H&M shares fall on poor reception to quarterly sales

Written by Stein Jacobsen

CopenhagenDecember 15 – Shares of H&M, the world’s second largest fashion retailer, fell 4.5% in early trading Thursday, as a 10% increase in net sales between September and November compared to the same period a year earlier could not match a rebound in Recently in the forecasts of some analysts.

H&M, which has struggled to keep up with Inditex competitor Zara, last month became the first major European retailer to lay off employees in response to the cost-of-living crisis, in a bid to save $2 billion. Swedish kronor ($196 million) per year.

Net sales in the September-November period, H&M’s fiscal fourth quarter, were 62.5 billion SEK ($6.13 billion), up from 56.8 billion SEK a year earlier. Analysts polled by Refinitiv had expected an average of 62.17 billion crowns.

“This is a slightly disappointing update on expectations that have risen in recent weeks on the back of somewhat better market data in Germany and Sweden,” JPMorgan analysts said in a research note.

Earnings won’t be known until full results for the period are announced on Jan. 27, according to James Grzynik, an analyst at Jefferies.

“We won’t know until the end of January to what extent pressure on gross margins and acceleration of inflation from operating expenses affected results,” Grzinic wrote.

Zara owner Inditex on Wednesday reported a 19% increase in net profit in the nine months from February to October, but said sales growth slowed to 11% in the last three months of that period, reflecting a weak consumer environment.

“H&M Group’s operations in Russia and Belarus closed for the quarter, with remaining inventory sold out and the last stores closing on November 30,” the company said in a statement.

“During the quarter, between 25 and 50 stores in China were temporarily closed due to the new outbreak. Corona virus disease“.

In local currency terms, this quarter’s sales were flat.

H&M’s stock price is down 36% so far this year, worse than the stockholm benchmark’s 12.8% drop and Inditex’s 11.3% drop.

(1 US dollar = 10.2119 Swedish krona)