May 16, 2016
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Cold spring pushes H&M April sales below forecast

May 16, 2016

H&M, the world's second-biggest fashion retailer after Spain's Inditex, reported on Monday a smaller than expected sales rise in April, and said unusually cold weather in several key markets weighed on its business, sending its shares down.

The news comes amid concerns that sluggish sales at some peers indicate not just weather headwinds and sharp competition in the budget segment, but also slowing underlying demand in key markets.


H&M's sales rose 5 percent in local currencies from a year earlier, below a mean 9 percent expected by analysts polled by Reuters.

According to Textilwirtschaft industry data, overall apparel sales in H&M's biggest market Germany were up 2 percent in April.

Monthly fashion sales tend to be particularly volatile at this time of year, especially for young fashion retailers that rely on impulse purchases made mainly in stores, said Societe Generale analyst Anne Critchlow.

"Cold weather was no doubt the main problem and given the much warmer weather recently across Europe, together with some pent-up demand following a cold spring, we expect much stronger sales in May," she said.

Britain's Next this month lowered full-year sales guidance, warning weak performance could indicate softer underlying demand for clothing and a wider slowdown in consumer spending.

U.S. rival Gap last week reported a bigger-than-expected sales drop in the quarter ended April 30..

Germany's Zalando, Europe's biggest dedicated online fashion retailer, said on April 19 that sales had picked up after Easter following slower-than-expected first-quarter growth.

H&M earlier said March sales, which grew by an unusually low 2 percent, were affected by chilly spring weather in some markets and an early Easter.

The firm's shares fell 1.5 pct in early trade.


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