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H&M's Quarterly Sales Lag Expectations

A Swedish flag flutters in front of residential houses in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes
A Swedish flag flutters in front of residential houses in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes
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H&M's Quarterly Sales Lag Expectations

A Swedish flag flutters in front of residential houses in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes
A Swedish flag flutters in front of residential houses in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes

Sweden's H&M on Friday reported flat sales in its most recent quarter, lagging expectations as the fashion firm struggles to attract customers while the cost of living crisis drags on.
"The work towards the company's goal of reaching a 10% operating margin in 2024 is going in the right direction. Profitability and inventory levels have been prioritized in the quarter," H&M said in a statement.
The world's second biggest fashion retailer said June-August local-currency sales, the figure most closely watched, were "flattish" year-on-year, missing the 5% growth forecast by analysts in a Reuters poll.
Net sales rose 6% to 60.9 billion Swedish crowns ($5.45 billion), lagging the 63.5 billion expected by analysts.
Excluding its Russia, Belarus and Ukraine operations - it's Russian stores were temporarily open for part of the third quarter last year but have since shut - H&M's sales rose 8% measured in Swedish crowns, it said.
H&M has announced that it will begin reopening stores in Ukraine in November which were closed last year following Russia's invasion.
H&M had seen a reversal of fortune this year that lifted its share price by 53% as sales rose while cost cuts announced last year took effect, but faces competition from Zara owner Inditex and China-founded fast-fashion retailer Shein.
Inditex beat expectations with a 40% jump in half-year net profit on Wednesday even as the world's biggest fast fashion company slowed the pace of its price increases.
Inditex's sales in constant currencies increased 14% between Aug. 1 and Sept. 11, falling short of analysts' expectations for an 18% rise in a sign that the heatwave in Europe had dented demand for autumn and winter clothes.

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Fashion

Gap's Turnaround Efforts Drive Quarterly Beat in Surprise Early Announcement

FILE PHOTO: The Gap logo is seen on the front of the company's store on Oxford Street in London, Britain, July 1, 2021. REUTERS/John Sibley/File Photo
FILE PHOTO: The Gap logo is seen on the front of the company's store on Oxford Street in London, Britain, July 1, 2021. REUTERS/John Sibley/File Photo
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Gap's Turnaround Efforts Drive Quarterly Beat in Surprise Early Announcement

FILE PHOTO: The Gap logo is seen on the front of the company's store on Oxford Street in London, Britain, July 1, 2021. REUTERS/John Sibley/File Photo
FILE PHOTO: The Gap logo is seen on the front of the company's store on Oxford Street in London, Britain, July 1, 2021. REUTERS/John Sibley/File Photo

Gap on Thursday surpassed Wall Street expectations for the second quarter, as a surprise early announcement of its results showed shoppers turned to its Old Navy and namesake brands to snap up trendy and fashionable clothing.
Shares of Gap closed up nearly 2% at $22.8. The stock was halted during the day following a Bloomberg News report that said the apparel retailer's earnings press release and presentation appeared on its website in the morning, hours earlier than scheduled.
A Gap spokesperson told Reuters that the company's results were briefly and accidentally posted on its website due to an administrative error. It was originally scheduled to release the numbers after the bell.
The Banana Republic owner is in the midst of a brand turnaround under CEO Richard Dickson and has been ramping up its stores with fresher and more chic styles to bring back lost customers.
Dickson on a post-earnings call said Gap's consumer base has broadened and the company is seeing more sell-throughs at full-price, resulting in less discounting.
People, who are otherwise saving dollars and curbing spending on big-ticket items, are more than willing to go all out and spend on in-trend footwear and clothing such as those from Abercrombie & Fitch, Roger Federer-backed On and Deckers Outdoor's Hoka.
"(Gap) is being managed better than it was ... it is not like all four brands are really completely healthy, but they are trending in the right direction under the new management," Morningstar analyst David Swartz said.
Comparable sales at Old Navy rose 5% during the quarter, while the Gap brand posted 3% growth. Banana Republic sales, however, were flat as the brand continues to focus on fixing the fundamentals and improve its pricing and assortment architecture.
Gap's second-quarter net sales rose 5% to $3.72 billion, beating LSEG estimates of $3.63 billion.
It earned 54 cents per share, also topping analysts' average estimate of 40 cents.
The apparel retailer reaffirmed its annual net sales forecast and expects gross margin to expand by about 200 basis points versus its prior forecast of at least a 150-basis-point increase.