H&M’s Second-Quarter Profit Beats Estimates on Cost-Cutting and Summer Sales
H&M’s shares hit a 16-month high on Thursday after the company reported second-quarter profit that beat estimates. The results were driven by cost-cutting measures and strong sales of its summer collection.
H&M: https://www.hm.com/ , the world’s second-biggest fashion retailer, said operating profit in the quarter was 4.74 billion Swedish crowns ($438.6 million), down from 4.98 billion a year earlier but above the 4.07 billion forecast by analysts in a Refinitiv poll.
The company said it had reduced its inventory levels by 2.5%, which helped to boost margins. H&M also said it had benefited from warmer weather in Europe, which boosted sales of its summer collection.
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“The external factors that affect our purchasing costs continue to improve, work on the cost and efficiency program is proceeding at full speed, and much of the work that we have done in recent years is starting to bear fruit,” said CEO Helena Helmersson.
H&M has been facing increasing competition from fast-fashion rivals like Shein. However, the company’s recent results suggest that its cost-cutting measures and focus on higher-priced brands are starting to pay off.
What does this mean for H&M?
The strong second-quarter results are a positive sign for H&M. The company has been facing increasing competition from fast-fashion rivals, but its recent results suggest that its cost-cutting measures and focus on higher-priced brands are starting to pay off.
H&M is also benefiting from warmer weather in Europe, which has boosted sales of its summer collection. The company has said that it expects to continue to see strong sales in the coming months.
What does this mean for investors?
The strong second-quarter results are likely to be welcomed by investors. H&M‘s shares have been under pressure in recent months, but the recent results suggest that the company is on the right track.
Investors will be looking for H&M to continue to deliver strong results in the coming quarters. The company has said that it expects to see continued growth in its online sales and in its higher-priced brands.
Overall, the strong second-quarter results are a positive sign for H&M. The company is facing increasing competition, but its recent results suggest that it is well-positioned to continue to grow in the coming years.
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FAQs
Why did H&M shares jump 11%?
H&M’s shares jumped 11% on June 28, 2023, after the company reported strong profits for the first quarter of the year. The company’s profits were boosted by its summer collection, which was well-received by consumers.
What was the impact of the summer collection on H&M’s profits?
The summer collection accounted for about 20% of H&M’s total sales in the first quarter of the year. The collection was particularly popular in the United States, where it helped to drive a 17% increase in sales.
What are the expectations for H&M’s share price in the future?
Analysts expect H&M’s share price to continue to rise in the near future. The company is well-positioned to benefit from the recovery of the global retail market, and its strong brand and customer loyalty should help to drive sales growth.
What are the risks to H&M’s share price?
The main risks to H&M’s share price include a slowdown in the global economy, a decline in consumer confidence, or a rise in the cost of raw materials.
