H&M Faces Challenging September Sales Due to Unseasonably Warm Weather — Retail Bum
H&M reported a rise in profits for the third quarter but noted that the unseasonably warm September 2023 weather in key markets had a detrimental effect on recent sales.
“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 retailer said in a press release. “The effect then gradually decreased during the summer. There was a weaker end to the quarter, with comparative figures affected by the temporary reopening in Russia in August last year. Having now moved into September, we can see that the start of the autumn season has been delayed because the month so far has been marked by unusually hot weather in many of our European markets.”
During the company’s earnings call, the fast fashion retailer also noted that it has been working toward offering the best prices and value as household living costs have significantly increased due to high inflation. In pursuit of this goal, the company is investing in technologies such as artificial intelligence (AI) and the supply chain. These investments have been vital in achieving flexibility, accelerated response times, and boosting precision in the procurement process. This, in turn, has given customers access to a broader and more relevant assortment.
Thanks to these investments, the company now anticipates fewer closures, and in fact, it has intentions to launch new stores.
According to the company, stores have been vital to building the H&M brand, and investments in this area are being increased to enhance the customer experience further.
Earlier this month, H&M extended its footprint by achieving a successful launch on JD.com, a major e-commerce platform in China. The company is also seeing encouraging growth in Latin America and is gearing up to introduce H&M products to the Brazilian market, where it expects to launch online and physically in 2025.
In Q3, H&M reported a 6% increase in net sales, reaching SEK 60.897 million. Sales for portfolio brands surged by 16% in SEK and 10% in local currencies. Gross profit rose by 10% to SEK 31.015 million, with a gross margin of 50.9%.
However, sales in September 2023 are expected to drop by 10% in local currencies, partly due to discontinued operations in Russia and unseasonably warm weather affecting several European markets.
Originally published at https://retailbum.com on September 27, 2023.