STOCKHOLM (Reuters) -H&M on Thursday reported lower-than-expected quarterly sales as shoppers tighten their belts with energy and food bills soaring and the world’s second-biggest fashion retailer struggles to compete with rival Zara.
Third-quarter net sales at the Swedish group were up 3% from a year earlier at 57.5 billion crowns ($5.36 billion). Analysts polled by Refinitiv had on average forecast a 5% rise for the June-August quarter.
Measured in local currencies, sales were down 4%.
“The third quarter got off to a weak start, in common with the industry in many of the group’s major markets,” H&M, which does the bulk of its business in Europe, said in a statement.
“Sales improved sequentially during the quarter, with a better start for the autumn collections than last year.”
The performance substantially underperformed market leader Inditex (BME:), the owner of Zara, which this week posted sales growth in constant currency terms of 16% for its May-July quarter. The Spanish group’s growth pace however slowed to 11% in the Aug.1-Sept. 11 period.
Inditex on Wednesday flagged further price hikes this autumn to offset soaring costs, despite worries demand would wane due to the cost of living crisis.
H&M is due to publish its full third-quarter earnings report on Sept. 29.
($1 = 10.7226 Swedish crowns)