H&M upbeat on June after chilly weather hits quarterly sales
Reuters
Published Jun 15, 2023 02:15AM ET
Updated Jun 15, 2023 05:10AM ET
By Marie Mannes and Anna Ringstrom
STOCKHOLM (Reuters) - H&M posted slightly weaker-than-expected fiscal second-quarter sales on Thursday, but prospects for a better third quarter after a strong start in June sent shares in the Swedish retailer up by 6%.
H&M said sales measured in local currencies for its March-May quarter were "flattish", compared with the average analyst forecast for a 1% gain, according to a Reuters poll. Net sales rose 6% to 57.6 billion crowns ($5.36 billion).
However, the world's second-biggest fashion retailer said June was off to a good start, and attributed chilly weather in key markets for the flat fiscal second-quarter result.
Cold weather in Europe over the past few months has hurt demand for summer clothes at H&M, which is more exposed to Northern Europe than some of its rivals, such as Zara-owner Inditex (BME:ITX), whose largest market is in warmer Spain.
Analysts at Royal Bank of Canada said the Swedish company's third quarter, which runs June to August, would be helped by warmer weather.
Handelsbanken analyst Nicklas Skogman said the market consensus for the third quarter was for a rise of 5% for sales in local currencies.
A predicted surge in tourism spending in Europe in the third quarter, with record tourism numbers forecast for some markets, would also help H&M, Jie Zhang, an analyst at AlphaValue said.
The shares were up 5% at 153 crowns at 0856 GMT. Some traders also said the gains were driven by hedge funds, who had been expecting a weaker result than sell-side analysts.
H&M launched a savings drive in 2022 after a spike in costs which it has only partly been passing on to cash-strapped customers, and its sales growth has been lagging that of Inditex, as well as online rivals such as the fast-expanding Shein.
Inditex, which has coped better than H&M in sluggish markets, last week said net sales in its quarter through April were up 13% and, in May, up 16%.
H&M, whose single-biggest market is Germany, is due to publish its full quarterly earnings report on June 29.
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Written By: Reuters
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