H&M sees double-digit sales growth for 10th month
H&M's July sales rose 14%
Swedish fashion giant H&M booked double-digit sales growth in July, marking the 10th consecutive month of double-digit increases.
Sales including VAT increased by 16% in local currencies for the period ending 31 July, compared to the same month a year ago. This was the group's 28th consecutive month of growth, and its 10th of double-digit increases. It was also above Reuters analyst expectations for a 12% rise.
The owner of the H&M, Cos, Monki, Weekday, Cheap Monday, and & Other Stories banners, operated 3,649 stores at the end of the month, up from 3,314 last year.
Stifel analyst Richard Jaffe said H&M’s July sales were slightly above expectation, and accelerated from June, "as favourable customer response to the company’s trend-right, value priced merchandise drove sales." He added: "The positive benefit of a weakening Swedish krona against most countries’ currencies also benefited sales."
Looking forward, he said the increasingly strong USD exchange rate will "result in increased purchasing costs in 2H (more than we saw in 2Q) compounded by increasing wages."
That said, despite the increased costs, "we believe H&M is unlikely to pass the cost increases on to their customers in order to be the lower-cost provider and gain market share. We view this as the correct strategy for the company but acknowledge the near-term pressure on earnings."
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