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H&M shares surge after a strong third quarter earnings report

posted onSeptember 18, 2018

H&M Hennes & Mauritz AB shares surged to the top of the European benchmark on Monday Sept.18, after the world's second-largest retailer reported better-than expected earnings over the third quarter.

The Sweden-based company has seen profits shrink and inventories pile up over the past couple of years and its shares have lost nearly two thirds of their value since record highs in 2015 according to Reutres.

But its sales bounced back in the third quarter, helped by a new logistics system, which enabled a faster and more efficient supply chain as well as a continued integration of store and online.

Sales including VAT in the period from 1 June 2018 – 31 August 2018, amounted to 64,800 m Swedish crowns (59,383), an increase of 9 percent compared to the corresponding quarter the previous year. Sales excluding VAT amounted to 55 billion Swedish crowns ($6.2 billion). In local currencies sales including VAT increased by 4 percent. 

The growth of third quarter sales boosted the stock which jumped 16.63 percent in Stockholm on Monday.

Market watchers said the stock was also buoyed by a report in Britain’s Mail on Sunday newspaper which said that H&M chairman and main owner Stefan Persson had talked to banks about “a massive debt financing package for further share purchases and a mega deal to take the firm private”.  

The H&M group will report full fiscal third-quarter figures on Sept. 27.

What started in 1947 with one single store for women’s clothing, Hennes in Västerås, Sweden, is now an international fashion and design group with over 4800 stores for customers locally in 69 markets and strong digital presence through nine clearly defined brands: H&M, COS, Monki, Weekday, & Other Stories, Cheap Monday, H&M Home, ARKET and Afound.

It is the world’s second biggest fashion retailer, just behind Spain-based Inditex (parent company of Zara). Inditex last week reported 3 percent sales growth for the six months to the end of July, and forecast second-half like-for-like sales growth of 4-6 percent as well as improved profitability. 

H&M was listed on the Stockholm Stock Exchange in 1974.

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