H&M Group has reported stagnant sales in the UK and significant European markets during its third quarter, primarily due to unseasonably cold weather in June affecting early trading.
For the three months ending August 31, the multinational retailer experienced a 3% decline in global net sales, totaling SEK 59 billion (£4.3 billion), compared to SEK 60.9 billion (£4.5 billion) during the same quarter last year. When adjusted for local currencies, sales were stable.
This performance has led the company to revise its forecast, now predicting an operating margin below 10% for the year, a downgrade from prior earnings expectations.
H&M CEO Daniel Ervér remarked: “The quarter began with weak sales in June due to low temperatures in many of our major European markets. However, sales improved in July and August, with an even more pronounced increase in September.”
“In spite of a tough start, we conclude the third quarter with sales in local currencies aligned with last year’s figures and effective cost management.”
For the nine-month period, net sales were stable in local currencies at SEK 172.3 billion (£12.7 billion), with approximately 30% of total sales deriving from online channels.
In Western Europe, including the UK, net sales dropped by 4% for the quarter, although year-to-date sales remained unchanged.
H&M’s gross profit for the quarter was SEK 30.1 billion (£2.2 billion), which translates to a margin of 51.1%, a slight increase from 50.9% the previous year. For the nine-month timeframe, gross profit rose to SEK 91.4 billion (£6.7 billion), resulting in a margin of 53%.
In spite of these sales difficulties, H&M noted that its autumn collection has been positively received, with September 2024 sales projected to rise by 11% in local currencies compared to the same month last year.
Ervér stated: “The autumn collection showcases the best of H&M: exceptional fashion, quality at the best price, all produced sustainably. We are enhancing the experience in our online and numerous physical stores, along with collaborations and unique events, raising our standards.”
He further explained: “The year 2024 is pivotal for establishing our future growth trajectory. We are accelerating improvements to our customer offerings while deprioritizing ventures that do not enhance our brands or contribute to sales and profitability.”
“Consumers are facing high living costs this year, and we continue to encounter global instability. External factors have affected our sales revenue and procurement costs more than we anticipated. Currently, we project that this year’s operating margin will fall below 10%.”
“We are fortifying the H&M brand by investing in product development, the shopping experience, and marketing, which are already beginning to yield positive results that will help boost sales and profitability.”
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