H&M reported its fastest quarterly sales growth in three years, though analysts said the big question is how much the struggling Swedish retailer cut prices on clothes to clear excess inventory.
Revenue rose 12 per cent to 56.4 billion kronor (€5.5 billion) in the three months through November, according to a statement on Monday. Analysts expected sales of 56.1 billion kronor. The figures exclude value-added tax.
While the gain may make bulls more optimistic that H&M is reducing its record inventory position, investors may react coolly after a recent rebound in the stock. H&M also had a very easy quarterly comparative. It may be hard to raise prices in December after offering such big discounts in November, Richard Chamberlain, an analyst at RBC Capital Markets said.
It won’t be clear until full results are published on January 31st what effect the sales spurt had on earnings. It’s possible a lot of the sales growth wasn’t very profitable: H&M has recently been selling sweaters for as little as $9.99.
Favuorable currency shifts supplied half of the growth; excluding foreign-exchange movements, sales grew 6 per cent in the quarter. – Bloomberg
