Sales growth at H&M was “flattish” in the three months to the end of August, the group reported in provisional quarterly results on Friday, as the Swedish fast fashion giant continued to lag its Spanish rival, Zara owner Inditex.
The high street giant said net sales increased 6 per cent year-on-year over the summer months to 60,897 Swedish krona (€5.12 billion), below the 10.4 per cent growth analysts polled by Reuters said expected.
Sales in local currencies, meanwhile, were “flattish” H&M compared with the same period in 2022.
“The work towards the company’s goal of reaching a 10 per cent operating margin in 2024 is going in the right direction,” the group said in a statement. “Profitability and inventory levels have been prioritised in the quarter.”
The figures are provisional and subject to revision when H&M publishes a report covering the first nine months of its trading year on September 27th.
H&M has struggled to match the sales growth at its Spanish rival Inditex. In its third quarter, the Zara owner saw year-on-year sales growth of 14 per cent excluding foreign-exchange movements, according to results published earlier this week, down from 17 per cent in the first half of the year.
Major European fashion brands have mostly enjoyed a strong trading year despite the impact of inflation on consumer spending. However, smaller retailers have struggled to keep up with high inflation, with at least 24 brands filing for bankruptcy or under restructuring since June last year, according to Bank of America analyst Geoffrey de Mendez.
H&M, meanwhile, had seen a reversal of fortune this year that lifted its share price by 53 per cent as sales rose while cost cuts announced last year took effect, but faces stiff competition from Zara owner Inditex and China-founded fast-fashion retailer Shein. - Additional reporting: Reuters
