H&M sales hit by hot weather

City A.M. Reporter
HENNES & Mauritz, the world’s second largest fashion retailer, said yesterday that unusually warm weather in Europe dented demand for autumn clothes and led to an unexpected drop in sales in August.

Shares in the Swedish budget apparel firm, which trails Zara owner Inditex by value and turnover, as well as by the number of markets and stores, fell almost 1.6 per cent, lagging the STOXX Europe 600 retail index.

Sales at stores open a year or more shrank four percent in local currencies in August, well below a forecast for one per cent growth.

“It was primarily the extreme heat wave in a number of European markets in August that affected sales negatively,” H&M said in a statement.

DNB Markets analyst Haakon Aschehoug said the figures probably meant H&M, which has the bulk of business in Europe, lost market share after outperforming it in recent months.

“We already know the [apparel sales] numbers from Sweden and Germany, and the US retail sales. This represents, in our view, an underperformance on the key markets of about four per cent.”

Societe Generale analyst Anne Critchlow said the figures meant flat like-for-like sales overall in the third quarter.

H&M said that, in its full third quarter, a strong appreciation of the Swedish crown, mainly against the euro, led to large negative currency translation effects.

Turnover in the June-August quarter grew seven per cent from a year earlier to 28.8bn crowns ($4.4bn), undershooting expectations for a nine per cent rise to 29.5bn.