Hugo Boss cuts operating profit forecast by €50 million as sales decline
Key Facts
Hugo Boss cut its 2026 operating profit forecast by €50 million at both ends of the range, to €250–300 million from €300–350 million, after previously expecting €300–350 million, according to a disclosure published on November 3. At the same time, it now expects currency-adjusted sales to decline in the high single digits, compared with its previous forecast for a mid- to high-single-digit decline. The forecast revision came as the group's currency-adjusted sales fell 5% in the third quarter, bringing the decline since the start of the year to 7%. The company quoted Chief Executive Daniel Grieder as saying demand was likely to remain volatile in the fourth quarter, adding: "We are adjusting our full-year 2026 outlook." The revision combines expectations of weaker demand and higher non-cash expenses, as the company lowered its annual profit and sales estimates.
The group's reported revenue was €946 million in the third quarter, down 4%, according to a Reuters report. On a currency-adjusted basis, sales fell more sharply, declining 5% during the quarter, while the cumulative decline since the start of the year reached 7%. This places third-quarter performance within the contraction reflected in the new annual outlook, with the company widening its expected decline to the high single digits. The disclosure did not only lower expected sales and profit; it also reported improvement in gross margin, cash flow indicators and inventory. These indicators present a picture of the quarter that combines weaker revenue and operating profitability on one hand with an improving margin and cash flow on the other.
The company said the outlook revision reflects higher non-cash depreciation and amortization expenses for IT assets. It also factored in weaker demand assumptions for the fourth quarter amid increased market uncertainty. Grieder said sales performance was affected by a reset of the business strategy and a weak consumer environment, and said demand could remain volatile during the final three months of the year. The forecast cut is therefore tied to two distinct factors in the disclosure: higher technology expenses and a more cautious assessment of future demand. The company did not specify how much each factor contributed individually to the cuts in its profit or sales forecasts.
At the quarterly profitability level, EBIT fell to €81 million in the third quarter, with a margin of 8.6%. From the start of the year through the end of September, EBIT was about €175 million, with a margin of 6.4%. By contrast, the third-quarter gross margin rose 220 basis points to 63.3%, and the company said its CLAIM 5 TOUCHDOWN initiatives drove the improvement. The figures for the same period show this divergence: a higher gross margin alongside lower EBIT and declining sales. Free cash flow before leases, meanwhile, rose to €155 million in the quarter, alongside a 14% year-on-year decline in inventory. The company linked the cash flow support to this inventory decline.
Hugo Boss also revised its 2026 estimates for capital expenditure and working capital. It raised its capital expenditure forecast to a range of 4–5% of group sales, including the acquisition of a logistics property it had previously rented. At the same time, it expects net trade working capital to reach about 21% of group sales. The company attributed this estimate to a decline in accounts payable following adjustments to payment terms for suppliers. These estimates accompany the lower EBIT range and distinguish operating performance forecasts from investment and working capital requirements. They also show that the logistics property acquisition is included in the capital expenditure range announced by the company.
The company's forecast published in March 2026 pointed to a currency-adjusted sales decline in the mid- to high-single digits during 2026, before a return to growth from 2027. The new forecast is for a decline in the high single digits, while 2027 remains the expected year for a return to growth in that earlier disclosure. The company also said at the time that it was targeting average annual free cash flow of about €300 million after leases between 2026 and 2028. Separately, Reuters reported that Frasers Group raised its stake in Hugo Boss to more than 50%, making the company its subsidiary. Hugo Boss published its third-quarter results and revised outlook on November 3, the date it had previously set for the results announcement.