H&M sales miss as retailer struggles to compete with Zara

STOCKHOLM (Reuters) -H&M on Thursday reported lower-than-expected quarterly sales as shoppers tighten their belts with energy and food bills soaring and the world’s second-biggest fashion retailer struggles to compete with rival Zara.

Third-quarter net sales at the Swedish group were up 3% from a year earlier at 57.5 billion crowns ($5.36 billion). Analysts polled by Refinitiv had on average forecast a 5% rise for the June-August quarter.

Measured in local currencies, sales were down 4%.

“The third quarter got off to a weak start, in common with the industry in many of the group’s major markets,” H&M, which does the bulk of its business in Europe, said in a statement.

“Sales improved sequentially during the quarter, with a better start for the autumn collections than last year.”

The performance substantially underperformed market leader Inditex (BME:), the owner of Zara, which this week posted sales growth in constant currency terms of 16% for its May-July quarter. The Spanish group’s growth pace however slowed to 11% in the Aug.1-Sept. 11 period.

Inditex on Wednesday flagged further price hikes this autumn to offset soaring costs, despite worries demand would wane due to the cost of living crisis.

H&M is due to publish its full third-quarter earnings report on Sept. 29.

($1 = 10.7226 Swedish crowns)

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