H&M's share price falls after sales figures disappoint

 
Helen Cahill
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Holiday Shoppers Look For Bargains On Black Friday
H&M has blamed the weather for its difficulties in 2016 (Source: Getty)

Swedish international clothing retailer H&M's share price fell 2.76 per cent in trading today after it reported disappointing Christmas sales figures.

The group's total sales in December rose six per cent year-on-year in local currencies, but analysts had forecast a sales increase of eight per cent.

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H&M said it had opened 422 stores in the year, and that it now has a total of 4,379 outlets. RBC's analyst Richard Chamberlain said the figures implied a like-for-like sales drop of three per cent.

"We think this reflects challenging industry conditions, but also a very weak first half of the month as Black Friday pulled forward more demand than we expected, at a likely lower margin," he said. "We think sales have returned to a more normalised pattern later in the month and so far in January."

Read more: Zara owner Inditex announces profit rise amid ongoing global expansion

The retailer blamed the weather for its difficulties in 2016, but the company was also hit by the strength of the dollar.

"H&M continues to face challenges in transitioning from a store based roll-out to a global multichannel operator," Chamberlain said. "However it should now be past the worst in terms of sourcing headwinds."

H&M's peer, Inditex, the retail giant behind Zara, has been proving to be a tough competitor due to its strength in sourcing the right clothes for the fast-fashion market. But, Chamberlain said H&M was trading at a "significant" discount to Inditex.

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