« Unstable weather in many H&M Group markets at the start of June 2024 had a negative impact on sales, but sales recovered when the weather normalized at the end of the month. » When presenting its results for the first half of the year, which ended on May 31, the Swedish fast fashion giant made a statement. With a turnover down 6% (in local currencies) in June, H&M suffered from bad weather conditions, with the continuous rains dissuading customers from going to the store to update their wardrobe. The first consequence is that stocks have accumulated. The second consequence is that markdowns will be greater in the third quarter. The third consequence is that, added to a higher cost base and a negative exchange rate effect, these sales make it more difficult to achieve annual targets. The stock market has understood this well. H&M shares, listed in Stockholm, collapsed by 13.9%, to 167 Swedish crowns, in early trading on Thursday.
Difficult comparison
In addition to its prospects, the Swedish group suffers from the comparison with its long-time rival, the Spanish Inditex, whose sales on shelves and on the Internet increased by 12% (at constant exchange rates) between May 1 and June 3. . It also suffered from the announcement of an operating profit below expectations for the first quarter. The indicator stood at 7.1 billion crowns (628.3 million euros), compared to 7.4 billion expected by the consensus. At 11.9%, the operating margin, calculated from a turnover of 59.6 billion crowns, up 3%, is also lower than market estimates.
New CEO Daniel Erver, who took office at the end of January following the surprise resignation of Helena Helmersson, is under pressure to speed up H&M’s recovery. And this in a context where competition is intensifying with the arrival of new ultra-aggressive players such as the Chinese Temu or Shein. The manager also recognized that while the objective of an operating margin of 10% for the entire financial year remains relevant, it is becoming more difficult to achieve. “ The most important condition for achieving it is that sales growth strengthens further in the second half of the year. » For this, the weather must be good.
