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H&M’s sales in the fourth quarter to Nov 30 were 62.19 billion Swedish crowns, up 3% in local currencies, a weaker performance than analysts’ mean forecast of 63.48 billion Swedish crowns.
H&M shares were down 3.6% at 9.23am.
Black Friday was on Nov 29 last year, and H&M said more of its sales around that key discounting day were reported as revenues in December, hitting quarterly sales by just under 1%.
Operating profit margin for the quarter was 7.4%, up from 6.9% a year before, as CEO Daniel Erver, who took over a year ago, said investments in marketing were starting to pay off.
“I’m pleased with the early progress, but I believe that there is more potential for us,” Erver said in a press conference.
H&M’s first quarter marketing spending is expected to increase year on year, but be somewhat lower compared to the fourth quarter.
H&M has been struggling to grow its sales as Chinese online retailer Shein attracts cash-strapped shoppers with ultra-low prices and Zara owner Inditex has managed to keep selling more clothes at higher prices.
In a push to make H&M trendier, Erver has increased marketing spending and hired pop star Charli XCX to model H&M’s autumn collection and to perform at free gigs attended by thousands during London Fashion Week and in New York’s Times Square.
Analysts said H&M still had work to do to turn its performance around.
“Considering the investments done in the offering (sharper product, refurbished stores in key cities, investments in price, and 600 million Swedish crowns more in marketing spend) we had expected more than 3% growth in Q4 and 4% growth in Q1 (Dec-Jan),” said Danske Bank analyst Daniel Schmidt.
H&M said it took a 200 million crown hit to operating profit due to winding down costs as it folds its Monki brand into Weekday to streamline operations.
The move, announced in November, will lead to the closure of most Monki stores.
The group has accelerated its store closures over the past years and focused new store openings on growth markets.
The retailer had 4,253 stores across all its brands at the end of the 2024 financial year, 116 fewer than a year ago.
H&M proposed a dividend of 6.80 crowns per share for 2024, a 4.6% increase from the 6.50 crowns per share it paid for 2023.
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