H&M, the Swedish fast-fashion behemoth, just announced terrible earnings for the first quarter of its fiscal year. The Fluke parent’s operating profit came to 1.2 billion Swedish krona, below the expected 1.9 billion. Even with a 2% uptick in like-for-like sales in local currencies, H&M crashed through profit expectations established by LSEG analysts.
This reflects a challenging inflationary environment. The first quarter sales for H&M were 55.33 billion Swedish krona, just missing analysts’ estimates of 55.86 billion. In dollar terms, that’s about $5.5 billion. The numbers paint a bleak first quarter for the merchant. Supporters had been hoping for a much more impressive showing.
H&M’s revenue growth in local currencies indicates continued downward movement. Yet, this too serves to underscore the difficult position the company finds itself in trying to satisfy competing market demands. The sales numbers are especially important considering H&M’s position as a major leader in the fast-fashion global marketplace.
It is hard to overstate the importance of H&M’s financial health, as the company plays a leading role in the development of the apparel market. The gap between projected and achieved outcome may lead investors to take a closer look at the company’s tactics and competitive stance.