Hugo Boss Cuts Sales Outlook, Shares Drop 9%

Hugo Boss shares experienced a significant decline of up to 10% on Tuesday following the company's announcement of a reduced sales outlook for the year. The German fashion brand now anticipates full-year sales to reach a maximum of 4.35 billion euros ($4.73 billion), attributing the downturn to ongoing macroeconomic challenges, particularly in the Chinese market. By mid-morning trading in London, shares had slightly recovered but were still down 8.8%. In a statement, CEO Daniel Grieder highlighted the "significant global macro uncertainty" impacting the company's performance, particularly in the second quarter. Preliminary figures indicated a 1% drop in group sales, totaling 1.02 billion euros, largely due to declines in both Asia and Europe. This adjustment in outlook reflects broader struggles within the luxury sector, as other high-end brands like Burberry and LVMH have also reported sales slowdowns. Burberry, in particular, faced a dramatic 16% drop in shares after issuing a profit warning, changing its CEO, and suspending its dividend following disappointing fiscal results. The luxury market has been notably affected by weaker demand from China, which has been a persistent issue for several quarters as the country continues to recover from the pandemic. Despite these challenges, Swetha Ramachandran, a global equities fund manager at Artemis Fund Managers, suggested that the slowdown in Chinese consumer spending might be overstated, noting that many Chinese shoppers are returning to make significant purchases abroad, reminiscent of pre-pandemic trends.