H&M Fourth-quarter Sales Disappoint Due to Late Black Friday

FILE PHOTO: The logo of fashion retailer H&M is on display outside a store in Stockholm, Sweden, July 17, 2023. REUTERS/Tom Little/File Photo

Swedish fast-fashion retailer H&M reported weaker-than-expected fourth-quarter sales on Thursday due in part to a late Black Friday, but said sales were up 4% in December and January, indicating a better start to the new fiscal year.
H&M's sales in the fourth quarter to Nov. 30 were 62.19 billion Swedish crowns ($5.65 billion), up 3% in local currencies, a weaker performance than analysts' mean forecast of 63.48 billion Swedish crowns.
H&M shares fell 4.5% at the market open, Reuters reported.
Black Friday was on Nov. 29 last year, and H&M said more of its sales around that key discounting day were reported as revenues in December, hitting quarterly sales by just under 1%. Operating profit margin for the quarter was 7.4%, up from 6.9% a year before, as CEO Daniel Erver, who took over a year ago, said investments in marketing were starting to pay off.
"Strong online sales together with improved product presentation and a more inspiring shopping experience, well-received womenswear collections and effective cost control all contributed to a positive development in the quarter," Erver said in a statement.
In a push to make the H&M brand trendier, Erver has hiked marketing spending and hired pop star Charli XCX to model H&M's autumn collection and to perform at free gigs attended by thousands during London Fashion Week and in New York's Times Square.
But analysts said H&M still had work to do to turn its performance around.
"H&M's Q4 results, albeit calendar impacted, confirm that the step up in marketing efforts is not having an especially significant impact on market share trends," Jefferies analysts said in a note.
H&M said it took a 200 million crown hit to operating profit due to winding down costs as it folds its Monki brand into Weekday to streamline operations. The move, announced in November, will lead to the closure of most Monki stores.
The group has accelerated its store closures over the past years and focused new store openings on growth markets.
H&M had 4,253 stores across all its brands at the end of the 2024 financial year, 116 fewer than a year ago.