H&M shares plunge amid profit doubts

H&M shares plummeted almost 14% on Thursday morning. Investors were put off after the fashion giant missed earnings forecasts and predicted a fall in sales for June. H&M said sales this month are likely to drop 6% against a year earlier, partly due to poor weather in many markets. The update cast doubt on whether the Swedish firm can meet its 10% full year profit margin target. CEO Daniel Erve said the group still believed it could hit that number, but warned the target was now harder to reach. He pointed at factors that influence purchasing expenses and sales revenues, including material costs and exchange rates. Avett warned such factors will have a more negative impact than expected in the second quarter. H&M has recently fallen short of key rival Zara and also faces more competition from XI in its core of cost conscious. Shoppers have been reluctant to spend due to high inflation. H&M said net sales in its second quarter rose 3% against a year earlier, seeing growth in all customer groups. Operating profit hit 672 and a half million dollars, up from a year earlier but below analyst forecasts.