Swedish fast-fashion retailer H&M reported weaker than expected sales for its first quarter on Thursday and said sales were up 1 percent so far in March, in a sign of a slow start to its spring and summer season.
H&M reported sales of SEK55.3 billion ($5.52 billion) for the December to February quarter, missing analysts’ mean estimate of SEK55.9 billion.
“Our sales and earnings in the quarter were somewhat weaker than planned – but the first quarter is the smallest quarter of the year for us in terms of sales and margin, and we are confident going forward,” CEO Daniel Ervér said in a statement.
Increased discounting and marketing investments impacted H&M’s profitability in the quarter, the company said, with the operating profit margin falling to 2.2 percent from 3.9 percent in the same period a year ago.
Ervér, leading H&M for just over a year, is trying to turn its fortunes around and has ramped up marketing, spending on pop stars like Charli XCX to model its collections as he tries to make the brand more desirable and better compete against Zara and Shein.
By Helen Reid; Editors: Terje Solsvik and Jan Harvey
Learn more:
H&M’s Big Bet on Fashion’s Elusive Middle
In an exclusive interview, CEO Daniel Ervér outlined his strategy to turn the Swedish fast-fashion giant’s greatest weakness — its positioning above Shein but below Zara in the category’s pricing hierarchy — into a strength. It all kicks off with a collection launching next month.
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