Hugo Boss may push back key sales and profit targets beyond 2025 when it reports its second-quarter results on Thursday, as investors watch for updates on trading and cost-cutting plans.

Shares in the company fell as much as 10 percent in July as it cut its full-year sales and earnings forecasts, citing weakening global consumer demand, especially in China and Britain.

It warned in March that its target of reaching €5 billion ($5.4 billion) in annual revenues in 2025 might be delayed, but said it still expected its margin on earnings before interest and taxes (EBIT) to reach at least 12 percent next year.

“Besides comments on current trading, which will be closely watched by investors, we would not rule out an update on Hugo Boss’ mid-term targets,” said Felix Jonathan Dennl, analyst at Metzler Capital Markets in Frankfurt.

Some analysts, including Dennl, expect Hugo Boss to hit its mid-term sales target two to three years later than originally forecast, and to reach its mid-term EBIT margin goal after 2028.

“If Hugo Boss can’t provide more visibility, the revenue and EBIT targets should be in doubt,” Alexander Zienkowicz, senior analyst at Mwb Research said.

In an average of estimates last updated ahead of the company’s preliminary results in mid-July, analysts had forecast sales of €4.65 billion and an operating profit of 519 million for 2025, corresponding to an EBIT margin of 11 percent.

Cost cuts are also going to be in focus, said Joerg Philipp Frey, analyst at Warburg Research. He highlighted the company’s 21 percent jump in marketing spend and higher brick-and-mortar retail expenses in the second quarter from a year earlier, in contrast with its quarterly sales decline.

The upmarket fashion brand has been on an expansion drive, increasing marketing spend and opening 102 new points of sale, including own stores, “shop-in-shops” and outlets, in 2023. It is trying to stem a slowdown in sales growth which has contributed to the company’s shares almost halving in value this year.

“To lift the share price, it will be important for Hugo Boss to demonstrate effective management of the issues at hand and a credible path to recovery,” Zienkowicz said.

The luxury sector is grappling with weaker sales and pressure on margins as inflation-hit shoppers hold off from splashing out on designer fashion. A property slump and job insecurity in China has exacerbated the problem.

Earnings from luxury companies this quarter have demonstrated the strains that the sector is under with both LVMH and rival Kering falling short of forecasts.

By Linda Pasquini and Ozan Ergenay; Editors: Matt Scuffham and Conor Humphries

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Hugo Boss Plunges After Slashing Outlook on China, UK Demand

The German high-end fashion brand now expects operating profit of around €350 million ($381 million) to €430 million in 2024. The shares slid as much as 11 percent on Tuesday.

Adidas AG reported a rebound in sales with its retail partners and a return to growth in North America, when Yeezy sneaker sales were excluded, as the brand looks to increase profits after years of crisis.

The German sportswear company posted currency-neutral revenue growth of 17 percent in its wholesale business last quarter, according to a statement Wednesday, a sign that retail partners like Foot Locker Inc. and JD Sports Fashion Plc are again embracing Adidas products.

Now in his second year at the helm, chief executive officer Bjorn Gulden has been winning over investors with a back-to-basics focus on sports and developing new footwear and apparel. While he’s capitalized on demand for classic shoes like the Samba and Gazelle, he’s now looking to impress with the launch of products that were developed since his arrival in January 2023.

Gulden’s strategy involves focusing much more on retail partners, which have recently been pushing newer labels such as On Holding AG and Deckers Outdoor Corp.’s Hoka as Adidas and Nike built out their own e-commerce channels.

That approach appears to be bearing fruit, potentially allowing Adidas to close the gap with Nike, which is struggling to replace top sellers such as the Air Force 1 and Dunk sneakers.

Adidas shares were little changed in early trading, and are up almost 30 percent this year. Industry leader Nike Inc., by contrast, is down more than 30 percent in 2024.

In the second quarter, Adidas posted double-digit sales growth in Europe and Latin America and 9% growth in Greater China. In North America, sales fell by 8 percent, with the decline “solely related to the significantly smaller Yeezy business,” the company said. Excluding Yeezy, Adidas grew in both its North America wholesale and direct-to-consumer channels.

What Bloomberg Intelligence Says:

Adidas’ FX-neutral full-year sales could rise by high-single digits as its turnaround appears underway after 2Q’s results, and 2024′s outlook is consistent with its July 16 pre-announcement, putting it in a position to recapture lost share.

— Poonam Goyal, BI retail-industry analyst

Adidas Momentum Continues to Build With Strong 2Q Results: React

Adidas also saw modest growth with its apparel offerings, driven by demand for football jerseys tied to this summer’s championships in both Europe and the Americas. Both Spain and Argentina, which won the tournaments, wear Adidas jerseys.

Yeezy footwear contributed about €50 million in operating profit during the second quarter, or about 14 percent of the total. At its height, Yeezy shoes were generating close to half of Adidas’ profit. Adidas cancelled the Yeezy partnership in October 2022 following the rapper Ye’s string of anti-Semitic comments.

Earlier this month, the company published figures showing better-than-expected second-quarter sales and raised its earnings forecast for the year. It now expects to generate operating profit of around €1 billion. That’s an increase from the previous target of €700 million but below analysts’ average estimate of €1.1 billion.

By Tim Loh

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Adidas CEO Rides Samba Craze to Revive Brand After Ye Debacle

Bjorn Gulden’s reliance on gut instinct has produced some successes already, but investors are wondering how far it will carry the company and whether it could create new vulnerabilities in the future.

Japanese beauty conglomerate Shiseido has named Kentaro Fujiwara as its new chief executive officer, effective Jan. 1 2025. He is currently the company’s chief operating officer.

Shiseido owns buzzy brands such as Drunk Elephant, Nars and Dr Dennis Gross, as well as its namesake line, and holds a number of fragrances licences for the likes of Narciso Rodriguez.

The incumbent CEO, Masahiko Uotani, will retire at the end of this year, but remain an advisor to the company, Shiseido said. He will leave the board of directors in March 2025.

Fujiwara’s appointment has been carefully orchestrated in a five-year succession plan that has seen the two executives work together to create a “successful leadership transition,” Shiseido said.

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Shiseido Wins Max Mara Fragrance License

The Japanese beauty conglomerate will develop, produce and manufacture fragrances for Max Mara, which has not sold perfume since it discontinued a line of scents launched in the mid 2000s.

London-based designer David Koma, whose namesake brand has been a mainstay of London Fashion Week since 2009, has been tapped as creative director of Italian designer brand Bluemarine.

Koma will become the brand’s third creative director in two years, after former Tod’s designer Walter Chiapponi left the brand after just one season in the role.

Prior to Chiapponi’s arrival, previous creative director Nicola Brognano had sought to rejuvenate Bluemarine with a sexy, street aesthetic from 2019 to 2023.

Founded in 1977, Bluemarine is owned by Eccellenze Italiane, the investment vehicle of Liu Jo co-founder Marco Marchi.

Koma’s first collection for the brand will be Pre-Fall 2025.

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Blumarine Appoints Walter Chiapponi Creative Director

The former Tod’s designer replaced Nicola Brognano in November 2023.

An octogenarian heir to the Hermès luxury fortune, who sparked controversy last year over a plan to leave his money to his gardener, may not have much to give away after all.

In the latest twist to the longstanding mystery surrounding Nicolas Puech’s billionaire status, a Swiss court this month threw out the 81-year-old’s allegations that his former wealth manager had a role in his fortune’s disappearance.

Puech’s lawyers told the court he no longer owns the assets in question: about 6 million shares worth roughly €12 billion ($13 billion) in family-controlled Hermès International SCA. The stake would make him the single largest investor in the purveyor of Birkin handbags and colourful silk scarves founded in 1837. The company has since expanded into one of the biggest players in the global luxury industry and made the Hermès family Europe’s wealthiest. The clan, which counts more than 100 members, has a net worth of about $155 billion, according to the Bloomberg Billionaires Index.

The decision by an appeals court in Geneva on July 12 found no evidence that financial adviser Eric Freymond mismanaged Puech’s fortune or that the reclusive fifth-generation Hermès heir was duped over a period spanning more than two decades during which time at least some of the stock was sold.

“The ‘gigantic fraud’ to which he was victim was undetectable to common mortals,” the court document read, adding that the allegations lacked clarity and were insufficiently backed up.

A lawyer for Puech, Gregoire Mangeat, declined to comment, while Freymond’s lawyers, Yannis Sakkas and Stephane Grodecki, said their client was satisfied with the outcome that included “harsh words” against the plaintiff. The case was first reported by online magazine Gotham City.

Lasting Enigma

The court decision is part of the fallout of an attempt by luxury tycoon Bernard Arnault, founder of LVMH, to gain control of Hermès more than a decade ago. He failed, but Puech became a family outcast over his alleged role in the way Arnault stealthily amassed a stake in the company.

The fate of Puech’s roughly 5.7 percent stake remains a lasting enigma from the showdown, which ended in 2014 when Arnault started unwinding his 23 percent holding and Puech quit the Hermès supervisory board.

In a sign the stake is still a preoccupation, on an earnings call Thursday an analyst quizzed Hermès executive chairman Axel Dumas about whether Puech owns the shares. “We don’t have a way to see and control them,” Dumas replied.

The Swiss decision leaves the question of the shares’ whereabouts unanswered. It does, however, offer a peek into Puech’s current circumstances.

Last year, the resident of Orsieres in the Swiss canton of Valais, described in public documents as a French national with an education in the arts, sought to cancel his inheritance contract with his Isocrates Foundation after reportedly starting administrative procedures to adopt his middle-aged gardener to whom he would bequeath some of his fortune. The decision left the charity in limbo and it has since postponed new grants.

In the Swiss case, Puech alleged his wealth came almost entirely from his shares in Hermès and that he no longer owns any of them, but didn’t realise it because Freymond received all his bank statements. The court document describes a 24-year period during which Puech relied on Freymond to manage his fortune.

Starting in 1998, Puech began transferring to Swiss banks Hermès shares that would eventually number 6 million. From that year, he gave Freymond a series of signed mandates to oversee his accounts. Beginning in 2001, shares were sold, bought and transferred through one of the banks.

Crucially, a profit of €53.7 million was recorded on share sales over a nearly two-year period through October 2010, the same month Arnault revealed to the Hermès family that he had amassed a stake in the company. Puech had no “objections” to the entry of the outside investor into the Hermès shareholding and even considered him an “ally,” according to evidence described in the court document. His family, however, mounted a strategy that ultimately succeeded in keeping Arnault at bay.

Equity Swaps

Puech cancelled Freymond’s mandates in October 2022, set out to take stock of his wealth and organise his succession, according to the Swiss ruling. A year later he filed three cases against Freymond, the first alleging the wealth manager withheld information, and wouldn’t and couldn’t return the Hermès shares. The others related to management of his foundation, loans and other investments.

The court ruling concluded that Puech willingly turned over management of his affairs to Freymond, including by signing numerous blank documents and giving access to his bank accounts. Puech never said he was duped or didn’t understand what he was signing, only that he left choices on growing his wealth to Freymond. He could have revoked their agreement at any time, the court said.

“It’s not clear who prevented the plaintiff from taking an interest in how his assets were evolving,” the court found. Puech’s “blind trust” in Freymond is not an indication of the wealth manager’s dishonesty.

By Tara Patel