In the key news on German stocks, Hugo Boss’ (DE:BOSS) share price declined after it reduced its full-year sales guidance for 2024. The company now expects sales to range between €4.20 billion and €4.35 billion, down from the previous forecast of €4.30 billion to €4.45 billion. This revision is attributed to weaker global demand, with China and the UK identified as the most challenging markets.
Hugo Boss is a luxury company specializing in clothing, footwear, and accessories.
Hugo Boss’ Challenging Q2
In the second quarter, the company reported a 1% decrease in its sales to €1.02 billion. While the company’s growth in the Americas increased by 5%, revenue in EMEA declined by 2%, and in the Asia Pacific, it fell by 4% in the second quarter.
Moreover, the company’s EBIT (earnings before interest and tax) decreased by 42% year-over-year to €70 million, indicating higher marketing investments and brick-and-mortar costs.
On the bright side, the company’s gross margin improved by 50 basis points to 62.9% compared to Q2 2023.
Hugo Boss will publish its second-quarter results for 2024 on August 1.
Luxury Sector Hit by China Slowdown
The downgraded outlook reflects the macroeconomic and geopolitical issues impacting the broader luxury sector. One of the primary challenges faced by the luxury market is the prolonged economic downturn in China, which has sharply reduced spending among affluent consumers.
Yesterday, the UK-based fashion house Burberry Group (GB:BRBY) reported a 21% decline in its comparable store sales in the first quarter of FY25. Burberry also warned of an operating loss for the first half and suspended its dividends for FY25.
Meanwhile, Swiss luxury brand The Swatch Group (DE:UHRA) also posted a 14% drop in its first-half sales in 2024 and expects the market to remain challenging this year.
Is Hugo Boss Stock a Buy?
Overall, analysts maintain a bullish outlook for Hugo Boos. Following the Q2 update, BOSS stock received two Buy and two Hold ratings from analysts today. Analysts from J.P. Morgan, Goldman Sachs, and Deutsche Numis predict a growth rate of around 55%, while Warburg Research sees a higher upside potential of 130%.
As per the consensus among analysts on TipRanks, BOSS stock has been assigned a Moderate Buy rating. It is based on eight Buy and five Hold recommendations. The Hugo Boss share price target is €64.66, which implies a huge upside of 75.5% from the current level.
