Hugo Boss confirms 42% drop in Q2 operating profit

(Corrects headline, paragraphs 1, 4 to say Q2 EBIT figure was confirmed, removes reference LSEG estimates)

By Ozan Ergenay and Tristan Veyet

(Reuters) – Hugo Boss confirmed the 42% drop in its second-quarter operating profit on Thursday, two weeks after the German fashion house slashed its annual forecasts and reported preliminary numbers, as economic and geopolitical challenges dampen global consumer demand.

The luxury sector is grappling with weaker sales and margin pressures as inflation-hit shoppers cut back spending on designer fashion. A property slump and job insecurity in China has exacerbated the problem.

“The weakening consumer sentiment in most markets led to a rapid slowdown in growth across the entire industry, which we could not completely escape from,” CEO Daniel Grieder said in a statement.

Hugo Boss said its earnings before interest and tax (EBIT) fell to 70 million euros ($75.8 million) in the second quarter, from 121 million euros a year earlier, as reported last month.

Its quarterly net income slumped 50% year-on-year to 39 million euros.

Earnings from luxury companies this quarter have demonstrated the strain that the sector is under, with both LVMH and rival Kering (EPA:) falling short of forecasts.

($1 = 0.9237 euros)

(This story has been corrected to say Q2 EBIT figure was confirmed, in the headline and in paragraphs 1 and 4, and removes the reference to LSEG estimates)