H&M Sees 5% Stock Rise Amid Early Summer Sales Boost
Swedish apparel giant H&M experienced a notable 5.2% jump in shares following its fiscal second-quarter announcement, signaling promising momentum as summer shopping picks up pace.
Quarterly Results Reflect Mixed Performance
In the quarter ending May 31, H&M's revenue slipped slightly to 56.71 billion Swedish krona ($5.99 billion), marginally below analyst forecasts of 57.01 billion krona. While this marked a year-over-year decline, the company reported a 1% sales increase in local currencies, hinting at underlying growth amidst a challenging retail backdrop.
Operating profit totaled 5.9 billion krona, meeting market expectations.
CEO Highlights Impact of Cost Pressures and Supply Chain Dynamics
CEO Daniel Erver noted that results were weighed down by rising purchasing costs linked to a stronger U.S. dollar and elevated freight expenses. However, he emphasized that these headwinds are expected to ease in the second half of the year, creating a more favorable environment.
“The negative external factors that increased costs in the first half are turning positive going forward,” Erver stated, underscoring a cautious optimism as consumer demand starts to rebound.
Summer Sales Uptick and Strategic Moves
H&M anticipates a 3% rise in sales in local currency terms for June, signaling renewed consumer interest as the warmer months arrive. Despite ongoing caution amid uncertain economic conditions, the company remains agile, carefully monitoring global trade developments and tariffs, particularly those involving the U.S. and major sourcing countries like China and Bangladesh.
Store Portfolio Adjustments
Further, H&M plans to streamline its retail footprint throughout 2025, closing around 200 stores in mature markets while opening approximately 80 new outlets primarily in growth regions. This strategy aims to optimize operations and better align with shifting consumer patterns.
Challenges Amidst Intensifying Competition
While H&M contends with softened sales after a string of underperforming quarters, the competitive landscape is also intensifying. Rivals such as Inditex, Shein, and Temu continue to pose strong challenges, especially from the lower-cost segment.
Broader retail headwinds, including weak consumer confidence and tariff uncertainties, strain the industry at large. Recent reports highlight retail and consumer goods as among Europe's most pressured sectors due to tight credit, inflationary costs, and reduced demand.
Looking Ahead
Despite these obstacles, H&M’s cautious yet constructive outlook and strategic adjustments suggest it is positioning itself to capitalize on a modest rebound as summer spending gains traction.
