Companies

H&M profits rise in the third quarter

Sep 28, 2023 Sweden

Despite the slowdown in sales during the third quarter, the Sweden-based fashion group saw its profits rise significantly in the period to 3.32 billion Swedish Krona (285.9 million euros)

“During the quarter the focus has been on profitability and inventory efficiency, resulting in strong cash flow and good profit development. We are taking further steps towards our goals and creating good conditions for profitable growth over time”, commented Helena Helmersson, CEO of H&M.

Third Quarter Results

In the three months to the 31^stof August, the fashion group's net sales amounted to 60.90 billion Swedish Krona (5.25 billion euros), increasing by 6% on a comparable basis to the same period of last year; in local currencies, “net sales were flattish” when compared with the previous year. “Sales in the third quarter started strongly with pent-up demand for summer garments following a cold May in most of our major markets. The effect then gradually decreased during the summer” explained Helmersson.

H&M's gross profit rose by 10% in the third quarter of the current fiscal year, totalling 31.02 billion Swedish Krona (2.69 billion euros), as compared to the same period of fiscal 2022; its gross margin widened accordingly to 50.9% from 49.0% in the third quarter of last year.

The company also posted a third quarter operating profit of 4.74 billion Swedish Krona (408.2 million euros), which corresponds to an operating margin of 7.8%, on a comparable basis to the 902 million Swedish Krona (77.7 million euros) registered on a similar period of the previous year. “The strong gross margin, the cost and efficiency programme, and good operational cost control all had a positive impact on operating profit”, reads H&M's report.

Then, in the quarter that ended in August, H&M saw its profits rise to 3.32 billion Swedish Krona (289.5 million euros) from 531 million Swedish Krona (45.7 million euros) in the third quarter of the prior year.

Nine Months Results

From December 2022 to August 2023, the group's net sales increased by 8%, reaching 173.39 billion Swedish Krona (14.9 billion euros), as compared to the same period of last fiscal year; in local currencies, net sales were flat when compared with the previous year.

In the first nine months of fiscal 2023, H&M's gross profit grew to 87.24 billion Swedish Krona (7.51 billion euros) from 82.27 billion Swedish Krona (7.09 billion euros) in a similar period of the prior fiscal year, which corresponds to a gross margin of 50.3%.

The company posted 7.15 billion Swedish Krona (615.8 million euros) in profits in these nine months, up from 4.28 billion Swedish Krona (368.6 million euros) in the same period of fiscal 2022.

Current Quarter

September's sales are expected to decline by 10% in local currencies, as compared to September 2022, with the discontinuation of operations in Russia accounting for 4 percentage points of the decrease. The Sweden-based group said this is due to the “unusually hot weather in several of the company's European markets, which has had a substantial negative impact on sales during the month”.

1 Swedish Krona = 0.086 euros

Image Credits: designscene.net

Sweden Companies Fashion H&M Quarter Results Results