H&M Fails to Meet Q2 Forecasts Despite Profit Gains, Citing Poor June Sales Due to Unfavorable Weather
H&M Group’s sales and profit gains failed to meet predictions for the second quarter, despite encouraging signs of a turnaround. The company also reported weak sales performance for June, attributing it to poor weather conditions across several markets.
For the three months leading up to May 31, sales rose by 3 percent to 59.61 billion Swedish kronor or $5.65 billion – applicable in both reported terms and local currencies. Operating profit saw a significant increase of 49.7 percent, reaching 7.1 billion Swedish kronor or $672.8 million. However, these results fell short of expectations. After-tax results saw a substantial leap of 52 percent, amounting to 5 billion Swedish kronor or $473.8 million.
Despite these gains, H&M anticipates a decrease in sales by 6 percent in June, when calculated in local currencies. This decrease is ascribed to unfavourable comparisons with the previous year and unstable weather adversely affecting purchasing.
However, the fashion retailer remains positive. H&M asserts that the second quarter has resulted in their best profit and cash flow for many years as it has focused on boosting sales and reducing costs.
Chief executive officer Daniel Ervér, who took over the reins at H&M in January stated, “We achieved our best results for many years in the second quarter, showing once more the H&M group’s strength and robust financial position, with strong cash flow as well as improved profitability and sales. We are now raising our ambitions further to strengthen the brand, the customer offering and the shopping experience.”
Chief executive officer Daniel Ervér, who took over the reins at H&M in January stated, “We achieved our best results for many years in the second quarter, showing once more the H&M group’s strength and robust financial position, with strong cash flow as well as improved profitability and sales. We are now raising our ambitions further to strengthen the brand, the customer offering and the shopping experience.” The company’s spring and summer collections enjoyed a warm reception from consumers, affirming its claims of a positive trend in all regions and growth in all customer groups. Daniel Ervér seconded these recognitions.
Despite the disappointing Q2 results, H&M’s sales performance is improving when compared to a decline seen in the first quarter of the year. Calculating the six months leading up to May 31, the company’s sales remained flat in local currencies and rose by 1 percent in reported terms, summing up to 113.27 billion kronor, or $10.73 billion.
