Profit statements

H&M reports more price hikes and beats profit expectations with fewer discounts

Budget fashion group H&M plans to raise prices further this year, it said on Wednesday after reporting better-than-expected profits with margins benefiting from fewer discounts.

In the first half of the year, H&M raised prices in the face of rising transport and raw material costs, and chief executive Helena Helmersson told Reuters prices were likely to rise throughout the month as well. year. The hikes would vary from market to market depending on the competitive situation, she said.

“While most of the restrictions associated with the Covid-19 pandemic appear to be essentially over, many challenges remain. Disruptions and delays still exist in the supply chain, but are gradually being mitigated. At the same time, there is substantial inflation,” says H&M.

Pre-tax profit at the world’s second-largest fashion retailer jumped 33% from a year earlier to 4.78 billion crowns ($471 million) in the Swedish group’s second quarter, on growth in sales of 12% measured in local currencies.

H&M shares rose 5% at 11:33 GMT after the group posted a jump in profits from March to May as shoppers returned to its stores in the aftermath of the pandemic.

Higher full-price sales and lower markdowns helped H&M boost its operating margin to 9.2% from 8.3% in the second quarter despite higher costs.

“Sales in physical stores have increased significantly while online commerce continues to do well,” Helmersson said in a statement.

Analysts polled by Refinitiv had on average expected a profit of 3.87 billion crowns.

Local currency sales in June, the first month of H&M’s third quarter, fell 6%, mainly due to the shutdown of its operations in Russia, Ukraine and Belarus. Russia was H&M’s sixth largest market with 4% of sales in the fourth quarter of 2021.

RBC analyst Richard Chamberlain said in a note to clients that June sales were below expectations. In June 2021, sales soared as more than 1,000 shuttered stores reopened after temporarily closing due to the pandemic. CEO Helmersson noted that July and August comparisons would be less difficult.

In China, H&M has seen sales slump over the past year amid a consumer boycott over the company’s stance in the Xinjiang region and a general decline in consumer demand in China. due to COVID-19 lockdowns.

H&M’s biggest rival, Inditex, owner of Zara, reported an 80% increase in profits earlier this month in its fiscal first quarter thanks to surging sales.

H&M also said on Wednesday that it had decided to use an authorization given by the owners at its annual general meeting in May to buy back 3 billion crowns of shares.

($1 = 10.1538 Swedish crowns)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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