H&M reports 4% drop in Sep-Nov sales, slightly more than expected

Swedish fashion retailer H&M on Friday reported a 4% drop in September-November sales measured in local currencies, larger than the 3% fall forecast by analysts as the company aims to prioritise profitability.
 

The decline is the biggest since the third quarter of 2022.
 

The world's second-biggest listed fashion retailer after Inditex, H&M has been prioritising its profit margin over sales, as it aims for an operating margin of 10% for 2024. For the first nine months of this year, its operating margin came in at 5.9%.
 

H&M has been losing ground to Zara owner Inditex, which on Wednesday reported a 15% rise in local-currency sales for the nine months through October, and a 14% rise for the following six weeks.
 

H&M shares have outperformed Inditex this year, though, up around 56% as investors bet on the company's ability to bounce back after inflation dented its profitability.
 

H&M was slower to raise its prices than Zara, as its customer base is, on average, more price-sensitive.
 

In Swedish crowns, its net sales were roughly unchanged at 62.6 billion crowns ($6.10 billion) against a mean forecast of 63.2 billion.