German fashion house Hugo Boss has cuts its sales and earnings forecasts for the year, citing weakening global consumer demand, especially in China and the UK, sending its shares down as much as 10%.
It now expects full-year sales to fall between €4.20 billion and €4.35 billion, compared witha previous forecast of €4.30 billion to €4.45 billion.
It also anticipates its operating profit (EBIT) to be around €350m to €430m, down from a previous €430m to €475m. It reported operating profit of €410m in 2023.
Its second-quarter operating profit (EBIT) amounted to €70m on a preliminary basis, representing a "massive 33% miss" compared with market expectations, Deutsche Bank analyst Michael Kuhn wrote in a note to clients.
The premium clothing brand has been on an expansion drive, increasing marketing spend and opening 102 new points of sale in 2023, but its shares have fallen this year as it warned of slower sales growth.
Hugo Boss shares were down 9% this morning, hitting their lowest level since April 2021.
"The critical question now will be whether guidance has been cut enough to de-risk 2024 and provide a clearing event that the stock's narrative can rebuild from," analysts at Jefferies wrote.
Hugo Boss' initial guidance for the year had already disappointed analysts expectations in March.
Along with its first-quarter results in May, the company had flagged weaker demand in China and concerns about the US consumer sentiment ahead of presidential elections.
The world's biggest watchmaker Swatch and luxury group Richemont flagged sluggish demand in China this week, while Burberry also issued a profit warning and scrapped its dividend payment for the year.
