H&M surges on summer sales and online spend
Swedish fashion group H&M says sales of its summer collections had started well and it would slow the rate of store openings as it invests more online, boosting its shares by more than 14%.
The world’s second- biggest fashion retailer after Zara owner Inditex said sales growth accelerated to 12% in local currencies in June, the first month of its fiscal third quarter, from 5% in the second quarter.
That beat analysts’ expectations as well as the 10% rise Inditex reported for the six weeks from the start of May. H&M chief executive Karl-Johan Persson said the arrival of warmer weather in Europe had helped.
Northern European markets, where unusually cold weather dampened demand for summer ranges in the second quarter, did particularly well in June as temperatures rose, he said.
Better collections from the core H&M brand and purchasing improvements that allowed the company to respond more quickly to demand also helped in June, he added. “It’s partly due to external factors, but we also do things better than we did a year ago. Underlying levels are sounder,” Persson said.
H&M also said that it was cutting the net number of new stores it plans to open in 2019 to around 130 from 175, as it invests more in digital features in the business. Persson said openings were shelved mainly in Europe, but also in the US and China.
More store closures will contribute to the new net total as well. Despite investing heavily in logistics, digital technology and store concepts, and reviewing its mix of stores and brands, H&M has struggled to convince investors it is back on track.
Its shares remain far off 2015 record levels and little above the 13-year low seen in 2018. H&M reported a pre-tax profit for the three months to the end of May, its fiscal second quarter, of 5.9bn Swedish crowns (€563m), down from 6bn a year earlier, slightly shy of analyst expectations.
