H&M flags slow winter sales even as fourth-quarter profits beat expectations

By Greta Rosen Fondahn

STOCKHOLM, Jan ⁠29 (Reuters) - H&M ⁠warned of ‍a slowdown in recent winter sales on Thursday even as cost controls helped the fast-fashion retailer record better-than-expected results for the ‍September-to-November quarter.

Operating profit in H&M's fourth quarter, which includes Black ​Friday, rose 38% from a year earlier to 6.36 billion crowns ($724 million) against an LSEG ​analysts' poll forecast of 5.53 billion crowns. Operating margin widened to 10.7% from 7.4%.

"Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take ​important steps towards all our long-term targets in a challenging environment," CEO Daniel Erver said.

During his two years on the job, Erver has sought ​to improve profitability, partnering with pop stars to make H&M trendier and tightening cost control.

While local-currency sales ‌grew 2% in the quarter, they dropped 2% in December and January, the rival to Zara-owner Inditex said, pointing to ​calendar effects.

Chief Financial Officer Adam Karlsson told ⁠analysts and media that lingering weak consumer confidence, particularly in some European markets, may increase the need to offer discounts ‌this quarter.

H&M also said it expected trade tariff costs to rise.

Its shares fell around 1% by 1140 GMT as disappointment over the company's outlook outweighed the upbeat quarterly ‌results.

H&M's stock has risen 31% over the past six months supported by a recovery ‌in margins. But analysts say Erver must now show he can also reignite sales.

H&M, whose customers are considered more price-sensitive than Zara's, has faced pressure for years as shoppers ‍tighten spending amid higher living costs and global uncertainty.

It is struggling to accelerate sales as cut-price online retailers like Shein ⁠compete for its customers and Zara dominates the upmarket end of fast fashion.

H&M proposed a dividend of 7.10 crowns per share, up from 6.80 crowns and above an expected 6.83 crowns.

($1 = 8.7903 Swedish crowns)

(Reporting by Greta Rosén Fondahn and Anna Ringstrom; Editing by Joe Bavier)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Sri Lanka ex-president's son arrested on graft charges
• UAE pardons Egyptian-Turkish poet facing 10 years in jail
• Body of King Oyo Nyimba, once world's youngest monarch, returns to Uganda for burial