COPENHAGEN, Dec 15 – Shares of H&M, the world’s second-biggest fashion retailer, were down 4.5% in early trading on Thursday as a 10% rise in net sales between September and November compared to the same period of the previous year, it could not match a recent rebound in the expectations of some analysts.
H&M, which has struggled to keep up with Inditex’s Zara competitor, last month became the first major European retailer to lay off staff in response to the cost-of-living crisis, in a bid to save $2 billion. SEK ($196 million) per year.
Net sales for September-November, H&M’s fiscal fourth quarter, stood at 62.5 billion SEK ($6.13 billion), up from 56.8 billion SEK a year ago. Analysts polled by Refinitiv had expected an average of 62.17 billion crowns.
“This is a slightly disappointing update against the background of expectations, which have risen in recent weeks on the back of somewhat better market data in Germany and Sweden,” said J.P. Morgan in an analysis note.
Earnings will not be known until full results for the period are released on January 27, according to James Grzinic, an analyst at Jefferies.
“We won’t know until the end of January to what extent pressure on gross margins and accelerating inflation from operating expenses have affected results,” Grzinic wrote.
Zara owner Inditex on Wednesday reported a 19% rise in net profit in the nine months from February to October, but said sales growth had slowed to 11% in the last three months. of that period, reflecting a weakening of the consumer environment.
“H&M Group’s operations in Russia and Belarus were closed during the quarter, with the sale of remaining stock and the closing of the last stores on November 30,” the company said in a statement.
“During the quarter, between 25 and 50 stores in China were temporarily closed due to new COVID outbreaks.”
In local currency, sales for the quarter were flat.
H&M’s share price has fallen 36% so far this year, worse than the 12.8% drop in the benchmark Stockholm stock index and the 11.3% drop in Inditex.