Hugo Boss Latest To Warn of Grim Times for Luxury Sector

Hugo Boss shares are tumbling about 9% in German trading Tuesday after the luxury fashion retailer became the latest to warn of bad times for the high-end sector.

The German fashion house lowered its fiscal 2024 sales outlook to between 4.20 billion euros and 4.35 billion euros from a previous forecast of EUR4.30 billion to EUR4.45 billion.

The company attributed its lowered outlook to “persistent macroeconomic and geopolitical challenges that are dampening global consumer demand,” noting that the U.K. and Chinese market environments are “particularly challenging.”

Luxury Spending Faces Pullback From Chinese Caution, Frugal Consumers

Luxury brands have been suffering from a pullback on consumer spending on high-end items as well as China’s economic slowdown, with trench coat maker Burberry on Monday replacing Chief Executive Officer (CEO) Jonathan Akeroyd as it warned of slowing demand for luxury goods. Burberry also projected a first-half operating loss and suspended its dividend.

According to the Financial Times, luxury brands are cutting prices by as much as 50% in China, to draw in consumers wary of spending on high-end items. Brands including Burberry and Versace are cutting prices in the country, the report said.

Caution by consumers globally amid high interest rates has added to the pressure luxury goods brands face. While ultra-high-end brands like LVMH (LVMUY), the maker of Louis Vuitton handbags and other luxury goods, have also been hit, posting a first-quarter sales drop, they have been overall more resilient than those in the mid-tier levels like Burberry and Hugo Boss.