Swedish high-street fashion giant H&M’s third-quarter financial results received a frosty reception from City analysts today.
Company revenue fell slightly in the nine-month period- to 172.29 billion Swedish krona (£12.7 billion) from 173.39 krona in the same period last year.
These results “were well below our… consensus expectations due to weaker top-line growth and especially negative FX movements and one-off charge,” said Barclays PLC (LSE:BARC) analysts.
H&M may have benefitted from currency tailwinds from UK sales given the recent strength in the pound, but given the lack of stand-alone UK sales data, any benefit was likely negligible.
EBIT margins were particularly concerning for Barclays, with the 5.9% results falling 22% below the bank’s expectations.
“The 10% EBIT margin target for this year now looks impossible to achieve,” said the bank, though “we welcome H&M's decision to focus on top-line growth”.
H&M sought to offset these poor results by providing an additional monthly trading update specifically for September.
Sales will be up 11% compared to last September, said H&M, guided by upgrades to existing stores, new digital offerings and the launch of its autumn collection.
But even this drew a shrug from analysts, with Deutsche Bank saying the September guidance fell below the bank’s 12% September target.
Deutsche analysts said: “Overall, in our view, the debate will be on what is actually underlying and whether the 11% current trading is weather/easy comp or some actual improvement.
“The real question though is how much is due to the success of the new ranges - it is likely too early to tell but it is the most important part of the H&M investment case at this point.”