STOCKHOLM (AFP) – Shares in Hennes and Mauritz (H&M) surged yesterday, boosted by quarterly results pointing to a budding recovery in the Swedish fashion retailer’s earnings.
About an hour into trading on the Stockholm stock exchange they stood 9.4 per cent higher at 158.84 kronor.
H&M, which has been lagging in a relentless competition with Spanish rival Zara, earlier reported a net profit of 4.5 billion kronor between March and May, the second quarter of its financial year.
The net result was little changed from year-earlier levels, and slightly short of analysts’ forecasts, but a brighter outlook still had investors rushing to buy into the stock.
“The H&M group continues to increase full-price sales, reduce markdowns and increase market share, showing that customers appreciate our collections and the improvements we are making to the product assortment and the customer experience,” said Chief Executive Officer Karl-Johan Persson in a statement.
Sales, meanwhile, rose by 11 per cent with analysts welcoming the Swedish group’s apparent success in accelerating its digital performance, especially in online sales which rose 20 per cent in local currencies in the quarter, and 27 per cent once converted back into kronor.
“H&M is continuing to execute better this year and is gaining share in major markets, albeit against easy comparisons,” analysts at the Royal Bank of Canada said in a note to investors.
H&M’s net margin rose to 7.8 per cent from 1.6 per cent in the previous quarter, a significant recovery but still far behind Zara, whose margin came in at 12.4 per cent for its latest quarter.