H&M shares hit two-year high after 'well-received' summer sales
Hennes & Mauritz AB
€15.72
11:10 24/04/24
Hennes&Mauritz posted its first increase in quarterly earnings for 2019 thanks to a well-received summer collection that allowed the company to reduce its inventory levels, sending it shares to their best level since end-2017.
For the three-month to 31 August, the fashion retailer posted a 25% jump in profits before tax to 5.01bn kronor, beating analysts' expectations, as sales jumped by 12% to 62.57bn kronor or 8.0% in local currency terms.
Less discounting also drove an improvement in gross margins from 50.3% one year ago to 50.8%, despite which its stock-in-trade declined.
"Well-received summer collections and increased market share show that we are on the right track," said company boss Karl-Johan Persson.
Persson also said the company was pushing to integrate its online and physical channels even more, while developing new features aimed at sustainability and reuse.
At the end of the quarter, it also launched on India's biggest ecommerce platform, Myntra, and launched H&M online in Indonesia followed by Thailand in September.
In local currency terms, US sales grew by 19.0%, helped by lower prices for some items, while the biggest increases were seen in Chile (32%) and India (29%).
Regarding the outlook, H&M reduced its guidance for new store openings in 2019 to around 120, with Persson adding on a conference call that the new season had gotten off to a "promising" start, helped by warm weather in September.
Persson said there was potential to lower rental costs in many markets come 2020, although the company's operating expenses were expected to remain high.
As of 1138 BST, shares of H&M were 6.46% higher to 196.36 kronor and changing hands just below the level of 198.30 kronor reached on 8 December 2017.