Swedish fashion retailer H&M shows “optimistic” signs ahead of its fourth quarter results on Friday, 27 January, according to Citigroup analysts, despite “muddled” market consensus.
Citi suggested H&M’s selling, general and administrative expenses “look optimistic” for the quarter, while forecasting a 6% jump in growth based on local currencies, compared to 5% predicted originally.
H&M did publish some results in December, highlighting full-year net sales grew by 12% to 223.5bn Swedish Krona - roughly £17.8bn - marking a 6% increase based on the local currencies of the 62 countries in which it operates.
Its fourth quarter sales had jumped too, growing 10% on 2021 to SEK 62.4bn, or just shy of £5bn.
H&M had been among retailers struggling with higher costs as inflation shot up last year, though, due to the war in Eastern Europe, which saw it pause sales in Russia, Belarus and Ukraine as a result.
Ahead of its full-year report, Citi said it was “cautious on H&M, looking for an entry point lower down,” with the retailer’s share price currently sitting at SEK 128.
Citi added it expected H&M “to lag our sales tracker’s aggregate expectations for its country markets”.
Commenting on its laying off of 1,500 staff in November, interactive investor analysts Victoria Scholar said H&M was “being forced to make tough decisions,” as it faced a “cocktail of pressures”.
These included “the demise of the high street, cost inflation, a weakening consumer and the economic slowdown,” she said, adding “there is also the bigger issue of the environment that is encouraging eco-conscious shoppers to shift away from buying cheap, fast fashion.”
H&M chief executive Helena Helmersson suggested growing sales in the first nine months of 2022 were: “Important proof that the H&M group is growing even when customers’ purchasing power is decreasing.”
During the same period, H&M closed 38 stores globally, while sales figures based on local currencies fell by 4%, a figure it blamed on the “one-time cost” of permanently closing its Russian stores.