H&M’s profit exceeds expectations, stock price rises 14% | Wilnesh News

shares H&M Shares of the Swedish retailer rose 14% in early trading on Wednesday after the Swedish retailer’s fiscal first-quarter profit significantly beat expectations.

Operating profit rose to 2.08 billion kronor ($196 million), compared with a forecast of 1.43 billion kronor in a poll of analysts from LSEG (formerly Refinitiv). The company’s operating margin rose to 3.9% from 1.3%, reiterating its target of 10% operating margin this year.

Net sales fell year-on-year in the first quarter, from SEK 54.9 billion to SEK 53.7 billion.

H&M has previously announced a focus on profitability amid growing competition from Chinese fast-fashion retailers such as Zara owner Inditex and Shein.

Daniel Ervér, CEO of H&M Group, said: “The development in the first quarter continues to move in the right direction, with improved gross profit margin and operating profit, reduced inventory and strong cash flow.” Helena Helmerson.

According to Reuters, Elwell said in a conference call with analysts after the earnings announcement that strengthening sales is the company’s top priority and expects prices to be lower at the end of 2024 than at the beginning of the year.

Inventory fell by 7% year-on-year this quarter. The accumulation of excess unsold inventory has been a long-standing problem for the company, making inventory reduction a core focus.

H&M said on Wednesday its board would propose a dividend of 6.5 crowns per share and seek authorization to buy back B shares at its annual shareholder meeting in May.

Analysts at Jefferies said the quarterly results showed “mixed revenue delivery” but “significant gross margin growth” to 51.5%.

Jefferies’ report added that positive sales momentum in early spring/summer lends credibility to the company’s 10% operating margin target.

H&M’s stock price has been volatile in recent years, falling 37% in 2022 and rising 57% in 2023.