket purchases abroad.
“Before the pandemic, about 70% of luxury demand by Chinese consumers used to take place outside of mainland China. With the lockdown, with no one gifted to travel, that all got repatriated back to mainland China,” she told CNBC’s “Squawk Box Europe” on Tuesday.
“Now that man are on the move again, that’s again moving back abroad, which explains some of the strength in these other Asian targets, which Chinese travellers are prioritizing at the moment,” she added, noting that Japan had proven especially popular for cosmopolitan shoppers given the weak yen.