H&M has posted a bigger than expected rise in quarterly profits despite sales remaining mostly flat as its cost cutting pays off.
Operating profit for the fashion retailer rocketed to £353m, up from £67m, in the three months to 31 August. This includes a £156m one-off cost relating to the winding down of its Russian operations.
Net sales for the third quarter inched up 6% to £4.55bn, with the period’s strong start from “pent-up demand for summer garments following a cold May” offset by weaker demand due to July and August’s colder weather.
In its nine-month report, the retailer posted a 61% increase in operating profit to £761m, up from £473.5m.
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The rocketing profits come as the retailer is in the midst of a cost-cutting programme which it implemented after profits tumbled last year.
H&M chief executive Helena Helmersson said: “During the quarter the focus has been on profitability and inventory efficiency, resulting in strong cash flow and good profit development.
“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.
“The cost and efficiency programme is proceeding at full speed and will continue to have an effect in the coming quarters. With a strong customer focus, improved cash flow and increased inventory efficiency our goal of an operating margin of 10 percent during 2024 remains.”
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