Swedish fashion group H&M is fighting the effects of inflation. He is also troubled by customers’ low desire to consume.
Fashion conglomerate Haines & Mauritz (H&M) got off to a better start in September after a weak third quarter. On Thursday in Stockholm, the group announced that the new Autumn collection has been well received by customers and that sales in the respective national currencies from September 1 to September 27 were up seven percent compared to the previous year. Still, prospects are very negative for the coming months, as purchase costs continue to rise as the dollar advances.
H&M therefore wants to reduce costs. The first impact of the programme, which aims to save about two billion Swedish crowns (183 million euros) annually, is not expected until the second half of 2023.
Russia’s withdrawal puts pressure on numbers
In the third trading quarter (up to the end of August), things turned out to be worse than expected for Sweden. At 49 per cent, gross margin was lower than expected, compared to 53.2 per cent a year ago.
The reason for the decline was higher raw material prices and freight costs. Adjusted operating profit also collapsed: At 3.01 billion Swedish crowns, it fell more than half and was less than the 4.34 billion expected by analysts.
In mid-September, H&M had already reported a four percent drop in sales in the third quarter to 57.45 billion Swedish crowns (5.4 billion euros). The withdrawal from Russia, announced in mid-July, also had a negative impact on the balance sheet in the third quarter. The entire settlement process resulted in a one-time cost of about 2.1 billion Swedish Crowns.
