H&M slumps on doubts over margin target and June sale drop
Q2 operating profit 7.1 bln SEK vs forecast 7.4 bln
Q2 net sales up 3% in local currencies
Sees drop in June sales, partly due to poor weather
Shares fall as much as 15%
Adds more quotes, updates shares
By Marie Mannes
STOCKHOLM, June 27 (Reuters) -H&M HMb.ST cast doubt over its full-year profit margin target on Thursday after missing quarterly earnings forecasts and predicting a fall in June sales, sending shares in the world's No.2 listed fashion retailer down as much as 15%.
Sales this month are likely to fall 6% in local currencies versus a year earlier, partly due to poor weather in many markets, the Swedish company said.
CEO Daniel Erver said H&M still stood by its 10% operating margin goal for 2024, but that it had got harder to reach.
"External factors that influence our purchasing costs and sales revenues, including materials and foreign currency, will have a more negative impact than we expected in the second half," he said.
The group said it would need stronger sales growth in the two remaining quarters to hit the margin target, which it aims to achieve by offering more discounts.
H&M offered fewer discounts in June, which was a positive sign for the long run but had a negative impact for the month, Erver told analysts and reporters.
H&M has often fallen short of Zara owner Inditex ITX.MC, while China-founded fast-fashion group Shein is expanding rapidly in Europe and plans a London stock market listing.
The Swedish group has been squeezed between the rock-bottom prices of Shein and Inditex's higher-end fashions aimed at more upmarket customers.
That has left it struggling to raise prices, with its core of cost-conscious shoppers reluctant to spend as inflation ate into purchasing power.
Analysts are likely to cut their full-year estimates for H&M's earnings per share by 1-2% based on Thursday's update, brokers DNB Markets said in a note to clients.
H&M shares fell as much as 15% and were down 11.7 at 1210 GMT, on track for their biggest single-day drop since 2001 and the worst performance in the pan-European STOXX 600 .STOXX index.
The stock is up 9% in the last 12 months, significantly lagging Inditex's 35% rise.
In an interview, Erver told Reuters he expected the third quarter to pick up from a poor June as the weather has improved.
Both spring and summer collections had been received well, he added.
"We nailed the sweet spot on combining ... different components, and we see the customer response has been tremendous. We are more confident about the rest of the quarter than what we have seen in the first month," Erver said.
H&M's net sales in March-May, the second quarter of its fiscal year, rose 3% in local currencies versus a year earlier.
Operating profit was 7.1 billion Swedish crowns ($672.5 million), up from 4.74 billion a year earlier but below a mean forecast of 7.37 billion in an LSEG poll of analysts.
($1 = 10.5564 Swedish crowns)
H&M PE ratio vs Inditex https://tmsnrt.rs/4cykol7
H&M has lagged rival Inditex https://tmsnrt.rs/4eFYFsI
Reporting by Marie Mannes; Editing by Terje Solsvik and Mark Potter
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.
