Fashion retailer H&M disappoints again in second quarter

Fashion group H&M continued to feel the effects of a weak consumer climate in its second fiscal quarter. In the three months to the end of May, sales fell by 3 percent to 54.8 billion Swedish kronor, the company announced on Thursday. Analysts, however, had expected a smaller decline in revenue.

The business was also impacted again by negative currency effects. The Swedish company's profit development was also disappointing. The share price recently reacted to the figures with a drop of around 2.5 percent.

Although H&M was able to keep its operating result almost stable at a good 5.9 billion kronor despite restructuring costs, experts surveyed by the news agency Bloomberg had expected an average increase to 6.35 billion. The bottom-line profit of 3.96 billion kronor was marginally above the previous year's level.

Mixed quarter

CEO Daniel Ervér painted a mixed picture of the quarter. He explained in a statement that although sales had developed somewhat more poorly than originally planned, H&M is making further progress in its efforts to achieve higher profitability. The operating margin rose to 10.8 percent in the second quarter, up from 10.4 percent in the same quarter last year.

At the same time, the manager admitted to problems in inventory management. He stated that the reduction of stock levels, which has been underway for some time, has in some cases meant that customer demand could not be met. H&M must improve in this area in the future and better balance supply and demand.

H&M is under great pressure in its competition with budget retailers such as Shein and Primark and has also recently been at a disadvantage in direct competition with Zara's owner, Inditex.

Since taking office in 2024, Ervér has been working to improve the product range, sharpen pricing and shorten delivery times. At the same time, the group continued to reduce its store network in the second quarter. These measures have contributed to the recovery of margins. Demand remains fragile in several key markets. H&M therefore also expects sales in June to be only at the previous year's level.

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