Hugo Boss sees profits and revenues fall in Q2

Hugo Boss has reported a 42% drop in operating profit (EBIT) to €70m (£59m) in Q2 2024 due to lower revenues in the three month period as well as higher operating expenses. Its sales also dropped by 1% to €1.01bn (£858.5m) and EBIT margin decreased by 490 basis points to a level of 6.9%. The group 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. Currency-adjusted revenues for Boss Menswear fell by 2% to €794m (£674.1m), while sales for Boss Womenswear increased by 2% to €68m (£57.7m). Meanwhile, at Hugo, currency-adjusted sales were up 3% to €152m (£129m), supported by the successful launch of its new, denim-focused brand line Hugo Blue. Regionally, in EMEA, currency-adjusted sales decreased 2% to €604m (£512.8m) YOY, 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. Additionally, revenues in the group’s brick-and-mortar retail business (including freestanding stores, shop-in-shops, and outlets) fell 2% below the prior year to €563m (£478m). This mainly reflects lower store traffic, in particular in markets such as the UK and China, which more than offset an increase in conversion rates. However, sales in brick-and-mortar wholesale expanded by 5% to €236m (£200.3m) in the second quarter, reflecting ongoing robust demand for the latest Boss and Hugo collections among wholesale partners. Against the backdrop of ongoing uncertainties regarding the future development of global consumer sentiment, Hugo Boss adjusted its financial outlook for fiscal year 2024 on 15 July 2024. As a result, Hugo Boss expects group sales to increase by +1% to +4% in group currency to an amount of around €4.20bn (£3.57bn) to €4.35bn (£3.69bn), with currencies anticipated to have a slightly negative impact on revenues. At the same time, the group expects EBIT for the full-year 2024 to develop in a range of 15% to +5%, amounting to around €350m (£297.18m) to €430m (£365.1m), thus taking into account the overall market uncertainty. Lastly, sales in the EMEA region are expected to grow in the low single-digit percentage range. Daniel Grieder, CEO of Hugo Boss: “By stepping up investments into our brands, products, and touchpoints, we boosted brand relevance for Boss and Hugo, winning over consumers from all over the world. 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. “And while the macro environment is likely to remain difficult for the time being, we are steadfast in our commitment to continue driving above-trend growth, capturing further market share, and focusing even more on operational and organisational productivity. Our confidence in the immense potential of our two brands, Boss and Hugo, remains strong, as do the long-term growth opportunities for our business.”