Hugo Boss to miss 2015 profit goal

Hugo Boss has ripped up its 2015 profit target after joining the ranks of luxury goods companies warning of weaker sales growth in China.

Hugo Boss is selling more clothes directly to customers. Picture: Reuters

The Asian powerhouse has become a key driver for upmarket brands in recent years but an easing in economic growth and a crackdown on bribery have hit demand.

Hugo Boss, best known for its men’s suits, said yesterday it was keeping a target of sales of €3 billion (£2.5bn) in 2015, but warned that it would no longer be able to reach a 25 per cent Ebitda margin – earnings before interest, tax, depreciation and amortisation as a percentage of sales.

French spirits group Remy Cointreau also reported a slowdown in Chinese demand yesterday, following similarly cautious comments from Glenmorangie-owner LVMH and British fashion house Burberry.

Claus-Dietrich Lahrs, Hugo Boss’ chief executive, described China as a “particular concern”, adding that there was little sign of the country returning to the double-digit percentage sales growth of recent years. He pointed to analysts’ estimates that the luxury goods industry would see sales rise by about 4 per cent in China this year – a figure that still outstrips most other key markets.

Lahrs added: “We are clearly committed to a 25 per cent Ebitda margin target but this will happen after 2015.”

As the firm now sells more clothes directly to customers and is publicising a new womenswear collection designed by Jason Wu – a favoured designer of US First Lady Michelle Obama – Hugo Boss is stepping up advertising and marketing spending.