H&M (HMb.ST), the world’s second-largest fashion retailer, announced stronger-than-expected March-May profits and said third-quarter sales were off to a solid start as it tries to catch up with faster-growing rivals.
The Swedish group’s March-May fiscal second-quarter operating profit was 4.74 billion Swedish crowns ($438.55 million), down from 4.98 billion a year earlier but ahead of a Refinitiv analyst mean projection of 4.07 billion.
H&M, which has lagged behind Zara owner Inditex (ITX.MC), has sought to promote its higher-priced brand Cos and appeal to buyers less vulnerable to the growing cost of living. At the same time, fast-fashion behemoth Shein captures market share with cheap garments.
“The summer collections have been well received and the third quarter has got off to a good start,” said CEO Helena Helmersson.
“The conditions for growth and profitability continue to improve,” she said.
H&M’s third-quarter local-currency sales grew 10% from June 1-27 last year.
H&M’s second-quarter operating profit margin was 8.2%, down from 9.2% a year earlier, and the company restated its objective of a 10% margin next year, which experts say may be difficult to achieve.
Last year, the group announced layoffs and other cost cuts to save money from the second half 2023.
H&M’s share price has climbed 27% in the past year, underperforming Inditex’s 58%.
