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
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
