H&M tops market expectations with strong fourth quarter sales

Fashion retailer H&M (STO:HM-B) topped market expectations on Tuesday for the first time in five quarters, revealing full year profits of £1.7 billion.

Sales were lower than expected over the full year, but were given a 7 percent boost in the final quarter. In a statement, H&M said fourth-quarter pretax earnings rose to 7.41 billion kronor, exceeding the 7.04 billion-kronor average estimate.

The earnings were released after a strong January, with the chain seeing a 6.2 percent increase in sales in Stockholm. The strong results defy the general high street trend for the final quarter of the year, with many stores being held back by unseasonable weather and currency changes.

Karl-Johan Persson, H&M’s CEO, commented: “2016 was an eventful year which included many positive things but also challenges for us as well as for the industry. During the year, we opened 427 new stores net worldwide and added three new markets, and we also rolled out our online store to 11 additional markets.

“Our sales increased by 7 percent in local currencies to SEK 223 billion – our highest annual turnover to date – although sales performance was lower than planned, which led to increased mark-downs. This, combined with the fact that the strong US dollar made our purchases more expensive, had a negative impact on our profit development for the full year. However, profits improved in the fourth quarter.

“From an already high level we took further market share, which clearly proves that our investments in our online business have been successful. Our brands COS, & Other Stories, Monki, Weekday and H&M Home had apart from strong online sales growth also very good store sales.”

Shares in H&M (STO:HM-B) are currently trading up 5.66 percent at 250.10 (1536GMT).