H&M is experiencing a challenging financial quarter with its sales remaining flat amid colder weather impacts.
- For the fiscal period ending 31 August, H&M’s global net sales slightly declined by 3% to SEK 59 billion (£4.3 billion) from SEK 60.9 billion (£4.5 billion) the previous year.
- The company’s gross profit rose slightly, marking a 51.1% margin despite challenges.
- CEO Daniel Ervér highlighted a slow start in sales due to June’s weather but noted improvement in subsequent months.
- Western Europe witnessed a 4% sales drop, although online sales contributed significantly to the group’s revenue.
H&M has reported a challenging third quarter, with global net sales declining 3% to SEK 59 billion (£4.3 billion) from the previous year’s SEK 60.9 billion (£4.5 billion). This period, ending 31 August, saw flat sales in local currencies attributed to colder weather impacting early trading in June. Despite these setbacks, the company recorded a slight increase in gross profit with a margin of 51.1%, up from 50.9% last year.
Chief Executive Officer Daniel Ervér noted that while the quarter began with slow sales due to adverse weather conditions in key European markets, there was a noticeable improvement in July and August, diminishing the disparity caused in June. Ervér remarked that September sales showed strong development, predicting an 11% increase compared to the previous year.
Despite a 4% decline in net sales in Western Europe, including the UK, H&M managed to maintain overall flat sales in local currencies for the nine months. Online channels played a critical role, comprising about 30% of total sales.
In response to the third quarter’s performance, H&M adjusted its annual operating margin expectation to below 10%, reflecting a cautious approach amid rising living costs and external economic turbulence. Ervér stated, “2024 is a year in which we’re laying the foundation for future growth. We’re increasing the pace of improvements in our customer offering and deprioritising things that don’t strengthen our brands or contribute to our sales and profitability.”
The retailer’s latest autumn collection has been well-received, with expectations for a substantial sales uptick as Ervér emphasised the focus on quality and sustainable offerings. The company is competing against firms like Inditex, which reported a profit increase, highlighting the competitive nature of the industry.
H&M’s strategic efforts point towards future growth despite current economic challenges.
