German retailer Hugo Boss closes 20 stores in China due to weak demand

After recently splitting with its Chief Executive, the troubled German retailer is going to further disappoint shareholders by failing to lift its end-of-year payout. It has vowed to do something about flagging sales in both the US and China, however, and part of this strategy is to close around 20 Chinese stores.

The group has proposed a dividend of €3.62 a share, stable with the previous year, despite sales rising 9 per cent last year – or by 3 percent excluding currency movements – to €2.8bn. According to a Bloomberg poll, analysts had been expecting an improvement in the dividend to €3.65 a share in an effort to appease shareholders, who have seen the company snip away at its forecasts several times in the last six months as demand for luxury fashion in key markets such as China has fallen.

Mark Langer, Financial Director at Hugo Boss, said: “To safeguard our profitable long-term growth, we have to align our strategy even more rigorously with customer needs. Management has therefore initiated measures to successfully address the external and company-specific challenges. Our brand’s attractiveness, the quality of our operating platform, our financial strength and our highly motivated workforce give us strong foundations for the future.”

Hugo Boss is one of a number of retailers caught out by the changing tides in China, a country where shoppers were once happy to spend on luxury status brands but are now turning more cautious.

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