Strong collections help H&M beat forecasts for ninth straight month

Hennes & Mauritz, the world’s second-biggest fashion retailer, saw higher sales growth than expected in December, helped by strong collections and colder weather after an unusually mild autumn in Europe.

European fashion retailers, most recently Britain's Marks & Spencer and Debenhams, complained of weak demand for high-margin winter clothing at the start of the season, but colder weather in December has since helped sales.

Primark, the discount chain owned by Associated British Foods that is growing fast in many of H&M's key markets, said sales rose 15 per cent in the 16 weeks to January 3rd.

For Sweden’s H&M, December was the ninth consecutive month that the company, which is also benefiting from a recovering US economy, achieved sales clearly or slightly above analysts’ expectations.

The company, which runs second behind Zara-owner Inditex in annual sales, said its sales rose 15 per cent year on year in December, above a 13 per cent increase expected by analysts and compared with a 10 per cent rise in November.

"The many new online markets are helping, but the strong collections are no doubt the main reason for H&M's stronger momentum," analyst Niklas Ekman at brokerage Carnegie said, noting online sales contributed around one to two percentage points of the group's growth. H&M has been slower to launch online than some rivals but is investing heavily in its web business. It plans to open eight new online markets this year, as well as its first stores in India, Peru, South Africa and Taiwan.

The latest of H&M's designer partnerships, after a decade of working with couturiers such as Versace and Karl Lagerfeld, is with Alexander Wang.

Mr Ekman said H&M’s sales growth stood out in the sector as it seemed to be shrugging off weak fashion demand across Europe, especially in Germany, its biggest market. “They are defying gravity,” he said. – (Reuters)