Swedish retailer H&M saw its shares slide Thursday morning after reporting a 10% increase in quarterly sales but failed to meet analysts’ expectations.
The company’s net sales between the months of September and November reached $6.1 billion, up from $5.8 billion a year ago.
“This is a slightly disappointing update in the context of expectations which had drifted higher in recent weeks amid somewhat better market data from Germany and Sweden,” said J.P. Morgan analysts.
The company’s performance was impacted by its pullout from the Belarusian and Russian markets and Covid-related store closures in China.
“The H&M group’s operations in Russia and Belarus were wound up during the quarter, with the remaining stock being sold off and the last stores having closed on November 30,” the company said.
The company plans to reveal its full results on January 27, according to Jefferies analyst James Grzinic.
“We won’t know until late January the full extent to which pressured gross margins and accelerating OPEX (operating spending) inflation conspired to hit earnings delivery,” Grzinic said.
While H&M is continuing to struggle, Zara’s parent company Inditex reported a 19% increase in net profit for the nine-month period leading to October. That being said, Inditex saw an 11% decline in sales in its last quarter due to weak consumer demand.