Reuters
Aug 15, 2011
H&M July sales fall more than forecast
Reuters
Aug 15, 2011
August 15 - H&M posted a 6 percent fall in like-for-like sales in July as the world's second-largest clothes retailer suffered from weak consumer sentiment in Europe where it makes most of its sales.
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The July figure was the biggest monthly sales drop for the Swedish budget fashion chain since April 2010, when sales in local currencies at established stores were also down 6 percent.
Societe Generale analyst Anne Critchlow said the data was disappointing. "Comparatives are tough while economic conditions are tough across Europe -- and will perhaps get worse."
Competitors most likely had bigger markdowns than H&M in the month, said an analyst who declined to be identified.
The average forecast in a Reuters poll of analysts had been for H&M to report a 5.1 percent comparative sales fall.
H&M's shares, which touched the lowest point in more than two years last week as global growth fears rocked markets, fell 1.9 percent by 0927 GMT, underperforming the European retail sector .
The world No. 2 clothes retailer after Zara owner Inditex said total July sales, which includes stores opened in the past year, were up 3 percent in local currencies -- the smallest rise since March, missing expectations for a 4.2 percent increase.
Like-for-like sales at H&M often track developments in its largest market, Germany. Clothing sales there were flat in July, according to industry journal Textilwirtschaft.
Inditex has suffered less than H&M from slack European demand because of a stronger presence in fast-growing emerging markets.
July is the second month of H&M's financial third quarter. Turnover in its second quarter was up 2 percent year on year.
In June, total sales grew 5 percent while like-for-like sales fell 4 percent amid tough year-ago comparisons and major markdowns by competitors.
H&M, which like many clothing retailers is also suffering a margin squeeze between a spike in costs and an effort to hold prices to protect market share, said it had 2,306 stores at the end of July compared with 2,066 a year earlier.
The group has stores in 40 countries and plans for 250 more stores in 2011 from 2010.
H&M, whose rivals also include Gap, Next and Marks & Spencer does not release absolute monthly sales figures, only the percentage change, and does not comment on the figures.
(Editing by Erica Billingham)
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