Hugo Boss has cut its outlook for sales and profit in the face of weakening consumer demand, just days after Mike Ashley’s Frasers Group took control of the German fashion house.
The luxury retailer said it expected its performance to take a hit from its turnaround plan but told shareholders this has been worsened by a “persistently subdued consumer environment”.
Analysts described this update as a blow to Frasers, the FTSE 250-listed retail group which gained control of Hugo Boss last week following a months-long pursuit.
The German fashion house told shareholders it expects to post full-year earnings of between €250m and €300m, below previous expectations of between €300m and €350m.
Hugo Boss said its full-year sales will decline by a high-single digit percentage, while it had previously been expecting takings to slip by a mid- to high-single figure.
The group blamed this on “softer demand” and the impact of its investment in new technology, including artificial intelligence.
The German fashion house’s sales declined by five per cent in the third quarter, marking a slight improvement on the year-to-date drop of seven per cent. It blamed “macroeconomic headwinds” for this performance.
Chief executive Daniel Grieder said: “Our top-line performance reflected both the deliberate strategic realignment of our business and a persistently subdued consumer environment. At the same time, we made further progress in improving our gross margin and operating efficiencies.
“With demand likely to remain volatile in the fourth quarter, we are adjusting our full-year 2026 outlook to reflect a more realistic assessment of the market environment. Our strategic direction, however, remains unchanged.”
‘Negative’ result for Frasers
Last week, Frasers pushed its stake in Hugo Boss above 50 per cent, making it a subsidiary of the group, which also owns Flannels, Harvey Nichols and Sports Direct.
This marked the end of Frasers’s long struggle to gain control of the German fashion house, as it aims to push into the luxury retail market. The firm has also pushed up its stake in British fashion house Burberry in recent weeks.
Michael Murray, chief executive of Frasers and Ashley’s son-in-law, was appointed chair of Hugo Boss’s supervisory board in September after its existing boss departed due to “recent changes in the company’s shareholder structure”.
Analysts at stock broker RBC said Hugo Boss’s worsening outlook is a “negative read for Frasers Group”.
They said they expect “renewed momentum” from the fashion house next year but added that “visibility on this is low, especially given ongoing political uncertainty”.
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