STOCKHOLM, Jan 29 (Reuters) - Swedish fashion retailer H&M reported on Thursday a bigger rise than expected in September-November operating profit but said sales in December and January were expected
H&M Anticipates Sluggish Winter Sales Despite Strong Q4 Profit Results
H&M's Financial Performance and Market Challenges
By Greta Rosen Fondahn
Quarterly Profit Overview
STOCKHOLM, Jan 29 (Reuters) - H&M warned of a slowdown in recent winter sales on Thursday even as cost controls helped the fast-fashion retailer record better-than-expected results for the September-to-November quarter.
Sales Trends and Consumer Behavior
Operating profit in H&M's fourth quarter, which includes Black Friday, rose 38% from a year earlier to 6.36 billion crowns ($724 million) against an LSEG analysts' poll forecast of 5.53 billion crowns. Operating margin widened to 10.7% from 7.4%.
Future Outlook and Strategic Adjustments
"Through a strengthened customer offering, good cost control and improved inventory productivity, we continue to take important steps towards all our long-term targets in a challenging environment," CEO Daniel Erver said.
During his two years on the job, Erver has sought to improve profitability, partnering with pop stars to make H&M trendier and tightening cost control.
While local-currency sales grew 2% in the quarter, they dropped 2% in December and January, the rival to Zara-owner Inditex said, pointing to calendar effects.
Chief Financial Officer Adam Karlsson told analysts and media that lingering weak consumer confidence, particularly in some European markets, may increase the need to offer discounts this quarter.
H&M also said it expected trade tariff costs to rise.
Its shares fell around 1% by 1140 GMT as disappointment over the company's outlook outweighed the upbeat quarterly results.
H&M's stock has risen 31% over the past six months supported by a recovery in margins. But analysts say Erver must now show he can also reignite sales.
H&M, whose customers are considered more price-sensitive than Zara's, has faced pressure for years as shoppers tighten spending amid higher living costs and global uncertainty.
It is struggling to accelerate sales as cut-price online retailers like Shein compete for its customers and Zara dominates the upmarket end of fast fashion.
H&M proposed a dividend of 7.10 crowns per share, up from 6.80 crowns and above an expected 6.83 crowns.
($1 = 8.7903 Swedish crowns)
(Reporting by Greta Rosén Fondahn and Anna Ringstrom; Editing by Joe Bavier)
