Following today’s release of H&M’s figures for the three months ending 31 August 2024; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “After a brief respite in the second quarter, H&M’s sales fell 3.1% to SEK59.0bn in Q3 FY2023/24, while remaining flat in local currencies. This led sales for the nine months to be down 0.6%. Q3’s decline was mainly due to a disappointing June in Europe, where the cold and wet weather wasn’t conducive to sales of its summer stock, but the group also still fails to compete with rivals such as Inditex and Mango on style and value for money. The group’s operating profits tumbled 26.0% in Q3, causing its operating margin to fall from 7.8% last year to 5.9%, although this was mainly blamed on currency effects. H&M has seen substantial improvements in September though and expects the month’s sales to rise 11% in local currencies, which is encouraging for Q4 and the next financial year.
“The group’s portfolio brands’ declined 6% in Q3, which can partly be explained by strong comparatives last year, but might also indicate a slowing in desirability as consumers continue to be mindful of their spending. The eponymous H&M brand outperformed its sister brands for the second consecutive quarter, which, along with September’s uplift in sales, indicates its style credentials are finally improving. H&M continues to invest in its marketing, unveiling Charli xcx as the face of its autumn campaign, benefitting from the cultural relevance of the artist. However, the brand should continue to harmonise its pricing structure to better define its positioning.
“Southern and Eastern Europe were the group’s better performing regions in Q3, with sales rising 8% and 4% respectively in local currencies, likely helped by more resilient weather. H&M had the most trouble in its home region of the Nordics, where sales fell 7%, which was heavily impacted by adverse weather. The combination of bad weather and cautious consumer spend also hindered its Western Europe performance, with sales down 2%. Sales in Asia, Oceania and Africa declined 2%, impacted by the slowdown of the Chinese economy, while North and South America rose 2%, mainly driven by store expansion, especially in Latin America, where the H&M brand plans to open its first Brazilian store in 2025.
“H&M continues to invest in its physical stores, refurbishing around 250 globally to modernize and further integrate its multichannel proposition. Online sales remained around 30% of the group’s revenue, and it recently revamped its website and mobile app to support this channel’s growth. It also expanded its digital presence to more platforms in emerging markets, such as Aijo.com in India and Trendyol.com in Turkey, and it plans to launch on two major Chinese online platforms, Douyin (the Chinese version of TikTok) and Pinduoduo, this Autumn. This will hopefully help it regain appeal among Chinese consumers following the brand’s widespread boycott in 2022.”
