H&M sales progress in Q3, but are “flattish” at constant exchange rates

In its usual brief quarterly sales report on Friday, Swedish fashion retail giant H&M Group reported net sales up 6% in Q3.

The company said sales reached SEK60.897 billion (€5.1bn/£4.4bn/US$5.5bn) in the three months up to the end of August compared with a year ago. And it added that net sales were “flattish” compared with last year on a currency-neutral basis. 

Excluding Russia, Belarus and Ukraine the increase was 8% in SEK.

It was a respectable result but one that sees it lagging its rival, Inditex. The two fashion retailers are the biggest in the world but H&M is in second place and shows no sign of taking the top spot any time soon.

The group didn’t offer much commentary on the figures but did add that “work towards the company’s goal of reaching a 10% operating margin in 2024 is going in the right direction”. And it said “profitability and inventory levels have been prioritised in the quarter” too, so it’s clearly trying to avoid too many markdowns, which should be good news for earnings.

The Swedish low-cost fashion retailer has been allowing prices to creep up in recent periods, RBC analyst Richard Chamberlain told Bloomberg. He said H&M’s UK prices are only 10% below average, while usually the retailer offers a 20% discount.

But despite the price focus, the company’s shares declined in early trading on Friday after the figures were released.