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H&M: shares stumble after sales below expectations

(CercleFinance.com) - Budget fashion group Hennes & Mauritz reported quarterly sales that were significantly below expectations on Friday, with the company hit by tough market conditions.

The market's reaction was severe: H&M shares listed on the Nasdaq Nordic market fell over 15% to 170 Swedish kronor in early trading.

In the group's fourth quarter, i.e. during the period from 1 September to 30 November, sales excluding VAT fell by 4% to 50.4 billion Swedish kronor, well below the consensus of 53.9 billion kronor.

H&M said sales were affected by a continued challenging market situation with "reduced footfall to stores due to the ongoing shift in the industry."

In order to respond to customers' behaviour, the company plans further integration of its physical and digital stores, while stepping up store closures, with fewer openings.

Citing a "poor publication" and "a very tough month of October for the fashion industry," broker Bryan Garnier has put its fair value on the stock under review, while maintaining a "neutral" recommendation on the stock.

"We believe investors will therefore carefully monitor inventory levels at full-year results," the broker said.

H&M is due to post its 2016/2017 FY earnings on 31 January. At its capital markets day in Stockholm on 14 February, the group will present its ongoing transformation plans in greater detail, it said.

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