Wall Street Journal
STOCKHOLM -- Hennes & Mauritz AB on Monday reported worse-than-expected sales in October, fueling concerns the Swedish fashion retailer is losing market share in key markets, with turnover particularly hit in France, Spain and the U.S.
Sales in stores open for at least a year fell 3% in October, its sixth straight month of falling sales, confounding expectations for a 3% rise and triggering a selloff in the retailer's shares. The stock lost 4.7% to 415.40 Swedish kronor ($60.86) on a broadly flat Stockholm market.
H&M, which launched a limited line of Jimmy Choo-designed shoes and accessories on Saturday, is known for its low-priced, fashionable clothes, selling limited collections from established designers including Karl Lagerfeld, Stella McCartney and Matthew Williamson.
"We're incredibly satisfied with the [Jimmy Choo] campaign," said Nils Vinge, head of H&M investor relations. "There is enormous interest all over the world and most of the collection sold out in the opening days," he said, noting that the campaign helps attract customers to the stores and position the brand, while also boosting sales.
Total sales, which include sales in new stores, rose 7% in October, but missed forecasts for a 13% rise. The company, which reports only percentage changes for its monthly sales, said it had 1,925 stores at the end of October compared with 1,702 stores a year earlier.
H&M has recorded falling same-store sales in 14 of the last 15 months, but said the global recession was affecting its customers differently. "Sales in Scandinavia, Central Europe and Asia were very satisfactory, while most other markets, primarily France, Spain and the U.S., had a continued weak sales development," the retailer said.
H&M is the world's third-largest fashion chain by revenue, behind Gap Inc. in the U.S., which recently posted a 4% increase in same-store sales for October, and Spain's Inditex SA, so tough competition was expected in those respective markets.
"It's a big disappointment," Credit Suisse said in a note, adding that October was at least better than the 11% and 8% declines seen in August and September, respectively. "September and October are the core months for the outerwear season and as such the season has been lost so far as H&M is concerned."
H&M doesn't give sales data for individual markets on a monthly basis, but Evli Bank analyst Anders Wiklund said the October sales figures could imply H&M is losing market share in the U.S., given the monthly figures from Gap. "They haven't had problems with collections for a long time, but one begins to ask if that could be it," Mr. Wiklund said.
Sales in stores open for at least a year fell 3% in October, its sixth straight month of falling sales, confounding expectations for a 3% rise and triggering a selloff in the retailer's shares. The stock lost 4.7% to 415.40 Swedish kronor ($60.86) on a broadly flat Stockholm market.
H&M, which launched a limited line of Jimmy Choo-designed shoes and accessories on Saturday, is known for its low-priced, fashionable clothes, selling limited collections from established designers including Karl Lagerfeld, Stella McCartney and Matthew Williamson.
"We're incredibly satisfied with the [Jimmy Choo] campaign," said Nils Vinge, head of H&M investor relations. "There is enormous interest all over the world and most of the collection sold out in the opening days," he said, noting that the campaign helps attract customers to the stores and position the brand, while also boosting sales.
Total sales, which include sales in new stores, rose 7% in October, but missed forecasts for a 13% rise. The company, which reports only percentage changes for its monthly sales, said it had 1,925 stores at the end of October compared with 1,702 stores a year earlier.
H&M has recorded falling same-store sales in 14 of the last 15 months, but said the global recession was affecting its customers differently. "Sales in Scandinavia, Central Europe and Asia were very satisfactory, while most other markets, primarily France, Spain and the U.S., had a continued weak sales development," the retailer said.
H&M is the world's third-largest fashion chain by revenue, behind Gap Inc. in the U.S., which recently posted a 4% increase in same-store sales for October, and Spain's Inditex SA, so tough competition was expected in those respective markets.
"It's a big disappointment," Credit Suisse said in a note, adding that October was at least better than the 11% and 8% declines seen in August and September, respectively. "September and October are the core months for the outerwear season and as such the season has been lost so far as H&M is concerned."
H&M doesn't give sales data for individual markets on a monthly basis, but Evli Bank analyst Anders Wiklund said the October sales figures could imply H&M is losing market share in the U.S., given the monthly figures from Gap. "They haven't had problems with collections for a long time, but one begins to ask if that could be it," Mr. Wiklund said.
