Swedish fashion giant H&M saw its sales decrease in the first fiscal quarter amid a reduction in its total number of stores.
Net sales for the quarter ended February 28 stood at SEK49.6 billion (US$5.2 billion), down 1 per cent year-on-year in constant currency.
The company ended the quarter with 4 per cent, or 163, fewer stores compared with the same point in time last year. The global store count was 4050 as of February 28.
“To strengthen the H&M group’s long-term position and profitability further, the optimisation of the store portfolio is continuing. More stores are being updated, and new stores are being opened, while some stores are being closed,” the retailer said.
On a reported basis, net sales declined 10 per cent, mainly due to currency translation.
Management said the quarter began with a weak December as demand dropped after Black Friday trading in November. Towards the end of the quarter, sales showed a positive trend, driven by well-received spring collections.
In constant currency, sales fell 3 per cent in Asia, Oceania, Africa, and the Americas. Western and Eastern Europe sales were down 1 per cent, while Southern Europe rose 3 per cent. Sales in the Nordics were flat.
Gross margin rose from 49.1 per cent to 50.7 per cent during the quarter. Operating profit increased by 26 per cent to SEK1.512 billion, and profit for the period grew 21.5 per cent to SEK704 million.
“Good cost control and improved gross margin contributed to strengthened profitability in a quarter marked by cautious consumption and large currency translation effects,” commented CEO Daniel Ervér.
“In a still challenging macroeconomic environment marked by increased geopolitical uncertainty, flexibility is more important than ever,” he added.
For the current quarter, the company expects March sales to increase by 1 per cent in constant currency.
The company noted it is closely monitoring developments in the Middle East and the implications for global trade. It added that Middle Eastern markets account for a small portion of its sales and that the markets are operated through franchise partners.
