H&M comparable sales shrink for third straight month

STOCKHOLM - Budget fashion firm Hennes & Mauritz reported its third straight month of falling like-for-like sales on Tuesday as the company is buffeted by weak European consumer morale.

Swedish H&M, the world's second-biggest apparel retailer after Zara owner Inditex, has the bulk of its business in Europe, where the debt crisis and rising unemployment have dampened the mood of shoppers.

Like-for-like sales, which strips out stores open for less than a year, fell in the first month of its new fiscal year by 2 percent from a year earlier in local currencies. The drop was less than the 4 percent mean forecast in a Reuters poll and compared with a 4 percent rise in December last year.

Total sales including stores opened in the last year rose 8 percent, better than a forecast 5 percent rise.

Despite the new like-for-like sales drop, H&M did better than the wider German market, H&M's single biggest, where overall apparel sales dove 9 percent last month, according to industry data.

H&M said sales in December were affected by a negative calendar effect of approximately 3 percentage points.

H&M is due to post its 2011/12 full-year earnings on Jan. 30. It has already said overall sales were up 10 percent in the year, of which established stores accounted for 1 percent.

Inditex, with a larger share of sales than H&M in faster-growing emerging markets and is less exposed to cost inflation in Asia, is seen posting a 16 percent rise in sales in its financial year to the end of January, according to Thomson Reuters Starmine data.