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Hennes & Mauritz’s sales beat the highest analyst estimate as the Swedish fashion retailer offered discounts to clear out inventory and received a boost from the weak krona.
Revenue excluding value-added taxes rose 9% to 55.8 billion kronor ($6.2bn) in the three months through August, the retailer said on Monday. Analysts expected 54 billion kronor. The stock rose as much as 9.5% in Stockholm.
“H&M seems to have come close to stabilising same-store sales,” wrote Charles Allen, an analyst at Bloomberg Intelligence. “If they have managed to reduce inventory, weak margins are likely to be forgiven.”
Last week, Zara owner Inditex SA reported its weakest six-month sales growth in four years. An unusually warm summer likely had shoppers staying away from stores and opting for lower-priced garments such as tank tops and shorts.
H&M has also faced increasing competition from online stores while battling its own logistical snafus and inventory pileup.
More than half of the revenue increase was due to most currencies strengthening against H&M’s reporting currency, the krona.
H&M also said that issues related to implementing a new logistics system raised costs in the US, France, Italy and Belgium in the period. The changes are designed to make H&M more efficient and integrate its store and online businesses, the retailer said.
H&M’s woes have attracted short-sellers, who have bet against about a quarter of the company’s freely traded shares, according to Markit Securities data. The company ended the second quarter with a record inventory position.
The
Stockholm-based company is scheduled to report full third-quarter results on
September 27.
