September heatwave hits sales at H&M

Sweden's H&M Group reported a jump in profits on Wednesday, in line with expectations, but warned that unseasonably hot weather had dented current trading.

The fashion giant, which also owns Cos, Weekday and Monkl, among other brands, reported third-quarter operating profits of Swedish krona 4.74bn. That was up from SEK902m a year previously, and in line with analyst forecasts for SEK4.72bn.

Net sales in the three months to 31 August increased 6% to SEK60.9bn.

However, H&M said sales during September were expected to fall by 10% in local currencies, or 6% once its discontinued Russian operations were stripped out.

Helena Helmersson, chief executive, said: “Sales in the third quarter started strongly, with pent-up demand for summer garments following a cold May in most of our major markets. The effect then gradually decreased during the summer.

“Having now moved into September, we can see that the start of the autumn season has been delayed because the month so far has been marked by unusually hot weather in many of our European markets.

“Our efforts to create conditions for profitable growth towards our long-term goals are taking us in the right direction. The cost and efficiency programme is proceeding at full speed and will continue to have an effect in the coming quarters.”

Victoria Scholar, head of investment at Interactive Investors, said: “H&M’s profit met analyst expectations, it is returning cash to shareholders and it’s positioning itself towards growth markets, including China.

“But sales look set to struggle near term as the seasons change from summer to autumn.

“It is struggling to compete with Inditex-owned Zara, which strongly appeals to the fashionistas, as well as with Shein and Primark, which offer rock bottom prices. H&M has been trying to cut costs and preserve margins, but it has found it challenging to pass on inflationary pressures to customers in terms of higher prices.”

As at 1045 BST, H&M’s Stockholm-listed shares were up 2%.