The second-biggest listed fashion retailer in the world, H&M, exceeded operational profit forecasts for the first quarter on Wednesday. According to CEO Daniel Erver, the company’s spring collections were well-received, and sales were beginning to rebound. Early trading saw a 12% increase in the Swedish group’s shares as it reported an operational profit of 2.08 billion crowns ($196 million), up from 725 million and beyond the 1.43 billion analysts in an LSEG poll had predicted.
Sales fell by 2% in the first quarter, but this was less than analysts had predicted. Instead, sales increased by 2% at the beginning of the second quarter, indicating more demand for the company’s apparel and accessories. After two months in the position, CEO Daniel Erver stated, “The quarter’s sales gradually improved during February with well-received spring collections, which is a positive sign that we are on the right track.”
While larger rival Zara has maintained its dominance in the industry, online fast-fashion retailer Shein, which sells $8 dresses, $5 t-shirts, and $2 jewelry items, has eaten into H&M’s market share at the lower end. H&M announced that it is renovating over 250 locations this year, a “significant increase” over last year, to enhance the in-store experience. It intends to close 160 locations in more established countries and open about 100 locations, mostly in developing regions.
