Jun 15, 2011
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H&M sales lag consensus

Jun 15, 2011

June 15 - Swedish budget fashion giant Hennes & Mauritz said on Wednesday its sales rose 2 percent year-on-year in May at established stores in local currencies, well below market expectations.

Pedestrians outside a Manhattan H&M store (Photo: Corbis)

The mean forecast in a Reuters poll of analysts had been for a 5.4 percent increase.

The world No. 2 clothes retailer said turnover in the March-May period, its fiscal second quarter, totalled 27.6 billion crowns ($4.36 billion) excluding VAT, lagging a forecast of 28.4 billion crowns.

Total May sales which include stores opened in the past year, were up 12 percent in local currencies, missing a 14.3 percent rise seen by analysts.

Zara owner Inditex, the world no.1 clothing retailer, posted a 10 percent rise in its fiscal first-quarter net profit on Wednesday, as growth in emerging markets compensated for a slowdown in Europe, where H&M has the bulk of its turnover.

Inditex said store sales in local currencies rose 11 percent in the period February 1 through to June 12.

Rising costs are pressuring clothing manufacturers, some of which are trying to pass some of them on to consumers. H&M, conscious of its market share and low-price image, has resisted passing on costs to its customers.

H&M's like-for-like sales trend often roughly matches developments in its largest market, Germany. Clothing sales there grew 6 percent in May year-on-year, according to industry journal Textilwirtschaft.

But H&M's monthly sales figures can be volatile and its weaker-than-expected May sales followed an 11 percent like-for-like rise in April, the biggest rise in eight months.

(Reporting by Anna Ringstrom, editing by Elaine Hardcastle)

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