Hugo Boss shares crashed by 13 percent after the company announced that it may fail to meet 2025 sales projections as customer demand is weakening. The high-end fashion brand registered an increase of 18 percent the previous year, but a weak future forecast made the shares plunge to a trading low last seen in 2016.
The German brand adjusted its forecast due to macroeconomic and geopolitical conditions that have led to falls in high-end retail. Consumers worldwide have slowed spending on the higher end of the market, from consumer durables to cars to affordable high-end brands. Two other high-end brands, such as Burberry and LVMH, have also reported a slowdown in sales.
Earlier, lifestyle brand Hugo Boss reported slow growth in January, with an increase of 18 percent for the fiscal year 2023. The Germany-based company reported a revenue of 4.1 billion euros for the first time.
The company has projected sales growth between three and six percent for 2024 and hopes for revenue between 4.3 billion euros and 4.45 billion euros. However, it also said that reaching the 5 billion euros sales target set for 2025 would be delayed, which caused the stock to reach its lowest on Thursday trading.
The weak outlook of apparel, perfume, and shoemakers disappointed investors and the market. Things are not looking good for 20224 and 2025 either.
CEO Daniel Grieder said that it was “too early to say exactly how much we are going to be delayed” and had doubts if they would be delayed, though the group was cautious.
The high-end retail market is seeing cautious consumer spending, and luxury goods makers generally discounted products at the end of 2023 to decrease inventory as demand for high-end products decreases in Europe and Asia.
Hugo Boss CEO Greider said the company spends money carefully and does not intend to cut jobs. Instead, premium German fashion houses are cutting costs to help increase gross margins in 2024.
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