H&M disappoints expectations in the third quarter. In the period between June and August the Stockholm giant recorded net sales of 60.9 billion Swedish crowns (around 5.1 billion euros), an increase of 6%, a progression that the company defined as “flat” compared to to last year, in local currency. In response, H&M shares fell by more than 4 percentage points on the stock market. Furthermore, net revenues also fell below analysts’ expectations, he recalls Reutersthey had estimated reaching 63 billion.
In the H&M report it specifies that, excluding Russia, Belarus and Ukraine (where the stores will reopen in November) the growth in local currency would have been equal to 8%, explaining that in the quarter just ended “priority was given to profitability and inventory levels”. Also adding that the company’s goal of achieving an operating margin of 10% by 2024 is “progressing in the right direction”.
It therefore seems that the momentum that emerged at the beginning of June and anticipated with the results of the second half of the year did not materialize in a brilliant quarter, which should have benefited from the effects of a more favorable climate. Among the reasons, analysts see the effects of the high cost of living on consumers’ propensity to purchase and the ruthless competition from fast fashion rivals, from Inditex (which has just closed a half-year in growth in terms of both revenues and profits) up to Shein.
Full results for the last three months and first nine months of the year will be released on September 27.