H&M misses expectations for holiday sales growth

Dive Brief:

Swedish fast-fashion retailer H&M on Monday reported December sales in local currencies rose 6% compared to last year. Converted into Swedish kroner, sales rose 10% for the month, according to a press release. The result missed expectations of 8% sales growth from analysts polled by Reuters.
Sales in October and November grew 10% and 9% year-over-year, the company said. RBC retail analyst Richard Chamberlain said the report suggests a same-store sales decline of 3%, according to City A.M.
In September, the company had warned that disappointing Q3 sales would likely continue into the holiday quarter as it expected to cut prices over the holidays. Shares fell 3.5% on Monday’s news, according to Reuters.

Dive Insight:

Unlike rival Inditex SA, parent of Zara and the innovator of speedily bringing small batches of fashion knock-offs to market, H&M has been faltering of late and may be feeling the effects of its own store and digital expansion efforts.

In its report, the company said its total number of stores on Dec. 31 was 4,379, compared to 3,957 on the same day in 2015. But for months, CEO Karl-Johan Persson has dismissed the notion that the retailer’s tepid sales would slow its expansion plans, and blamed some of its troubles on weather. As seen again in Monday's report, the strong dollar has also taken a bite out of H&M's performance.

H&M’s move to pull plus-size options in stores, a trend first spotted in New York last year, could also be leaving money on the table while it chases categories, including cosmetics and activewear, that signal departures from its fast-fashion focus.

RBC analyst Chamberlain noted the impact of discounting in his remarks, according to City A.M.: "We think this reflects challenging industry conditions, but also a very weak first half of the month as Black Friday pulled forward more demand than we expected, at a likely lower margin. We think sales have returned to a more normalized pattern later in the month and so far in January."

On Monday, CEO Persson released the monthly sales report without comment. The company said it will release its full-year report on Jan. 31 and January sales on Feb. 15.