Strong demand for spring collection boosts H&M profits
27 March 2024, 11:24
Daniel Erver, chief executive of H&M, said it has seen signs it is ‘on the right track’.
Fashion giant H&M has said it has seen a positive response from shoppers to its spring collection as it posted a rise in profits.
The firm saw shares in Sweden jump on Wednesday after better-than-expected profit for the first quarter.
Daniel Erver, chief executive of H&M, said it has seen signs it is “on the right track” as it seeks to maintain its market share amid the rapid growth of fast fashion rivals such as China’s Shein.
On Wednesday, the company said net sales dipped by 2% for the quarter to February 29, compared with the same period last year. This was a smaller fall than predicted by analysts.
The group said sales were moving in the “right direction”, with an increase of 2% so far in March.
Meanwhile, it said recorded higher-than-expected operating profits of 2.08 billion (£155 million) krona for the quarter, up from 725 million (£54 million) a year earlier.
Mr Erver said: “The quarter’s sales gradually improved during February with well-received Spring collections, which is a positive sign that we are on the right track.
“Our priorities remain firm: to enhance the assortment, always offer the best price, create inspiring experiences in both physical and digital environments, and to strengthen our brands.
“Thanks to the investments being made in tech, the supply chain and sustainability, combined with continued cost control, committed colleagues and a long-term perspective, we see good opportunities for profitable and sustainable growth.”
Robyn Duffy, senior analyst at RSM UK, said: “With new CEO Daniel Erver focused on profitability and improving margin, we’ve seen gains in these areas which should go some way to reassuring investors.
“With aims of reaching a 10% operating margin by the end of the year, this should allow the business to invest in better quality product at a better price, and give H&M a more competitive edge against its rivals.
“H&M will be one to watch for the rest of the year in terms of whether this new strategy will pay off.”
