Despite signs of a turnaround in sales and significant profit gains, H&M Group underperformed forecasts in the second quarter. It also said June sales had been weak, impacted by bad weather in many markets.
Sales were up 3 percent in both reported terms and local currencies in the three months to May 31, to 59.61 billion Swedish kronor, or $5.65 billion at current exchange.
Operating profit jumped by 49.7 percent to 7.1 billion Swedish kronor, or $672.8 million, but this was below forecasts. Results after tax leapt 52 percent to 5 billion Swedish kronor, or $473.8 million.
The company said sales in June were expected to decrease 6 percent in local currencies due to strong comparisons with last year and unstable weather in many of its markets, which had impacted purchasing.
Nevertheless, the fashion retailer said it had delivered its “best profit and cash flow for many years” in the second quarter as it doubled down on improving sales and tightening costs.
“We achieved our best results for many years in the second quarter, showing once more the H&M group’s strength and robust financial position, with strong cash flow as well as improved profitability and sales,” stated chief executive officer Daniel Ervér, who took over the reins at H&M in a surprise move in January after successive quarters of weak sales. “We are now raising our ambitions further to strengthen the brand, the customer offering and the shopping experience.”
The company said its spring and summer collections had been well received by consumers. “We are seeing growth within all customer groups and a positive trend in all regions,” stated Ervér.
The stronger sales followed on from a decline in the first quarter of the year, as reported. For the six months to May 31, H&M’s sales were flat in local currencies and up 1 percent in reported terms, to 113.27 billion kronor, or $10.73 billion.