Hugo Boss Lowers Profit Outlook as Sales Slow

METZINGEN, Germany — Hugo Boss AG lowered its profit forecast for 2016 as the struggling German fashion label reported a fall in second-quarter sales, highlighting the challenge facing new chief executive officer Mark Langer.

Earnings before interest, taxes, depreciation and amortisation and other items will decline by 17 percent to 23 percent in 2016, the Metzingen, Germany-based company said in a statement on Friday. That compares with its previous forecast of a low double-digit decline. Hugo Boss also said currency-adjusted sales will now probably end the year stable or down 3 percent, after predicting a low single-digit increase.

Second-quarter sales fell 4 percent to €622.1 million ($692.9 million), the company said. Analysts had expected €608.5 million, according to a Bloomberg survey. Earnings before interest, taxes, depreciation and amortisation and other items declined to €107.7 million, compared with analysts’ €88.1 million average estimate.

Langer, promoted from chief financial officer in May to replace Claus Dietrich Lahrs, needs to cut costs and revive weak US sales, which have been marred by discounting. The company said it will shut some 20 freestanding stores globally in the next 18 months, adding to the closures of about 20 shops in China. Terrorist attacks in Europe have deterred tourists from traveling to the region, denting sales. Still, Italy's Marzotto family has increased its stake in Hugo Boss, showing confidence that Langer can turn things around.

By Corinne Gretler and Aaron Ricadela; editors: Matthew Boyle and John Bowker.