German fashion house Hugo Boss is facing difficulties connecting with consumers.
Shares of Hugo Boss dropped by more than 7% on Tuesday after the luxury retailer announced it was reducing its 2024 sales forecast due to weakening demand in key markets, including the U.K. and China.
The high-end clothing company stated that its updated outlook takes into account “persistent macroeconomic and geopolitical challenges” that have dampened global consumer demand.
“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” said Daniel Grieder, Hugo Boss’ chief executive officer, in a statement.
Grieder mentioned that although the timeline for 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 implemented over the last three years.
Hugo Boss is not alone in its struggles to reach consumers in Europe and Asia. Earlier this week, British luxury giant Burberry reported similar issues, stating it was losing favor with Chinese consumers. Additionally, Burberry announced the departure of its CEO and anticipated a decline in profits, leading to a roughly 16% drop in its stock.
Chinese shoppers have long been crucial for the luxury industry. Despite the struggles of Hugo Boss and Burberry, other high-end retailers such as Prada and Moncler have been seeing positive results from shoppers in Asia. In April, these retailers reported that their sales were boosted by both local shoppers and tourists.