Sep 15, 2014
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H&M tops forecast with 19 pct rise in August sales

Sep 15, 2014

STOCKHOLM, Sweden - Hennes & Mauritz's sales climbed nearly 20 percent in August, beating forecasts and extending what has been a strong run for the world's second-biggest fashion retailer this summer.

The Swedish company has benefited from a recovering U.S. economy, stronger online sales and a broader product offering which includes new brands such as & Other Stories and sales of items such as homeware.

Hennes & Mauritz (H&M), which lags Zara-owner Inditex by annual sales, said on Monday its sales rose 19 percent year-on-year in August, well above the 13 percent increase expected in a Reuters poll of analysts.

August is the final month of the company's fiscal third quarter. It will unveil detailed earnings for the period on Sept. 25.

Last month, H&M took on Inditex in its home market with its first Spanish online store. H&M has been slower to launch online compared with rivals but has recently invested heavily in its web business and plans sites in eight to 10 markets in 2015.

The company posted net sales of 38.8 billion Swedish crowns ($5.4 billion) excluding sales tax for June through August, beating a forecast of 37.8 billion and compared with 32.0 billion in the same period last year.

Warm weather in northern Europe has lifted retail sales this summer.

Last week, Next, Britain's second-biggest clothing retailer by value of sales, reported a near 20 percent rise in first-half profit, with growth at both its stores and home shopping business.

Clothing sales in Sweden rose almost 5 percent in August from the same month last year, data from the Swedish Trade Federation's Stilindex showed.

On the other side of the Atlantic, a recovery in the United States has also boosted sales for some retailers.

Apparel retailer Gap Inc raised its full-year profit forecast in August.

Still, analysts have been cautious about the outlook for the second half of the year, saying profit margins could come under pressure due to competition and rising wages in Asia, where H&M produces the majority of its garments.

Inditex will see its net profit fall 4.4 percent in the first half of 2014 from a year earlier due to negative currency effects, a poll of analysts has shown. It is due to release earnings on Wednesday.

1 US dollar = 7.1474 Swedish crown

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