Hugo Boss shares plunge

Shares in German clothier Hugo Boss plunged after saying its profit will decline by at least 10% this year due to weaker-than-expected sales in the US and China.

Earnings before interest, taxes, depreciation, and amortisation (ebitda), and excluding special items, will decline by a “low double-digit” percentage this year, the company said.

The company will also miss its goal of an adjusted operating margin of 25%. Shares fell 20% to €55.55 in Frankfurt, the most since October 2008.

Sales in company-operated stores this year have been weaker than expected, mainly in the US and China, Boss said.

Analysts had expected a 1% decline in ebitda this year, according to estimates.

To stem slowing sales, Boss is curtailing distribution at US retailers, where the company cited “highly promotional” levels of discounting.

It is also adjusting prices in Asia. Hugo Boss joins other luxury firms in feeling the fallout from sluggish China demand.

The revision is the second in six months for the fashion label, which in October cut its sales and earnings forecast for the year due to lacklustre performance in China and the US.