Hennes & Mauritz AB’s sales just missed analyst estimates as households across Europe are struggling with a cost-of-living crisis amid soaring prices for everything from energy to food.
Sales in local currencies dropped 4% in the three months through August, the firm said Thursday in a statement. Analysts had expected a drop of 1.4%.
The company, one of the world’s biggest fashion retailers, had almost recovered from the Covid 19-pandemic when Russia invaded Ukraine, and is now struggling with soaring inflation and a more pessimistic outlook for the broader economy. In June, H&M said it would take a financial hit of 2-billion kronor for closing its shops and exiting Russia.
Sales were off to a bad start in the quarter, but saw some improvement because of higher interest in its autumn collections than in the prior year. Total sales came in at 57.45 billion kronor ($5.36 billion).
The drop in sales is a contrast to Zara-owner Inditex SA, which on Wednesday reported a 25% jump in sales for the first half and a higher profit than expected after increasing prices. H&M has said it seeks to strengthen its market position by not raising prices by the same rate as its competitors.
The stock has fallen 37% year-to-date and currently trades near its coronavirus-related lows of the spring 2020. That’s when the firm had as much as 80% of its store network closed.