Weak consumer demand impacts Hugo Boss results

In the second quarter of 2024, Hugo Boss sales reached 1,015 million euros, representing a decline of 1 percent, both currency adjusted and in group currency.

As announced on July 15, operating profit (EBIT) decreased by 42 percent to 70 million euros in the second quarter, reflecting lower revenues and higher operating expenses.

The company attributed the weak results to persistent macroeconomic and geopolitical challenges dampening global consumer demand, with retail sentiment in key markets such as China and the UK particularly affected.

Commenting on the company’s trading update, Daniel Grieder, CEO of Hugo Boss said in a statement: Over the past three years, our Claim 5 growth strategy has enabled Hugo Boss to drive superior, high-quality top-line growth. However, following this period of strong top-line momentum, the global market environment deteriorated substantially in the first half of 2024. 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.”

Highlights of Hugo Boss financial results

In the first six months, currency-adjusted group sales increased 3 percent above the prior-year level, with broad-based growth across all brands as well as most regions and most distribution channels. In group currency, revenues expanded by 2 percent in the first half, amounting to 2,029 million euros.

Currency-adjusted revenues for Boss menswear remained 2 percent below the prior-year level, while sales for Boss womenswear increased by 2 percent currency-adjusted.

At Hugo, currency-adjusted sales were up 3 percent, supported by the successful launch of its new, denim-focused brand line Hugo Blue.

The company said, in EMEA, currency-adjusted sales decreased 2 percent, reflecting ongoing soft consumer sentiment in the UK as well as a further slowdown in industry growth in key markets such as Germany and France. At the same time, the company continued to drive double-digit revenue improvements in emerging markets.

In the Americas, currency-adjusted sales were up 5 percent reflecting further sales improvements in the US market. While Latin America also contributed to growth, recording double-digit improvements in the three-month period, sales in Canada remained on the prior-year level.

Currency-adjusted sales in the Asia/Pacific region decreased 4 percent reflecting sales declines in China. The company added that Southeast Asia & Pacific recorded another robust performance in the second quarter, with revenues up high-single digit, supported by a particularly strong performance in Japan.

Review of Hugo Boss performance across retail channels

Sales in the licence business increased 3 percent currency-adjusted, supported by strong improvements in the eyewear business, while brick-and-mortar retail performance reflected lower store traffic mainly in markets such as the UK and China and remained 2 percent below the prior year.

Wholesale expanded by 5 percent in the second quarter, while digital business was down 4 percent currency-adjusted.

In the second quarter, Hugo Boss recorded an improvement in its gross margin, up 50 basis points to a level of 62.9 percent.

The group's EBIT margin decreased by 490 basis points to a level of 6.9 percent. Net income amounted to EUR 39 million, down 50 percent against the prior-year level. Net income attributable to shareholders decreased by 51 percent to 37 million euros, resulting in earnings per share of 0.54 euro, also down 51 percent year over year.

Hugo Boss forecast reflects market uncertainty

For the year ahead, Hugo Boss expects sales to increase by 1 percent to 4 percent in group currency to around 4.20 billion euros to 4.35 billion euros.

Sales in the EMEA region are expected to grow in the low single-digit percentage range, while sales in the Americas are forecast to increase at a mid to high single-digit percentage rate. For Asia/Pacific, the company expects revenues to decline moderately in 2024, reflecting ongoing muted local demand in China.

The company said that EBIT for the full year is forecasted to develop in a range of 15 percent to 5 percent, amounting to around 350 million euros to 430 million euros, taking into account the overall market uncertainty.

Hugo Boss expects net income to develop within a range of 15 percent to 5 percent in 2024.