H&M sales fall for fifth month

Hennes & Mauritz reported a bigger than expected fall in underlying sales last month, the fifth straight month of year-on-year declines.

The world's largest fashion retailer firm has struggled with weak consumer spending in Europe, where it has the bulk of its business, and with a strong rise in the value of the Swedish crown.

In contrast Inditex's aggressive expansion further afield with Zara and other brands has helped it ride out the European downturn better than many competitors.

H& M said its same-store sales in February fell 3 per cent in local currencies from a year earlier, worse than the average forecast of a 2 per cent drop given by analysts in a Reuters poll.

Total sales in February, which includes sales in stores open less than a year, were up 5 per cent, also missing forecasts for a 7 per cent rise.

The group said sales were negatively affected by just over 3 percentage points due to fewer shopping days compared to last year's leap year.

But with under half of Inditex's 6,000 stores globally, H& M continued to lag its arch rival in terms of performance, said Barclays analyst Chris Chaviaras. "Still, H& M has a very strong brand value - they just need to reinvent it," he added.

H& M's shares were down 1 per cent at 231 crowns in early morning trade, a drop of nearly 8 per cent from a year ago.

Inditex, which has seen its shares gain 50 per cent in the same period, earlier this week posted a sharp rise in full-year profits as its aggressive expansion into markets like China offset woes in Europe. Its 2012 net profit rose 22 per cent while H& M's rose 7 per cent.

H& M has also been branching out from its core brand, as well as investing in online shopping and continuing to open stores. It now includes H& M Home, COS, Monki, Weekday and Cheap Monday.

H& M said the quarterly sales figure was also depressed by substantial currency conversion effects due to the strengthening of the Swedish crown. The full quarterly results are due to be announced on March 21.

Reuters