Bitten by the big chill in late February and early March in major European markets, spring has gotten off to a limp start for Hennes & Mauritz AB, which reported softer-than-expected results for the first quarter.
The Swedish fast-fashion giant said provisional sales including VAT, converted into Swedish krona, dipped 1.6 percent in the three month period ended Feb. 28 to 53.55 billion kronor, or $6.54 billion.
The group’s sales including VAT remained unchanged in local currencies versus the equivalent year-ago period, which totaled 54.4 billion kronor.
“This is a seasonally quiet time of year, but demand tends to take longer to recover than before Christmas as customers are generally buying for themselves, not for others,” said Richard Chamberlain, an analyst at RBC Capital Markets.
“Contrary to some commentators, we also don’t think the recent cold weather has been helpful for clearing H&M’s old inventory, as customers buying at this time of year tend to want newness,” he added.
Watch on FN
Chamberlain predicted further gross margin pressure as a result of higher discounting and soft like-for-like sales trends for the chain due to “a tough European apparel sector and H&M brand challenges.”
The figures come after Spanish rival Inditex reported a 7 percent rise in net profits and a 9 percent rise in sales in its fiscal year.
H&M for its part reported a 13 percent dip in full-year profit and a disappointing sales performance, up 4 percent year-on-year, highlighting its struggle to grapple with the shift of consumption to digital avenues.
Its stores numbered 4,743 on Feb. 28, compared with 4,393 a year earlier.