H&M sales grow for sixth quarter

Swedish retailer H&M has struggled in recent years as its clothes fell out of favour with shoppers. (Bloomberg pic)

GENEVA: Hennes & Mauritz (H&M) sales growth slowed in the key July and August months, hampering the Swedish retailer’s attempt to end a three-year slump in earnings.

Sales growth probably slowed down to 6% in those two months from 12% in June, Berenberg analysts said, based on calculations from figures H&M reported Monday.

The shares dropped as much as 3.2%.

H&M has been trying to reduce its high inventory level, which stood at 40 billion kronor (US$4.2 billion) at the end of June.

The retailer has struggled in recent years as its clothes fell out of favour with shoppers and it launched a plethora of new formats.

Rival Inditex this month reported an acceleration in sales, while Primark announced a drop in like-for-like revenue.

H&M has recently slashed prices to as low as US$5.99 for skinny jeans and US$17.99 for a dress with a belt.

The retailer said its summer collections were well-received and it managed to increase market share.

The sales increase of 8% in local currencies during the quarter shows that part of the revenue growth is coming from foreign-exchange moves.

A weaker krona makes it more expensive to source goods from Asia, which could be cutting into profitability.

H&M was facing easy comparisons with the year-earlier quarter, when logistics issues exacerbated its inventory woes.

The stock has advanced 47% this year.

H&M’s stock can be volatile because short sellers have bet against about a sixth of the company’s freely traded shares, according to IHS Markit data.

H&M is scheduled to report full earnings on Oct 3.