Times are tough for H&M as sales flatline despite extra stores

By

Sandra Halliday

Published
Mar 15, 2018

H&M shares fell nearly 5% in early Thursday trading as the fashion retail giant reported Q1 sales down by more than analysts had expected. Coming just a day after rivals Inditex and LPP had turned in more buoyant figures, the news looked even worse than it might have done had it been seen in isolation.

It had already warned last month that it had been carrying too much stock and had needed to offer deep discounts to shift last season’s looks. And it also said that it had made fashion missteps.

So how bad were the figures? Well, in local currencies, sales at the world’s second biggest fashion retailer were virtually flat. At least they didn’t fall, but given that analysts had been predicting a slight increase, and taking the impact of inflation into account, a flat result isn’t a good result.

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And the fact that the company had 4,743 stores on 28 February 2018 compared to 4,393 a year earlier also made the performance look poor in the December to February quarter.

So let’s look at the actual numbers. Sales including VAT were SEK53.554 billion and excluding VAT they were SEK46.181 billion.

Do we know what went wrong in the period? No. The company offered no more than the basic figures, H&M being notoriously tight-lipped when it comes to releasing sales information. The full three-month report isn’t out until March 27 and it comes with an analyst conference call so we might hear more at that point but we shouldn’t count on any great detail even then.

But the company did have some better news this week having just announced that its still-new Arket chain will open its first branch in the company’s home town, Stockholm, early this summer. The store, at Drottninggatan 53 in central Stockholm, follows the brand’s launch in August 2017 with openings in five major European cities as well as an online store in 18 markets.