H&M Group has reported stagnant sales in the UK and across major European markets amid unfavourable weather conditions in June.
- The global fashion retailer’s net sales dipped 3% to SEK 59bn for the quarter, compared to SEK 60.9bn the previous year.
- Local currency sales remained flat, impacting profit forecasts with an expected operating margin below 10%.
- Despite a rocky start, H&M’s sales improved in July and August, with promising results for September driven by the autumn collection.
- H&M continues to face stiff competition from rivals like Inditex, with external factors further challenging the retail giant.
H&M Group announced a challenging third quarter with no sales growth in the UK and key European markets, attributing this stagnation primarily to unfavourable weather conditions in June that adversely affected consumer purchases. The global net sales decreased by 3% to SEK 59 billion, down from SEK 60.9 billion the previous year. However, when evaluated in local currencies, sales remained static, compelling the fashion giant to revise its profit forecasts and anticipate an operating margin drop below 10%, deviating from previous expectations.
Daniel Ervér, CEO of H&M, acknowledged the difficulties at the start of the quarter but highlighted a recovery, noting, ‘The quarter started with slow sales in June due to cold weather in many of our key European markets. In July and August, we saw sales pick up, with even stronger sales development in September.’ This positive momentum in later months was principally driven by the encouraging reception of the autumn collection, expected to boost September sales by 11% in local currencies compared to the same period last year.
Despite maintaining flat sales year-to-date at SEK 172.3 billion, with online channels representing 30% of total sales, Western Europe saw a 4% drop in net sales for the quarter. The retail landscape proved competitive, with rival companies like Inditex managing to circumvent the adverse conditions faced by H&M by posting a profit rise of 10% earlier in the period.
Ervér expressed optimism regarding the strategies H&M is implementing to foster future growth, stating, ‘2024 is a year in which we’re laying the foundation for future growth. We’re increasing the pace of improvements in our customer offering and deprioritising things that don’t strengthen our brands or contribute to our sales and profitability.’ Through increased investments in product excellence, customer experience enhancement, and strategic marketing, H&M aims to fortify its market position amid high consumer living costs and global economic turbulence.
H&M strives to navigate challenging market conditions and seeks growth through strategic changes and enhanced customer offerings.
