H&M reports sluggish start to spring sales
H&M's sales were up just 1% in March after a weaker than expected first quarter, the Swedish fast-fashion retailer reported on Thursday, in a sign of a slow start to its spring and summer season.
H&M has ramped up marketing spend in a bid to boost its brand but the returns on that investment have been slow to appear. Its shares, down 11% since the start of the year, fell 1% in early trading in response to the anaemic sales growth and lower profitability.
"Even if we are taking important steps, we are not satisfied with our result in the first quarter," CEO Daniel Erver said in a call with analysts.
"We are still in a high inflation climate where the customers' spending power is limited, so we stay very focused on providing outstanding value for money."
Erver, who has led H&M for just over a year, is trying to turn its fortunes around through better marketing and more fashionable clothes, spending on pop stars like Charli XCX to model its collections as he tries to make the brand more desirable and able to compete more effectively against Zara and Shein.
The company's sales of 55.3 billion Swedish crowns ($5.52 billion) for the December to February quarter, were up 2% in local currencies but below analysts' mean estimate of 55.9 billion Swedish crowns. March sales growth was weaker than the 4% increase reported a year ago.
Sales were slightly weaker in the U.S., the Nordics and the UK in the first quarter, Erver said, while Germany and Poland performed better.
In the U.S., H&M will likely hike prices to mitigate the impact of import tariffs imposed by President Donald Trump, chief financial officer Adam Karlsson told analysts.
"We will follow how competitors do this and we will be very diligent in how we assess that we continue to give relatively better value than anyone else," Karlsson said.
H&M's biggest manufacturing hubs are China, where the U.S. has already placed an additional 20% tariff on imports, and Bangladesh, one of the countries at risk of so-called "reciprocal" tariffs Trump plans to announce on April 2.
Increased discounting, marketing investments and "negative external factors" impacted H&M's profitability in the quarter, with the operating profit margin falling to 2.2% from 3.9% in the same period a year ago.
Markdowns were higher than expected due to a later Black Friday, RBC analysts said.
Erver said the hit to profitability from investments in the brand would be smaller in the second quarter, and improvements to H&M's womenswear product assortment were starting to have a positive effect.
After hosting a string of Charli XCX concerts last year, H&M has continued to invest in big-name brand ambassadors, hiring musicians Tyla and FKA Twigs to model its spring and summer collection launched last week.
The retailer, which also owns brands including Arket, Cos, & Other Stories, and Weekday, has been upgrading stores and sharply reducing its overall number of stores. H&M has 4,213 stores globally, it reported on Thursday, its smallest store footprint since 2016.
($1 = 10.0259 Swedish crowns)
(Reporting by Helen Reid; Editing by Terje Solsvik, Jan Harvey and Jane Merriman)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Channel Post MEA
16 hours ago
- Channel Post MEA
Synology Launches DiskStation DS425+ Compact 4-Bay Storage Solution
Synology launches the DS425+, a compact 4-bay storage solution that provides a fixed storage configuration of up to 80 TB of raw data, ideal for smaller-scale deployments with consistent storage requirements. For network connectivity, the DS425+ features a 2.5GbE port along with a 1GbE RJ-45 port. Additionally, it supports M.2 NVMe SSDs for either SSD caching or high-performance all-flash. 'The DS425+ offers remarkable performance and capability for its size,' said Michael Wang, Product Manager at Synology. 'They are an ideal choice for users with specific storage needs who still want the benefits of centralized storage.' DS425+ is engineered as a full-featured system to deliver consistent performance and reliability with Synology hard drives. It follows a carefully curated drive compatibility framework, backed by over 7,000 hours of rigorous testing. To ensure optimal integration and long-term dependability, DSM on the DS425+ requires compatible hard drives* for installation. Versatile features for business workloads Powered by Synology's DiskStation Manager (DSM), these systems offer versatile features to meet diverse business data management needs. Synology Drive transforms the system into a private cloud, enabling cross-platform access and site-to-site syncing for distributed teams. Active Backup Suite provides comprehensive protection for Windows, Linux, and MacOS devices, virtual machines, and cloud accounts, with flexible off-site backup options. Surveillance Station delivers scalable video management and offers real-time intelligent analytics to safeguard physical assets.
Zawya
17 hours ago
- Zawya
End of tax loophole for Shein starting to have impact, say South African retailers
JOHANNESBURG - South Africa's closure of a tax loophole that benefited global discount e-commerce retailers Shein and Temu is starting to show positive signs as some consumers reject the higher prices, the CEOs of local fashion retailers Mr Price and TFG said on Friday. Last November, South Africa's tax authority ended the practice known as "de minimis", which allowed companies to drop-ship packages valued at less than 500 rand ($28.12) from suppliers in China to consumers in South Africa, paying a flat rate of 20% in lieu of customs duties, and no VAT of 15%. Other markets including the United States, Britain and the European Union are also closing or planning to close loopholes that have given low-cost online platforms like Shein and Temu, owned by PDD Holdings', pricing advantages. "There's nothing punitive about them, it's just levelling the playing field so that everybody trading in South Africa and importing products pays exactly the same duties," TFG CEO Anthony Thunström told Reuters in an interview after the company's earnings release. Both Thunström and Mr Price CEO Mark Blair said it was difficult to get official data to quantify the exact impact on the fast-fashion giants. "But our understanding is that the closure of that loophole has significantly slowed down some of the international pure play online into South Africa," Thunström said. Local brick-and-mortar fashion and e-commerce retailers had urged South African regulators to impose a 45% import duty on all clothing imports, no matter the price, to level the playing field. "One thing all of us have seen on Shein is the social media outrage that's now taken place because of higher prices, so it does make us feel comfortable that the new legislation has been applied correctly," Blair told investors during an earnings presentation. "I think it's still a bit erratic, not across the board and if I look at our own e-commerce sales, it grew slightly ahead of our store sales, so there must be some positive impact," he added. Mr Price and TFG are also investing in technology and enhancing product ranges as they bid to gain market share. Mr Price said on Friday that it expects to invest 1.6 billion rand this financial year ending March 2026 in about 200 new stores, supply chain, store revamps and technology, while TFG said it plans to open over 100 new stores. ($1 = 17.7839 rand)
Zawya
19 hours ago
- Zawya
Shein and Reliance aim to sell India-made clothes abroad within a year, sources say
Fashion retailer Shein and partner Reliance Retail plan to rapidly expand their Indian supplier base and start international sales of India-made Shein-branded clothes within six to 12 months, said two people with knowledge of the matter. The China-founded, Singapore-headquartered Shein has been discussing plans with the Indian retailer since before the U.S. imposed tariffs on Chinese imports that intensified the need to diversify sourcing, the people said. The aim is to raise Indian suppliers to 1,000 from 150 within a year, they said. In a statement to Reuters, Shein said its partnership with Reliance was limited to the licensing of its brand to Reliance Retail for Indian domestic consumption only. Reliance did not respond to queries. Shein sells low-priced apparel such as $5 dresses and $10 jeans shipped directly from 7,000 suppliers in China to customers in around 150 countries. Its biggest market is the U.S. where it is adjusting to tariffs on low-value e-commerce packages from China which could previously be imported duty free. The retailer launched in India in 2018 but its app was banned in 2020 as part of government action against China-linked firms amid border tension with its northeastern neighbour. It returned in February under a licensing deal with the Reliance Industries unit which launched selling Shein-branded clothes produced in local factories. In contrast, Shein's other websites mainly list goods from China. Reliance, controlled by Asia's richest person, Mukesh Ambani, has contracted 150 garment manufacturers and is in discussion with 400 more, said the two people, declining to be identified due to confidentiality concerns. The goal is 1,000 Indian factories making Shein-branded clothes within a year for both the Indian market and to service some of Shein's global websites, the people said. Shein initially wants to list India-made clothes on its U.S. and British websites, one of the people said. Discussions have been ongoing for months and the launch time of six to 12 months could change depending on supplier numbers, the person said. The scale of supplier expansion and export time frame is being reported for the first time. Shein has licensed its brand for domestic use to Reliance which "is responsible for manufacturing, supply chain, sales and operations in the Indian market alone," Shein said in a statement. In December, Minister of Commerce and Industry Piyush Goyal told parliament that the Shein-Reliance partnership aimed to create a network of Indian suppliers of Shein-branded clothes for sale "domestically and globally". ON-DEMAND MANUFACTURING Shein is a fast-fashion behemoth earning annual revenue of more than $30 billion through low prices and aggressive marketing. Most of its products are from China with some made in countries such as Turkey and Brazil. Its expansion in India mirrors interest in the country from the likes of Walmart and others throughout the global fashion and retail industries, particularly those looking for suppliers outside China due to the U.S.-China trade war. The Shein India app has been downloaded 2.7 million times across Apple and Google Play stores, averaging 120% on-month growth since its launch, data from market intelligence firm Sensor Tower showed. Offerings during its first four months have reached 12,000 designs, a fraction of the 600,000 products on Shein's U.S. site. In the women's dresses category, its cheapest item was priced at 349 Indian rupees ($4) compared to $3.39 on the U.S. site as of June 9. Shein's Indian partner Reliance, which operates the app, is working with suppliers to assess whether they can replicate Shein's global best-sellers at lower cost, the two people said. Reliance aims to emulate Shein's on-demand manufacturing model, asking suppliers to make as few as 100 pieces per design before increasing production of those that sell well, they said. Executives from Reliance recently visited China to understand Shein's "innovative" supply chain operations, "data driven" design processes and "disruptive" digital marketing, Manish Aziz, assistant vice president Shein India at Reliance Retail, said in a LinkedIn post in which he called Shein's scale and speed "truly incredible". The partnership is one of dozens Reliance has with fashion brands, such as Brooks Brothers and Marks and Spencer. The firm also runs e-commerce site Ajio and its retail network competes with Amazon and Walmart's Flipkart as well as value retailers such as Tata's Zudio. Reliance plans to work with new suppliers to source fabric - especially fabric made using synthetic fibres where India lacks expertise - and import required machinery, the people said. The firm will invest in suppliers and help them grow which in turn will help the Shein-Reliance partnership go global, they said. (Reporting by Dhwani Pandya in Mumbai and Helen Reid in London; Editing by Aditya Kalra, Christopher Cushing and Kate Mayberry)
