Two days after Hugo Boss lowered its profit outlook citing a challenging market environment in China, the German luxury fashion company said its CEO is stepping down.
As of Feb. 29, Claus-Dietrich Lahrs will leave his post at the helm of Hugo Boss after eight years with the company and his replacement has not yet been named. For now, the company said in a statement, managing board members will assume Lahrs’ responsibilities, and it will deal with finding a new CEO “without delay.”
“Claus-Dietrich Lahrs has put his stamp on the development of Hugo Boss during the past years,” supervisory board chairman Michel Perraudin, said. “For the brand he has paved the way for an international future and he has positioned the company well in the market. Major strategic decisions for the development of the own retail business and for the development towards a leading fashion company in the premium market fall into his term of office.”
Lahrs called his tenure at the company “successful and exciting” adding that, “The special Hugo Boss spirit will keep the company on the success path also in the future.”
Hugo Boss also said in the same statement that Bernd Hake, currently senior vice president EMEA, Middle East and India, will be appointed as a member of the company’s board responsible for sales at retail.
In January, Hugo Boss reported group sales up 10 percent to 750 million euro ($828 million) for the fourth quarter, though adjusted for currency, the growth was a lower 5 percent. Comparable sales in the quarter fell 1 percent and profit was up 2 percent to 171 million euro ($189 million).
“High levels of promotional activity at retail, cautious customer spending and adverse weather conditions in many key markets had a negative impact on sales and earnings development,” the company noted.
For the full 2015, sales were up 9 percent to 2.81 billion euro ($3.1 billion), or 3 percent in local currencies—lower than the company’s 3 to 5 percent growth projection.
On Tuesday, Hugo Boss issued a profit warning, blaming weak sales in China for the bulk of it. Sales are now forecast to increase in the low single-digit range.
“The challenging market environment in China and the U.S. in particular and continued investments in the group’s growth potential, however, will depress earnings,” the company said.
So far this year, sales have been weaker than expected in China and the U.S., and the company has plans to make adjustments accordingly.
Hugo Boss will adjust its prices in Asia to more closely match those of Europe and the U.S., and distribution of the Boss core brand will be limited in the U.S. wholesale business in an effort to “elude the impact of a highly promotional market environment as far as possible,” the company noted.
But the adjustments can only help so much and Hugo Boss expects its operating profit in 2016 to decline in the low double-digit range.
The news sent Hugo Boss stocks down to a five-year low Tuesday and Wednesday, but Lahrs’ departure sent shares back up a touch Thursday, and at publication time Hugo Boss stocks were trading at $51.38.