Hugo Boss CEO Claus-Dietrich Lahrs has quit after eight years, taking the blame for a profit warning based on tumbling sales in Greater China and the US.

The German fashion house’s share price fell to its lowest in five years after it warned investors it expected sales to grow more slowly in 2016 than previously forecast and for its operating profit to fall. The share price regained about 2.5 per cent after Lahrs announced his departure, but it is still down 31 per cent in a year.

Lahrs, 52, will leave on February 29 “upon his request as part of a mutual agreement” according to a company statement.

After working with LVMH and Christian Dior, Lahrs joined Hugo Boss in 2008 and with private equity investor Permira launched a global expansion program. Sales rose by more than 60 per cent after some 100 stores were opened and the brand expanded into womenswear.  Permira has since sold out of the business.

The brand’s current problems are most obvious in China, where luxury goods sales have fallen over the last 12 to 24 months, partly due to a government clampdown on gift giving and graft.

Hugo Boss now plans to reduce prices across Asia to more closely mirror German levels, and limit distribution through wholesale channels to reduce discounting from overstocks.

This story first appeared on Inside Retail’s sister site, Inside Retail Asia.

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