Hugo Boss confirmed the 42 percent drop in its second-quarter operating profit on Thursday, two weeks after the German fashion house slashed its annual forecasts and reported preliminary numbers, as economic and geopolitical challenges dampen global consumer demand.
The luxury sector is grappling with weaker sales and margin pressures as inflation-hit shoppers cut back spending on designer fashion. A property slump and job insecurity in China has exacerbated the problem.
“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,” CEO Daniel Grieder said in a statement.
Hugo Boss said its earnings before interest and tax (EBIT) fell to €70 million ($75.8 million) in the second quarter, from €121 million a year earlier, as reported last month.
Its quarterly net income slumped 50 percent year-on-year to €39 million.
Earnings from luxury companies this quarter have demonstrated the strain that the sector is under, with both LVMH and rival Kering falling short of forecasts.
By Ozan Ergenay, Tristan Veyet and Linda Pasquini; Editor: Milla Nissi
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Hugo Boss Plunges After Slashing Outlook on China, UK Demand
The German high-end fashion brand now expects operating profit of around €350 million ($381 million) to €430 million in 2024. The shares slid as much as 11 percent on Tuesday.
