H&M sales stagnates due to record inventory
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H&M sales worldwide – in local currencies – stagnated in the second quarter, reaching SEK 51.98 billion (US$5.88 billion).
The poor figure was achieved despite a net increase of 303 stores between May 31 this year and the same time last year, taking the network to 4801.
H&M was carrying record levels of inventory estimated at US$4 billion at the end of the first quarter and had to resort to discounting in the second quarter to shift stock.
Analysts were unimpressed by the figure. “It’s worrying,” Magnus Raman, an analyst at Handelsbanken told Bloomberg. He estimated the fall in like-for-like sales over the past year at 6.8 per cent.
“The consensus estimate was already at very low levels and still the company doesn’t manage to meet them.”
“H&M is undertaking a series of turnaround initiatives,” said a Barclays analyst. “Although many of these sound sensible in the longer term, we think they will take time to materialise and continue to view the next 12 months as challenging.”
Questions & Answers
Q.What was H&M's total sales figure in the second quarter and how does this compare to expectations?
What was H&M's total sales figure in the second quarter and how does this compare to expectations?
H&M's sales in local currencies reached SEK 51.98 billion, or US$5.88 billion, in the second quarter. This figure was below analyst consensus estimates, which were already at low levels.
Q.What impact did increased inventory levels have on H&M's performance during the second quarter?
What impact did increased inventory levels have on H&M's performance during the second quarter?
H&M held record inventory, estimated at US$4 billion, at the end of the first quarter. To reduce this stock, the company resorted to discounting during the second quarter, impacting its sales figures.
Q.How many new stores did H&M open in the past year, and did this expansion boost sales?
How many new stores did H&M open in the past year, and did this expansion boost sales?
H&M added 303 stores between May 31 last year and the same time this year, expanding its network to 4801. However, despite this growth, worldwide sales still stagnated.
Q.What is the outlook for H&M over the next year, according to analysts?
What is the outlook for H&M over the next year, according to analysts?
Analysts believe H&M's turnaround initiatives are sensible in the long term but will take time to show results. They view the next 12 months as challenging for the company.
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