By Linda Pasquini and Marleen Kaesebier
(Reuters) -Hugo Boss on Thursday forecast sales and operating profit for 2024 below market expectations and said it 2025 sales target might be slightly delayed, blaming weak consumer demand, especially in some European markets.
The German fashion house sees earnings before interest and taxes (EBIT) of 430-475 million euros ($468-$517 million), up from 410 million euros in 2023 but below analysts’ consensus estimate of 490 million euros in a company-provided poll.
Sales should increase between 3% and 6% to around 4.30-4.45 billion euros, also below analysts’ consensus of 4.56 billion euros, and a marked slowdown from 18% growth in 2023.
The company’s shares dropped 17% to 52.30 euros at 0812 GMT, on track for their worst day in eight years.
“While we are conscious that the 2024 guide might be given conservatively, clearly demand conditions have continued to deteriorate,” Jefferies analysts wrote in a note to investors.
Hugo Boss continued reaping the fruits of its 2022 brand revamp last year, which brought in new customers in Asia and helped to support sales despite weakening demand in Europe.
However, unfavourable currency effects coupled with an increasingly promotional market dampened margin improvement at the end of 2023, the company said.
The luxury and apparel sector had to discount products in the last months the year as companies aimed to cut down their inventories amid slowing demand.
Hugo Boss said its goal of 5 billion euros in revenue by 2025 might be slightly delayed as consumers facing inflation and a surge in borrowing costs cut discretionary spending. It still expects its EBIT margin to reach at least 12% that year.
The group said it aimed to further optimise its operations, including sourcing and logistics, as well as curb costs in bricks-and-mortar retail and headquarter functions, as it seeks to improve its gross margin in 2024.
($1 = 0.9174 euros)
(Reporting by Linda Pasquini and Marleen Kaesebier in Gdansk; Editing by Varun H K and Mark Potter)
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