Hennes & Mauritz (H&M), the world's third-biggest clothing retailer, beat second-quarter profit forecasts today and said currency swings were becoming less costly, pushing its shares higher.
The retailer, which has ten outlets in Ireland said sales in May, the final month of the second quarter, were unchanged from a year earlier against analysts' average forecast for a 1.4 per cent rise, while turnover at stores open at least a year fell 9 per cent versus a forecast drop of 8.5 per cent.
H&M, which has over 1,800 shops in more than 30 countries, said calendar effects knocked 4-5 percentage points off May sales and the performance should be seen in the context of a 25 per cent surge in sales in the same month last year.
“Let's call it a very solid report from H&M today where a lot of focus was on the gross margin,” said Soren Lontoft Hansen, an analyst at Sydbank.
H&M said its gross margin - a key measure of profitability - came in at 61 per cent, beating analysts' forecast of 60.2.
Second-quarter price markdowns were the same as a year earlier, and currency hedges continued to put downwards pressure on the gross margin, it said.
But those effects were less damaging than in the first quarter and were expected to decrease further in the current quarter, it added.
Europe's retailers are struggling with the worst economic downturn since the Second World War, though there have been some signs recently that consumer sentiment is starting to improve.
Euro zone retail sales edged up in April from March, their first monthly increase in five months, while consumer confidence is rising in H&M's home market of Sweden and also its biggest market, Germany.
A recovery is far from assured, however. DSG International, Europe's second-biggest electricals retailer, said today it expected trading to stay tough.