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HomeTop Business NewsH&M's Sales Take a Dip in September, Blaming the Heat Wave

H&M’s Sales Take a Dip in September, Blaming the Heat Wave


H&M, the world’s second-largest fashion retailer, has reported a decline in sales for September due to unusually hot weather in its European markets. The delay in the start of the autumn shopping season has affected the company’s performance, with sales down 10% year-on-year in local currencies. In comparison, H&M’s biggest rival, Zara owner Inditex, reported a 14% increase in sales between August 1 and September 11.

This setback comes as H&M has been striving to improve its performance and catch up with Inditex. The company has been facing challenges due to a cost-of-living crisis that has impacted consumer spending. Vera Diehl, a portfolio manager at Union Investment, commented on the significance of Inditex’s sales growth in comparison to H&M’s decline, stating, “If the sales at your competitor basically go up by 14% with the same weather, that tells you something, to my mind.”

Despite the decline in sales, H&M’s quarterly profit has risen thanks to cost-cutting measures. The company’s operating profit for the June-August period, which represents its third quarter, was 4.7 billion crowns (€404 million), compared to 902 million crowns in the same period last year. Analysts had predicted an average profit of 4.7 billion crowns.

H&M explained that the year-ago figure included a one-off cost of 2.1 billion crowns related to its exit from the Russian market. This cost, along with other factors, accounted for four percentage points of the September sales decline. The company remains committed to its goal of increasing the operating margin to 10% by the end of next year. It also stated that its cost-cutting program is progressing “at full speed.”

Barclays analyst Nicolas Champ commented on H&M’s margin target, describing it as “challenging but achievable.” He noted that achieving this target would require an acceleration in top-line growth. H&M also announced that it has returned to JD, one of China’s largest e-commerce marketplaces, after a period of absence. The company had faced criticism over its stance on alleged human rights abuses in China’s Xinjiang region. H&M had previously returned to Alibaba’s e-commerce platform in 2020 but had not been available on JD since 2021.

In addition to these developments, H&M has initiated a share buyback program, planning to repurchase up to 3 billion crowns of stock by March 31 next year. This move aims to enhance shareholder value and demonstrate confidence in the company’s future prospects.

Overall, H&M’s performance in September has been impacted by the delayed start of the autumn shopping season due to hot weather in its European markets. However, the company’s cost-cutting measures have contributed to a rise in quarterly profit. H&M remains focused on achieving its margin target and has re-established its presence on JD, one of China’s major e-commerce platforms. The share buyback program further underscores the company’s commitment to enhancing shareholder value.

Thomas Lyons
Thomas Lyons
Thomas, the founder and chief editor at Top Rated, harbours a deep-seated passion for business, news, and product reviews. His thirst for knowledge and experience has led him on a journey across the length and breadth of the country, enabling him to garner a wealth of insight. At TopRated.ie, his sole aim is to deliver meticulously researched news and provide impartial reviews of fact checked Irish companies, thus helping readers make well-informed decisions.


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