H&M’s stock shot up 14% in early trading on Wednesday as the Swedish retailer handily exceeded analysts’ projections for its first-quarter fiscal profit.
Operating profit increased to 2.08 billion Swedish krona ($196 million) as opposed to the 1.43 billion krona predicted by analysts surveyed by LSEG. The business increased its operating margin from 1.3% to 3.9% while maintaining its goal of a 10% operating margin for this year.
In the first quarter, net sales decreased from 54.9 billion krona to 53.7 billion krona year over year.
Prioritising profitability is something H&M has stated it would do going forward, in response to increasing competition from Chinese fast fashion companies like Shein and Inditex, the owner of Zara.
“After Helena Helmersson’s unexpected resignation at the beginning of the year, Daniel Ervér, the CEO of H&M Group, joined the company, development continued in the right direction in the first quarter with an improved gross margin and operating profit, lower inventory, and strong cash flow.”
Prioritising increasing sales, Ervér stated in a conference call with analysts after the results were released.
Source (CNBC)
