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

City A.M. Reporter
THE WORLD’S second-biggest apparel retailer Hennes & Mauritz yesterday 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 one per cent in local currencies in July from a year earlier.

Total sales in the month – the second of H&M’s fiscal third quarter – were up nine per cent in local currencies, against a forecast for a 10 per cent 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. It said it had 2,940 stores on 31 July, up from 2,603 a year earlier.

The quarter had a healthy start with comparable sales up three per cent in June, their fastest pace in nine 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 per cent this year, trade at 23.8 times forecast 2013 earnings, just below biggest rival Inditex’s 24.9 times multiple. They closed down 1.63 per cent yesterday.