H&M comparable sales fall in June for first time since March

STOCKHOLM, Sweden - The world's second-biggest apparel retailer Hennes & Mauritz on Thursday unexpectedly posted a small decrease in July like-for-like sales, the first monthly drop since March.

Sales in stores open at least a year at the Swedish budget fashion firm were down 1 percent in local currencies in July from a year earlier, against a mean forecast in a Reuters poll of analysts for a 1 percent rise.

Total sales in the month - the second of H&M's fiscal third quarter - were up 9 percent in local currencies, against a forecast for a 10 percent rise.

Apparel firms have faced tough times in Europe as the economic downturn and uncertain outlook make consumers hold on tighter to their wallets, and H&M has seen competition toughen in its low-price segment.

H&M, which has the bulk of business in Europe, did not comment on the data on Thursday. It said it had 2,940 stores on July 31, up from 2,603 a year earlier.

The quarter had had a healthy start with comparable sales up 3 percent in June, their fastest pace in 9 months. In the second quarter, consumer gloom and bad weather in Europe led to more markdowns than planned and a larger profit drop than expected.

Chief Executive Karl-Johan Persson said in mid-June that new collections had sold surprisingly well to date. But he cautioned this could be down to pent-up demand after chilly weather held back spring shopping, rather than a rise in underlying demand.

H&M's shares, which are up nearly 10 percent this year, trade at 23.8 times forecast 2013 earnings, just below biggest rival Inditex' 24.9 times multiple, according to Thomson Reuters data.