- German-born chief had led apparel maker for eight years
- Successor will ‘have his or her work cut out,’ says analyst
Hugo Boss AG Chief Executive Officer Claus-Dietrich Lahrs resigned after the German fashion retailer cut its profit outlook for the second time in six months.
Lahrs, 52, will leave Feb. 29 and Hugo Boss’s board will find a successor “without delay,” the company said in a statement Thursday. The stock, which had lost a quarter of its value since Hugo Boss cut its targets Tuesday, rose as much as 4 percent -- about the same amount it gained when the German-born Lahrs was named CEO eight years ago.
Lahrs’s successor will have to contend with weakening sales in the U.S. and China, which prompted the clothier to forecast a low double-digit percentage decline in full-year Ebitda on Tuesday. Hugo Boss also won’t reach its goal of an adjusted operating margin of 25 percent. The revision was the second in less than six months for the German fashion label, best known for men’s apparel such as suits and jackets.
“The incoming CEO will have his or her work cut out,” MainFirst analyst John Guy said in a note, citing an “inconsistent communication approach” from the company over the past year.
The CEO’s swift departure contrasts with the warm welcome he received when former owner Permira Advisers chose him after a three-month search for Bruno Saelzer’s successor. Lahrs’s experience at brands like Louis Vuitton and Christian Dior suggested that Hugo Boss could push more into womenswear under his watch. In 2013 Lahrs hired designer Jason Wu to spearhead womens’ styles, yet slackening demand for high-priced fashion around the globe led to a steady drumbeat of worse-than-expected sales and profits.
The series of lower outlooks contrasts with Hugo Boss’s announcement in August that it would accelerate store expansion after a rebound in European sales. Lahrs raised the budget for expansion 9 percent that month even as clearing out inventory at third-party stores was already weighing on profitability.
European fashion houses are contending with slumping demand from China and Hong Kong as shoppers there hunt for better prices abroad. Sales at handbag maker Prada have stagnated for the past two years, and its finance chief Donatello Galli resigned last week.
Italian luxury shoemaker Salvatore Ferragamo SpA has also warned that full-year sales and profit may miss analysts’ estimates. In response, Hugo Boss and others have tried to expand their range of lower-priced “affordable luxury” items.
Hugo Boss also named Bernd Hake to its managing board responsible for sales and retail, shifting from his current role of senior VP of EMEA, Middle East and India.