Hugo Boss is the latest luxury brand to feel the effects of the slowdown in China.
The company announced that net profit fell 7 percent to €75.6 million, well below analysts forecast of €82 million, reports the London Evening Standard.
In China, first-quarter sales fell 3 percent. Last year, menswear sales in China, its most important category, fell 10 percent, according to Reuters.
Hugo Boss blamed its disappointing sales figures in China on the luxury spending slowdown in the country. Richemont also recently blamed the slowdown in China on falling short of analysts’ estimates. Burberry echoed Richemont’s sentiments and also added that the falling euro has led to an increase of “gray market” Burberry goods finding their way into China.
According to estimates from investment bank J.P. Morgan Cazenove, between 20 and 40 percent of all luxury sales in mainland China are now parallel.
Despite these negative sales factors in China, Hugo Boss remains confident about the coming year, as the company has implemented strict inventory management and plans to open 50 new stores.
Furthermore, sales in its U.K. core market contributed to a 9 percent group revenues increase to €668 million under Jason Wu’s creative direction.
image credit: billie ward