H&M Group experienced flat sales in the UK and key European markets during a challenging third quarter, prompting a reduction in profit expectations.
- Global net sales for H&M dropped 3% to SEK 59bn, while sales in local currencies remained flat.
- Gross profit improved slightly, but the company revised its operating margin forecast to below 10% for the year.
- Despite a slow start due to cold June weather, sales rebounded in July and August with promising September projections.
- Increased competition and high consumer living costs have further pressured H&M’s financial performance.
H&M Group has reported unchanged sales figures across its key markets in the third quarter, notably affecting regions such as the UK and other parts of Europe. The period from June to August proved difficult, with global net sales declining by 3% to SEK 59 billion, down from the previous year’s SEK 60.9 billion. Despite the overall dip, sales in local currencies remained stagnant.
The company did see its gross profit rise to SEK 30.1 billion, reflecting an improved margin of 51.1%. However, the third quarter’s lukewarm performance has led H&M to lower its annual operating margin forecasts, now predicting it will fall below the 10% mark, a step back from prior targets.
CEO Daniel Ervér explained the impact of the cold weather in June, stating, ‘The quarter started with slow sales in June due to cold weather in many of our key European markets.’ However, he noted that there was a significant recovery in sales during July and August, with expectations of a substantial 11% increase in September compared to the same month last year.
Throughout the nine-month period, sales figures have remained constant in local currencies at SEK 172.3 billion, with digital channels contributing to approximately 30% of these sales. Net sales in Western Europe, including the UK, declined by 4% over the quarter, yet they remained static year-to-date.
Competition from other industry players, notably Inditex, which reported a 10% rise in profits recently, has intensified the pressure on H&M. Daniel Ervér remarked, ‘2024 is a year in which we’re laying the foundation for future growth.’ H&M is adjusting its strategy by focusing on enhancing product offerings and customer experience to drive future profitability.
H&M is navigating a difficult market environment, seeking to stabilise and position itself for future growth despite current challenges.
