H&M beats expectations with sales boost amid warnings of rivals snapping up market share
H&M has posted a sales boost larger than anticipated for the three month spring period, echoing figures from rival Zara last year.
The Swedish fashion giant revealed net sales were up 17% year-on-year, or 12% measured in local currencies, at 54.5bn Swedish crowns (£4.36bn),
According to the Reuters news agency, analysts polled by Refinitiv had on average forecast sales of 52.8bn crowns (£4.32bn).
H&M is the world’s second biggest fashion retailer, behind Zara and Pull & Bear owner Inditex.
Its Spanish rival posted an 80 per cent leap in first quarter profit last week as shoppers were eager to stock their wardrobes up after Covid lockdown measures were eased.
Despite beating analyst expectations, H&M was battling headwinds of rising inflation, Covid restrictions in China and the looming threat of a global recession, Harry Barnick, senior analyst at Third Bridge noted.
The retailer could push up prices in “certain ranges” but price increases across its “core fashion ranges” would be a challenge, Barnick said.
In terms of its rivals, Inditex was outpacing H&M this year due to its “online investment, pricing power and fast response to real time fashion trends,” Third Bridge analysts suggested.
Chinese e-commerce powerhouse Shein also represented “a real global threat” to H&M, despite H&M being more committed to sustainability and quality,” Barnick said.
However, market share could be regained if customers start trading down from higher-priced brands like Zara as well as potentially clawing back share from smaller and local brands who fail to mitigate headwinds.
Barnick concluded: “H&M’s overall growth ambitions will continue to be held back by stagnant growth in Asia. Our experts say it needs to win back the trust of Chinese consumers to capitalise on this high-growth market.”
Shares in the retailer dipped by almost five per cent on Wednesday morning.