Online business of H&M thrives

Online business of H&M thrives

30 June 2017

The Swedish clothing company presents positive results for the second quarter. However, it does face some challenges in major markets like the USA and China.

H&M announced this morning that due to a strong growth in Online business, turnover increased by 10 percent to 5.3 billion Euro from the beginning of March until the end of May. Further on, H&M also realized a profit of around 600 million, more than analysts anticipated. Investors also appreciate the new figures and H&M’s stock price went up by 2.5 percent.

According to H&M-CEO Karl-Johan Persson, the business does face challenges in important markets like USA, China, The Netherlands as well as Switzerland. Turnover increased only by 7 percent for these countries in the first quarter.

 

Growth potential and online business

At the beginning of 2017, the Swedish company intended to grow and increase its turnover by 10 to 15 percent annually. In the long run, it wants to focus on the online business. According to the company, online sales in some countries contribute up to 30 percent to the total sales.

 

Competition never sleeps

Despite the strong growth, however, figures for May were disappointing. Compared to previous year, turnover increased only by four percent . Analysts, on the other hand, anticipated at least 6 percent. The first part of the month was tough due to general market conditions, stated H&M.

Over the last couple of years, H&M has forfeited market share to its competitors Inditex (known for its brand Zara) and Primark. The reason for this could have been high depreciations because clothes of the winter-season did not sell. However, the business in Great Britain, Scandinavia and Eastern Europe thrives, mentioned H&M-CEO Persson.

Currently, the shares of Hennes & Mauritz AB are trading around SEK 210.20 (date: June 29th). Bloomberg analysts do assess a 12-month target price of SEK 226.13 (date: June 29th) . 12 analysts recommend BUY, 11 recommend HOLD and 12 recommend SELL. However, since the share’s performance depends on corporate-, industry- and economic-related conditions, investors should always consider the risk of their investments. Developments could turn out differently than expected by investors.

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04/12/2020 22:20:33