H&M blames warm weather for September sales slide
H&M said unusually hot weather in many of its European markets had delayed the start of the autumn shopping season, sending sales lower in September, while cost cuts helped the fashion retailer’s quarterly profit rise.
H&M, whose biggest rival is Zara owner Inditex, said September sales would be down 10% year-on-year measured in local currencies. That compares with Inditex reporting sales between August 1 and September 11 that were up 14%.
The decline deals a blow to hopes the world’s second-biggest fashion retailer is turning its performance around after lagging behind Inditex, as a cost-of-living crisis curbs shoppers’ spending.
“If the sales at your competitor basically go up by 14% with the same weather, that tells you something, to my mind,” said Vera Diehl, portfolio manager at Union Investment, which holds shares in both H&M and Inditex.
Operating profit in the June-August period, the Swedish group’s third quarter, was 4.7bn crowns (€404m) against a year-earlier 902m crowns. Analysts polled by LSEG had on average forecast a 4.7bn crown profit.
The year-ago figure included a one-off cost of 2.1bn crowns for the group’s exit from Russia, which also accounted for four percentage points of the 10% September sales decline, H&M said.
The company stuck to its goal of increasing operating margin to 10% by the end of next year, and said its cost-cutting programme was continuing “at full speed”.
The margin target is “challenging but achievable,” Barclays analyst Nicolas Champ said, adding that it would, however, require some acceleration in top-line growth.
H&M also said it had this month returned to JD, one of China’s biggest e-commerce marketplaces, after a prolonged absence due to criticism over its stance on alleged human rights abuses in China’s Xinjiang region.
It returned to Alibaba’s e-commerce platform last year, but has not been available on JD since 2021.
H&M announced a share buyback programme starting on Wednesday, planning to buy back up to 3bn crowns of stock by March 31 next year.