Sales growth proves elusive for H&M in Q4

H&M Group issued an update on Friday and while it covered both the fourth quarter and full year, it was (as is usual for the Swedish fashion retail giant) very Scandi-minimalist.

So, what did we learn? Net sales in Q4 — the period from 1 September to 30 November — were just-about-flat compared to the corresponding quarter last year and added up to SEK62.629 billion  (€5.5bn/£4.8bn/US$6.1bn). That was actually a marginal rise as the company’s sales were SEK62.433 a year ago. 

But excluding Russia and Belarus, the increase was 3% in SEK although inflation would have wiped out any gains and it was also a drop of 1% in local currencies. In total, the group’s net sales fell by 4% in local currencies compared with the corresponding quarter last year. That was worse than the 3% drop analysts had expected.

For the full year that began on 1 December 2022, net sales rose 6% to SEK236 billion and again, with Russia and Belarus out of the equation, the increase was 8% in SEK but only 1% in local currencies.

Those figures are all only provisional and we won’t get full confirmation — nor any info on reasons for the tepid sales performance, margins, costs, profits and any other commentary — until the company reports its full-year results at the end of January. We do know that it has been prioritising margins, so hopefully part of the sales performance will be explained by it offering fewer discounts.

But it’s always tempting to draw comparisons with Inditex given that they always report their results within a day or two of each other. 

Inditex was also hit by a slowdown in the latest quarter although it didn’t seem to affect the Spanish giant quite as much. Its sales rose in Q3 (the three months to the end of October) with a 6.6% hike. Yet that was well was below analyst expectations and also below the double-digit figures of the past couple of years. But it added that store and online sales in constant currency between 1 November and 11 December had risen as much as 14% year on year.

What can we conclude from this? It’s likely that both of the companies — which between them operate around 10,500 stores globally so are good bellwethers for the state of the fashion sector — were affected by the weather woes and cost-of-living crisis that hit their smaller peers in late summer and early autumn.

Weather extremes began with parts of Europe seeing unbearable heat in the summer while other areas didn’t get much sun and both extremes dented summer season sales. But then, just as everyone expected the weather to turn chilly and autumn collections dropped in-store, the weather stayed pleasantly warm and sunny so coats, knits and boots were the last things on consumers’ minds.

We can only hope that 2024 turns into year in which spring, summer, autumn and winter behave in ways that match the industry’s long-range planning.