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Expanding Profits of H&M Despite ‘Flattish’ Quarterly Sales

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Expanding Profits of H&M Despite ‘Flattish’ Quarterly Sales

H&M has disclosed a larger than expected surge in quarterly profits, despite experiencing relatively stagnant sales. The fashion retailer witnessed a significant increase in operating profit, rising to £353m from £67m during the three months ending on August 31. This surge encompasses an exceptional expense of £156m associated with the closure of its Russian operations. Net sales for the third quarter showed a modest uptick of 6% to £4.55bn. The period kicked off strongly due to pent-up demand for summer clothing following a chilly May, but demand waned in July and August due to cooler weather.
The spike in profits aligns with H&M’s cost-reducing initiatives, which were implemented after a notable profit downturn last year. CEO, Helena Helmersson, mentioned that the quarter’s emphasis was on profitability and inventory efficiency, yielding robust cash flow and substantial profit growth. The company is currently experiencing a delay in the onset of the autumn season due to unusually hot weather in numerous European markets. Nevertheless, H&M remains dedicated to its cost and effectiveness program and aims to attain an operational margin of 10% by 2024.

Image Source: Sorbis / Shutterstock

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