Pedestrians cross the road in front of an H&M store in Hong Kong.
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H&M shares fell greater than 14 percent on Thursday morning after the corporate reported a smaller-than-expected increase in second-quarter profit and raised doubts about its June sales targets and full-year profit margin.
The share was capable of reduce its losses barely and was down 13 percent by 9:00 a.m. London time.
The world’s second-largest retailer said operating profit for the March-May period was 7.1 billion Swedish crowns ($672 million), below the 7.37 billion Swedish crowns expected by analysts, in keeping with an LSEG survey cited by Reuters.
The result for the second quarter was nevertheless higher than the 4.7 billion Swedish kronor for a similar period last yr.
The company also said that bad weather is prone to dampen sales in June, with a decline of 6 percent in local currencies expected in comparison with the identical period last yr.
The share was further weighed down by H&M CEO Daniel Ervér expressing doubts about whether the corporate would have the ability to realize its margin goal this yr.
“Our target of a 10 percent operating margin for the full year 2024 remains,” he said. “However, the conditions to achieve this level this year have become more challenging as we expect external factors affecting our purchasing costs and sales revenues, including materials and foreign exchange, to have a more negative impact than expected in the second half of the year.”
He added that the corporate continues to take a position in its online experience and in its stores. After modernizations in New York, London and Tokyo, the stores in Paris, Milan, Berlin, Stockholm, Hamburg and Munich are actually being modernized.
This comes as higher living costs and a decline in spending following the pandemic have weighed on each domestic and luxury retail sales.
Earlier this month, Zara owner Inditex reported a slowdown in Sales in the primary quarter in comparison with the previous yr’s growth, but indicated an upward trend in May.
Meanwhile, China-founded fast-fashion giant Shein is pushing into European retail and preparing for its IPO in London.
