The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
STOCKHOLM, Sweden — Hennes & Mauritz AB's sales gained for a fifth consecutive quarter as the Swedish retailer tries to reduce a buildup of inventory and end a three-year slump in earnings.
Sales rose 11 percent to 57.5 billion Swedish kronor ($6.1 billion) in the three months through May, which is H&M’s second quarter. Analysts expected 57.1 billion kronor. In local currencies, revenue gained 6 percent.
Key Insights
The reports suggests that H&M has made further inroads in reducing its high inventory level, which was the equivalent of 18.6 percent of sales in the first quarter. H&M had forecast that it would reduce discounts in the second quarter.
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H&M has struggled in recent years as its clothes fell out of favour with shoppers and amid heavy investments in online platforms. While the figures show sales have been perking up, a good portion of that was driven by the weaker Swedish krona and easier comparisons.
The big question is whether better sales will translate into earnings growth. Operating profit has gained only once in the past 14 reported quarters. H&M’s second-quarter earnings are due June 27.
Market Reaction
The stock has gained 22 percent this year. H&M’s stock can be volatile because short sellers have bet against 18.6 percent of the company’s freely traded shares, according to IHS Markit data.
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