H&M: quarterly results surprise on the upside

(CercleFinance.com) - Fashion chain Hennes & Mauritz has posted better-than-expected first-quarter sales and profit on Friday, citing lower markdowns and increased market share.


As a result, the stock jumped by 13.6% in morning trading, largely outperforming a 1.3% rise in the STOXX Europe 600 Optimised Retail index.

The clothing retailer said its gross margin - a key measure of profitability — came in at 50%, up from 49.9% in the same period one year ago.

The group's net sales increased by 10% to 51 billion Swedish kronor in the quarter from 1 December 2018 to 28 February 2019. In local currencies, net sales increased by 4%.

H&M said it has benefited from a stronger customer offering, combined with ongoing improvements in buying and logistics, and continued strong sales momentum.

The quarter's pre-tax profit dropped to 1 billion Swedish kronor from 1.26 billion Swedish kronor, negatively affected by lower sales in Germany.

The retailer said it also suffered from hefty costs due to the replacement of its online platform in Germany, as well as continued costs relating to new logistics systems.

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