ANN/THE STAR – Sweden’s H&M yesterday reported flat sales in its most recent quarter, lagging expectations as the fashion firm struggles to attract customers while the cost of living crisis drags on.
“The work towards the company’s goal of reaching a 10 per cent operating margin in 2024 is going in the right direction. Profitability and inventory levels have been prioritised in the quarter,” H&M said in a statement.
The world’s second biggest fashion retailer said June-August local-currency sales, the figure most closely watched, were “flattish” year-on-year, missing the five per cent growth forecast by analysts in a poll.
Net sales rose six per cent to SEK60.9 billion (USD5.45 billion), lagging the SEK63.5 billion expected by analysts.
Excluding its Russia, Belarus and Ukraine operations – its Russian stores were temporarily open for part of the third quarter last year but have since shut – H&M’s sales rose eight per cent measured in Swedish crowns, it said. H&M has announced that it will begin re-opening stores in Ukraine in November.
H&M had seen a reversal of fortune this year that lifted its share price by 53 per cent as sales rose while cost cuts announced last year took effect, but faces competition from Zara owner Inditex and China-founded fast-fashion retailer Shein.
Inditex beat expectations with a 40-per-cent jump in half-year net profit on Wednesday even as the world’s biggest fast fashion company slowed the pace of its price increases.
Inditex’s sales in constant currencies increased 14 per cent between August 1 and September 11, falling short of analysts’ expectations for an 18 per cent rise in a sign that the heatwave in Europe had dented demand for autumn and winter clothes.
