Swedish fashion group H&M said sales of its summer collections had started well and it would slow the rate of store openings as it invests more online, boosting its shares by 10 percent. The world's second-biggest fashion retailer after Zara owner Inditex said on Thursday sales growth accelerated to 12% in local currencies in June, the first month of its fiscal third quarter, from 5% in the second quarter.
That beat analysts' expectations as well as the 10% rise Inditex reported for the six weeks from the start of May. Chief Executive Karl-Johan Persson told Reuters the arrival of warmer weather in Europe had helped. Northern European markets, where unusually cold weather dampened demand for summer ranges in the second quarter, did particularly well in June as temperatures climbed, he said.
Better collections from the core H&M brand and purchasing improvements that allowed the company to respond more quickly to demand also helped in June, he added. "It's partly due to external factors, but we also do things better than we did a year ago. Underlying levels are sounder," Persson said.
H&M also said it was cutting the net number of new stores it plans to open in 2019 to around 130 from 175, as it invests more in digital features across the business.
Persson said openings were shelved mainly in Europe, but also in the United States and China. More store closures will contribute to the new net total as well. Executives at a news conference stood by H&M's capital spending forecast for the year as a whole, reassuring analysts who had feared more pressure on margins from higher investments, after the firm said recently it had intensified its work to adapt to a rapidly changing retail landscape. H&M reported a pretax profit for the three months to the end of May, its fiscal second quarter, of 5.9 billion crowns ($640 million), down from 6.0 billion a year earlier, slightly shy of analyst expectations.
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