H&M has reported a larger than expected increase in quarterly profits, even though sales remained relatively flat. The fashion retailer’s operating profit soared to £353m, up from £67m, in the three months ending on August 31. This growth includes a one-off cost of £156m related to the winding down of its Russian operations. Net sales for the third quarter saw a slight rise of 6% to £4.55bn. The period saw a strong start due to pent-up demand for summer clothes after a cold May, but demand weakened in July and August due to colder weather.
The surge in profits coincides with H&M’s cost-cutting efforts, which were introduced after a significant decline in profits last year. CEO Helena Helmersson stated that the focus during the quarter was on profitability and inventory efficiency, resulting in strong cash flow and good profit growth. The company is now experiencing a delay in the start of the autumn season due to unusually hot weather in many European markets. However, H&M remains committed to its cost and efficiency program and aims to achieve an operating margin of 10% by 2024.
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