H&M forecasts Q2 decline despite sales rising 10% in Q1

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H&M
// H&M reports smaller than expected decline in first quarter pre-tax profit
// It saw profits shrink and stocks pile up in recent trading updates
// The retailer’s pre-tax profit fell for the 7th straight quarter in December-February

H&M has reported a smaller than expected decline in first quarter pre-tax profit as the fashion giant experienced an improvement in margins.

The Swedish retailer saw profits shrink and stocks pile up in recent trading updates thanks to footfall decline, as well as high street competition and ever-changing consumer behaviours.

The retailer’s pre-tax profit fell for the seventh straight quarter in December-February, to SEK 1.04 billion (£85 million), down from SEK 1.26 billion (£104 million) last year.

However, sales increased by 10 per cent year-on-year to SEK 51.01 billion (£4.2 billion) in the first quarter, up from SEK 46.2 billion (£3.8 billion).

Meanwhile, gross margin increased to 50 per cent, from 49.9 per cent a year ago in the first quarter.

H&M said this month saw net sales rose by seven per cent in local currencies.

However, the retailer forecasts a decrease in sales in the second quarter.

“Our ongoing transformation work has contributed to stronger collections with increased full-price sales, lower markdowns and increased market shares,” H&M chief executive Karl-Johan Persson said.

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