top of page

Fashion Retailer H&M's Sales Jump, But Investors Fret Over Margins

PARIS, France - H&M, the world's second - biggest fashion retailer, posted a forecast - beating 17% jump in March - May sales, joining main rival Inditex in reporting a rebound in demand as pandemic restrictions have eased.

Sales were, however, still lower than before the pandemic began. Investors also voiced concerns over profit margins ahead of H&M's full quarterly earning report due on June 20.

H&M in March flagged price hikes to compensate for higher raw material and transport costs. Meanwhile, souring consumer confidence in Europe and stores that were closed in Russia due to the war in Ukraine could prompt price markdown to help shift unsold clothes.

H&M did not comment on the sales figures on Wednesday, and its shares were down 6% by 1000 GMT, taking a year - to - date to drop to 29%.

'Whilst in a less spectacular manner than Inditex last week, H&M also confirmed that the reopening process in Europe has led to strong demand conditions persisting in recent weeks', Jefferies analysts, with a 'hold' rating on H&M shares, said in a note to clients.

They added, however: 'Investors will be keen to better understand the extend to which price recovery is offsetting mounting input pressures and rebuilding costs'.

Sales were up 12% year - on - year when measured in local currencies, at 54.5 billion crowns ($5.4 billion) in its fiscal second quarter, the Swedish company said in a statement. Analysts polled by Refinitiv had on average predicted sales of 53.8 billion crowns.

'Whilst the top line improvement is encouraging, we are mindful that strength in clothing trends over summer could be short - lived as the consumer environment weakens', JPMorgan analysts said in a note.

'We note that Nordics sports retailer XXL profit warned on Q2 yesterday evening, and that this followed a warning last week from online clothing pure - play Boozt, with both citing weakening consumer sentiment', they said.

Inditex, the owner of Zara, reported an 80% jump in quarterly profit last week.



bottom of page