(Updates with shares, analyst comments)
By Adam Cox
STOCKHOLM Aug 15 Swedish fashion giant Hennes &
Mauritz (HMb.ST) posted better-than-expected sales figures for
July on Friday, defying an economic slowdown as cost-conscious
shoppers appeared to favour its moderately priced clothes.
H&M, the world's third-biggest retailer by sales, said
turnover in established stores was up 3 percent, compared with
forecasts for a 2.1 percent gain.
In June, this measure of sales dipped 2 percent as economic
gloom weighed on the retail sector. Overall sales rose 15
percent, topping forecasts for a 12.7 percent rise, according to
a Reuters poll.
"Given the weakness in the general retail market in Europe,
it's a nice increase," said Mats Hyttinge, analyst at Glitnir.
Hyttinge cited H&M's market position as a retailer of
fashionable but not overly expensive clothing as a reason for
"The price structure they have is pretty attractive," he
H&M shares were up 2.6 percent by 0820 GMT, outperforming a
0.4 percent rise in the Stockholm blue chip stock index
The stock has gained 15 percent from a nearly two-year low
of 279 crowns a month ago. But it is still down 28 percent over
the past 15 months after setting a life-time high of 450 crowns
in April 2007.
H&M's sales boost came despite recent downbeat news from
Germany, the Swedish retailer's biggest market, where industry
data showed apparel sales fell 2 percent in July.
"Sales are a little bit better than the market expectations.
It shows the trend we have seen -- that in a weak market H&M
will perform better than the underlying clothing market," said
Peter Wallin, analyst at Kaupthing.
Inditex (ITX.MC), Europe's biggest clothing firm, has
suffered a slowdown in turnover this year although it has not
adjusted its target for full-year growth of 4 percent in
Hyttinge said it was tough to plunge into retail sector
shares given current conditions but that longer-term investors
might find some appeal in H&M.
"If you're a long-term investor, I think it's an interesting
opportunity," he said.
If the company can continue to deliver this kind of growth,
he said, at some point the market will view it as a bargain. Its
price/earnings ratio is already around multi-year lows.
"At a certain point you say, 'Now it's time to get in
again'," Hyttinge said. "The only thing that worries us is the
The dollar has rebounded sharply in the past couple of
weeks, a move which, if sustained, could eat away at H&M's
"That could be a little killjoy," Hyttinge said.
(Additional reporting by Lina Osterberg; Editing by Erica
Billingham, Hans Peters)