Despite sales dip, momentum builds at H&M as new strategy pays off, expert says
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H&M’s lacklustre sales after missing quarterly earnings forecasts, may not be as dire as reports would suggest. With inflation easing, the second half of 2024 will present the retailer with new opportunities.
Robyn Duffy, senior analyst for consumer markets at RSM UK, told FashionUnited: “Despite unfavourable weather in Europe, sales momentum is finally picking up at H&M after weaker performance in Q1 and indicates that the new strategy from CEO Daniel Erver is starting to pay off.
“Improved full-price sales, which enabled promotional events to start later this year, has boosted profit margins. This indicates that efforts to rationalise inventory are yielding results. Investors will be watching this closely for the rest of the year, and maintaining strong discipline in stock will be crucial.
“A focus on customer is now key for the brand. Following the lead of rival Zara, H&M is aiming to capture market share by showcasing its fashion-forward credentials and attracting higher-end fast-fashion consumers. New concept stores in prime locations, like London’s Kings Road and Seoul’s Myeongdong, reflect H&M’s strategy to redefine the brand experience for a more aspirational consumer base.
“Looking ahead to Q3, the company faces challenges to continue this upward trajectory with results for June expected to decrease 6% due to strong sales in the same period last year. However, with inflation stabilising and initial interest rate cuts from the European Central Bank already in effect, followed likely by the UK and US later this year, demand for the brand is expected to strengthen as consumer spending power increases.”