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H&M sales decline continues in July

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Like-for-like (LFL) sales at fashion retailer H&M fell six per cent year-on-year in July – its largest comparative annual sales decline since April 2010, according to a trading update published by the company today.

It comes after the clothing specialist, which has stores in around 40 countries worldwide, reported a LFL sales decline of four per cent in June and following the business’s decision to absorb the rising cost of materials rather than passing on higher prices to consumers.

Despite slowing sales H&M continues to expand its market share and it increased the size of its property portfolio from 2,066 stores on July 31st 2010 to 2,306 outlets by July 31st 2011, helping total sales last month rise by three per cent year-on-year in local currencies.

This growth, however, does not mask the difficult environment in which mid-market retailers are currently operating in.

In June the retailer reported that the UK, US, China, Russia and South Korea are among its strong growth markets, but group profits after financial items fell from SEK 8.95 billion (£851 million) in the first half of 2010 to SEK 6.88 billion in the six months to May 2011.

Speaking at the time, H&M CEO Karl-Johan Persson said: “Increasing interest rates, higher energy prices and austerity measures in many economies have decreased consumer spending power. During the spring, the fashion retail industry has been characterised by many price campaigns and special offers.

“Our profitability remained strong with an operating margin of 20.3 per cent despite strong negative effects from many external factors that were beyond our influence, such as the high cotton prices.”

H&M sales development for the month of August and total revenues for the group’s third quarter will be published on September 15th 2011, while a nine-month report covering the period between December 1st 2010 and August 31st 2011 will be made available two weeks later.

Published on Monday 15 August by Editorial Assistant

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