H&M April sales rebound boosts recovery hopes
STOCKHOLM (Reuters) - Fashion chain Hennes & Mauritz (HMb.ST) said sales rebounded at a faster rate than expected in April as the retail bellwether ended eight months of declines, adding to signs of a tentative recovery in consumer spending.
April same store sales -- made up of store, internet and catalog sales running for at least one financial year -- rose 8 percent, the Swedish company said on Friday, just beating a mean forecast for 7.5 percent seen in a Reuters poll of analysts.
It was the firm's first rise in sales since July 2008.
Analysts had expected H&M, the world's third-biggest clothing retailer by sales after Gap Inc (GPS.N) and Zara owner Inditex (ITX.MC), to post a quick rebound after a cool March held back spring sales, while a new launch also boosted figures.
"The April performance is flattered by a soft comparative and the launch of the first phase of the Matthew Williamson range across 200 stores on 23 April," Citigroup said in a note.
Total sales also rose faster than expected, gaining 19 percent from a year ago compared with a forecast for 17.5 percent as H&M continued to expand.
In spite of a sales environment that has been grim for retailers, H&M -- which offers high-fashion looks at low prices -- has stood by plans to open a net 225 stores this year, and positive signs have also started to emerge elsewhere in the sector.
British retailer The John Lewis Partnership JLP.UL, a more upmarket retail bellwether, last week had its best sales performance so far this year on the back of warmer weather, while British fashion and homewares retailer Next (NXT.L) forecast improved sales.
Consumer confidence indicators edged higher in much of Europe in April, though data from the early part of May was mixed in the United States, where a fall in April retail sales dented hopes of a near-term economic recovery.
Analysts say H&M has continued to perform well even as cash-strapped buyers have reined in spending, and they expect the company will push ahead with new store openings despite the downturn.
"They have been very clear that they should continue to open 10 to 15 percent new stores this year," said Anna-Karin Envall, an analyst at ABG Sundal Collier. "They have strong financials, so there is no need for them to change that strategy."
GERMANY TO LAG
H&M's biggest market, Germany, is not expected to see economic growth before the second half of 2010 and recovery following the current recession is likely to be muted, the European Central Bank said last week.
Last week, Spanish fashion retailer Mango said it would pare back store opening plans this year due to the economic downturn.
But both H&M and arch-rival Inditex have stuck to forecasts for an increase in like-for-like sales this year.
H&M posted a surprise 13 percent fall in first-quarter pretax profit due to unfavorable currency swings, but analysts say a stronger Swedish crown could help H&M reduce purchasing costs in the second quarter.
At 4:23 a.m. EST, H&M shares were down 1.2 percent compared with a 0.1 percent rise in the DJ Stoxx European retail index .SXRP.
(Additional reporting by Mark Potter, editing by Will Waterman, John Stonestreet)
- Tweet this
- Share this
- Digg this