Apparel Retailer H&M'S Two Quarter Earnings Fell Sharply Last Year.

H&M stores

The second largest in the world

Retailer

Hennes & Mauritz AB (HMb.ST) Hayne Maurice's two quarter earnings rebelled sharply in the year to year. The company blamed it on the unusual cold and rainy weather in Europe in 3 and April, resulting in lower sales growth than expected, forced to increase the discount rate, and a strong dollar, resulting in continuous high procurement costs.

However, the group's stock price rose by 2.4% to 256.5 Swedish Crown in early.

In the two quarter of May 31st, pre tax profits of H&M Hennes & Mauritz AB AB fell by 17% to 7 billion 2 million kronor, or 850 million US dollars, less than the 7 billion 230 million Krona of market expectations, but the decline has narrowed considerably compared with 29.6% in the first quarter.

The profit after tax 5 billion 357 million kronor is also 17% lower than that of the same period last year, which is worse than the market forecast of 5 billion 460 million kronor, while the group's largest rival, Zara Inditex's parent company SA ITX.MC (Indo group) can still achieve 8% operating profit growth in the latest quarter.

In the two quarter, gross margin of H&M Hennes & Mauritz AB shrank by 180 basis points to 57.6%, only slightly ahead of 57.5% of the market forecast.

H&M Hennes & Mauritz AB CEO Persson Persson said in the earnings report that many markets in the first half of the year

The retail industry is extremely challenging. The group has to enter the three quarter with higher than expected inventory level, and the negative impact of rising costs and purchasing currency formation still exists.

He expects the three quarter earnings will continue to be hit by these factors, but if the US dollar keeps its current level, the impact of the fourth quarter on purchasing costs will be weakened.

Soci e t e G e n e rale SA (SOGN.PA) rale analyst, Anne Critcholow, said that higher inventory means that the group will further reduce its sales price, and the gross profit margin will continue to suffer in the three quarter.

Sanford C. Bernstein analyst Jamie Merriman said that the two quarter's performance showed no signs of improvement in the short term.

In the two quarter, H&M Hennes & Mauritz AB group sold a total of SEK 54 billion 341 million, up 2.1% compared with the same period last year, or 5% at local exchange rate, but still hit the lowest income growth rate in the past three years.

Excluding VAT value added tax, sales increased from 45 billion 867 million Swedish Swedish kronor to 46 billion 874 million Swedish kronor, or 5 billion 600 million US dollars in the same period last year, as well as 47 billion 700 million Swedish krona, which was expected by the market.

In addition to Europe's weather problems, the group's growth in the second and fifth largest markets in the United States and China has also slowed down significantly. According to the local exchange rate, the US growth rate has dropped from 11% in the first quarter to 7%, and China has decreased from 6% to 3%.

The H&M Hennes & Mauritz AB group said that the overall sales in the first three weeks of June increased by 7% over the local exchange rate, narrowing than the 9% increase in May. The market also expressed disappointment at the data.

The nditex SA India India Textile Group disclosed last week that sales growth of 15% in the first half of the two quarter of May 1st -6 13.

As of the end of May, H&M Hennes & Mauritz AB AB has 4077 stores in 62 countries and regions worldwide, a net increase of 438 over the same period last year.

Of the 153 new stores added in the first half of the fiscal year, 32 were in China and 18 in the United States.

The group maintained the goal of net new 425 stores in the current fiscal year.

In e-commerce, after the successful landing of five eastern European countries, Luxemburg, Ireland, Japan and Greece in the two quarter, the group will also enter Canada and South Korea in the autumn, and the group's e-commerce coverage will increase to 34 markets by the end of the year.

H&M Hennes & Mauritz AB (HMb.ST), when it opened more than 2% on Wednesday, fell rapidly to 0.88% Krona at the end of the deadline, down 0.88%.

As of Tuesday, 21, the stock closed down 17.05% in 2016, a 24.11% decline in the past 52 weeks, while Inditex SA (ITX.MC) fell only 4.42% and 1.09% in these two periods.