The Global fashion retailer H&M (Hennes & Mauritz) has announced a significant boost in profits for the fiscal quarter ending March 2024, defying industry expectations amidst continued economic uncertainty and supply chain disruptions.
Despite facing headwinds from its rival brands such as Zara and Shein, H&M emerges victorious in the first quarter of this financial year, scrapping all expectations as the firm amasses a strong first-quarter operating profit. “The Swedish group has struggled to maintain its position in the fast-fashion sector as bigger rival Zara ITX.MC extended its dominance and China-founded online retailer Shein, which sells $8 dresses, $5 t-shirts and $2 jewelry, grew rapidly” Reuters in its recent article reported.
H&M’s first fiscal quarter reports 2024
As per the official reports released by the Sweden-based fashion firm, the group’s net sales amounted to Swedish Kronor (SEK) 53,699 million defying the IBES estimation of SEK 53,236 million. Gross profit increased by 7 percent to SEK 27,655 million corresponding to a gross margin of 51.5 percent. Operating profit amounted to SEK 2,077 million, corresponding to an operating margin of 3.9 percent. This data revealed by the company surpasses the prediction of 1.43 billion kronor in a poll of analysts by LSEG, erstwhile known as Refinitiv. As clearly mentioned in the report the H&M group’s sales in the period 1 – 25 March 2024 increased by 2 percent in local currencies compared with the same period the previous year.
In addition to this, the fashion firm’s shares escalated to 12 per cent in early trade after it posted a stronger than expected Operating profit on Wednesday. Among other things, the report shows a 22 percent reduction in greenhouse gas emissions in 2023.
Here’s what the CEO of H&M says
Daniel Ervér, the CEO of Swedish clothing brand comments that they are elated to have a fantastic position with billions of visits a year to their physical and digital stores. Having more than 200 million customers in our loyalty programme, in a global market that external market analysts expect to grow by more than 5 percent a year up to 2028, the newly appointed CEO expresses her gratitude to be entrusted with leading the H&M group.
Sharing some insight on the recent profit of the company, Ervér says, “In the first quarter we continued to take steps in the right direction, with a gross margin of 51.5 percent, a substantial improvement in operating profit to SEK 2.1 billion, inventory down by 7 percent and continued strong cash flow. Through continued cost control, better precision in our collections and close cooperation with our suppliers, we now stand better equipped.”
H&M’s Plan for this business year
As per the statement of Erver “Development continued in the right direction in the first quarter with an improved gross margin and operating profit, lower inventory and strong cash flow. Our top priority is to continue improving the customer offering, the store experience and the supply chain in order to increase sales.”, the brand plans to open around 100 new stores and close around 160 stores, making a net decrease of around 60 stores. Most of the openings will be in growth markets, while the closures will mainly be in established markets.
