H&Ms sales have continued on an upward trajectory

H&M's sales have continued on an upward trajectory

Swedish fashion giant Hennes & Mauritz (H&M) has posted another monthly sales increase in July.

H&M group sales including VAT increased by 10% in local currencies for the month of July, compared to the same month in the previous year. The total number of stores rose from 3,649 to 4,105 over the year. 

The results mean H&M's sales have now risen for 40 consecutive months. The 10% year-on-year July sales rise is up on the 8% booked in June.

Stifel analyst Richard Jaffe believes favourable weather and increased promotions due to an inflated inventory position, fuelled sales in the month but likely pressured margins.

"We expect sales to accelerate in August given the easier comparison (sales increased 1% in August LY versus +14% in June and +16% in July LY) and coincident with the company's back-to-school floorset. In August, we anticipate more broad-based consumer acceptance of fashion trends likely fuelling sales as the consumer updates her wardrobe."

In its second-quarter results, published in June, H&M blamed higher purchasing costs due to the strengthened US dollar and increased markdowns for a 17% fall in profit.

For the three months ended 31 May, the retailer saw net profit fall to SEK5.3bn (US$649.5bn) from SEK6.4bn a year earlier, with gross margin narrowing to 57.6% from 59.4% in the previous year. Sales including VAT increased 2% to SEK54.34bn.

H&M Q2 sales slump on increased markdowns