H&M (HMb.ST), the world’s second-largest fashion retailer, declared a surprising operational profit for December-February on Thursday despite lackluster demand as consumers cut spending due to rising prices.
The Swedish group’s fiscal first-quarter operating profit was 725 million Swedish crowns ($69.73 million), compared to 458 million a year earlier and a Refinitiv analyst poll’s mean loss of 1.10 billion.
H&M said integrating Sellpy’s second-hand platform revenues had increased earnings by approximately 1 billion crowns but cautioned that cold weather had delayed spring sales in several areas.
H&M struggled to compete with Inditex (ITX.MC), owner of Zara and other brands, and quick fashion internet shops like SHEIN and Temu.
“The external elements that impact purchasing costs continue to improve, work on the cost and efficiency plan is progressing at full speed, and many of the adjustments that we have made in recent years are starting to have an effect,” said Chief Executive Helena Helmersson.
Analysts said H&M’s first-quarter revenue, released separately on March 14, was weaker than expected since the tiny sales gain failed most projections.
After the pandemic, Inditex drew people back to in-person shopping, but SHEIN and Temu succeeded online with $10 gowns.
H&M expects March net sales to rise 4% in local currencies compared to last year.
The business stated the spring collections were warmly appreciated in warmer temperatures.
Inditex gained 19.7% in 2023, while H&M gained 9.5%. On Wednesday, Stockholm’s stock finished at 122.86 crowns, one-third of its 2015 all-time high of 368.5 crowns.
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