Consultants say that H&M has hit a sweet spot in China, which has quickly grown into the clothing company’s fifth largest market-behind Germany, the USA, the United Kingdom, and France-because Chinese rivals have yet to master the fast-rolling design to production to retail cycle.
It already revealed earlier this month that trading in August was hurt across Europe by unseasonally warm weather in some of its core markets, which saw it post its weakest group-wide sales rise in nearly two years.
The world’s second-biggest fashion retailer said sales from September 1st to September 22nd rose 12 per cent in local currencies, up from a rise of just 1 per cent in August.
Last week, Zara’s owner Inditex reported a brisk start to the autumn season, with sales in local currencies in the six weeks to September 10 up 16 per cent.
H&M may still be growing sales, but it seems it’s not enough for investors, with the fashion group’s share price dropping 2.3 per cent at pixel time.
She said the shares are likely to perform in line with the market as they underperformed last month.
Chief executive Karl-Johan Persson, said: “Profits have developed well during the first nine months of the year, although profits in the third quarter were negatively affected by increased purchasing costs due to the strong U.S. dollar”.
The retailer, which operates 3,675 stores in 46 countries, said this left group profits for the third quarter flat at 6,936 Swedish kronor (£540 million) compared to a year ago. H&M sources most of its clothes in Asia, where it pays in dollars. A flagship Cos. store is soon to open in the heart of Beijing’s top shopping district, selling pants and blouses for about $100.
The company says it plans to open some 400 new stores by year-end and that the H&M Beauty section launched successfully in July, expanding to some 700 stores in 28 markets.