H&M Sales Miss Views After Warm Weather Hits Autumn Demand — Update
By Dominic Chopping
STOCKHOLM--Sweden's Hennes & Mauritz reported a larger-than-expected sales drop in its final quarter of the year, having previously warned that the start to its autumn season had been delayed by unusually warm weather in Europe.
The fashion retailer said Friday that sales in local currencies fell 4% in the September to November quarter versus a drop of 3.6% seen in a FactSet forecast.
H&M had earlier cautioned that sales in September could fall by as much as 10% due to hot weather causing customers to delay purchases of autumn clothes, while the company is also missing out on Russian sales this year after exiting the country.
Reported sales in its fourth quarter were flat on the year at 62.63 billion Swedish kronor ($6.11 billion), against the SEK62.9 billion seen by FactSet, as the lack of pricing power continues and overall demand for products is weak, Bernstein analyst William Woods said in a note.
Excluding Russia, Belarus and Ukraine, sales increased by 3% in Swedish kronor but fell 1% in local currency, likely highlighting weakness in other regions such as Asia and the Americas, Woods added.
Overall, the sales figures show H&M continues to lag Zara owner Inditex who earlier this week reported 11.8% constant currency growth with positive growth in all regions and across all concepts, he said.
"It' is also interesting to note that H&M didn't reiterate the 10% full-year 2024 earnings before interest and tax margin."
In the previous quarter, the company had said its work toward hitting a 10% operating margin in 2024 is heading in the right direction.
H&M will report full fourth-quarter earnings on Jan. 31.
At 0846 GMT shares traded 0.6% higher at SEK177.72.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
December 15, 2023 04:17 ET (09:17 GMT)
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