H&M’s Cost-Cutting Measures Payoff, Shares Jump 17 Percent — Retail Bum

H&M saw its shares jump 17% after the company’s Q2 profit margins beat analysts’ estimates, driven by results of previous cost-cutting measures and the performance of its summer collection.

The company reported an operating profit margin of $438.6 million, higher than the $34.5 million analysts were expecting.

H&M also benefitted from increased sales across different markets even as it saw a decline in consumer spending and suffered from unfavorable weather impacting its business, H&M CEO Helena Helmersson said.

Sales between June 1 and June 27 were up 10% compared to the year before, marking a solid start for the third quarter. Demand was particularly high for the brand’s womenswear collection as well as its Cos and Arket brands, she added.

“With a robust financial position, stable cash flow and a well-balanced inventory, the H&M group stands strong. Our long-term goals remain in place,” Helmersson said. “Already next year the operating margin is to reach 10 percent.”

One of the other key factors that helped the Swedish retailer saw a decline in its inventory levels, which were at 16.7% of rolling 12-month sales as of May 31, down from 19.2% a year before, according to CNBC.

“I was really surprised to see that, without any higher promotional activity — because markdowns were in line with last year — H&M decreased its inventory position,” said Cedric Rossi, next-gen consumer analyst at Bryan Garnier in Paris.

Originally published at https://retailbum.com on June 30, 2023.