H&M's Q2 misses forecast, June sales decline

People walk past a branch of fashion retailer H&M in Copenhagen, Denmark, March 26, 2024. REUTERS/Tom Little/ File Photo

STOCKHOLM (Reuters) -H&M, the world's second-biggest listed fashion retailer, reported on Thursday a smaller-than-expected rise in March-May operating profit and said June sales were expected to fall, making its full-year earnings goal harder to achieve.

Operating profit in March through May, the Swedish group's second quarter, was 7.1 billion Swedish crowns ($672.5 million) against a year-earlier 4.74 billion and a mean forecast in an LSEG poll of analyst of 7.37 billion.

Sales for the month of June 2024 are expected to decrease by 6% in local currencies compared with the same period last year, partly due to unstable weather in many of the group's large markets, H&M said.

Chief Executive Daniel Erver said the group still believed in its 10% operating margin goal for 2024 but that this had become more difficult to reach.

"External factors that influence our purchasing costs and sales revenues, including materials and foreign currency, will have a more negative impact than we expected in the second half of the year," he said.

"The most important prerequisite for achieving our goal is that sales growth is further strengthened in the second half of the year compared with the second quarter increase," he added.

The retailer has often fallen short of rival and Zara owner Inditex, while China-founded fast-fashion group Shein is also expanding rapidly in Europe and plans a London stock market listing.

($1 = 10.5564 Swedish crowns)

(Reporting by Marie Mannes, editing by Terje Solsvik)