H&M delivers pleasant surprise as Q3 sales beat predictions

H&M has consistently disappointed in recent periods. 

But the Swedish fashion retail giant seems to have turned its fortunes around in the latest quarter with the company on Monday saying that it saw higher local-currency sales growth than anyone had expected for the third quarter of its financial year.

Local-currency sales including VAT in the June to August period rose 4% from a year earlier, although analysts had expected a rise of less than 2%.That’s particularly interesting because some of its retail peers have reported that the very hot weather in many of its key markets during June, July and part of August had dented their sales.But H&M seems to have made hay while the sun shone and it said that its reported sales excluding VAT were up a powerful 9% to SEK55.8 billion (£4.7 billion). 

While local-currency sales easily beat forecasts, so did these reported sales, with analysts having expected a rise of around 5.5%.The company’s explanation was that as a group, its “continuous transition, to face the major shift within the industry, has contributed to a gradually improved sales development and increased market share in many markets in the third quarter.”That said, “sales and cost development in some of the group’s important markets such as the US, France, Italy and Belgium were in the third quarter considerably affected by the issues that emerged during the implementation of new logistics systems in the spring.” 

It didn’t go into any more detail about the new logistics systems, which are designed to enable a faster and more efficient supply chain as well as continued integration of store and online.Presumably we’ll learn more on September 27 when the company issues it nine-month report for the period up to August 31.