Hugo Boss Shares Plummet Amid Sales Outlook Cut
- Shares of Hugo Boss plummeted nearly 10% after the company revised its sales outlook downwards.
- The revision was primarily attributed to feeble consumer demand in China, a crucial market for luxury brands.
- This decline in stock reflects broader concerns about the luxury retail sector's performance amid changing consumer habits.
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 house 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, trading 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, primarily due to declines in Asia and Europe. This adjustment 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 struggled to rebound post-pandemic. Despite these challenges, Swetha Ramachandran, a global equities fund manager, 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 where 70% of luxury demand from Chinese consumers occurred outside mainland China.