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This comes as a real disappointment after it had reported strong second-quarter numbers as cost-cutting measures started to bear fruit and its summer collection benefited from warmer weather in Europe.
Net sales increased by 6% to 60.9 billion Swedish crowns, below estimates of SEK 63.5B. In local currencies, sales growth was “flattish” on an annual basis during the June to August period, missing analysts’ forecasts of 5% cited by Reuters.
The owner of brands like Arket, Cos and Monki said that its efforts to reach a 10% operating margin in 2024 were heading in “the right direction,” adding that it has also placed an emphasis on profitability during the third quarter.
H&M has attempted to boost its profit margins through higher pricing, according to analysts quoted by Reuters. However, this strategy has not yet proven to be as successful as a similar drive by archrival Inditex (BME:ITX), which reported a sharp jump in half-year net profit earlier this week.
“Absent further clarification from the company on the extent of measures taken in [third quarter] to protect profitability, we would expect consensus [earnings before interest and taxes] estimates to move down,” analysts at Morgan Stanley said in a note.
