H&M Group has reported flat sales in a challenging third quarter.
- Sales in the UK and European markets were impacted by colder June weather.
- The global net sales decreased by 3% year-on-year in local currencies.
- H&M’s autumn collection received positive feedback despite earlier hurdles.
- The company is adjusting strategies for future growth amid competitive pressures.
H&M Group has faced a challenging third quarter, with sales remaining stagnant in the United Kingdom and other key European markets. Notably, the cooler weather in June contributed significantly to these results. For the three months ending on 31 August, the globally recognised fashion retailer reported a 3% decline in net sales, falling to SEK 59 billion (£4.3 billion) compared to SEK 60.9 billion (£4.5 billion) in the previous year. When evaluated in local currencies, sales remained flat.
The company reported a gross profit of SEK 30.1 billion (£2.2 billion) for the quarter, with a margin of 51.1%, a slight increase from the margin of 50.9% the year before. However, H&M had to revise its profit outlook, predicting an operating margin for the year to fall below 10%, which is a reduction from its previous financial targets. H&M’s CEO, Daniel Ervér, acknowledged the difficult start to the quarter, stating, “The quarter started with slow sales in June due to cold weather in many of our key European markets. In July and August, we saw sales pick up, with even stronger sales development in September.”
Despite the initial setbacks, the company managed to conclude the quarter with sales on par with the previous year in local currencies, aided by robust cost management. Looking at broader performance, H&M’s sales for the first nine months remained stagnant in local currencies at SEK 172.3 billion (£12.7 billion), with 30% of total sales from online channels. In Western Europe, including the UK, quarterly sales declined by 4%, while yearly sales remained unchanged.
Notably, H&M’s autumn collection was met with enthusiasm, and sales in September were projected to increase by 11% in local currencies compared to the same month in the previous year. Ervér expressed optimism about the new collection, highlighting it as “the best of H&M: fantastic fashion and good quality at the best price, in a sustainable way.” Amidst fierce competition from other retailers, such as Inditex’s Zara, which saw a 10% profit jump earlier in the year, H&M is adjusting its approach.
Ervér elaborated on the company’s strategic focus: “2024 is a year in which we’re laying the foundation for future growth. We’re increasing the pace of improvements in our customer offering and deprioritising things that don’t strengthen our brands or contribute to our sales and profitability.” He noted that high consumer living costs and global turbulence have affected the company’s revenue and costs more than anticipated. Ervér added, “We are strengthening the H&M brand by investing in products, the shopping experience and marketing, which we are already seeing start to make an impact and which will contribute to increased sales and profitability.”
H&M is actively reshaping its strategies to counteract a challenging market environment and drive future growth.
