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German beauty retailer Douglas has warned that global trade tensions and weak demand for premium cosmetics will hit sales and profits this year, sending its shares down 22 per cent on Friday.
The group slashed its annual forecast on Thursday, saying macroeconomic uncertainties had accelerated a slowdown in the high-end beauty market in Germany and France, leading to lower footfall in stores and online traffic.
The company, which listed in Frankfurt last year, is now expecting to report a net income of about €175mn for its current financial year, down from a previous forecast of between €225mn and €265mn.
It is expecting net sales of about €4.5bn, down from an upper estimate of €4.8bn.
Douglas is the latest consumer-facing company to warn of the fallout on shoppers from rising global uncertainty. On Thursday chief executive Sander van der Laan said: “The increasing economic and political global tensions have now also reached the premium beauty sector in Europe.
“In the past weeks we have seen an accelerating slowdown in consumer traffic and demand in the market. Hence, our recent sales and gross profit developments have not met our initial expectations.”
Douglas said it was assessing its medium-term guidance and would report back in May. The company added that it had already enacted “several countermeasures” to stabilise its performance, including cost cutting and the reallocation of capital.
Douglas had already cut its guidance in February after reporting weakening sales for the first quarter ending in December, triggering a sharp sell-off in its shares.
Since its return to public markets a year ago, the former private equity-owned retailer has seen its share price fall by half, never rising above its IPO price of €26.
“Investors viewed the premium category as more defensive and less economically sensitive than other retail categories but this does not appear to be the case,” Deutsche Bank analysts wrote in a note on Friday.
The bank said it now expected the “weak sales environment [to] continue for an extended period” amid intensified promotional activity from competitors seeking to entice cautious consumers.
“These are challenging times and we already took striking decisions,” said van der Laan. “We move every lever in our business to safeguard our sales and profits — as well as our employees and shareholders.”
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