UPDATE: H&M June Same-Store Sales Fall 5%, Misses Forecasts
July 15 2009 - 3:15AM
Dow Jones News
Fashion retailer Hennes & Mauritz AB (HM-B.SK) Wednesday
reported a worse-than-expected drop in comparable store sales in
June, indicating it's still being hurt by consumers reining in
spending amid the economic slowdown.
H&M, the world's third-largest fashion chain by revenue
behind U.S.-based Gap Inc. (GPS) and Spain's Inditex SA (ITX.MC),
said June same-store sales fell 5%, missing analysts'
forecasts.
Seven analysts polled by Dow Jones Newswires on average had
predicted sales in stores open longer than a year would fall
1.4%.
H&M's total sales, which include sales in new stores, rose
4%, underperforming analysts' forecast of 8.4%. H&M reports
only percentage changes for its monthly sales, not actual
revenue.
Evli Bank analyst Anders Wiklund said he expected shares to open
lower, as both same-store and total sales disappointed.
Its shares closed Tuesday at 390 Swedish kronor ($50). Since the
start of the year they have risen 21%, outperforming the 6.1% gain
for the OMX index of the 40 biggest Nordic companies.
H&M is feeling the pinch from a general slowdown in
consumption as shoppers cut spending amid rising unemployment. To
attract buyers, the retailer started its summer sale in May this
year, instead of June, and launched a first-ever guest designer
summer collection by Britain's Matthew Williamson.
"There's a general weakness in the retail market right now and
then there's the early discounting period that's probably hitting
it also," Wiklund said.
Nonetheless, he expects H&M to outperform peers during the
downturn due to its winning cheap-and-chic clothing business
concept.
"H&M has many qualities that will enable it to fare better
than the competition," Wiklund said.
Apparel sales in Germany, H&M's top market where it
generates roughly a quarter of its revenue, fell 1% last month,
according to industry journal Textilwirtschaft.
In H&M's home market of Sweden, the company's fifth biggest
market, June clothing sales rose 4.3%, according to the Swedish
Retail Institute.
The total number of H&M stores worldwide increased by 14% to
1,827 on June 30 from 1,600 a year earlier.
This month, Karl-Johan Persson, the 34-year old son of the
majority owner and grandson of the founder, took over as chief
executive.
Company Web site: www.hm.com
-By Anna Molin and Ola Kinnander, Dow Jones Newswires;
+46-8-5451-3091 or +46-8-5451-3097; anna.molin@dowjones.com or
ola.kinnander@dowjones.com