German fashion house Hugo Boss is facing challenges in engaging with consumers.
Shares of Hugo Boss dropped by more than 7% on Tuesday after the luxury retailer revised its 2024 sales outlook downward due to weakening demand in key markets, including the U.K. and China.
The high-end clothing company said it updated its outlook after considering “persistent macroeconomic and geopolitical challenges” that have been affecting global consumer demand.
“We are operating in a period of significant global macro uncertainty, which also impacted our performance in the second quarter,” said Daniel Grieder, Hugo Boss’ chief executive officer, in a statement.
Grieder mentioned that although the timing of a “macro recovery remains uncertain,” the company aims to be profitable in the second half of the year. He highlighted that the retailer plans to achieve this through its “CLAIM 5″ growth strategy, which has been in place for the past three years.
Hugo Boss is not alone in its struggles to connect with consumers in Europe and Asia. Earlier this week, British luxury giant Burberry noted similar challenges, stating it was losing favor with Chinese consumers. Additionally, Burberry announced it was replacing its CEO and bracing for a decline in profits, leading to a 16% drop in its stock.
Chinese shoppers have long been crucial for the luxury industry. Despite the difficulties faced by Hugo Boss and Burberry, other high-end retailers like Prada and Moncler have seen a boost from shoppers in Asia. In April, these retailers reported that their sales were bolstered by local shoppers and tourists.