Hugo Boss slumps after downbeat 2024 forecasts

Investing.com - Shares in Hugo Boss (ETR:BOSSn) slumped in European trading Thursday after the luxury fashion retailer unveiled disappointing sales and profit forecasts for 2024, citing weak consumer demand.

At 04:45 ET (09:45 GMT), Hugo Boss stock fell 18% to €51.94, a year-to-date drop of 23%.

The German fashion giant forecast earnings before interest and taxes (EBIT) of €430-€475 million (€1 = $1.0900), below the consensus estimate of €490 million in a poll provided for the market by the company.

Sales should increase between 3% and 6% to around €4.30-€4.45 billion, also below consensus expectations of €4.56 billion, and a marked slowdown from 18% growth in 2023.

The company added that its goal of reaching €5 billion in revenue by 2025 might be slightly delayed as cash-strapped consumers cut back on discretionary spending. 

“This marks the first round of earnings downgrades following 10 consecutive upgrades, which will likely negatively impact Hugo Boss’ equity story near-term,” said analysts at Citi, in a note dated March 7, keeping a ‘neutral’ rating and a €64.10 12-month target price for now.

The U.S. bank expects mid-single digit percent and around 10% downgrades to consensus 2024 sales and EBIT forecasts, respectively, “following the 4Q23 margin miss (a reminder of how much Hugo Boss is investing to support the top line), wholesale slowing to single-digit growth in 4Q23 for the first time since the pandemic, and a cautious initial FY24E guidance amid weak consumer sentiment.”