Despite flat Q4 sales, the Swedish fast-fashion brand’s H&M shares rose on Friday as the company announced 4% sales growth in 2023.
Despite the 4% yearly growth, which came around as the side effects of the pandemic ending, H&M’s net sales for the period from September 1, 2023, to November 30, 2023, remained unchanged compared to the same quarter last year.
“H&M will be hoping for a last-minute rush of shoppers buying clothes for Christmas given how its fourth quarter period to the end of November was disappointing,” said AJ Bell Investment Director Russ Mould.
Excluding Russia and Belarus, there was a 3% increase in SEK (Swedish Krona) currency and a 1% decrease in all local currencies.
Overall, H&M Group’s net sales declined by 4% in local currencies compared to the corresponding quarter last year.
“Like a lot of fashion retailers, H&M has suffered from having too much stock, which it needs to offload. The only way to do that quickly and efficiently is to sell these items at a discount. That’s bad for group profit margins,” Mould added.
Furthermore, the problem did not affect H&M alone.
“Inditex has seen a slowdown in growth, and ASOS and Boohoo are also finding life a lot harder,” said Russ Mould. “Consumers are being more cautious with spending on fast fashion, and there is also fierce competition from the likes of Shein,” he added.
