H&M sales stagnate under weight of record inventory

h&mH&M sales worldwide – in local currencies – stagnated in the second quarter, reaching $9.07 billion, including GST.

The poor figure was achieved despite a net increase of 303 stores between May 31 this year and the same time last year, taking the network to 4801.

H&M was carrying record levels of inventory estimated at $5.42 billion at the end of the first quarter and had to resort to discounting in the second quarter to shift stock – a problem Australian retailers are all too familiar with.

Analysts were unimpressed by the figure. “It’s worrying,” Magnus Raman, an analyst at Handelsbanken told Bloomberg. He estimated the fall in like-for-like sales over the past year at 6.8 per cent.

“The consensus estimate was already at very low levels and still the company doesn’t manage to meet them.”

“H&M is undertaking a series of turnaround initiatives,” said a Barclays analyst. “Although many of these sound sensible in the longer term, we think they will take time to materialise and continue to view the next 12 months as challenging.”

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