Hugo Boss experiences a 9% decline in share price after cutting its 2024 guidance due to weak demand in China.

• On Tuesday, Hugo Boss's stock price dropped by as much as 10% after the company revised its sales forecast.
• The German fashion house anticipates full-year sales of up to 4.35 billion euros ($4.73 billion) due to macroeconomic challenges, particularly in China.
• The latest high-end fashion line to caution about ongoing challenges in the luxury market is the retailer.

The company's sales outlook cut led to a 10% drop in shares on Tuesday, making it the latest high-end fashion line to report ongoing challenges in the luxury sector.

The German fashion house announced Monday that it anticipates full-year sales of up to 4.35 billion euros ($4.73 billion), which is slightly lower than its previous projection of up to 4.45 billion euros.

The company attributed its revised outlook to "persistent macroeconomic and geopolitical challenges," specifically mentioning China and the U.K. as particularly challenging markets.

The stock price has decreased by 8.8% as of 9:53 a.m. London time, with losses being slightly reduced.

CEO Daniel Grieder stated that our performance in the second quarter was impacted by the significant global macro uncertainty.

Despite the uncertainty of the timing of any macro recovery, our consistent investment in our strong brands, BOSS and HUGO, gives us confidence in our ability to continue driving above-trend growth and capturing further market share.

The company's second guidance cut this year, announced on Monday, moderates the sales growth target for 2024 from 3% to 6% to 1% to 4% in group currency.

The group sales of Hugo Boss decreased by 1% in the second quarter, reaching 1.02 billion euros. This decline was mainly due to decreases in sales in Asia and Europe, the company announced on Monday.

The company's second-quarter operating profit decreased by 42% compared to the previous year, reaching 70 million euros. This decline was due to "weaker sales and strategic investments in the business," the company stated in its preliminary report.

Grieder anticipates that the company will achieve profitable growth in the second half of the year, according to his statement.

The luxury sector has been affected by macroeconomic and geopolitical concerns, resulting in a slowdown in sales for other high-end brands such as Burberry and LVMH.

On Monday, Burberry's shares dropped 16% after a poor first-quarter performance, resulting in a profit warning, the replacement of its CEO, and the cancellation of its dividend. The company's stock was trading 1.3% lower at 9:50 a.m. London time.

The Swiss luxury group Richemont reported a 1% increase in sales at constant exchange rates in the first quarter, despite a decline in Chinese sales affecting their results.

The luxury sector has been affected by weaker demand from the Chinese market for several quarters due to the pandemic's impact on the world's second-largest economy.

Artemis Fund Managers' global equities fund manager, Swetha Ramachandran, stated on CNBC that the slowdown in Chinese consumer spending may be overstated, as many Chinese shoppers are once again making their big ticket purchases overseas.

During the pandemic, Chinese consumers' luxury demand, which previously accounted for about 70%, was repatriated back to mainland China due to travel restrictions.

As people start traveling again, some are returning to Asia, which is contributing to the popularity of other Asian destinations among Chinese travelers. Japan, in particular, has been a popular choice for international shoppers due to the weak yen.