Strong dollar and hot weather hit H&M’s summer sales and see share price fall
Swedish retail giant H&M's share price fell this morning, despite promising third quarter results.
The figures
Sales at H&M Group – which includes facias Cos, & Other Stories and Monki as well as the mainline brand, were up 11 per cent to SEK 132bn Swedish Krona (£10bn) in the nine months to the end of August, ahead of estimates.
Sales for the third quarter alone were up 11 per cent.
Profits also rose 11 per cent, over the nine months, to SEK 20bn, although there was no increase in the group's profits for the quarter.
Why it's interesting
H&M may still be growing sales, but it seems it's not enough for investors, with the fashion group's share price dropping 2.3 per cent at pixel time.
Some analysts have warned that H&M's growth strategy – which heavily relies on opening more stores – could come under pressure as markets saturate. Weather has also been an issue with H&M blaming "unseasonably warm" August in many of the group's larger European markets.
Andy currency headwinds are also affecting overall returns. The group said the strong US dollar increased purchasing costs, hitting third quarter profits.
What H&M said
Chief executive Karl-Johan Persson, said: “Profits have developed well during the first nine months of the year, although profits in the third quarter were negatively affected by increased purchasing costs due to the strong US dollar.”
He added: “Sales were also good in the third quarter even though sales in August were negatively affected by the unseasonably warm weather in many of our large European markets. When the weather became more normal in September, sales took off again and we are looking forward to an exciting fashion autumn.
“Our other brands are performing well. For example, Cos now has around 130 stores across 27 markets, Monki more than 90 stores in 13 markets, & Other Stories 25 stores in 10 markets and Weekday 20 stores in five markets.”
Persson said new-store openings around the world were "continuing according to plan," from Russia to Switzerland, New Delhi and Cape Town.
In short
H&M will need to do more than open new stores to keep investors onside.