H&M's recovery continues as fourth quarter sales jump 9%
Reuters
Published Dec 16, 2019 07:26AM ET
H&M's recovery continues as fourth quarter sales jump 9%
STOCKHOLM (Reuters) - Fashion retailer H&M (ST:HMb) said on Monday its sales rose 9% in the fourth quarter, putting it on course to increase annual profits for the first time in four years following heavy investment in online and other services to adapt to a changing market. Shares in the world's second-biggest apparel group were up 2% at 1000 GMT, outperforming the wider market in Stockholm (OMXSPI).
They have now climbed 53% this year on hopes the group has embarked on a road to recovery after slowing footfall at its core H&M-branded stores caused years of sliding group profits, mounting inventories and shrinking market value.
Over the past few years the Swedish-based retailer has invested in online services, new store concepts and independent brands to broaden its customer base and turn itself around.
H&M said its sales in September-November, its fourth quarter, were held back by the Black Friday shopping day falling later this year.
It said sales for the quarter rose 9% to 61.7 billion crowns ($6.41 billion). Analysts had forecast a 10% rise, according to Refinitiv SmartEstimates.
In local currencies, growth was 5%.
"Black Friday this year fell a week later, i.e. just before the end of the month of November," H&M said in a statement.
"Therefore some of the big Black Friday online sales will not be recognized until December. The amount in question is
expected to be approximately 500 million crowns."
H&M said that adjusted for that, sales grew 10%, or 6% in local currencies and analysts said that stripping out the Black Friday impact, sales broadly matched expectations.
Rival Inditex (MC:ITX), the world's biggest clothing retailer and owner of the Zara chain, said last week its net profit grew 14% in the three months through October, helped by sales growth of 9% according to Reuters' calculation and shrinking inventories.
RBC analyst Richard Chamberlain, with an "outperform" rating on H&M's shares, said H&M's sales figures indicated the retailer had gained share in major markets such as Germany, H&M's biggest market, where industry-wide in-store sales shrank by an estimated 4%.
In the third quarter, H&M had increased profit for the first time in more than two years as heavy spending to meet changes in the market helped sales reach 8% growth in local currencies - a pace last seen three years ago.
Analysts expect full-year profits to grow for the first time since 2015, despite still-high inventory and investment levels.
H&M, which is controlled by the founding Persson family, is scheduled to publish its full earnings report on Jan. 30.
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Written By: Reuters
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