Hugo Boss plunges to 9-year low as turnaround unravels

Bloomberg

Hugo Boss AG plunged to a nine-year low after the German suitmaker cut its full-year outlook on weakness in the US and Hong Kong, casting doubt on CEO Mark Langer’s turnaround efforts.
The guidance reduction comes two months after the suitmaker previously lowered its outlook, citing weak sales to tourists and pricing pressure in the US Now the anti-Beijing protests in Hong Kong, which led to a plunge in visits by mainland Chinese luxury shoppers, are creating a new headache.
The company’s turnaround efforts have gone awry since it replaced its chief executive officer with then-chief financial officer Langer in 2016, as suitmakers struggle to adjust to the trend towards casual office attire. Hugo Boss set out a plan last year to shift toward a faster-fashion model, speeding up production, personalising its clothes more and boosting e-commerce.
“We see no end to this pressure,” wrote Piral Dadhania, an analyst at RBC Europe, slashing his price target by more than a quarter to 50 euros. “Hugo Boss is clearly not
immune.”
The announcement weighed on other apparel makers, with Burberry Group Plc shares diving as much as 4.1%.
Hugo Boss had expected sales to grow faster in Asia, which has been driving the fashion industry’s sales. Luxury conglomerate LVMH said that sales in Hong Kong fell 40% in August and September.
The fashion house said it expects currency-adjusted sales to increase by a low single-digit percentage this year, down from previous guidance for an increase at the lower end of a mid-single-digit range.