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Reuters

The world's second-biggest fashion retailer, Hennes & Mauritz (H&M), on Monday reported a bigger rise than expected in May sales in local currencies.
Local-currency sales at the Swedish budget apparel firm, which has the bulk of its business in Europe, grew 10 per cent in the last month of its fiscal second quarter, beating a forecast 8 per cent in a Reuters poll of analysts.
H&M's single biggest market, Germany, saw overall apparel sales shrink 5 per cent in the month, according to data from German monthly Textilwirtschaft data. H&M did not provide a country to country breakdown.
H&M's second-quarter sales were 45.9 billion crowns (HK$43.4 billion), up 21 per cent from a year earlier, beating a forecast of 44.7 billion crowns.
The company said crown weakness against most of its sales currencies had a substantial positive effect on reported sales. The fast-expanding firm said that including value-added tax (VAT) sales were up 10 per cent in local currencies and up 20 per cent in crowns.
Alandsbanken analyst Lars Soderfjall said the figures were a good sign ahead of H&M's full quarterly report on June 25.
"New concepts and online trade probably contribute increasingly to organic growth," he said.
Biggest rival Inditex last week reported a higher-than-expected profit for its fiscal quarter through April, helped by recovering consumer confidence in Europe.
H&M, which unlike Inditex sources most of its products in Asia in US dollars, is expected to see higher sourcing costs in the quarter.
H&M' shares are up about 1 per cent this year, substantially underperforming Spain's Inditex. Its stock is trading at 23 times 12-month forward earnings, a discount to Inditex which trades at 23 times forward earnings.
H&M said calendar effects pulled down May sales by around 3 percentage points, and quarterly sales by around 2 percentage points.


H&M's local currency sales up 10pc in May, exceeding forecast

H&M sources most of its products in Asia in US dollars, and is expected to see higher costs in the quarter. Photo: K.Y. Cheng

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