Hugo Boss, a renowned fashion brand, experiences a significant downturn in profits amid weak consumer demand.
- In the second quarter, Hugo Boss reported a 42% drop in operating profit, amounting to €70m (£59m).
- Sales dipped by 1% year-on-year to €1.01bn (£857m), influenced by geopolitical and economic pressures.
- The company adjusted its 2024 sales and profit forecast due to declining markets, notably in China and the UK.
- Despite challenges, Hugo Boss remains committed to improving operational efficiency and capturing more market share.
In a challenging economic climate, Hugo Boss has reported a notable decrease in operating profit for the second quarter, down by 42% to €70m (£59m). This downturn comes shortly after the company had to revise its annual projections, a move necessitated by diminishing consumer demand.
Revenue for the period fell slightly by 1% year-on-year, reaching €1.01bn (£857m). This decline is partially attributed to persistent macroeconomic and geopolitical challenges, which have curbed global consumer demand, notably impacting major markets such as China and the UK.
The Americas presented a more positive outlook for the brand, with a currency-adjusted sales increase of 5% year-on-year. This growth was driven by the brand’s strategic focus on enhancing its lifestyle positioning. However, this uptick was not enough to counterbalance the setbacks experienced in other regions.
In the EMEA region, sales adjusted for currency were down by 2% compared to the previous year. This decline mirrors the ongoing soft consumer sentiment observed in the UK and further deceleration in pivotal markets like Germany and France.
The Asia Pacific region experienced a 4% drop in currency-adjusted sales, primarily due to reduced consumer confidence in China, which impacted domestic retail performance therein.
After reassessing its financial outlook for 2024 on 15 July, Hugo Boss now anticipates a modest sales increase of 1% to 4% in group currency, ranging between €4.20bn (£3.52bn) and €4.35bn (£3.65bn). Previously, expectations were set for a 3% to 6% rise, amounting to between €4.30bn (£3.61bn) and €4.45bn (£3.73bn). The forecast for EBIT has also been adjusted to a range of -15% to +5%, reflecting anticipated financial pressures.
CEO Daniel Grieder remarked on the situation, 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.” Despite the obstacles, the company is resolute in driving above-trend growth and improving operational productivity.
Hugo Boss remains resolute in its strategy to overcome market challenges and drive future growth.
