H&M upbeat on June after chilly weather hits quarterly sales

H&M reported weaker than expected second quarter sales on Thursday as chilly weather held back demand in key markets, although the Swedish clothes group said June had started well and its shares rose by 3% in early trading.

Analysts polled by Reuters had on average forecast a year-on-year rise of 1% after H&M flagged in late March that cold weather was dampening demand for spring and summer styles.

“Sales in the second quarter were affected by unfavourable weather conditions compared to the corresponding period last year on several of the H&M group’s large markets” H&M said.

Jefferies said in a note to clients that the update was a little less downbeat than feared, but it was still a clear lag compared to competitors, with cold weather in northern Europe a drag as well as H&M’s large U.S. presence.

Zara owner Inditex (BME:ITX), whose largest market is warmer Spain, has a smaller share of sales in northern Europe and the U.S. and is also less affected by weather swings.

H&M said sales in June, the first month of its third quarter, had got off to a good start and Richard Chamberlain at Royal Bank of Canada said this period will be helped by warmer weather and a positive calendar impact.

Net sales at the world’s second-biggest fashion retailer after were up 6% to 57.6 billion crowns ($5.36 billion) against a forecast 7% rise.

H&M launched a savings drive in 2022 after a spike in costs which it has only partly been passing on to cash-strapped customers, and its sales growth has been lagging that of Inditex as well as online rivals such as the fast-expanding Shein.

Inditex, which has coped better than H&M in sluggish markets, last week said net sales in its quarter through April were up 13% and, in May, up 16%.

H&M’s unchanged local currency turnover is a slowdown from the previous quarter, as well as from 2022.

H&M, whose single-biggest market is Germany, is due to publish its full quarterly earnings report on June 29.