Expanding Online Presence in China Amid Challenges

  • H&M lowers profit target for the full year
  • Flat net sales of SEK59bn (£4.35bn) in Q3
  • Operating profit dropped 26% to SEK3.5bn (£260m)
  • Profit after tax at SEK2.3bn (£170m)
  • Gross profit at SEK30.1bn (£2.22bn) with a 51.1% gross margin
  • Sales in September expected to increase by 11% YoY in local currencies
  • First H&M Beauty flagship store opened in Sweden
  • First H&M store in Brazil set to open in Sao Paulo by end of 2025
  • Opening digital stores on Douyin and Pinduoduo, China’s biggest e-commerce platforms

H&M has announced that it will not meet its forecasted 10% profit margin for the full year due to flat net sales of SEK59bn (£4.35bn) during Q3, which ended on August 31, 2024. The operating profit dropped by 26% to SEK3.5bn (£260m), significantly lower than the average analysts’ expectations of SEK4.9bn (£360m). Profit after tax amounted to SEK2.3bn (£170m) and gross profit reached SEK30.1bn (£2.22bn) with a 51.1% gross margin. Despite the challenges, sales in September are expected to increase by 11% YoY in local currencies. The company has opened its first H&M Beauty flagship store in Sweden and plans to open its first store in Sao Paulo, Brazil by the end of 2025. Additionally, it will be launching digital stores on Douyin and Pinduoduo, two of China’s largest e-commerce platforms. CEO Daniel Ervér stated, ‘Despite a challenging start, we are concluding the third quarter with sales on par with last year in local currencies and with good cost control. We are strengthening the H&M brand by investing in products, shopping experience, and marketing, which is already showing positive impact and will contribute to increased sales and profitability.’

Factuality Level: 8
Factuality Justification: The article provides accurate information about H&M’s financial performance, including net sales, operating profit, gross margin, and future plans for store openings and digital expansion in China. The CEO’s statement also adds context to the company’s current situation and future strategies.
Noise Level: 3
Noise Justification: The article provides relevant information about H&M’s financial performance and future plans, but lacks in-depth analysis or exploration of the reasons behind the results and potential long-term consequences.
Financial Relevance: Yes
Financial Markets Impacted: H&M’s stock price and other fashion retailers
Financial Rating Justification: The article discusses H&M’s financial performance, including its profit margin, net sales, and operating profit, which directly impacts the company’s stock price and can also affect the performance of other fashion retailers in the market.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.

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