H&M: Strong collections help retailer beat forecasts for ninth straight month

STOCKHOLM, Sweden - Hennes & Mauritz, the world's second-biggest fashion retailer, saw higher sales growth than expected in December, helped by strong collections and colder weather after an unusually mild autumn in Europe.

European fashion retailers, most recently Britain's Marks & Spencer and Debenhams, complained of weak demand for high-margin winter clothing at the start of the season, but colder weather in December has since helped sales.

Primark, the discount chain owned by Associated British Foods that is growing fast in many of H&M's key markets, said sales rose 15 percent in the 16 weeks to Jan. 3, with trading strong in the last five weeks.

For Swedish-based H&M, December was the ninth consecutive month that the company, which is also benefiting from a recovering U.S. economy, achieved sales clearly or slightly above analysts' expectations in Reuters polls.

The company, which runs second behind Zara-owner Inditex in annual sales, said its sales rose 15 percent year on year in December, above a 13 percent increase expected by analysts and compared with a 10 percent rise in November.

"The many new online markets are helping, but the strong collections are no doubt the main reason for H&M's stronger momentum," analyst Niklas Ekman at brokerage Carnegie said, noting online sales contributed around 1 to 2 percentage points of the group's growth.

H&M, which is keeping on trend for this season with draped tops, jersey pyjamas and patterned cardigans, has been slower to launch online than some rivals but is investing heavily in its web business. It plans to open eight new online markets this year, as well as its first stores in India, Peru, South Africa and Taiwan.

The latest of H&M's designer partnerships, after a decade of working with couturiers such as Versace and Karl Lagerfeld, is with Alexander Wang, whose sporty leisurewear collection hit stores in November featuring sweatshirts, leggings and the like mostly in black and grey.

Ekman said H&M's sales growth stood out in the sector as it seemed to be shrugging off weak fashion demand across Europe, especially in Germany, its biggest market. "They are defying gravity," he said.

December is the first month of H&M's fiscal first quarter. It will unveil detailed earnings for 2013/2014 on Jan. 28.

Its shares, which rose on Tuesday to a record high, fell 0.5 percent by 1057 GMT, roughly in line with the main Stockholm index.