HENNES & Mauritz, the world's third-biggest clothing retailer, reported yesterday a bigger-than-expected 3 per cent drop in year-on-year sales at established stores in July.
The average forecast in a Reuters poll had been for a 1 per cent drop. Total sales at the Swedish budget fashion chain were up 7 per cent, undershooting a forecast 9 per cent rise.
Weak consumer sentiment during the global downturn has hit retailers ADVERTISEMENT hard, but there have recently been some signs of improvement, with a return to economic growth in the second quarter for France, Germany and Japan, the last of which H&M entered last year.
H&M and Spanish Inditex, Europe's biggest clothing retailer, which owns the Zara chain, have so far weathered the downturn better than mid-market rivals such as Britain's Marks & Spencer and Next, helped by a focus on low-cost, fast-moving fashions, and geographic spread.
"This sales data is slightly worse than expected, but no drama," said an analyst
"H&M is not as active as its competitors when it comes to markdowns, which is bad for like-for-like sales, but good for margins."
"The company has its stocks well under control and defends its margins," said another analyst.
In late June, H&M reported forecast-beating March-May profits.
But like-for-like sales in May, and also in June, fell more than expected.
Main rival Inditex, which in June reported a drop in first-quarter net profit that roughly matched expectations, is due to report fiscal second-quarter earnings on September 16.
H&M, which in June signed up luxury shoe-maker Jimmy Choo Ltd as the latest in a string of high-profile guest designers, has more than 1,800 shops in more than 30 countries, including 137 outlets in the UK.
The UK's flagship store is in Regent Street, London, with other major sites in Leeds, Glasgow and Manchester.
