H&M profit beats expectations as brand reboot starts to bear fruit

Written by Greta Rosen Fondan and Helen Reed

Stockholm (Reuters) -H & M Fashion Retail has informed H & M for profits in the second quarter a little stronger on Thursday, an encouraging sign as CEO Daniel Erver is trying to attract more shoppers with more written clothes.

The H&M shares increased by 4 % by 1000 GMT, as investors focused on profit instead of sales in the second quarter, which decreased slightly more than expected. Erfar said that his focus on profitability instead of sales growth only.

The second largest fashion retail dealer listed in the world said that she expects sales to rise in June, which is measured in local currencies, by 3 %, which is an improvement after a 6 % decrease in the same period.

“Our groups are more modern, they are more in the direction, and more modern, and the customer reception ceremony was strong throughout this quarter,” Erver said at a press conference.

Erfar said that cotton fabric and verification of engraved dresses, blouses and skirts were particularly common this season, as the trend continued in the fall. He said that sales of accessories were picked up, as social media also leads madness to reach the mini bags, sports shoes and mobile phones.

In the United States, where H&M includes about 500 stores, Erver said that the feelings of the consumer have decreased significantly due to the “turbulent” definitions since president Donald Trump’s rise from imports, and competitors began raising prices as a result.

Erver said that H&M, whose products vote primarily from China and Bangladesh, focus on maintaining competitive prices, because consumers are especially sensitive to prices given the uncertainty about the economy in the United States and the world.

H & M sales of 56.7 billion Swedish crowns ($ 5.99 billion) in March to a quarter, a decrease from 59.6 billion years. LSEG analysts expected 57.0 billion crowns revenues.

The owner of Zara Inditex also reported earlier this month of disappointing sales, in the sign that consumers are backing from spending on clothes because the American customs tariff creates risks to global economic growth.

The employment profit in the second quarter of H&M 5.91 billion crowns, won the expectations of analysts of 5.88 billion, and the operating profit margin was 10.4 %, a decrease of 11.9 % a year ago but is still better than the analysts were afraid.

“The delivery of the best margin is a little better than expected a positive signal to the market,” said J. Zhang, Alphavalue analyst. “The brand upgrade strategy started to bear fruit.”

H&M said that its high -price brand has done well in particular and that shoppers choose more medium and second elements in all fields, which helps to increase profitability.

But Erver put more discount in the quarter in June to August, where he said that summer reduction operations throughout the market were very competitive.

Although it reduces the world’s store numbers, H&M is also looking for growth in new markets through the growing middle class, with plans to open its first stores in Brazil in the second half, as well as in El Salvador and Venezuela, and its release in Paraguay next year.

($ 1 = 9.4635 Swedish crowns)

(I participated in the reports of Greta Rosen Fondan and Helen Red, edited by Anna Rangestrom, David Evans, Jean Harvey and Jin Meriman)