H&M share Tumbles And Also Quarterly Sales Drop

Fashion retailer H&M said sales had fallen during the last three months as fewer shoppers visited its stores, sending its shares plummeting and underlining its struggle to adapt to a shift of business online. Sales in the September-November period were far below its own expectations. It plans to speed up efforts to adjust to changes in the market, including closing more H&M stores and opening fewer new ones, and start selling the brand through Chinese online platform Tmall.

Company said in a statement “The quarter was weak for the H&M brand's physical stores, which were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry. In addition, there have been imbalances in parts of the H&M brand's assortment composition”.

Fourth quarter sales shrank 4 percent year-on-year, or 2 percent in local currencies, to 50.4 billion crowns ($5.97 billion), lagging a mean Reuters poll forecast for a 2 percent increase, or 5 percent in local currencies.

Main rival Inditex, the owner of Zara, has outperformed H&M and others in recent years, helped by a more flexible supply chain that allows it to adapt quicker to demand.

The Spanish company this week reported slower sales growth in the three months through October but said sales growth had gained pace again in November.

A string of analysts have lowered their ratings on the H&M stock recently amid concerns that H&M won't be able, despite rapid online growth, to keep up with newer and nimbler pure-online players such as Zalando and Asos, and that comparable sales declines will extend into 2018.