INTERNEWSTIMES.COM
The Swedish fashion giant H&M experienced a significant setback on Thursday, as its shares plummeted 7% following a disappointing third-quarter earnings report. The company missed analysts’ profit expectations and abandoned its earnings margin target for the year, signaling a more challenging environment for the world’s second-largest listed fashion retailer.
The company reported an operating profit of 3.51 billion Swedish crowns ($345.8 million) for the fiscal third quarter, falling short of analysts’ forecasts of 4.93 billion crowns. This represents a decline compared to the 4.74 billion crowns reported in the same period last year.
H&M attributed the disappointing results to “external factors” that have impacted both sales revenue and purchasing costs. The company had already warned earlier this year about the difficulties in achieving its earnings margin target, but the latest announcement indicates that the challenges are more significant than initially anticipated.
“External factors have impacted our sales revenue and purchasing costs more than we expected. At present we estimate that this year’s operating margin will be lower than 10 percent,” said Daniel Ervér, chief executive officer of H&M, in a written statement.
Despite the setback, Ervér expressed confidence in the company’s plan to increase sales and profitability. However, investors reacted negatively to the news, sending H&M shares tumbling 7% on Thursday. The Stockholm-listed firm was among the worst performers on the pan-European Stoxx 600 during morning trading.
The decline in H&M’s operating profit and the decision to abandon the margin target highlight the ongoing pressures facing the global fashion industry. Factors such as rising inflation, supply chain disruptions, and changing consumer preferences are likely contributing to the challenges.
H&M’s stock price drop reflects investor concerns about the company’s ability to navigate these challenges and achieve its growth targets. The company’s future performance will depend on its ability to adapt to the evolving market conditions and effectively manage its costs.
Analysts will be closely watching H&M’s future performance to see how the company addresses these challenges and whether it can regain investor confidence. The company’s ability to innovate, adapt to changing consumer trends, and manage costs effectively will be crucial in determining its future success. (Red)
