By Anna Ringstrom
STOCKHOLM (Reuters) – Sweden’s H&M (ST:), the world’s second-biggest trend retailer, beat quarterly revenue forecasts because it recovered extra rapidly than anticipated from a coronavirus-induced hunch, in a optimistic signal for the business.
Revenue earlier than tax for June-August, the corporate’s third quarter, got here in round 2 billion Swedish crowns ($229 million).
That was properly beneath 5 billion crowns a 12 months earlier, however a lot greater than analysts’ imply forecast of 191 million crowns, in response to Refinitiv’s SmartEstimate mannequin, which is weighted in direction of more moderen estimates and higher-ranked analysts.
“H&M group’s restoration is best than anticipated,” the corporate stated in an announcement on Tuesday. “Extra full-price gross sales mixed with sturdy price management enabled the corporate to already flip to revenue within the third quarter.”
Gross sales fell 19% to 50.9 billion crowns, towards expectations for an 18% drop. In native currencies, the autumn was 16%.
“Excellent information and properly above consensus,” stated Societe Generale (OTC:) analyst Anne Critchlow of the third-quarter earnings.
She has a ‘maintain’ ranking on the shares, which had been up 11% in early commerce, decreasing their year-to-date decline to 16%.
Shortly after firm veteran Helena Helmersson changed the grandson of H&M’s founder as CEO in January, the pandemic slammed H&M, pushing it right into a deep loss within the March-Could quarter as gross sales halved.
The corporate, which can publish its full quarterly report on Oct. 1, has been reducing workers, opening fewer new shops than deliberate and completely closing others to chop prices.
“After its Q2 outcomes, administration warned that elevated markdowns would hamper its earnings by round 2-3%-points, however this now seems to have reversed to a slight optimistic impact,” analysts at Carnegie stated in a word.
Analysts have been warning it’s going to take time for trend retailers’ gross sales to get well to pre-pandemic ranges, and up to date indicators of second waves of COVID-19 infections in some nations have added to the uncertainty.
RBC analyst Richard Chamberlain, with a ‘sector carry out’ ranking on H&M, stated H&M’s revenue enchancment augured properly.
“We expect most of this may be sustained going ahead and count on consensus revenue earlier than tax upgrades for 2021-22 within the vary of 5-10% following right this moment. We additionally suppose this can be a optimistic learn for the attire sector on the whole, eg, (Primark proprietor) ABF (L:), Inditex and Subsequent ,” he stated.
H&M’s largest rival, Zara proprietor Inditex (MC:), will report Could-July outcomes on Wednesday. Britain’s Subsequent (L:) and John Lewis report on Thursday.
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