Hugo Boss (BOSSY) shares extended losses Wednesday after the German fashion house's CEO said its restructuring efforts will only bear fruit in 2018 as the company scales back its ambitions of becoming a luxury brand.
Shares in the Metzingen-based group fell more than 10% by midday (6:00 am EST) in Frankfurt, changing hands at at €54.80 each and adding further misery for investors which have seen it fall more than 25% since the beginning of the year.
Declines had stabilized in the past three months, along with other luxury brands, after Boss signalled a recovery in China. Luxury peers LVMH (LVMUY) has gained 13.25% since the beginning of the year and Burberry (BURBY) is up more than 16% over the same time period. LVMH and Burberry were down 1.4% and 2% respectively amid a wider European selloff Wednesday.
New CEO Mark Langer told shareholders and an investors event in London that the company will focus on two brands - the premium menswear line and its HUGO label aimed at younger shoppers - doing away with others brands including Boss Orange and Boss Green. The move will focus Boss on its core suits business.
"The company has decided to streamline its brand labels. This has been largely anticipated by the market and is likely to be seen as a positive. A number of labels is perfect for a wholesale model but as the company is now 60% exposed to retail the use of different labels is arguably confusing for consumers," analysts from Credit Suisse said in a note Wednesday.