Hugo Boss shares tumbled to their lowest level in 2021 after the company revised its profit forecast for the year, citing weakness in key markets like China and the UK. The luxury German fashion brand now expects an operating profit of approximately €350 million ($381 million) to €430 million in 2024, down from the previous range of €430 million to €475 million, as stated in a late Monday announcement. Additionally, the company has also lowered its sales expectations. As a result, the shares dropped by as much as 11% at the opening of Tuesday’s trading session, reaching the lowest intraday level since April 2021. Currently, the stock is trading at €36.68, down 9.1% as of 10:10 a.m. Frankfurt time. This setback is a blow to the brand’s restructuring efforts under the leadership of CEO Daniel Grieder and marks the first time the company has reduced its full-year guidance during his tenure, according to Citigroup Inc. analyst Thomas Chauvet.
In June 2021, the former executive of Tommy Hilfiger joined Hugo Boss with the aim of revitalizing their clothing range and attracting a younger customer base. The company was heavily impacted by the shift towards casual wear during the pandemic and the increase in remote working.
According to Chauvet, an analyst, Boss has been performing exceptionally well in recent years, meeting and exceeding market expectations. However, the demand for premium casual wear has now become more subdued, posing a challenge for the company. This setback could affect its performance in the second half of the year and raises doubts about its sales and margin targets for 2025.
The luxury sector has had a mixed start to the earnings season. Burberry Group Plc, a UK trench-coat maker, experienced a 16% drop in shares on Monday. This decline continued after the company announced the suspension of its dividend, a change in CEO, and a warning that it may report a loss for the first six months of the year.
Shares of Swatch Group AG remained relatively stable after experiencing a significant decline of 9.8% on Monday. The decline occurred following the company’s announcement of a sharp decrease in sales and a 70% decline in operating profit for the first half of the year.
On the other hand, Richemont, the owner of Cartier, reported a slight increase in sales for the first quarter on Tuesday. This growth was attributed to the strong performance of its jewelry brands, which helped offset declines in China and its luxury watchmakers. As a result, Richemont’s shares saw an increase of up to 2.3%.