Sector performance

Slower growth of premium and luxury sector

The growth trajectory of the global premium and luxury goods sector continued in the current fiscal year, despite the challenging macroeconomic conditions and weak consumer spending in many key markets. According to a study by the Altagamma trade association and the consulting firm Bain & Company, the industry expanded by 6% after currency adjustments last year, outpacing aggregate economic growth. In comparison to past years, however, this indicates a weaker growth trend, which was primarily attributable to the still difficult market environment in China. Growth in the sector was mainly supported by a good development of the retail channel, although most of the growth was driven by the opening of new stores.

Overall, the sector increased by about 3% in Europe after currency adjustments. Despite the relatively low growth, Europe remained the world's largest market for luxury goods. In many parts of the region, high unemployment rates, severe austerity measures and low wage growth affected consumer spending and, in turn, the development of the luxury sector. However, healthy growth in Eastern European markets partially made up for persistently weaker trends in Western and particularly Southern Europe. Especially the metropolitan areas of Western and Southern Europe benefited from demand from tourists. In the Americas the premium and luxury sector increased its sales despite recurring uncertainty with respect to the U.S. budget dispute and the resulting temporary decrease in consumer confidence. Overall the region saw growth of roughly 7% after currency adjustments. An increasingly stabilizing labor market and real estate market had a positive impact on consumer spending in the region. Sector growth was also supported by growing demand from tourists in the large American cities. Demand for premium and luxury products in Asia remained at a relatively moderate level during 2013. Particularly in China, the low level of economic growth and weaker consumer sentiment in response to the government's anti-corruption laws resulted in merely modest growth in the industry compared to prior years. Indeed, the menswear segment, which is of particular importance for the HUGO BOSS Group, even contracted slightly according to one market study. Overall, Hong Kong and Macao developed on average somewhat better than Mainland China. Despite the slower growth, China remained the nation with the largest share of industry sales worldwide. Surprisingly positive figures were reported in the past year in Japan, where the industry benefited from improved consumer confidence and a shift toward domestic consumption triggered by exchange rates. Adjusted for currency effects, the Asian luxury goods market is estimated to be growing at about 5%.