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H&M Sales Rise for Fifth Straight Quarter

Anna Molin and Thomas Mulier
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H&M Sales Rise for Fifth Straight Quarter

(Bloomberg) -- Hennes & Mauritz AB revenue growth showed a slowdown in April and May, stymieing the Swedish clothing retailer’s attempts to reduce a buildup of inventory that’s been weighing on earnings.Sales in the latest quarter were above analysts’ estimates as compiled by Bloomberg News. But the figures suggest growth slowed to 5.5% in April and May from a 7% rate in March, wrote Fredrik Ivarsson, an analyst at Kepler Cheuvreux. That suggests stock-in-trade probably increased 4% in local currencies at the end of May, said Ivarsson, who estimates earnings were flat for the quarter. The shares fell 1.8% as of 9:53 a.m. in Stockholm, having earlier dropped as much as 3.1%.Clothing retail has been a difficult market lately, with Inditex SA reporting weak sales recently due to rainy and cold weather and Gap Inc. suffering a 10% drop in revenue at its namesake chain. H&M, which had pledged to reduce discounts, said turnaround initiatives are starting to work, though challenges remain. The biggest of those is that backlogs are standing near the equivalent of a fifth of total revenue.“We expect inventories to remain high at the end of the second quarter,” wrote Richard Chamberlain, an analyst at RBC Europe. He added that H&M faces a risk that customers may start to expect discounts the longer inventories build up.H&M is scheduled to report earnings on June 27 for its second quarter, which ran through May. Analysts expect a 3% increase in operating profit, which would be the first gain in two years.\--With assistance from Hanna Hoikkala.To contact the reporters on this story: Anna Molin in Stockholm at amolin3@bloomberg.net;Thomas Mulier in Geneva at tmulier@bloomberg.netTo contact the editors responsible for this story: Katerina Petroff at kpetroff@bloomberg.net, ;Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards IIIFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

(Bloomberg) -- Hennes & Mauritz AB revenue growth showed a slowdown in April and May, stymieing the Swedish clothing retailer’s attempts to reduce a buildup of inventory that’s been weighing on earnings.

Sales in the latest quarter were above analysts’ estimates as compiled by Bloomberg News. But the figures suggest growth slowed to 5.5% in April and May from a 7% rate in March, wrote Fredrik Ivarsson, an analyst at Kepler Cheuvreux.

That suggests stock-in-trade probably increased 4% in local currencies at the end of May, said Ivarsson, who estimates earnings were flat for the quarter. The shares fell 1.8% as of 9:53 a.m. in Stockholm, having earlier dropped as much as 3.1%.

Clothing retail has been a difficult market lately, with Inditex SA reporting weak sales recently due to rainy and cold weather and Gap Inc. suffering a 10% drop in revenue at its namesake chain. H&M, which had pledged to reduce discounts, said turnaround initiatives are starting to work, though challenges remain. The biggest of those is that backlogs are standing near the equivalent of a fifth of total revenue.

“We expect inventories to remain high at the end of the second quarter,” wrote Richard Chamberlain, an analyst at RBC Europe. He added that H&M faces a risk that customers may start to expect discounts the longer inventories build up.

H&M is scheduled to report earnings on June 27 for its second quarter, which ran through May. Analysts expect a 3% increase in operating profit, which would be the first gain in two years.

--With assistance from Hanna Hoikkala.

To contact the reporters on this story: Anna Molin in Stockholm at amolin3@bloomberg.net;Thomas Mulier in Geneva at tmulier@bloomberg.net

To contact the editors responsible for this story: Katerina Petroff at kpetroff@bloomberg.net, ;Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.