Hugo Boss’s sales suffer amidst the falling Chinese economy

Hugo Boss has recently announced that it is anticipating challenges in the Chinese and US markets, which will have a negative impact on sales next year. While a decline is expected, the brand plans to continue investment in its stores and online platform.

The German fashion retailer* announced in a presentation for its investor day that 2016 sales growth is likely to be lower than its long term target for a high single-digit increase, adding that it would only reach 2020 targets for a core earnings margin of 25% if the overall market recovered.

These results come just a year after one of Hugo Boss’ main brands BOSS opened two new flagship stores in Hong Kong.

Earlier this month, Burberry recorded a 9% increase in pre-tax profits, while still in the midst of a “challenging” trading environment due to China’s suffering economy. The British brand said sales at stores open for a year or longer have been affected by the Chinese climate, especially those in Hong Kong, a major shopping destination for mainland visitors.

Up until its recent economic downturn, Hong Kong was viewed as China’s shopping centre, housing the world’s luxury and most expensive retailers. However, failing sales have led to cuts in rents and ultimately struggling retail sales, following years of luxury growth in the region.

Both Boss and Burberry have faced a declining demand in China as well as an overall decrease in luxury retail spending. Burberry is poised to downsize its biggest store in Hong Kong, while it has been suggested that French house Louis Vuitton will also be assessing sales performance in its 8 China stores in second-tier cities.