H&M has reported a 'slow' third quarter as sales slip and it warns on profit guidance

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Swedish fashion giant H&M has reported a “slow” third quarter as sales dipped and the retailer lowered its operating margin expectations.

H&M posted a 3% dip in net sales from SEK 60.9bn (£4.38bn) last year to SEK 59bn (£4.35bn) for the three months from June 1, 2024, to August 31, 2024.

Gross profit for the period reached SEK 30.1bn (£2.2bn), down from SEK 31bn (£2.3bn), while operating profit also fell from SEK 4.74bn (£350m) to reach SEK 3.5bn (£260m).

During the third quarter, H&M said it retained its focus on “creating a strong assortment” that offers both value for money and a good omnichannel shopping experience.

The fashion giant attributed “slow sales” at the start of the period to unseasonably cold weather in June across many of its main European markets.

The retailer also noted challenges such as consumers’ living costs “remaining high” as well as external turbulence and high purchasing costs, which have all taken a toll on the company’s revenue to date.

Looking ahead, H&M said its new autumn collection reflects “the best of H&M” and hailed its collaboration with popstar Charli XCX.

The fashion retailer added that initial sales of its autumn/winter ranges have been “very well received” by shoppers.

In terms of outlook, H&M has lowered its expectations, with operating margin now expected to be lower than the 10% forecast previously pledged.

H&M chief executive Daniel Ervér said: “Despite a challenging start, we are concluding the third quarter with sales on par with last year in local currencies and with good cost control.

“We are strengthening the H&M brand by investing in products, the shopping experience and marketing, which we are already seeing start to make an impact and which will contribute to increased sales and profitability.

”At present, we estimate that this year’s operating margin will be lower than 10%.

“We are strengthening the H&M brand by investing in products, the shopping experience and marketing, and are already seeing that the efforts we have started are having an effect. We are confident that our plan will contribute to increased sales and profitability.”