H&M: Q3 earnings disappoint

(CercleFinance.com) - On Thursday morning, Hennes & Mauritz reported a taxable profit well below market expectations for Q3, mainly due to high marketing expenses.


The Swedish ready-to-wear giant announced that its pre-tax profit fell to 3.1bn SEK (E274m) for the three months to the end of August, compared with 4.4bn SEK a year earlier.

Consensus was looking for 4.2bn SEK.

The group was hit mainly by a 1% rise in selling, general and administrative expenses, which totalled 26.6bN SEK over the quarter, up 4% in local currency.

In its press release, H&M points out that expenses linked to the closure of its online destocking site Afound also weighed on profits.

Although gross margin improved to 51.1%, compared with 50.9% a year ago, it was below analysts' forecasts.

Sales were down to 59bn SEK, compared with 60.9bn SEK a year earlier, and were also below the consensus of 60.4bn SEK.

The clothing chain, which faces stiff competition from Zara (Inditex), reports that its autumn collection was particularly well received by consumers.

This has led it to forecast year-on-year sales growth of 11% (in local currency) in September, which did not seem enough to halt the fall in its share price on Thursday morning on the Stockholm Stock Exchange.

The share is currently down more than 6%, making it one of the worst performers on the pan-European STOXX Europe 600 index.


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