German fashion house Hugo Boss is struggling to connect with consumers.
Shares of Hugo Boss dropped by over 7% on Tuesday after the luxury retailer announced it was lowering its 2024 sales forecast due to weakening demand in key markets, including the U.K. and China.
The high-end clothing company cited “persistent macroeconomic and geopolitical challenges” that have dampened global consumer demand as the reason for updating its outlook.
“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 noted that while the timing of a “macro recovery remains uncertain,” the company aims to be profitable in the second half of the year through its “CLAIM 5″ growth strategy, which has been in place for the past three years.
Hugo Boss is not alone in its challenges 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. Burberry also announced the departure of its CEO and warned of declining profits, leading to a roughly 16% drop in its stock value.
Chinese shoppers have been crucial for the luxury industry. Despite the struggles of 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 their sales were supported by local shoppers and tourists.