H&M Abandons 2024 Earnings Margin Target, Q3 Profit Lags

People walk past a closed H&M clothing store in Omsk, Russia, March 3, 2022. REUTERS/Alexey Malgavko
People walk past a closed H&M clothing store in Omsk, Russia, March 3, 2022. REUTERS/Alexey Malgavko
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H&M Abandons 2024 Earnings Margin Target, Q3 Profit Lags

People walk past a closed H&M clothing store in Omsk, Russia, March 3, 2022. REUTERS/Alexey Malgavko
People walk past a closed H&M clothing store in Omsk, Russia, March 3, 2022. REUTERS/Alexey Malgavko

H&M, the world's second-largest listed fashion retailer, said on Thursday it no longer expected to reach its full-year earnings margin goal, while reporting a lower-than-expected operating profit for the June-August period.

H&M has struggled to boost its profitability amid high inflation and stiff competition from its bigger Spanish rival Zara, owned by Inditex, and the rapid growth of cut-price online fast-fashion retailer Shein.

"At present we estimate that this year's operating margin will be lower than 10%," Chief Executive Daniel Erver said in a statement.

The accumulated margin stood 7.4% for the first three quarters.

The full-year operating margins for 2022 and 2023 were 3.2% and 6.2% respectively, and H&M had cautioned in June that factors such as materials costs and foreign currency had made the 2024 target more difficult to reach.



France Fines Shein 40 Million Euros for Misleading Discounts

FILE PHOTO: A view of a Shein pop-up store at a mall in Singapore April 4, 2024. REUTERS/Edgar Su/File Photo/File Photo
FILE PHOTO: A view of a Shein pop-up store at a mall in Singapore April 4, 2024. REUTERS/Edgar Su/File Photo/File Photo
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France Fines Shein 40 Million Euros for Misleading Discounts

FILE PHOTO: A view of a Shein pop-up store at a mall in Singapore April 4, 2024. REUTERS/Edgar Su/File Photo/File Photo
FILE PHOTO: A view of a Shein pop-up store at a mall in Singapore April 4, 2024. REUTERS/Edgar Su/File Photo/File Photo

France's antitrust agency said on Thursday it had fined China-founded fast-fashion retailer Shein 40 million euros ($47.17 million) for alleged deceptive business practices including misleading discounts, following a nearly year-long probe.

The agency, in charge of consumer protection as well as competition, said Infinite Style E-Commerce Co Ltd, which handles sales for the Shein brand, had misled customers about discounts, and that the company had accepted the fine, Reuters reported.

Under French regulations, the reference price for any discount is the lowest one given by a retailer during the 30 days preceding the offer. Shein infringed that rule by not taking into account previous offers, and sometimes increasing the price before applying a discount, the agency said.

It said its investigation showed the company "deceived consumers about the authenticity of discounts they could benefit from."

The probe, conducted across thousands of products on Shein's French site between October 1, 2022 and August 31, 2023, found 57% of advertised deals were not, in fact, offering a lower price; 19% had less of a discount than advertised; and 11% were in fact price increases.

In a statement, Shein said the antitrust agency had informed Infinite Style Ecommerce Co Ltd (ISEL) of breaches related to reference price and environmental regulations in March last year, and ISEL had taken corrective action within the following two months.

"This means that all identified issues were addressed more than a year ago," Shein said, adding that ISEL was committed to complying with French regulations.