“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” says Daniel Grieder, CEO of Hugo Boss. Credit: Shutterstock.

Hugo Boss revealed a 1% fall in group sales to €1m during Q2 as challenging macroeconomic and geopolitical conditions weigh on global consumer demand.

EBIT was further impacted by strategic investments into the business.

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Gross margin, however, increased 50 basis points to 62.9% thanks to efficiency gains in its global sourcing activities.

Sales increased 5% in the Americas but fell 2% in EMEA and 4% in Asia Pacific in the second quarter.

Revenues were also down slightly in brick-and-mortar retail (-2%), reflecting lower store traffic (all growth rates currency-adjusted). The overall softer consumer sentiment also affected the performances across brands. Currency-adjusted revenues for Boss Menswear remained 2% below the prior-year level, while sales for Boss Womenswear increased by 2% currency-adjusted. At Hugo, currency-adjusted sales were up 3%, supported by the successful launch of its new denim-focused brand line Hugo Blue.

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Hugo Boss lowered its full-year outlook following its Q2 results and now expects group sales of around €4.2bn to €4.35bn (+1% to +4% in group currency); EBIT of between €350m and €430m (-15% to +5%).

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“We are operating in a period of significant global macro uncertainty, which also affected our performance in the second quarter,” says Daniel Grieder, CEO of Hugo Boss. “Although the timing of any macro recovery remains uncertain, our strategy of consistently investing in our strong brands, Boss and Hugo, gives us confidence in our ability to continue driving above-trend growth and capturing further market share. By translating this sales performance and focusing even more on operating effectiveness, we have the ability to return to profitable growth in the second half. With the continued execution of our ‘CLAIM 5’ strategy, we are committed to driving substantial value creation for our shareholders going forward.”

Last week British retail giant Frasers Group announced it was increasing its stake in Hugo Boss further, with an apparel analyst noting it is “taking advantage” of the brand’s “relatively low share price”.