Business

H&M’s sales fall as Zara owner Inditex pulls away

Spanish company has also diversified more quickly into higher-priced brands

Inditex, the world’s biggest clothing retailer and owner of Zara, has consistently outperformed H&M in the past few years as a result of online growth and its push into new markets. Photograph: Miguel Vidal/Reuters

Wed Mar 15 2017 - 16:27

Fashion retailer H&M's sales fell unexpectedly in February while Inditex, which owns Zara, pulled further ahead of its Swedish rival, helped by its expansion online and a bigger emerging market presence.

Inditex, the world’s biggest clothing retailer, has consistently outperformed H&M in the past few years as a result of online growth and its push into new markets. The Spanish company has also diversified more quickly into higher-priced brands, reducing exposure to the rise of discount chains like Primark.

H&M has embarked on plans to roll out ecommerce in more markets this year and speed up expansion of newer brands such as the mid-market COS and & Other Stories.

Shares fell

But on Wednesday H&M revealed that local-currency sales fell in February for the first time in four years, slipping 1 per cent year-on-year, against a forecast in a Reuters poll of analysts for a 6 per cent rise. H&M’s shares fell 5 per cent.

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In contrast, Inditex’s local currency sales rose 13 per cent from February 1st to March 12th, as customers snapped up items from spring collections like double-breasted jackets, palazzo trousers and embroidered tulle tops.

This was adjusted for an extra trading day in February 2016. H&M sales were up 3 per cent in February, taking that calendar effect into account.

Inditex results highlight the success of its strategy, with like-for-like sales up 10 per cent in the year to end-January, helped by a shift towards opening bigger stores in prime locations that are then integrated with online operations.

– (Reuters)

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