H&M: shares drop after tough start to the year

(CercleFinance.com) - H&M has had a "tough" start to the year, with the Swedish budget fashion retailer trying to step up its transformation in the wake of rapid digitalisation.


H&M's gross margin — the group's basic measure of profitability — fell to 49.9% in the first quarter to 28 February 2018, down from 52.1% a year ago.

As a result, profit after financial items dropped to 1.26 billion Swedish kronor, from 3.21 billion Swedish kronor the year before, it said.

The clothing group - which called 2018 "a transitional year" - said weak sales have been caused by clearance sales, combined with unusually cold winter weather.

"Last but not least, inventory levels continued to increase to 17.6% of sales, compared to 16.7% in the previous year," analysts at Bryan Garnier pointed out.

"Hence the start to the year was more difficult than anticipated," the broker added.

Shares in H&M were down 4.8% at 121.2 Swedish kronor this morning in Stockholm.

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