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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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Bangladesh Garment Industry Short on Cotton as Floods Worsen Protest Backlog

FILE PHOTO: Women work in a garment factory in Dhaka, Bangladesh, May 3, 2020. REUTERS/Mohammad Ponir Hossain/File Photo
FILE PHOTO: Women work in a garment factory in Dhaka, Bangladesh, May 3, 2020. REUTERS/Mohammad Ponir Hossain/File Photo
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Bangladesh Garment Industry Short on Cotton as Floods Worsen Protest Backlog

FILE PHOTO: Women work in a garment factory in Dhaka, Bangladesh, May 3, 2020. REUTERS/Mohammad Ponir Hossain/File Photo
FILE PHOTO: Women work in a garment factory in Dhaka, Bangladesh, May 3, 2020. REUTERS/Mohammad Ponir Hossain/File Photo

Garment factories in Bangladesh, one of the world's biggest clothing production hubs, are struggling to complete orders on time as flooding disrupts their cotton supplies - exacerbating a backlog caused by recent political turmoil.
Bangladesh is a leading global cotton importer due to the size of its textile and garment industry, but the devastating floods mean few trucks and trains have been able to bring supplies to factories from Chittagong port over the last week, industry officials and analysts said.
The disruption, on top of the unrest and protests that led to factory closures earlier this month, have caused garment production to fall by 50%, said Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association.
"The industry is now under immense pressure to meet deadlines, and without a swift resolution, the supply chain could deteriorate even further," Reuters quoted Hatem as saying.
Bangladesh was ranked as the third-largest exporter of clothing in the world last year, after China and the European Union, according to the World Trade Organization, exporting $38.4 billion worth of clothes in 2023.
At the clothing factory she runs in the capital, Dhaka, Rubana Huq is counting the cost of lost production.
"Even for a moderate-sized company like ours, which makes 50,000 shirts a day and if the price of one single shirt is $5, there was $250,000 of production loss," said Huq, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
She said some garment plants were slowing resuming production, but estimated that complete recovery "would be at least six months away", warning that Bangladeshi manufacturers could lose 10%-15% of business to other countries.
Bangladesh's readymade garments industry, which supplies many of the world's best-known fashion brands, accounts for more than 80% of the country's total export earnings.
Buyers are adopting a cautious approach and could potentially delay new orders, said Shahidullah Azim, a director of the BGMEA industry group.
"The longer this uncertainty persists, the more challenging it becomes for us to maintain the momentum we have built," he told Reuters.
The Bangladesh Meteorological Department said flood conditions could persist if the monsoon rains continued, as water levels were receding very slowly.
Some cotton shipments could get diverted to India, Pakistan and Vietnam, commodity analysts said.
"We are already hearing and seeing some cotton for prompt delivery wanted by Pakistan and Vietnam," said Louis Barbera, partner and analyst at VLM Commodities based in New Jersey.
New orders shifted from Bangladesh could also be accommodated in southern India, said Atul Ganatra, president of the Cotton Association of India.
Even before the floods and political unrest, the Bangladeshi garment industry was grappling with power shortages that remain a problem, said Fazlee Shamim Ehsan, vice president at the country's knitwear manufacturers and exporters association.
"Energy shortages continue to hamper our operations," he said.