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Hugo Boss has warned that its updated goal of reaching €5 billion in revenue by 2025, which it set out in January, might be “slightly delayed amid weak consumer sentiment”. Shares were down 17.2 per cent following the announcement.
The German company confirmed that its sales grew 18 per cent to a record €4.2 billion in 2023, in line with its preliminary results.
In 2024, the company expects sales to grow between 3 and 6 per cent, reaching between €4.3 billion and €4.45 billion. EMEA is expected to grow low to mid single digits, the Americas are forecasted for mid to high single-digit percentage growth and APAC is expected to achieve high single to low double-digit growth.
However, the outlook is coloured by “persistently weak consumer confidence” and geopolitical tensions, which are curbing global retail spend particularly in Europe and the Middle East, Hugo Boss said in a release. CEO Daniel Grieder said it’s too early to know exactly when it will hit €5 billion.
The company’s 2024 guidance was “disappointing”, Jefferies analysts Frederick Wild, James Grzinic and associates Bhumi Kanabar and Elizabeth Moore said in a note ahead of the call. “Clearly demand conditions have continued to deteriorate.”
“While we have always pointed out that we expect a certain normalisation of growth, our outlook might still seem cautious to you,” Yves Müller, Hugo Boss CFO and COO, told investors. “However there are good reasons to remain vigilant at this point of time given the current macroeconomic and geopolitical environment and considering the weak consumer sentiment in distinct markets.”
Grieder said Hugo Boss won’t be cutting costs through layoffs or other measures, but it will be “spending money more cautiously”. He told investors: “When you look into the market with the macroeconomic issues that are out there and consumer sentiment, the priority and focus needs to go to getting more effective, more efficient and more profitable — that’s how we manoeuvre our company successfully through this.”
Grieder joined in June 2021 to lead the company’s turnaround (including splitting the brands into Hugo targeted at Gen Z and Boss targeted at millennials). Yesterday, his contract was renewed until 2028. The company said the focus this year remains on building brand relevance and doubling down on its “Claim 5” strategy, which comprises five pillars: boost brands, product is king, lead in digital, rebalance omnichannel and organise growth.
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