H&M Blames Warm Weather Across U.S., Europe for Sales Missby
Hennes & Mauritz AB reported revenue that missed analysts’ estimates as unseasonably mild weather weighed on demand in North America and Europe.
November sales rose 4 percent in local currencies, only the second time this year that the retailer’s monthly growth has fallen below 10 percent. The shares declined as much as 1.1 percent in Stockholm.
H&M attributed the underperformance to unpredictable weather including in Germany, where it gets about a fifth of sales. The update provided a contrast with larger rival Inditex SA, which last week reported its fastest sales growth in three years, showing how the Spanish company’s focus on value for money and choice are paying off.
The unfavorable weather and H&M’s relatively inflexible business model are “likely to put further pressure on fourth-quarter margins,” said Exane BNP Paribas analyst Simon Bowler. Gross margin in the third quarter narrowed to 55.9 percent, the lowest since 2004, hurt by August price markdowns along with the rising dollar.
Revenue excluding sales tax reached 48.7 billion kronor ($5.8 billion) in the fourth quarter, Stockholm, Sweden-based H&M said in a statement Tuesday. Analysts predicted 49.5 billion kronor, according to the average of 20 estimates compiled by Bloomberg.