H&M shares fly off the shelves on quarterly results

by AFP/ pic by AFP

Shares in Hennes and Mauritz surged on Thursday, boosted by quarterly results pointing to a budding recovery in the Swedish fashion retailer’s earnings.

About an hour into trading on the Stockholm stock exchange they stood 9.4 percent higher at 158.84 kronor.

H&M, which has been lagging in a relentless competition with Spanish rival Zara, earlier reported a net profit of 4.5 billion kronor (427 million euros, $485 million) between March and May, the second quarter of its financial year.

The net result was little changed from year-earlier levels, and slightly short of analysts’ forecasts, but a brighter outlook still had investors rushing to buy into the stock.

“The H&M group continues to increase full-price sales, reduce markdowns and increase market share, showing that customers appreciate our collections and the improvements we are making to the product assortment and the customer experience,” said CEO Karl-Johan Persson in a statement.

Sales meanwhile rose by 11 percent with analysts welcoming the Swedish group’s apparent success in accelerating its digital performance, especially in online sales which rose 20 percent in local currencies in the quarter, and 27 percent once converted back into kronor.

“H&M is continuing to execute better this year and is gaining share in major markets, albeit against easy comparisons,” analysts at the Royal Bank of Canada said in a note to investors.

H&M’s net margin rose to 7.8 percent from 1.6 percent in the previous quarter, a signficant recovery but still far behind Zara, whose margin came in at 12.4 percent for its latest quarter.