H&M July sales beat expectations

 
Kasmira Jefford
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The fashion retailer will open a net 400 stores this year and enter five new markets
SWEDISH fashion giant H&M posted a better-than-expected rise in sales last month, thanks to improvements to its website and after broadening its home and beauty ranges.

The world’s second-biggest clothing retailer said sales in local currencies rose by 16 per cent in July, compared with the same time last year, beating expectations.

Analysts on average had forecast a 12 per cent rise in sales. It was the 10th consecutive month of double-digit growth.

“Industry sales growth has been supportive and we think H&M is benefiting from its improved online offer, stronger seasonal sales and range extensions into areas like Home and Beauty,” RBC Capital Mar­kets analyst Richard Cham­berlain said. Shares in H&M have lagged behind its global peers amid concerns of further gross margin deterioration due to the strong dollar against the euro.

Chamberlain expects a decline of 160 basis points for this year and 100 for 2016.

However he added that lower Chinese supplier costs, including a weaker yuan, should give H&M more negotiating power with suppliers going forward.

The retailer had 3,649 stores at the end of July compared with 3,314 last year. It plans to open a net 400 stores by the end of the year and expand its new H&M Beauty range to 900 stores in 40 markets as well as online.

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