H&M Low Sales Expectations Due To Weak Business Performance

According to the world clothing shoes and hats net, Sweden

Giant Hennes & Mauritz AB (

The sales figures for the fourth quarter of 2017 (September 1, 2017 to November 30th) were released on Friday.

Sales (including VAT) decreased by 4% to SEK 58 billion 450 million compared with the same period last year, and sales of SEK 50 billion 390 million excluding VAT.

In local currency terms, sales fell by 2% over the same period last year.

H&M said sales in the fourth quarter were far below the group's expectations, mainly due to weak business performance.

Due to the decrease of physical shop customers, H&M stores have also been greatly affected.

After the announcement, H&M's share price fell 15% on Friday afternoon, the biggest decline in 8 years.

Raymond James analyst Cedric Lecasble said H&M's fourth quarter sales figures "may be the worst quarterly sales in the company's history".

He predicted that the fourth quarter sales will rise by 3% over the same period, which is already 5% below the average.

H&M's competitors,

The parent company Inditex has just released its sales data in the first 9 months of the fiscal year, with sales up 6% year-on-year.

The analyst's evaluation of Inditex is better than that of H&M, and the Inditex provider's performance is excellent.

Accelerate online and offline integration

In November, Barclays Bank (Barclays) lowered its H&M stock rating to "reduction", and pointed out that the growth of H&M was mainly due to the opening of new stores.

RCC Capital Markets pointed out in a memorandum earlier this month that online offline integration is "challenging" for H&M.

On Friday, H&M announced its strategic cooperation with China's e-commerce giant Alibaba. Its core clothing brand H&M and its home brand H&M Home will enter Tmall in the spring of 2018.

At present, H&M's brand Monki has already opened shop in Tmall.

H&M opened its first store in China 10 years ago, and now its sales in the Chinese market are about $1 billion 300 million.

H&M said it would accelerate online sales to cater to consumers' changing preferences.

"This includes continuing to integrate offline stores and online sales channels, optimizing H&M brand store portfolio - closing more stores and reducing new stores," H&M said in a statement.

H&M also said its other brands, including Cheap Monday, COS, Other Stories, Weekday and Arket, will also enter Tmall one after another, and H&M has entered into in-depth negotiations with Alibaba on related issues.

Alibaba President Michael Evans said H&M matched perfectly with Tmall.

H&M chief executive Karl-Johan Persson said Tmall is an important complement to the existing store mix and online channels for the group.

RBC Europe analyst Richard Chamberlain believes that Tmall will vigorously expand its brand share in China by entering H&M.

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