Hugo Boss warns of slowdown in key Chinese market for luxury goods

German fashion and fragrances firm Hugo Boss yesterday warned sales growth would halve in 2012, cooled by a probable slowdown in red-hot Chinese demand for designer labels.

Profits and sales at luxury goods companies such as Burberry, LVMH and Richemont jumped last year but many are braced for a less-dramatic rise in 2012 after China cut its growth forecast for this year.

Hugo Boss – which makes perfumes including Boss Orange, advertised by actress Sienna Miller – said it expected sales to rise by up to 10 per cent in 2012, with growth coming from all regions, compared with 19 per cent in 2011. China alone grew 33 per cent last year.

Hugo Boss is giving wholesalers in southern Europe more time to pay as they struggle to obtain financing from banks amid the eurozone debt crisis. Chief executive Claus-Dietrich Lahrs said: “Some of them got longer targets for payment, but we have to make sure the bills are paid. We have this on the radar and are in intense talks.”

The company also said it will convert its preference shares into ordinary stock, sparking speculation among analysts that private equity firm Permira may be preparing to sell its stake.