Hugo Boss lowers annual outlook on weak demand, higher expenses

Hugo Boss Cuts Annual Sales and Profit Outlook on Weak Demand, Higher Costs

Hugo Boss Revises Financial Forecast Amid Market Challenges

Nov 2 (Reuters) - German fashion group Hugo Boss cut its outlook for annual sales and operating profit on Monday, citing weak consumer demand and depreciation expenses tied to its IT assets.

Factors Behind the Downgrade

The downgrade comes as Hugo Boss grapples with sluggish demand linked to macroeconomic uncertainty and geopolitical tensions while pursuing measures to boost profitability and efficiency.

Updated Sales and Profit Expectations

The retailer of men's suits and casualwear now expects group sales to decline in the high-single-digit percentage range in 2026, versus its previous forecast for a mid- to high-single-digit decline.

EBIT and Depreciation Impact

Earnings before interest and taxes (EBIT) is now expected to range between €250 million ($280.15 million) and €300 million for the period, compared with an earlier forecast of €300 million to €350 million. It expects higher non-cash depreciation and amortization on IT assets due to AI and technology developments.

Recent Financial Performance

In the third quarter, the firm's revenue decreased 4% to €946 million, while EBIT was down nearly 15% at €81 million. Gross margin expanded by 220 basis points to 63.3%.

Capital Expenditure Outlook

The retailer now expects capital expenditure of 4% to 5% of group sales this year, compared with its earlier forecast of about 4%.

Ownership Changes and Upcoming Results

Hugo Boss, which is set to become a subsidiary of Mike Ashley-controlled Frasers after the British retailer raised its stake to more than 50%, will publish its full third-quarter results on Tuesday.

($1 = 0.8924 euros)

(Reporting by Anusha Shah in Bengaluru; Editing by Shailesh Kuber and Sherry Jacob-Phillips)